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What immediate steps are needed to ease the pressure on incomes?

Household finances remain under pressure. This has led many to question how much longer it will be before they start feeling the benefits of growth. Raising pay in the short-term isn’t an option for many business, but the CBI believes there are immediate steps businesses can take to help the hardest pressed groups.

Working families have been among the hardest hit groups and businesses can better support them straight away by further embedding flexible working. Business needs to challenge outdated assumptions of traditional working patterns. More openness to flexible working will help those with caring responsibilities to get work or stay in work which in turn can help reduce financial burdens. Unfortunately, there is still a stigma attached to flexible working in many workplaces, and barriers such as rigid job design do not help.

The CBI’s blueprint for raising living standards, A Better off Britain, outlines that there is also a big role for government in tackling burdens. The share of business income spent on employing workers – wages, pension contributions and National Insurance Contributions (NICs) – is currently just above its long term average of 72.7%. But rising NICs and pension costs have limited the scope for pay rises. Raising the threshold at which employees start to pay NICs to £10,500 by the end of the next parliament would leave an extra £363 per year in family budgets.


Childcare is an increasing drag on families’ incomes too. Middle income families now spend 34% of their net income on childcare, higher than in many other countries. Over 50% of parents with a child under two would like to get a job or work more hours but the cost of childcare is a significant barrier. Closing the gap between the end of maternity pay at 39 weeks and the start of childcare support at age three would make a big difference.


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