Tory benefit cuts will lead to more than 2.6 million British children living in poverty by 2020, a new study has revealed.
The research by the Institute for Fiscal Studies (IFS) forecasts that another four years of David Cameron’s Government will mean the poorest households, particularly larger families and single parents, will be hardest hit.
The IFS report, funded by the Joseph Rowntree Foundation, finds that the UK’s booming jobs market has cut the number of people living below the poverty line over the last two years.
But the study says “the outlook looks less favourable for low-income households” in coming years and warns that inequality will worsen due to George Osborne’s planned cuts.
It predicts that those at the very bottom of society, in the lowest 10% of households, will see no real terms growth in their incomes over the rest of the Parliament.
One IFS projection of absolute poverty
And the impact on children will be stark, with the “absolute poverty” rate set to rise sharply from 15.1% in 2015/16 to 18.3% in 2020/21.
Families with more than three children will suffer most from the Tory government’s decision to limit child tax credit and universal credit to families with two offspring from April 2017.
Ministers insist that the two-child limits on benefits reflect voters' demands for a 'fairer' welfare system, and point out that the success of the economy has helped lift families above the breadline in recent years.
The increase in absolute child poverty rates is much larger in lone-parent families than in couple families too, mainly because they rely more on benefits and tax credits.
The impact on larger families
Labour seized on the figures, with Shadow Chancellor John McDonnell saying they should “shame” George Osborne into halting his planned cuts to welfare.
"When you read through the detail of this report the alarming figures are that by the end of this Tory government one in four children will be living in relative poverty with a rise to 2.6 million children living in absolute poverty,” he said.
"As the report clearly states, the government's planned tax and benefit changes are a major reason for these rises in relative and absolute poverty over the next 5 years. If you could take out the Tory planned regressive reforms then you would be able to take out the Tory increases in child poverty too.
"This report should shame the Chancellor, as any upsides rely more on the policies of OPEC in setting oil prices than George Osborne in boosting wages. And as this report clearly states it's Tory policies that will drive up child poverty over this parliament.
"It further proves how the Tories are holding back the aspirations of millions over the next 5 years."
The IFS report has good news, however, for pensioners, who are projected to avoid the poverty line because of the Government’s ‘triple lock’ guarantee on the state pension.
Shadow Chancellor John McDonnell
The latest official data on household income only run up to 2013–14 and the IFS has estimated what has happened since then, taking into account labour market trends and changes in tax and benefit policy.
The study finds that rising employment, as well as record low inflation, have helped increase most incomes on average in the past three years.
Most people have seen falls in the number in ‘absolute’ poverty – that is, the number falling below a fixed real poverty line.
In 2015/16 the IFS estimates there were about 400,000 fewer children, 300,000 fewer working-age adults without children, and 200,000 fewer pensioners in absolute poverty than in 2013/14.
But the planned cuts in benefits for the rest of the Parliament will begin to bite from this year.
The report adds that young adults have seen particularly strong income growth over the last two years, though this only represents a partial bounce-back following severe income losses between the 2008 recession and 2013.
Median income among those aged 22 to 30 is estimated to have increased by 10.5% between 2012/13 and 2015/16. But this comes after a huge 13% fall in incomes for this group since 2007/08.
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