Child poverty risks hitting record levels by 2022
The Resolution Foundation said average household incomes are not forecast to rise materially over the next two years but the outlook for low-income families “is particularly poor”.
It predicts real disposable incomes for the poorest families will be no higher in 2023-24 than they were in 2003-04.
The think tank blamed weak productivity and earnings growth for holding back living standards, but said government policy was also driving the “particularly weak outlook” for lower income groups.
It noted that the final year of the benefit freeze – which will collectively reduce working age household incomes by £1.5bn – starts in April 2019, while the repercussions of the two-child limit on benefits will continue to be felt during the remainder of this parliament.
Its report The Living Standards Outlook 2019 said: “Ongoing welfare cuts are set to cause a sharp rise in relative child poverty, which has been increasing continuously since 2011.
“By the end of the parliament, the proportion of children living in relative poverty (after housing costs) is on course to hit 37%– exceeding the previous high of 34% in the early 1990s.”
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.”