Thursday, July 16, 2015

No Respite for the Poor

Nearly two-thirds of British children in poverty live in working families, the Institute for Fiscal Studies has revealed.

The economic think-tank said child poverty and inequality are set to rise as a consequence of the government’s planned tax and benefit cuts, which will favour high earners and hit the poor. Recent declines in income inequality would be reversed, while currently static child poverty rates would begin to increase, the IFS said. Disabled people, lone parents and social housing renters – also appeared to be hit by rising material deprivation, meaning that they were more likely than others to struggle with the cost of basic goods and services.

The report said: “Recent falls in inequality are likely to prove temporary. Stronger earnings growth and the Conservatives’ planned income tax cuts would do most for incomes towards the top of the distribution, while planned benefit cuts will hit low-income households [both in and out of work] hardest.”

A government spokesperson said: “Work remains the best route out of poverty…”

The IFS said that the effect on poverty of this jobs boost had been outweighed by low wages. “Since 2009–10, a fall in the number of workless families has acted to reduce poverty, but this has been offset by a substantial rise in in-work poverty,” said Chris Belfield, an IFS research economist and an author of the report. “This largely reflects the wider nature of the labour market since the recession: robust employment and weak earnings.”

While income inequality barely changed across social groups, the top 1% of earners increased their share of household income from 5.7% in 1990 to 8.4% in 2007-08 and 8.3% in 2013-14.

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