Households Spending Bigger Share Of Income On Fuel And Other Essentials

[interestrateripoff]

http://www.theguardian.com/business/2013/oct/30/household-spending-income-fuel-essentials-ons-energy

Households in Britain have seen their living standards stagnate for the past four years and are spending an increasing share of their incomes on "essentials" such as fuel, food and housing.

The Office for National Statistics (ONS) says households' true disposable income has flatlined since the end of the recession, in the autumn of 2009, even though national output has expanded by 4.2% over the same period.

In a report likely to intensify the political row over energy prices, the ONS says the proportion of household income accounted for by essentials rose from 28.3% in 2003 to 36% a decade later.

I'm sure everyone else will be just as shocked as I am over this! I mean bills going up by around 10% YoY and it's eating up more of household income, I would never have figured that out.

[19 year mortgage 8itch]

Housing seem to be the issue, not energy.

[Eddie_George]

Housing seem to be the issue, not energy.

The price of energy is the patsy for house prices. No one dare mention that high house prices are a bad thing. :angry:

[FreeTrader]

Housing seem to be the issue, not energy.

Yep.

This is the table from the report:

Housing is by far the largest contributor to the increase and yet the author then goes on to analyse the energy components, completely avoiding any discussion of the elephant in the room.

The Guardian article does likewise, with its title suggesting that 'fuel' is the primary culprit.

[Eddie_George]

Yep.

This is the table from the report:

Housing is by far the largest contributor to the increase and yet the author then goes on to analyse the energy components, completely avoiding any discussion of the elephant in the room.

The Guardian article does likewise, with its title suggesting that 'fuel' is the primary culprit.

Would be interesting to see the data before 2003. As by 2003, the bubble was inflating fast.

[19 year mortgage 8itch]

Yep.

This is the table from the report:

Housing is by far the largest contributor to the increase and yet the author then goes on to analyse the energy components, completely avoiding any discussion of the elephant in the room.

The Guardian article does likewise, with its title suggesting that 'fuel' is the primary culprit.

I know, Faisal Islam was pointing it out and tweeted that table vociferously this morning.

Fingers crossed C4 news cover it in that respect.

Also pointing out that the issue was baked in before 2011...

Although I wonder how much of the apparent lack of increase 2011-13 is due to personal tax allowance increases (my half baked understanding of this report's disposable income definition)

Edited October 30, 2013 by 7 Year Itch

[FreeTrader]

I know, Faisal Islam was pointing it out and tweeted that table vociferously this morning.

Fingers crossed C4 news cover it in that respect.

Also pointing out that the issue was baked in before 2011...

Although I wonder how much of the apparent lack of increase 2011-13 is due to personal tax allowance increases (my half baked understanding of this report's disposable income definition)

But do you think Faisal Islam is aware that over 70% of the housing category is accounted for by imputed OO rent?

That's why ONS can't afford to give an exhaustive analysis of the housing contribution – it would raise too many awkward questions.

In the National Accounts, imputed rent affects both household disposable income and expenditure. An owner occupier is a landlord who receives income from his tenant (himself).

Wage growth has been sluggish over the past few years but if you own your own home you've been doing okay income-wise because the amount you receive from renting your house to yourself has been rising strongly.

Unfortunately this has been offset by the fact that you are paying your landlord (yourself) a lot more in rent!

[19 year mortgage 8itch]

But do you think Faisal Islam is aware that over 70% of the housing category is accounted for by imputed OO rent?

Probably not although he did allude to those not affected by this increased cost of housing (outright homeowners? Imputed rent 'payers' LHA claimants?) and one of the replies he got pointed out that the ONS's own rent figures did not agree with this table which is something we know all about.

[R K]

But do you think Faisal Islam is aware that over 70% of the housing category is accounted for by imputed OO rent?

That's why ONS can't afford to give an exhaustive analysis of the housing contribution – it would raise too many awkward questions.

In the National Accounts, imputed rent affects both household disposable income and expenditure. An owner occupier is a landlord who receives income from his tenant (himself).

Wage growth has been sluggish over the past few years but if you own your own home you've been doing okay income-wise because the amount you receive from renting your house to yourself has been rising strongly.

Unfortunately this has been offset by the fact that you are paying your landlord (yourself) a lot more in rent!

Just wait 'til the penny drops with the Daily Mail and Express. It'll keep them in front page splashes for life.

[Quicken]

Hmmm... the beeb said recently on the news channel that transport was the biggest component of houshold spending, which was surprising to me. I believe they were working on a graph like the one here.

Note the convenient exclusion of mortgage costs, council tax etc. The actual housing expenditure breakdown is here:

Of course, this doesn't include imputed rentals.

[TheCountOfNowhere]

perhaps some clever bloke at the gas company worked out thot with those low low interest rates...customers could be squeezed more on prices.

i would expect even with the low rates house affordability for most people on the edge in 2007 are now back on the edge...but this time there is no magic bullet to save them...bar maybe wage inflation....so that's they ####ed then.

[workingpoor]

I believe this is the way to HPC in the current status quo, once people reach the point of nothing left over after paying mortgage / bills / food / fuel etc they will give up clinging on to "homeownership" and go through a forced sale taking a lower price just to get out of it.

IMPO HTB2 is all about trying to get these types some desperate HPI so they can MEW to clear built up debts spent on credit cards etc trying to cling on.

[Tonkers]

I'm a lazy cow, but we are making our own bread now as a matter of money saving. I can't wait to make our own wine.

In the supermarket I calculate cost per calorie - 2 scotch eggs at 1.20 beat everything else.

[wish I could afford one]

Would be interesting to see the data before 2003. As by 2003, the bubble was inflating fast.

I've calculated an affordability ratio (read the left axis as 0.30 = 30% of average gross earnings etc) going back to 2000. It shows the uptick nicely from about 2002. It's calculated using average mortgage rates, average earnings and an average land registry house. Source with full methodology.

[Tankus]

Imputed.....rental.....

Owner occupier imputed rental income tax ......wtf

http://stuartbuck.blogspot.co.uk/2005/02/imputed-rental-income.html

I'm listening to dark side of the moon at the mo..... Coincidence.... But so apt

[FreeTrader]

Imputed.....rental.....

Owner occupier imputed rental income tax ......wtf

http://stuartbuck.blogspot.co.uk/2005/02/imputed-rental-income.html

I'm listening to dark side of the moon at the mo..... Coincidence.... But so apt

Taxation on imputed rent was introduced in the UK under Schedule A (cases 1 and 2) of the Income Tax Act 1799. It was finally abolished in 1963.

Schedule A case 1 was for "Lands Occupied by the Owner".

Schedule A case 2 was for "Houses and Buildings occupied by the Owner".

According to Kevin Holmes :

"Schedule A was effectively a continuation of the English property taxes that preceded

the introduction of income tax. Taxation of property sourced income in this way in 1799

was not founded on the economic theory of imputed income per se, but on the assumption

that ownership of property reflected ability of the affluent classes to pay tax."

The Concept of Income: A Multi-Disciplinary Analysis

[wonderpup]

So the plan to inflate away the debt is not going that well I guess- if you spend a bigger share of your income on day to day essentials your debts are getting larger in relation to what you have left to service them.

It's kind of ironic that the thing the 1% need to save their debt based wealth is a strongly unionized workforce capable of demanding and getting inflation related pay rises- that way the inflation strategy might work- but without it they run the risk that trashing the currency will bring the thing down as debt servicing is abandoned in favor of feeding the kids and keeping them warm.