Thinktank says since 2010 child poverty has risen twice as fast as official figures show

Britain’s poorest 30% of households saw an end to their post financial crash recovery last year as inflation and cuts to in-work benefits outweighed wage rises to leave them as much as £150 worse off.

The Resolution Foundation, an independent thinktank, said its audit of income and poverty levels for 2017-2018 found that income growth slowed for all households last year.

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However, the lowest 30% of households found their incomes going backwards by between £50 and £150, widening the gap with middle and higher-income earners, who saw a modest rise in their living standards once benefit changes were taken into account.

The report comes at a time when the government faces accusations that cutbacks to tax credits are pushing low-income families into poverty while the successor, universal credit, is technically flawed, leading to long delays and miscalculated payments.

The thinktank said the drop in incomes for the poorest was modest at 0.3% but the impact was greater after a weak recovery in wages over the previous decade. A typical middle-income household saw a rise of only 0.9%, although this was the weakest since 2012, and a marked slowdown from the 1.6% rise in 2016-17, and the 2.5% average in the 10 years before the financial crisis.

The top 30% of households also widened the gap with the poorest 30% but incomes at the top only rose by 0.4%.

“With the middle pulling away from the bottom, child poverty is projected to have increased last year by around 3%,” the report read. “This was driven by benefit cuts that particularly hit low-income families, including the 3% real-terms fall in the value of tax credits and child benefit.”

The thinktank said a wide-ranging review of child poverty showed it fell further than official figures show in the New Labour years until 2010, taking thousands more children out of poverty than previously believed, and has risen more sharply during the period of austerity over the past eight years.

“Child poverty actually fell from 3 million in 1998-99 to around 1.6 million in 2010-2011 – rather than falling from 3.3 million to 2.3 million, with half a million more children taken out of poverty than official surveys suggest,” the report read. “This means the target to halve child poverty between 1998 and 2010 was almost met, rather than being missed by 600,000 children as previously thought.”

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Since 2010 child poverty has been rising twice as fast since as official figures show, it said.

“The proportion of children in poverty has actually grown by 21% between 2011 and 2016, rather than 11%, in part because the growth is from a lower base. This has been driven by a longer-term rise in children living in poor working families, up from 30% to 39% since 2003-2004,” the report read.

Adam Corlett, a senior economic analyst at the foundation, said: “Reducing child poverty has been a goal of politicians from all parties in recent decades. But our analysis shows that child poverty is likely to have risen last year and that rises since 2010 have been underestimated in official government data.”