Rising inflation puts further pressure on low-income families

Date: 22nd March 2017
Category: Child poverty

End Child Poverty research demonstrates that prices are estimated to rise by 35% between 2010 and 2020, but Child Benefit will have increased by just 2% over the same period - around a seventeenth of what would be needed to keep up with increases in the cost of living.

The UK Chancellor, Philip Hammond, outlined his Spring Budget on March 8th, but failed to provide any relief for families who are feeling the pinch because of a four-year freeze to children's benefits.

The figures from the Office for Budget Responsibility estimates that inflation will be 3.9% in 2017/18 - half a per cent higher than previously forecast, and approaching twice the rate of inflation last year. Prices are rising much more rapidly than anticipated when these benefit freezes were put in place.

Sam Royston, Chair of the End Child Poverty coalition said:

"We are extremely disappointed that the Chancellor has not recognised or addressed the impact that rising inflation is having on family budgets. End Child Poverty research shows that the freeze to children's benefits will mean that low income families are up to £2800 a year worse off by 2020. Yet instead of using the Budget to help disadvantaged families, the Chancellor has left them out in the cold.

"Freezing benefits may not reduce the amount of cash in people's pockets, but cash isn't what matters - what matters is what people can to afford to buy with it. Families on a low income simply cannot afford to pay the increased prices of food, fuel and travel when there is no increase to the pounds in their pocket."

"Poverty has a massive impact on children's lives. It leads to a poorer childhood and worse outcomes throughout life. Child poverty also has a cost to society as a whole - estimated to be at least £29 billion a year. The Government must address this issue of rising child poverty."

Additionally, the Scottish Federation of Housing Associations (SFHA) has urged the Scottish Government to counteract these welfare cuts.

Although Chancellor Philip Hammond announced an extra £350m for Scotland in the Spring budget speech, SFHA warned the cash will do nothing to alleviate the hardship facing thousands of Scots ahead of April's Universal Credit roll-out.

April sees three new welfare cuts introduced: the child element of Universal Credit will be limited with claimants receiving a higher amount for their first child and a lower rate for other children; Child Tax Credit is being restricted to two children; and housing support for 18-21-year-olds will be removed - potentially leaving many homeless and destitute.

Mary Taylor, chief executive of SFHA, said she welcomed the increase in capital investment in Scotland but urged for a proportion of the cuts to be mitigated by Scottish ministers - as promised in the SNP's election manifesto.

"Those affected will be new claimants for Universal Credit in "full service" areas, and for them it will have a potentially catastrophic effect," she said.