Incomes stagnated and poverty rose last year

Published on

Typical household incomes stagnated last year (2017-18), as child poverty continued to rise, the Resolution Foundation said today in response to the latest Households Below Average Income (HBAI) statistics, published earlier today (Thursday).

The latest figures show that the number of children living in absolute poverty increased by 200,000 last year. Relative child poverty also increased slightly last year before housing costs (BHC), and fell slightly after housing costs (AHC).

As a result, 30 per cent of children – 4.1 million in total – were living in relative poverty (AHC) in 2017-18. 70 per cent of children living in poverty are now in working families.

The Foundation says that the recent increase in child poverty has been primarily driven by the freeze in the value of working age benefits, which were set against inflation reaching as high as 3 per cent in late 2017. It adds that with the bulk of the benefit freeze taking place after 2017-18, (with the benefit freeze continuing into 2018-19 and 2019-20, and other cuts such as the two child limit slowly taking effect) child poverty is expected to rise over the coming years.

The Foundation has projected a rise in child poverty to around 37 per cent by 2023-24, compared to an earlier record high of around 34 per cent in the mid-1990s.

Today’s figures also showed that typical income growth overall slowed to zero (down from 1.9 per cent in 2016-17), as a result of high inflation and weak pay growth. The Foundation’s broader living standards outlook for the parliament is subdued income growth, with the poorest families falling further behind.

 

Adam Corlett, Senior Economic Analyst at the Resolution Foundation, said:

“Typical household income growth ground to a halt in 2017 as a result of high inflation and weak pay growth. Ongoing benefit cuts also meant that the number of children living in absolute poverty also increased by 200,000 – the first time this has happened since 2012.

“With the bulk of the government’s £12bn of welfare cuts taking place after this period, child poverty is likely to continue rising, and could even hit a record high within the next few years.

“The political conversation around austerity may have shifted but the lived experience of it hasn’t for millions of families. Reducing child poverty needs to return to near the top of the government’s priority list.”

Notes to Editors

  • The HBAI 2017-18 statistics are available here.
  • The Resolution Foundation’s Living Standards Outlook 2019 is available here, while its report on child poverty across Scotland is available here.
  • Relative child poverty is defined as children living in households on less than 60 per cent of median household income. Absolute child poverty is defined as children living in households on less than 60 per cent of the 2010-11 level of median household income.
  • For more information contact Rob Holdsworth on 020 3372 2959 or 07921 236 972.