The poorest 30% of families in Britain have seen the weakest growth in their income since 2012, with experts fearing that child poverty rates will continue to rise as low-income households are subjected to over £14bn worth of cuts to social security benefits.
Analysis by the Resolution Foundation think tank reveals that the incomes of Britain’s poorest families fell by between £50 and £150 last year, the greatest squeeze on family budgets since 2012.
The Resolution Foundation also discovered income growth slowed for all households last year, with a typical middle income household seeing a rise of just 0.9 per cent.
Meanwhile, the richest 30% experienced a modest increase of 0.4%, while the poorest 30% saw their disposable income fall by 0.3%.
Child poverty is believed to have increased last year by around 3%, driven mainly by years of benefit cuts, including a 3% real-terms cut in the value of tax credits and child benefit.
Government data shows that the proportion of children in poverty has grown by 11% over this period, driven by a rise in children living in poor working families – up from 30% to 39% since 2003-4.
Worryingly, child poverty has actually been growing more quickly than Government figures suggest. According to the Resolution Foundation’s research, the proportion of children in poverty has actually grown by 21% between 2011 and 2016, rather than the 11% figure quoted in official Government figures.
Resolution Foundation says the rise in child poverty last year is part of a broader trend seen since 2011, and warn that without significant investment in the benefits system this trend is likely to continue.
The Government should also reconsider planned reductions in Universal Credit support “so that it becomes a vehicle for reversing recent increases in child poverty”, the think tank says.
Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “Reducing child poverty has been a goal of politicians from all parties in recent decades. But our analysis shows that child poverty is likely to have risen last year, and that rises since 2010 have been underestimated in official government data.
“Our analysis shows how important cash benefits like tax credits have been for supporting just about managing families and tackling child poverty since the millennium.
“It’s vital that government and other policy makers understand the positive impact that cash transfers have on low-income families, not least as they are in the middle of a huge multi-year programme of over £14bn worth of benefit cuts.
“The risk is that, unless the lessons of the past are learned, the future could spell squeezed incomes and further increases in child poverty.”