Children living in poverty could hit record high

The proportion of children living in relative poverty could hit a record high of 37 per cent by the end of this parliament, according to a new report published today by the Resolution Foundation.

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In Living Standards Outlook 2019, which brings together recent data, forecasts by the Office for Budget Responsibility (OBR) and the impact of current Government policy, the Foundation warned ongoing welfare cuts are set to cause a sharp rise in relative child poverty, which has been increasing since 2011.

The report predicts that by the end of this parliament the proportion of children living in relative poverty, calculated after housing costs, is on course to hit 37 per cent, exceeding the previous high of 34 per cent in the early 1990s.

The Foundation has warned the majority of children in single parent families or in families with more than two children could be living in poverty by the time of the next election.

Typical working household incomes are not forecast to rise over the next two years, and the outlook for low-income families is particularly poor, with real disposable incomes for low-to-middle income households in 2023-24 set to be no higher than in 2003-04.

While it says low productivity and earnings growth are holding back living standards for most households, the Resolution Foundation has blamed Government policy for driving the particularly weak outlook for lower-income groups.

The report notes that the final year of the benefit freeze, which will reduce working age household incomes by £1.5bn, will start in April, while the impact of the two-child limit on benefits will grow over the remainder of the parliament.

The Foundation said that while strengthening pay and employment is not directly within the Government’s short-term control, action to prevent child poverty hitting a record high should be a priority for politicians of all parties.                      

Adam Corlett, senior economic analyst at the Resolution Foundation, said, ‘UK households have already taken a £1,500 a year hit to their incomes, compared to pre-referendum expectations. There’s now a huge risk that their incomes stagnate over the next few years, as the economy’s pay performance struggles to get out of first gear. 

‘The outlook for low-and middle-income families is particularly tough, with ongoing benefit cuts set to drive down income levels and drive up child poverty.

‘The UK’s current economic outlook is highly uncertain, and will hopefully surprise on the upside. But whatever direction the economy takes, the government must reassess the continuation of working-age welfare cuts. Otherwise, its non-Brexit record risks being stained by a return to record levels of child poverty.’

Child Poverty Action Group’s director of policy Louisa McGeehan called the report a ‘wake-up call’ for the Government.

‘In the UK we have been very successful at reducing poverty among pensioners but we have allowed child poverty to rise,' she said. That is unjustifiable in a country that is compassionate and believes that every child matters. 

‘The good news is that child poverty is responsive to policy change – this means that if we act fast we can take action to reduce it. A first step is to end the freeze on working age benefits early and uprate child benefit and restore its value to families where it really makes a difference.

‘The Government should also end the punitive, poverty-producing two child limit and benefit cap that break the link between children’s needs and they support they get.

‘It’s only by re-investing in struggling families that the Government can avoid presiding over record levels of child poverty.’