Scrap the benefits freeze or force half a million more into poverty, says thinktank
3 min read
Almost half a million more people would be forced into poverty in the UK in 2020 if the government maintains its freeze on benefits, according to a report.
The Joseph Rowntree Foundation found that the policy to freeze working-age benefits for four years from 2016/17, both for those in and out of work, represents the “single biggest policy driver” behind the expected rise in poverty.
The influential thinktank say that the hit on families is set to be just under £1bn more than the £4bn initially forecast, due to prices rising quicker than expected.
They found the plans, which were drawn up while George Osborne was Chancellor, will lead to 470,000 more people living in poverty by 2020/21.
They say that in 2019/20, when the freeze is set to end, a couple with two children receiving the soon to be rolled out Universal Credit will be £832 worse off a year than they would have been had benefits risen in line with inflation since 2010.
Among their recommendations is the unfreezing of income related benefits such as tax credits, Universal Credit, the Local Housing Allowance and Job Seekers Allowance, over more widespread benefits such as child benefit.
The group have also called on ministers to ditch plans to increase the personal allowance to £12,500, a move they say overwhelmingly benefits the better off.
They say that boosting income related benefits with inflation in 2018/19, at a cost of £2.8bn, would instead result in 380,000 fewer people living in poverty in 2020/21 - nine in 10 of whom would be in families with children and 17 in 20 would be working families.
Chief Executive of the foundation, Campbell Robb said: “While the Treasury gains from this policy in the short-term, more children living in poverty has costs the Exchequer an estimated £6.4bn per year in lost tax revenue and additional benefit spending.
“The focus should be on making sure low-income family budgets keep pace with the cost of essentials, while reducing the benefit bill through increasing employment and enabling people on low pay to increase their earnings.
“No government wants to fight an election on a record of rising poverty and falling living standards. Circumstances have changed, so policy needs to change too.
"As prices rise, the priority should be to protect the budgets of the lowest income families. It’s time to lift the freeze.”
A spokesman from the Department for Work and Pensions said: “Our reforms mean we have a welfare system that’s fair to those who use it as well as those who pay for it.
“The best way to help people support their families and raise their incomes is to help them into work and we now have record numbers of people in employment.
“We’re helping millions of families meet the everyday cost of living and keep more of what they earn – we introduced Universal Credit, increased the National Living Wage and tax free Personal Allowance to make sure it pays to be in work.
“We’ve also doubled free childcare, and continue to spend over £90bn a year supporting people who are out of work or on a low income.”
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