Benefit cuts '˜will increase child poverty' - report

The Institute for Fiscal Studies forecasts that many households will see incomes rise slowly although faster than inflation but poorer families will see no growth in real terms.

Its report, funded by the York-based Joseph Rowntree Foundation, predicts cuts to benefits and tax credits hitting families with three children or more will contribute to a rise in child poverty using both absolute and relative measures.

The report is a blow to Chancellor George Osborne ahead of his Budget later this month when he will seek to show the Government is helping raise income levels through measures such as the national living wage which comes into force in April.

James Browne, one of the authors of the IFS report, said: “Following an historically slow recovery in living standards after the recession, stronger growth in household incomes at all income levels over the last two years will have been welcome news.

“For some, particularly the better off and pensioners, this is likely to continue over the next five years as earnings and state pensions grow more quickly than inflation.

“But the prospects are not so good for others, including large families with low incomes, who will bear the brunt of planned benefit cuts.”

The IFS study offers better news on pensioner poverty which is likely to “continue its long-run downward trend”.

Helen Barnard, head of analysis at the Joseph Rowntree Foundation, said: “The dramatic fall in pensioner poverty is one of the greatest public policy achievements of our time. It shows what we can be done with an effective set of policies, political commitment, sustained focus and resource beyond the lifetime of one parliament.

“But plans to reduce poverty cannot be restricted to one age group and we need to rethink how we best target scarce resources on those in greatest need. The extremely concerning forecasts for the increase in absolute child poverty by 2020 demonstrates the urgent need for a comprehensive strategy to sustainably reduce poverty across all ages.

The report was leapt on by the Chancellor’s critics at evidence that his economic plans are failing.

Shadow Chancellor John McDonnell said: “This report highlights how this recovery is truly built on sand, as gains over the past few years from low inflation due to the falling price of oil, will be offset by the policy of this Tory government over the next 5 years.

“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.”

A Government spokesman said: “Living standards are now growing beyond pre-crisis levels and IFS analysis today predicts household incomes growing across the board, with young adults seeing particularly strong income growth.

“The IFS also say absolute poverty is falling with strong rises in employment helping incomes at the bottom of the distribution keep pace with those at the middle – and this is even before the new National Living Wage comes into effect this April.

“But as the Chancellor has said, we need to show resolve in delivering reforms to improve our productivity which is the only way to deliver sustained rises in living standards.”