£20 benefit uplift helped take almost half a million out of poverty before being abolished by Rishi Sunak
The £20 uplift to Universal Credit introduced during the Covid pandemic and abolished by chancellor Rishi Sunak last autumn played a part in lifting 400,000 children out of poverty, new figures released today have indicated.
But charities said that the withdrawal of the uplift, coupled with the chancellor’s refusal to upgrade welfare benefits in line with soaring inflation, means that many of the same children will be thrust back into poverty this year.
The Child Poverty Action group accused ministers of “turning their backs on low-income families” after a mini-budget in which Mr Sunak cut fuel prices for motorists and promised an income tax cut for workers, but left the annual benefit increase at 3.1 per cent in a year when inflation is expected to reach almost 9 per cent.
Independent economic thinktank the Institute for Fiscal Studies said that the “benign” impact of the £20-a-week payment and Mr Sunak’s furlough scheme meant that the incomes of Britain’s poorest households actually rose by almost 4 per cent during the pandemic.
But IFS associate director Jonathan Cribb said that they were likely to fall back again this year as taxes rise and earnings and benefits fail to match inflation.
The government’s response to the cost-of-living crisis showed it is “to some extent unable and to some extent unwilling to protect household incomes, including for the poorest, in the way that it managed to do during the pandemic”, said Mr Cribb.
CPAG said that even after 400,000 children being lifted out of relative poverty in 2020/21, today’s figures showed that 3.9 million – more than a quarter (27 per cent) of all the country’s children – were in poverty, after housing costs are taken into account.
This was 300,000 higher than when Conservative-led governments took power in 2010/11.
More than one in five (22 per cent) children – a total of around 900,000 – was living in a household classified as food insecure.
The group’s chief executive Alison Garnham said: “Today’s figures show that government has the power to protect children from poverty. But in a week when the chancellor made clear he was comfortable with his choices and the prime minister claimed child poverty had been left out of his plan for the country ‘by accident’ it looks like ministers have turned their backs on low-income families.
“Many of the children who were lifted out of poverty by the £20 increase to universal credit have already been forced back over the brink by the government’s actions. And as millions struggle with spiralling costs, we know the picture will worsen.
“Government must step in to support hard-pressed families by increasing benefits by 8 per cent to match inflation.”
Dan Paskins, director of UK impact at Save the Children, said: “There is a clear message from these statistics: strengthening the social security system is the most effective way to lift children out of poverty. But instead of building on the policies introduced during the pandemic, the UK government has taken several steps backwards.
“On top of the £20 cut to Universal Credit last year, families are now facing another real-terms cut to their incomes because the chancellor has failed to increase benefits in line with inflation.
“For months, parents have been telling us that they’re skipping meals, turning off the heating and electricity and taking on unsustainable amounts of debt. Children are going to school hungry and feeling anxious about what this crisis means for their family.
“The government must invest in social security now, before families are forced into even more desperate situations. And in the longer term, we need to see more ambitious strategy to lift families’ incomes. Because it’s simply not acceptable that in one of the richest countries in the world, more than a quarter of children are growing up in poverty.”
Mark Russell, chief executive at the Children’s Society, said: “It’s a stain on our nation that nearly a third of children – around 3.9m – were living in poverty last year.
“The looming cost-of-living crisis will undoubtedly make matters worse as more desperate families struggle to make ends meet. Some will face impossible choices between heating and eating. Compared to the overall population, children remain more likely to be in low-income households.
“This is unacceptable. The spring statement did not go far enough to help families facing the frightening prospect of rising prices and higher bills. The government must provide more targeted and extensive help as a matter of urgency.”
A government spokesperson said: “Latest stats show there were 2 million fewer people in absolute poverty after housing costs than in 2009/10, and 600,000 fewer compared to 2019/20. These figures reflect the temporary emergency support we provided during the pandemic.
“The landscape now is vastly different, and it is right that our focus has shifted to filling the record number of vacancies as we know that work is the best and most sustainable route out of poverty.
“This is backed up by over £22bn of targeted investment to support low-income households. We have made permanent changes to Universal Credit that mean claimants in working households are £1,000 better off on average, cut fuel duty by 5p a litre and set out our £9.1bn energy rebate.
“This support is all in addition to a rise in the minimum wage to £9.50 from tomorrow and cutting National Insurance for more than 30m people from July.”