As the recovery takes hold, is there still cause for concern over living standards? 

Katie Schmuecker is Policy and Research Manager at the Joseph Rowntree Foundation. She tweets at @katieschmuecker

The Office for Budget Responsibility forecast for wage growth looks strong, and the Bank of England inflation forecast anticipates it remaining low. This has led some to proclaim the debate about the cost of living all but over. But new research by Loughborough University for JRF reveals the extent of the ground that needs to be made up by low income families following the recession.

The Minimum Income Standard (MIS) research asks members of the public what goods and services all households should be able to afford for a minimum, socially acceptable standard of living. The project is now in its sixth year which enables us to look at what has influenced living standard between the recession and now. It shows that relatively little changed in terms of the goods and services people think are required for an acceptable standard of living, but the cost of the basket of essentials has soared by 28%. This is at a time when average wages have increased by 9% and the national minimum wage by 14%.

So far, it may sound fairly familiar. However, what MIS enables us to do is to get a real sense of the scale of the problem for the first time.

Take for example a couple with two children where both parents work. In 2008 if they earned £14,000 each they would have enough disposable income to afford what the public think is an adequate standard of living. To still be able to afford an adequate standard of living in 2014 they would each need to earn over £20,000; but if they had received pay rises in line with the national average over the last six years they would actually be earning £15,000 each today.

The reason behind the decline in family living standards is not simply the rising cost of essentials and stagnant wages; austerity has also played a part. While the family benefits from the increase in the personal tax allowance, the amount of state support they receive in the form of tax credits and child benefit has reduced. They lose £2 for each £1 gained as a result of tax and benefit changes.

A gulf has opened up between family incomes and needs. This has led some senior Conservatives - like the Chancellor, Matthew Hancock and Robert Halfon – to argue for more robust rises in the minimum wage or for more businesses to opt to pay the Living Wage. This has to be a core part of a strategy to improve living standards, but even if the recovery does deliver strong pay growth, it is extremely unlikely be enough to bridge the gap for families at the bottom.

Increasing pay needs to be accompanied by a strategy to address the rising cost of essential items like childcare, fuel, public transport, social housing and food. There is also a need to ensure where measures to improve living standards are introduced - like the increase in the income tax allowance – they actually filter through to those in greatest need. At present, none of those earning under £10,000 will benefit from further increases in the income tax threshold. What is more, under Universal Credit, a low income family that pays tax would only keep 35p of each £1 they gain as a result of a tax cut because the benefit is removed after tax. One way to deal with this particular problem would be to increasing the amount a household is allowed to earn before benefits begin to be withdrawn each time the income tax or national insurance threshold rises.

What this report makes clear that for those on low incomes there is still a long way to go to make up the ground that’s been lost over the last six years. It is vital that as the recovery gathers momentum those in greatest need feel the benefits of growth.