Over two million poor families will be more than £50 a week worse off by the end of the decade, according to an alarming analysis of welfare cuts, crippling rent rises and looming inflation.
In a bleak assessment of the plight of the poorest families in Britain, the study commissioned by the Local Government Association found that more than 84% of those set to lose £50 a week or more are households with children, either lone parents or couples. Almost two-thirds of them are working households, despite claims from ministers that they wish to create a welfare system that encourages work.
The analysis, by the Policy in Practice consultancy, also undermines claims from ministers that moves to cut taxes and increase the wages of the poorest are compensating them for years of austerity and the rising cost of living.
While some of the seven million low-income households in Britain will be better off by 2020, the group as a whole faces an average loss of £40.62 a week by 2020 compared with the end of last year, once benefit and tax changes, wages, housing costs and inflation are all taken into account.
The report’s publication comes as Philip Hammond, the chancellor, faces intense pressure to ease years of austerity following an election result that signalled voters had reached the end of their patience with spending cuts. Nurses took to the streets in protest last week over claims they have suffered a 14% real-terms cut in their wages over the past seven years. Hammond is also under pressure to curb rising levels of student debt in the forthcoming budget.
The study finds that the introduction of the government’s flagship policy of universal credit, which combines a series of benefits into a single payment, will lead to an average income loss of £11.18 per week. It coincides with new warnings from Citizens Advice that the rollout of the system should be halted, amid claims that some of those already receiving it have found themselves in serious debt.
With charities and councils warning of rising homelessness, increasing housing costs are identified as a main cause of falling income. More than 2 million low-paid private renters face an average real-terms loss of £38.49 a week by 2020.