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Nearly helped children living below ‘acceptable standard’ in April: report

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Nearly half of children are expected to live in families forced to “sacrifice in essentials” by the start of the new fiscal year, new analysis suggests (Owen Humphreys/PA) (PA File)

Nearly half of children are expected to be living in families forced to “make essential sacrifices” by the start of the new fiscal year, a new analysis suggests.

The New Economics Foundation (NEF) has estimated that 23.4 million people will fall short of the “acceptable standard of living” by April 2022, at an average of £8,600 per year.

This represents more than a third (34%) of the population, the think tank said, and means almost half (48%) of children will be in households “unable to provide them with a decent standard of living”.

The figure rises to 77% for children from single-parent families and 96% for those from unemployed families, according to NEF estimates.

Labor said it was “shameful” that “so many children are now growing up poor and insecure under the Conservatives”.

The NEF measured the cost of living using the Minimum Income Standard (MIS), calculated by the Center for Social Policy Research at Loughborough University.

The MIS produces budgets for different types of households, based on what the public believes is needed for an “acceptable standard of living” in the UK.

The NEF compared these budgets to people’s incomes, creating what it said was “an accurate picture of how many people won’t be able to afford the cost of living” for April.

He said the implication of living below the MIS income is “having to choose between everyday essentials.”

“The average couple with children earning below the MIS will not meet the threshold of £184.61 per week,” the NEF said.

MIS produces budgets for different types of households (Dominic Lipinski/PA) (PA Wire)

MIS produces budgets for different types of households (Dominic Lipinski/PA) (PA Wire)

“Losing the MIS by such a large amount will force people to make impossible decisions.”

Sam Tims, an economist at the NEF, said “there is little time left for the Chancellor to take action to avert the worst contraction in income in real terms in 50 years.”

“The cost of living is rising faster than at any time in recent history. While all families will feel pressured in April, lower-income households will be proportionally more affected,” she said.

“But the cost of living is only a crisis when people cannot afford it and government support must be able to respond flexibly to this.”

Meanwhile, the Resolution Foundation has published new research that suggests the protracted conflict in Ukraine could spark a second spike in inflation this fall, reaching more than 10% for the poorest households.

The cost of living is a crisis only when people cannot afford it and government support must be able to respond flexibly to this

Sam Tims, NEF Economist

The chancellor heads into his spring statement with “good news on public finances but terrible news on family finances,” the think tank said.

Loans for the current fiscal year are expected to be £30bn lower than forecast in October, and tax revenue is expected to be £40bn higher than forecast.

But he warned that the outlook for household finances is “grim” while the Ukraine crisis means there is “increased uncertainty around the UK’s economic outlook, with the only certainty being that it has deteriorated markedly”.

The think tank warned that the conflict will cause higher inflation, leading to higher debt payments for the Chancellor and a further reduction in income.

It is also likely to “weaken GDP growth and increase the likelihood of a recession,” he said.

The NEF said the implication of living below the MIS income is 'having to choose between essentials every day' (Aaron Chown/PA) (PA Wire)

The NEF said the implication of living below the MIS is “having to choose between everyday essentials” (Aaron Chown/PA) (PA Wire)

“A protracted conflict in Ukraine would mean inflation would be higher and longer lasting than previously anticipated, and the drivers of inflation are likely to change over the course of the year,” the Resolution Foundation said.

“While inflation is currently spread fairly evenly across the income distribution, that could change in the fall as food price inflation (already two percentage points above its historical average) continues to rise, and rising wholesale energy costs drive another steep increase in the energy bill. price cap in October.

“With the poorest tenth of households spending double the share of their household budgets on food and energy bills compared to the richest tenth of households, the second inflation peak of 2022 in the fall could reach more 10% for these families”.

The Foundation suggested that the Chancellor should “review improving benefits this April.”

He said this would be a better idea than scrapping the planned increase in national insurance, a move he claimed would be “misfocused.”

A protracted conflict in Ukraine would mean higher and longer lasting inflation than previously anticipated

Resolution Foundation

James Smith, director of research at the Resolution Foundation, said: “The top priority should be protecting the poorest households who are most exposed to the biggest cost of living crisis Britain has faced in generations.

“This can be done by increasing profits by 8%, instead of the 3.1% currently forecast, in April. The Chancellor cannot shield Britain entirely from the difficult times ahead, but he must act urgently to ensure the pain is distributed fairly.”

Responding to the NEF analysis, Jonathan Ashworth, the Labor Party’s Shadow Work and Pensions Secretary, said: “It is shameful that so many children are now growing up poor and insecure under the Tories, in households that cannot afford the basic items.

“Twelve years of Tory economic mismanagement have given us soaring inflation, skyrocketing heating bills, punitive tax increases, and two big cuts to Universal Credit in six months.”

A Treasury spokesman said: “The devastating Russian invasion of Ukraine will have a huge impact on lives and livelihoods around the world and the effects will be felt across the country.

“It is right that we do all we can to show solidarity with the people of Ukraine and work with our allies and partners to impose the toughest sanctions to inflict maximum and lasting pain on Russia.

“We know people are concerned about the cost of living, but we are already providing over £20bn worth of support this financial year and next, including targeted support for energy bills, reducing the rate of reduction of the Universal Credit to help low-income people keep more of what they earn, and freezes taxes on alcohol and fuel to keep costs down.”


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