Child poverty on course for record high due to stagnant wages and benefits cuts, report finds

Slow wage increases and an ‘actively regressive’ tax and benefits policy to push an extra 1 million children into poverty, Resolution Foundation forecasts

Ben Chapman
Tuesday 19 February 2019 20:17
Young Lives animation traces the consequences of child poverty

Child poverty risks hitting a record high by 2023-24 unless the government implements substantial changes to universal credit and other benefits, a report has found.

Stagnating incomes and “actively regressive” tax and benefits policies are set to push an extra 1 million children into poverty between 2016-17 and 2023-4, according to the Resolution Foundation.

The think tank forecasts that the majority of children with single parents, families with three or more children and households where no one is in work will be living in poverty within five years.

It calculated that four years of benefits freezes, compounded by a spike in inflation after the Brexit referendum, will leave the poorest UK households £4.4bn worse off.

Years of falling wages and benefit cuts have come at a “terrible human cost”, said TUC general secretary Frances O’Grady.

“Millions are struggling to put food on the table and clothe their kids.

“The government needs to stop pretending the problem doesn’t exist and must help the many working families who can’t make ends meet.

“We need ministers to boost the minimum wage now and use the social security system to stop people being locked into poverty.”

Many families will see £2,700 wiped from their budgets by the two-child limit on universal credit while other benefits have not been raised since 2015. Meanwhile, sharp rises in prices which have eaten into already tight budgets.

Overall, the child poverty rate is predicted to soar from 20 per cent in 2016=17 to 29 per cent in 2024 without drastic changes to benefit policies, according to the Resolution Foundation’s forecasts.

Brexit-related uncertainty has also eroded real household incomes which are £1,500 lower on average than had been predicted before the June 2016 referendum, but problems have been exacerbated by “deliberate policy choices” which have compounded the impact on low-income groups, the report said.

Campbell Robb, chief executive of the Joseph Rowntree Foundation, said that the government’s continued failure to deal with child poverty undermines what the UK stands for as a country.

“More and more children are going to school hungry, having to go without a proper winter coat or living in a family who are unable to afford a decent home,” he said.

“It is within the government’s power to stem the rising tide of child poverty before it reaches a record high.”

Gordon Brown on Universal Credit roll-out and child poverty in the UK

Mr Robb singled out the government’s benefits freeze as the policy pushing the most families into hardship.

Child Poverty Action Group’s director of policy Louisa McGeehan, said: “After years of deep social security cuts we are on the cusp of a child poverty crisis which will damage both the life chances of a generation and the wider economy.”

Official figures this week showed wages were rising at their fastest pace in a decade but the Resolution Foundation’s analysis found that incomes had been “generally stagnant” since the Brexit referendum. Over 20 years from 2003-4 to 2023-24, some groups are expected to see zero income growth.

However, the economy could perform better than expected if the worst elements of Brexit uncertainty can be removed, the Resolution Foundation said.

Margaret Greenwood, shadow work and pensions secretary, labelled the report a “damning verdict on almost nine years of Conservative austerity”.

“Over 4 million children are growing up in poverty under this government and that figure is set to rise to over 5 million in the next few years,” Ms Greenwood said.

Labour has pledged to stop the rollout of universal credit, put an end to zero-hour contracts and introduce a real living wage of £10 an hour.

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