Inflation could push 4m more Britons below poverty line, study finds

Research shows people who are just about managing will suffer as cost of living rises but wage growth slows and benefits are cut.


Powered by Guardian.co.ukThis article titled “Inflation could push 4m more Britons below poverty line, study finds” was written by Jessica Elgot Political reporter, for theguardian.com on Wednesday 15th February 2017 00.01 UTC

At least 4 million people are at risk of falling below the poverty line because of rising food and fuel prices, a new study from the Joseph Rowntree Foundation has warned.

The cost of living could rise by up to 10% by 2020, increasing pressure on household budgets, the foundation said, with the impact worsened by a freeze on tax credits and working age benefits.

Record levels of employment would not solve the problem, the JRF’s report said, given the growing numbers of working people in low income jobs.

Around 30% of the population, equivalent to 19 million people, are living below the nationally-recognised minimum income standard (MIS), a benchmark calculated by Loughborough University’s centre for research in social policy, which assesses the income required for decent living standards. The latest available figures, from 2014-15, show a rise of 4 million since 2008.

Around 8 million of them could be classified as “just about managing” families, to whom Theresa May referred in her Tory leadership speech, and who are making ends meet but not earning enough to have an adequate standard of living. The MIS assesses the income needed to have not just food, shelter and clothes, but to be able to be an active participant in society.

“You have a job but you don’t always have job security,” the prime minister said of so-called “Jams” last summer. “You can just about manage but you worry about the cost of living and getting your kids into a good school. If you’re one of those families, if you’re just managing, I want to address you directly.”

However, the foundation said, the government should not overlook the other 11 million people who lived far below the minimum income standard, at high risk of being in severe poverty with precarious finances.

Campbell Robb, the JRF chief executive, said: “The government focus on people on modest incomes is welcome, but it cannot be at the expense of those at the poorest end of the income scale: it must remember just about managing today can become poverty tomorrow.”

The price of a minimum “basket of goods” has risen 27%-30% since 2008, and average earnings by only half that amount,” the charity said. The increase in the number of poorer families mostly came between 2008 and 2012, the figures showed, but since then the growth in low income has stopped, but not reversed.

Robb said the government should take remedial action in next month’s budget, including allowing families to keep more of their earnings and increasing benefits and tax credits to match the rise in living costs.

“This could be a very difficult time for just managing families as rising inflation begins to bite into finely-balanced budgets,” he said. “The high cost of living has already helped push 4 million more people below an adequate income, and if the cost of essentials such as food, energy and housing rise further, we need to take action to ease the strain.”

Matt Padley, research fellow at Loughborough’s social policy research centre, and one of the report’s authors, said: “Unfortunately the conditions to the end of the decade still look unfavourable for these groups. With forecasts of rising inflation, slowing wage growth combined with cuts to tax credits, the outlook is set to be highly challenging for families whose low incomes mean they are, at best, only just managing to make ends meet.”

Debbie Abrahams, the shadow work and pensions secretary, said the government could start by reversing cuts to in-work support. “This report makes clear millions more people are struggling to make ends meet as a result of this government’s seven wasted years of austerity,” she said.

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