17 December 2010
The government’s tax and benefit reforms will plunge 800,000 people into relative poverty by 2013/14, the Institute for Fiscal Studies has found.
In a study commissioned by the Joseph Rowntree Foundation, the influential economics think-tank says that although the average household income is projected to fall, increasing numbers will be living on less than 60% of the national median.
If the fall in average incomes is not taken into account, the picture is even worse, with 900,000 people expected to be living on less than 60% of the 2010/11 average by 2013/14.
Both measures are being assessed as part of this year’s Child Poverty Act, which imposes legally binding targets for reducing child poverty.
Increases in child poverty will be minimal before 2012/13, the study finds, due to above-inflation increases in Child Tax Credit.
However, during 2012/13 and 2013/14, tax and benefit reforms introduced by this year’s Comprehensive Spending Review will affect increasing numbers of low-income households.
‘This is at odds with the government’s claim in the 2010 Spending Review that its reforms will have no measurable impact on child poverty in 2012/13,’ the report says.
If the IFS’s projections are accurate, it would take a 10.5% fall in relative child poverty to meet the Act’s target to reduce child poverty by 5% by 2020/21. Such a drop would be the biggest ever seen since child poverty began being consistently recorded in 1961.
The IFS says that beyond 2013/14, poverty will be affected by the introduction of the Universal Credit benefit system.
JRF chief executive Julia Unwin said: ‘We are very concerned about the future levels of child poverty and working-age poverty.’ She argued that although recent announcements from ministers have emphasised getting people back into jobs, JRF research shows that work alone will not provide a route out of poverty.
‘More children than ever from working households are living in poverty… We are also particularly worried about the forecast rise in poverty among childless adults – a group of people that has been neglected for far too long.
‘This research highlights the need and urgency for an anti-poverty strategy that protects and supports the most vulnerable.’
