Current government policy will result in a rise in poverty in the UK, according to forecasts by the Institute for Fiscal Studies (IFS) in Child and Working-Age Poverty from 2010 to 2020. The report, commissioned by the Joseph Rowntree Foundation, predicts that between 2009 and 2015 the number of children in relative poverty will rise by 300,000, taking the proportion to 22.2 per cent; the number of adults of working age in relative poverty is predicted to rise by 700,000 in the same period. The levels of poverty are also expected to continue to rise between 2015 and 2020.
The report also predicts that, because real incomes are set to continue to fall among low income families, ‘absolute child and working-age adult poverty are forecast to rise continuously and by more than relative poverty’ between 2009 and 2013.
Key points include:
- The number of children in relative poverty is forecast to rise from 2.6 million in 2009/10 to 2.9 million in 2015/16 and 3.3 million by 2020/21 (measuring income before housing costs), and that of working-age adults from 5.7 million in 2009/10 to 6.5 million in 2015/16 and 7.5 million by 2020/21.
- Relative child poverty will rise from 20 per cent currently to 24 per cent by 2020/21, the highest rate since 1999/2000 and considerably higher than the 10 per cent target in the Child Poverty Act (2010).
- The proportion of children in absolute poverty (using the 2010/11 poverty line fixed in real terms) is forecast to rise to 23 per cent by 2020/21, compared with the 5 per cent target.
- Absolute poverty will rise considerably in the next few years as earnings growth is forecast to be weak but inflation high. Real median household income will remain below its 2009/10 level in 2015/16.
- The direct impact of the current government’s announced reforms to personal tax and benefit policy will be to increase relative poverty among children by 200,000 in both 2015/16 and 2020/21, and among working-age adults by 200,000 and 400,000 in 2015/16 and 2020/21 respectively.
- Universal Credit should reduce poverty substantially, but the poverty-increasing effect of other government changes to personal taxes and state benefits will more than offset this.
The full report, Child and Working-Age Poverty from 2010 to 2020 (IFS Commentary 121), is available from the Institute for Fiscal Studies website.
Joseph Rowntree Foundation, Child and Working-age Poverty from 2010 to 2020