Broke Britain: How soaring bills have left cash-strapped families with less to spend than for 17 years

Devastating price rises mean families have less to spend on themselves than at any time for 17 years.

The share of household income eaten up by unavoidable outgoings such as housing, food, heat and council tax has soared over the past six years.

It means the amounts left over for "discretionary spending" are at their lowest since 1991. And the economic experts who produce the figures are warning of worse to come.

Forecasters at Capital Economics expect food prices to go on rising at their current rate of 6 per cent a year for months to come, while gas and electricity prices will jump by up to 10 per cent in the second half of this year.

The average council tax bill is up 4 per cent this year while the average water bill has grown 5.8 per cent.

The findings echo those of the Daily Mail's Cost of Living Index, which has shown families need to find more than £100 a month extra this year just to stand still.

Once higher mortgage costs are added, millions are having to pay out at least another £2,000 a year to keep their heads above water.

Yet according to the Government's preferred measure, the Consumer Price Index, inflation is running at only 2.5 per cent.

The report will pile pressure on Gordon Brown, who blamed Labour's desperate showing in last week's elections on the "hurt" being felt by ordinary families.

The Prime Minister is facing increasing demands from his own party to announce measures to relieve the burden.

Last night former Home Secretary Charles Clarke called for an emergency 'mini-Budget' to help re- establish Labour's economic competence in the wake of divisions over the scrapping of the 10p tax rate.

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Tory leader David Cameron twisted the knife by promising to make the 10p tax debacle the focus of his party's campaign to pull off its first by-election victory for 26 years in the Labour seat of Crewe and Nantwich later this month.

Shadow Chief Secretary to the Treasury Philip Hammond said: "These figures help to explain why hard-working families across Britain are feeling worse off under Labour.

"Soaring prices, stagnant earnings and Gordon Brown's stealth taxes are combining to squeeze our standard of living - and the electorate sent Gordon Brown a signal last Thursday that it has had enough."

The Capital Economics report predicted one small piece of good news - interest rates falling to around 3.5 per cent by the middle of next year.

This will bring a slight reduction in the share of the household budget taken by mortgage payments, although the report warned that lenders are not passing on all the cut in official rates to all borrowers.

But any saving on mortgages will be more than accounted for by further rises in all the other bills people cannot avoid.

Increases on food, rent, council tax and utility bills are set to continue-outpacing the average growth in earnings of just under four per cent. With commodity prices still rising, the report said food inflation could remain at its current rates of six per cent or so for the next few months.

And the continuing surge in oil and wholesale gas prices means the rises in utility prices announced at the start of this year are unlikely to be the last. Oil hit a new record $122 a barrel yesterday, meaning the price has risen by 25 per cent over just four months.

Capital Economics also warns that rents will rise because of the increased demand for rental property from would-be first-time buyers finding it difficult to get a mortgage.

A separate report yesterday said homebuyers now need to find deposits of at least £30,000 to get the cheapest mortgage deals.

Overall, the Capital Economics report says that even the most basic 'unavoidables' are now swallowing up 31 per cent of the average household's income.

This represents a sharp rise from just 25 per cent six years ago. Once costs of things like travel and phone bills are added in, the situation is even bleaker.

Vicky Redwood, an economist at Capital, said: "It is reasonable to assume that food, rent, council tax and utility bills are the bits of spending which people find hardest to avoid.

"The share of household income left over for discretionary spending looks likely to remain at its lowest level since 1991."