The Joseph Roundtree Foundation has released research that shows that almost half a million more people would be forced into poverty over the next three years if the proposed freeze on benefits goes ahead.
A new briefing by JRF published yesterday highlights how the freeze makes families worse off - the majority of whom are in work. The freeze is the single biggest policy driver behind the expected rise in poverty by the end of the Parliament.
JRF is calling for the Government to target its resources better at struggling families. Rather than increase the personal tax allowance to £12,500, which would overwhelmingly benefit better off families, JRF is urging the Government to remove the benefits freeze. Only £1 in every £6 spent on raising the personal tax allowance goes to the bottom half of the income distribution.
The influential thinktank say that the hit on families is set to be just under £1bn more than the £4bn initially forecast, due to prices rising quicker than expected.
They found the plans, which were drawn up while George Osborne was Chancellor, will lead to 470,000 more people living in poverty by 2020/21.
They say that in 2019/20, when the freeze is set to end, a couple with two children receiving the soon to be rolled out Universal Credit will be £832 worse off a year than they would have been had benefits risen in line with inflation since 2010.
They say that boosting income related benefits with inflation in 2018/19, at a cost of £2.8bn, would instead result in 380,000 fewer people living in poverty in 2020/21 - nine in 10 of whom would be in families with children and 17 in 20 would be working families.
Chief Executive of the foundation, Campbell Robb said:
“People who are just managing at best are being hit in the pocket by the freeze on benefits and tax credits. It means millions of families are finding life even harder to make ends meet - whether paying for the weekly food shop, covering energy bills or finding enough money to pay the rent.
“While the Treasury gains from this policy in the short-term, more children living in poverty has costs the Exchequer an estimated £6.4bn per year in lost tax revenue and additional benefit spending.
“The focus should be on making sure low-income family budgets keep pace with the cost of essentials, while reducing the benefit bill through increasing employment and enabling people on low pay to increase their earnings.
“No government wants to fight an election on a record of rising poverty and falling living standards. Circumstances have changed, so policy needs to change too. As prices rise, the priority should be to protect the budgets of the lowest income families. It’s time to lift the freeze.”
Source: Joseph Roundtree Foundation/ Holyrood.com