Poverty set to rise in UK, as IFS warns families will be worse off in 2016 than they were 14 years ago

A recent report by the Institute for Fiscal Studies (IFS) has predicted that poverty is set to rise in the UK under this government, with incomes falling, meaning families in 2015 will still not be earning more than they did in 2002  on average.

The IFS report predicted that “absolute poverty is forecast to rise by about 600,000 children and 800,000 working-age adults,” while “median income is expected to fall by around 7% in real terms, which would be the largest three-year fall for 35 years.”

The director of the IFS, Paul Johnson, said: “In the period 2009-10 to 2012-13, real median household incomes will drop by a whopping 7.4% – a record matched only by the falls seen between 1974 and 1977.”

Critics of this government have described how the coalition’s policies are affecting the lowest-income earners and the vulnerable hardest, shifting the burden onto lower-income earners to lower the deficit. Alison Garnham, chief executive of the charity Child Poverty Action Group, said: “The IFS analysis confirms that the chancellor’s new tax and benefit measures are a takeaway from low-income families with children to those at the middle and top. It is particularly perverse to reduce incomes of the lowest-paid working families by reducing tax credits when this is the group the government claims it wants to help through improved work incentives.”

(I have not heard David Cameron say: “We are all in this together” for a very long time, now.)

Shadow home secretary Yvette Cooper said that the poorest 30% of households would lose more than three times as much as the richest 30%.

 The IFS report stated that, in the longer term, the government’s planned  introduction of Universal Credit will act to reduce both absolute and relative poverty; The long term effect of Universal Credit is to reduce relative poverty by about 450,000 children and 600,000 working-age adults in 2020–21.
However, the IFS report continued, stating that “the net direct effect of the coalition government’s tax and benefit changes is to increase both absolute and relative poverty. This is because other changes, such as the switch from RPI- to CPI- indexation of means-tested benefits, more than offset the impact on poverty of Universal Credit.”
“Absolute and relative child poverty are are forecast to be 23% and 24% in 2020–21 respectively.”

The report continued: “These compare to the targets of 5% and 10%, set out in the Child Poverty Act (2010) and passed with cross-party support. This would be the highest rate of absolute child poverty since 2001–02 and the highest rate of relative child poverty since 1999–2000.”


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