Latest Public Sector News

11.10.11

Rise in poverty predicted

The UK is set to see a large rise in poverty, due to a decline in incomes. The Institute for Fiscal Studies (IFS) has released a report which predicts that 600,000 more children will be living in poverty by 2013.

‘Below the poverty line’ is defined as a household income of at least 60% less than the national average, and there were already 2.2 million children and 2 million adults living in absolute poverty in 2009-2010.

The introduction of the Government’s Universal Credit scheme is designed to replace six income-related, work-based benefits that should directly reduce the number of children in poverty by 450,000. The median income is also predicted to slowly rise after 2013, but it will be some time before it recovers from the sharp decline it faces now.

James Browne, one of the authors of the report, said: “The Child Poverty Act imposes even more stringent targets in a much more constrained fiscal environment. Even if there were an immense increase in the resources made available, it is hard to see how child poverty could fall by enough to hit this supposedly legally binding target in just nine years.”

A spokesman for the Department of Work and Pensions said: “The IFS acknowledge that Universal Credit will substantially reduce child poverty. It will make work pay for the first time, tackling in-work poverty and lift over one million people, including 450,000 children, out of poverty.

“Our wide-ranging reforms will have a dynamic impact on some of the poorest families, encouraging people into work, many for the first time, and improving the life chances of children at an early age.

“Over the last decade billions of pounds have been moved around the tax and benefit system in an attempt to address poverty. This has had the perverse effect of trapping thousands of families on benefits while income inequality increased to its highest ever level.

“It is clear that sticking with the status quo, which has had no meaningful long-term effect on poverty projections, is not an option.”

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