Families losing out on £5,000 a year in wages
Think tank says UK in biggest slowdown in 60 years
FAMILIES will have lost out on £5,000 a year by 2022 due to the biggest slowdown in wages growth for 60 years, with children in low-income families among the groups hardest hit, according to an independent think tank.
The Institute for Fiscal Studies found the long-term impact of the 2008 economic crash and the “tepid” recovery means that average family incomes will be 18 per cent lower in 2021/22 than they would have been if pre-crash trends had continued.
And benefit cuts planned by the Government mean the poorest 15 per cent of the population will have lower incomes in five years’ time than they do now, reversing the recent move towards reduced inequality, said the IFS.
The economic think tank predicted that absolute child poverty would rise from 27.5 per cent in 2014/15 to 30 per cent in 2021/22, “entirely” as a result of the direct impact of tax and benefit reforms planned for this Parliament.
The Office for Budget Responsibility (OBR) forecast suggests household incomes will not grow at all for the next two years and will rise by just four per cent over the next five years.
IFS also said that even if real earnings grow by one percentage point more each year than the OBR expects, average incomes will still be 16 per cent lower in 2021/22 than would have been reached if pre-crash trends had continued after 2008.
And the think tank warned: “Of course, things could instead turn out worse.”
But pensioners will continue to enjoy faster-rising living standards than the rest of the population, with average incomes due to be 24 per cent higher in 2021/22 than 2007/08.
IFS research economist Tom Waters said the figures suggested “the long shadow cast by the financial crisis” will not have receded by 2021/22.
Campbell Robb, chief executive of the independent Joseph Rown- tree Foundation, said: “These troubling forecasts show millions of families across the country are teetering on a precipice, with 400,000 pensioners and over one million more children likely to fall into poverty and suffer the very real and awful consequences that brings if things do not change.
“One of the biggest drivers of the rise in child poverty is policy choices, which is why it is essential the Prime Minister and Chancellor use the upcoming Budget to put in place measures to stop this happening. An excellent start would be to ensure families can keep more of their earnings under the Universal Credit.”
Labour Treasury spokesman Peter Dowd said: “Today’s damning indictment on the outlook for living standards is yet more evidence of the Tory Government’s economic failure.”
Liberal Democrat Treasury spokeswoman Baroness Kramer said: “With the upcoming Budget, the Government have a chance to change course. For all the talk about the ‘just about managing’ we have seen no real help for them. It is time for the Government to act.”
A Treasury spokesman said: “We are taking action to support families with the costs of living by cutting taxes for millions of working people, doubling free childcare for nearly 400,000 working parents and introducing the National Living Wage.”
‘‘ Forecast shows millions of families across the country are teetering on a precipice
COMEDIAN Jo Brand yesterday visited mental health charity See Me in Glasgow on behalf of comic relief.
She was joined by Jenny Pewsey, Jayson McSwiggan and Zoe Mason to discuss the charity’s work. See Me is Scotland’s programme to tackle mental health stigma and discrimination and is funded by the Scottish Government and Comic Relief.
Also attending was Richard Monaghan, who started going to the charity after suffering serious depression.
He came up with with the concept of Pass the Badge, which asks people to wear a See Me badge for a day and then pass it on to someone else to wear.