UK's poorest families see drop in income

The UK’s poorest families saw their incomes go backwards last year, as the gap between the lowest earners and those on middle and higher-pay grades widened.

The Resolution Foundation found households in the lowest 30 per cent bracket saw their incomes fall by between £50 and £150, while others saw a modest rise in their living standards.

The report found that the 0.3 per cent drop in incomes for the poorest was enhanced in its impact by a weak recovery in wages over the last decade.

A middle income family saw a modest rise of 0.9 per cent in its income, in contrast to 1.6 per cent the previous year, while those at the top saw slower growth at 0.4 per cent.

Meanwhile, child poverty is said in the report to have jumped last year by around 3 per cent as a result of benefit cuts.

The thinktank says the 3 per cent real-terms fall in the value of tax credits and child benefit was a major reason behind the rise.

Elsewhere, the study found that miscalculations in how much the UK Government spends on benefits, meant the proportion of children in poverty has actually grown by 21 per cent between 2010 and 2016, rather than 11 per cent.

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said: “Reducing child poverty has been a goal of politicians from all parties in recent decades.

“But our analysis shows that child poverty is likely to have risen last year, and that rises since 2010 have been underestimated in official government data.

“Our analysis shows how important cash benefits like tax credits have been for supporting just about managing families and tackling child poverty since the millennium.

“It’s vital that government and other policy makers understand the positive impact that cash transfers have on low-income families, not least as they are in the middle of a huge multi-year programme of over £14bn worth of benefit cuts.

“The risk is that, unless the lessons of the past are learned, the future could spell squeezed incomes and further increases in child poverty.”

Shadow Work and Pensions Secretary, Margaret Greenwood said: “The sharp rise in child poverty on this Government’s watch is shocking.

“Government denials can’t disguise the impact that deep social security cuts are having on low income families who are struggling to cope with basic household bills.

“The harsh reality behind the figures is one of families forced into debt and even turning to food banks to survive. All too many of these households have someone in work whose wages don’t cover rapidly rising rents.”