The think tank predicts that welfare reforms will push 600,000 families into poverty
Yesterday David Cameron promised that this parliament would be characterised by ‘an all-out assault on poverty’.
On the same day, the Resolution Foundation published a report which concluded that ‘measures announced at the Summer Budget are expected to significantly increase the number of children (and households) living in poverty’.
This week the Tories have shown themselves to be masters of PR.
They have repeated a series of benevolent-sounding mantras – ‘we are the builders’, ‘finish the fight for real equality’, ‘the party of working people’ – which conceal the glaring omissions or even contradictions beneath.
The Resolution Foundation has looked closely at what Osborne’s plans, announced in the Summer Budget, will mean for the poorest in society. The report is depressing reading. It predicts that:
1. By 2020, at least an extra 300,000 children will be in poverty, rising to 600,000 once all policy measures have taken effect. Two-thirds of this increase will be among children in working households.
2. The new National Living Wage will be ‘more than offset’ by benefit changes, with cuts to working tax credits creating an ‘overnight shock to income’ for many families in 2016. Interestingly, Osborne cited the research of the Resolution Foundation when he made the wage announcement in July.
3. Inequality will increase. The poverty threshold currently stands at 60 per cent of the median income. As earnings rise, median income should also rise, and with it the poverty threshold. But benefit income will stand still, of not fall. This means that the distance of families on benefits to the poverty line will increase.
4. New ways of measuring poverty will obscure the worsening picture. The Welfare Reform and Employment Bill removes the current measure of income poverty from the suite of government metrics, introducing new ‘Life Chances’ measures of the number of children living in workless households, and educational attainment for children by the age of 16.
The Resolution Foundation acknowledges that too narrow a focus on incomes has drawbacks but but ‘removing any focus on incomes makes very little sense’.
This focus on worklessness will do little to improve incomes for the working poor. The problem of worklessness among families with children has actually been diminishing, meaning a new approach is needed.
5. Having a job and being in poverty are increasingly looking like unrelated circumstances. The Resolution Foundation predicts that in-work poverty will rise from 1.6 million in the 2016 baseline to between 2.2 million and 2.3 million in 2020 – accounting for around half of the overall rise in child poverty.
Ruby Stockham is a staff writer at Left Foot Forward
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