Thursday, June 25, 2020

Poverty - UK

Britain entered the coronavirus crisis with a less generous welfare safety net, and after the worst decade for income gains for households since comparable records began in the 1960s. Families falling out of work during the coronavirus crisis will get £1,600 less on average in benefits. 

Even after taking account of emergency additions to the welfare safety net launched as the virus spread to Britain earlier this year, the Institute for Fiscal Studies (IFS) said benefits for out-of-work households were worth 10% less than in 2011.

 For an average out-of-work household with children, the shortfall jumps to £2,900 a year or 12%, less than was available in 2011 before the cuts kicked in.

Highlighting the scale of the Tories’ austerity drive and the stuttering recovery from the 2008 financial crisis, the IFS said cuts to working-age benefits and tax credits meant low-income households in particular had experienced stalling improvements in living standards.

Finding that the impact was entirely down to benefit cuts, which offset growth in wages over the period, it said incomes for the poorest 10th of households were essentially the same in 2018–19 as they had been five years earlier in 2013–14.

Without the temporary changes announced by Rishi Sunak in March to raise the value of universal credit and other benefits to soften the blow delivered by Covid-19, households would have been 15% worse off, and families with children 16% worse off, the IFS said. The changes are due to last for 12 months. Unemployment is expected to more than double this summer.

Pascale Bourquin, research economist at the IFS, said: “The years following the great recession [2008 financial crisis] do not provide a good blueprint for a bounce-back: in the last decade, we have witnessed the slowest growth in household incomes since records began as earnings and productivity stalled and working-age benefits were cut sharply. We now have the dual challenge of trying to recover the ground people have lost in their careers and employment prospects, and addressing the problems we already had.”

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