Two million of UK’s poorest to be £50-a-week worse off by end of decade - analysis

Posted On: 
10th September 2017

Over two million of the UK’s poorest families are set to be £50-a-week worse off by 2020 as a result of welfare cuts and soaring rents, according to new analysis.

Wages, rent and inflation are attributed to the fall
PA Images

The study commissioned by the Local Government Association (LGA) found that more than 84% of those in the group are either single parent or coupled families with children.

The report, which was analysed by the Policy in Practice consultancy and seen by the Observer, found nearly two-thirds of them are working households.

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It reveals government attempts to up the minimum wage and lower income tax on poorer workers would fail to benefit 4.8 million low-income households.

The analysis adds that the roll-out of the Government’s controversial universal credit programme – which combines multiple benefits into one payment – will lead to incomes falling by £11.18 per week.

While some of Britain’s seven million lowest-income households are set to be better off by 2020, when accounting for changes to benefit and tax, wages, renting costs and inflation, as a whole they face an average loss of £40.62 a week by 2020 compared with the end of last year.

The LGA say an “affordability crisis” is set to take hold in housing, with private rents going up, while benefits fail to match it.

Soaring private rent also mean two million of the lowest paid will see an average real-terms loss of £38.49 a week by 2020, the study shows.

On top of that, low-income private renters with three or more children, will see an average income loss in real terms of £67.21 a week – more than double that of private renters without children, on £30.67.

Claire Kober, chair of the LGA’s resources board, said the report came as councils were already faced with having to plug a funding gap of £5.8bn by 2020.

“Councils are particularly concerned by the potential rise in the number of households in temporary accommodation or at risk of homelessness,” she said.

“With the right funding, freedom and flexibilities, councils could do so much more to manage and mitigate the impact of the welfare reforms, and help low-income households.”

A Department for Work and Pensions spokesperson said: “This report assumes that people won’t make any attempt to change and to improve their lives.

“But our welfare reforms incentivise work and, for the first time, universal credit helps working people progress and earn more, so they can eventually stop claiming benefits altogether.

“Under universal credit people are finding a job faster and staying in it longer than under the old system, and since the benefit cap was introduced, 34,000 households have moved off the cap and into work.”