Benefit cuts pushed up relative child poverty, IFS report shows

Relative child poverty in the UK increased from 27% in 2013 to 31% in 2019.

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According to new data from the IFS, benefit cuts increased relative child poverty in the UK, defined as living in a home where the income is less than 60% of the median income, in the years leading up to the pandemic.

Relative child poverty increased from 27 percent in 2013 to 31 percent in 2019. As a result, lower-income families incomes are lagging further behind average incomes.

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Families with three or more children saw a significant increase in relative child poverty, rising from 34% in 2013 to 47% in 2019. Benefit reductions for these families have been more than normal as a result of controversial policies like the benefit cap and the “two-child limit”.

However, the percentage of children living in material deprivation decreased by a quarter from 24 percent in 2013 to 18 percent in 2019, according to questions about their families’ ability to pay for necessities.

These are the results of the Joseph Rowntree Foundation-funded Institute for Fiscal Studies’ (IFS) Annual Living Standards, Inequality, and Poverty Report, which was released today.

In response to the report, Action For Children stated that the current concern is that these decreases in material deprivation were actually caused by a drop in the relative pricing of necessities, particularly gas.

The nonprofit organisation issues a warning that material deprivation among children may start to increase as a result of the present, sharp spike in food and energy prices.

Some people may find it more difficult to effectively heat their houses as a result of rising energy costs, and low-income households are predicted to be the hardest hit by inflation.

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Director of policy and campaigns at Action for Children, Imran Hussain, said: “No child in the UK should go without essentials. As the leadership contest for the next Prime Minister debates future tax cuts which will cost billions, the most vulnerable families in our society are sinking under an historic cost-of-living crisis.

“Today’s findings provide yet more proof that targeted support for low-income families such as the £20-a-week uplift to Universal Credit can lift children out of poverty.

“Whoever the next Prime Minister is needs to make fighting child poverty part of the core business of government and the best way to do that is to invest in child-related benefits.”

Thomas Wernham, a Research Economist at the IFS and an author of the report, said: “The share of children whose families couldn’t afford essentials fell substantially in the years leading up to the pandemic, even as income-based measures of child poverty flatlined or increased.

“A fall in the relative prices of essential goods such as gas, food, and clothing in the years before the pandemic is likely to have played a part in this reduction.

“The pre-pandemic reductions in child deprivation may go into reverse with particularly high energy price inflation and poorer families facing higher rates of inflation. This is why the government has targeted support for the rising cost of living at poorer families receiving means-tested benefits.”

Peter Matejic, Chief Analyst at the Joseph Rowntree Foundation, the funder of the report, said: “This report highlights the powerful impact prices have on the living standards of families on low incomes.

“Overall material deprivation fell before the pandemic due to falling prices, but with inflation currently at a 40 year high and the basic rate of benefits at a 40 year low, we know large numbers of families are going without essentials once again.

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“It is unacceptable that going into the pandemic, a decade of cuts to working-age benefits drove child poverty to its highest level since 2017.

“It is critical that the Government act urgently to improve the adequacy of our social security safety net, with stopping benefit debt deductions at unaffordable rates being a necessary first step.”

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