Keir Starmer is facing fresh pressure to axe the two-child benefit limit as a major report warns today an extra 400,000 children could be plunged into poverty by 2030.
The Resolution Foundation think-tank warns that without urgent action the number of kids living in relative poverty is set to soar to 4.6million by the end of the decade. The organisation says it will in part be driven by the continued rollout of the controversial two-child benefit limit and the freezing of Local Housing Allowance.
The PM has so far resisted calls to scrap the Tory austerity-era two-child benefit limitand earlier this week warned the public to brace for a “painful” Budget in October. Last month seven Labour MPs were suspended after voting against the Government to scrap the policy introduced by ex-Tory Chancellor George Osborne.
The Resolution Foundation says that while its forecasts are “bleak”, they are “not set in stone”. Instead, they are urging ministers to axe the two-child benefit limit, the benefit cap and the freeze to Local Housing Allowances. The organisation says this would lift 600,000 children out of poverty overnight.
The Resolution Foundation’s study also concludes the majority of projected rises in living standards growth over the Parliament is due to come in this year alone. Incomes are expected to grow by 3% in 2024/25, but annual median income growth for non-pensioner households is forecast to tumble to 0.4% between 2024/25 and 2029/30. This would leave annual average income growth over the whole Parliament at 0.8% – or £1,400 per household.
Alex Clegg, an economist at the Resolution Foundation, said: “Britain is currently experiencing a mini living standards recovery as inflation falls but wage rises remain high. But this isn’t set to last, with the majority of income growth projected over the Parliament coming in this year alone. After that, wage rises are forecast to weaken and be overtaken by rent and mortgage cost increases.”
He added: “This troubling outlook highlights the need for the new Government to beat the forecasts that they have inherited. A new economic strategy that delivers stronger growth, coupled with the reversal of damaging benefit policies set by the previous Government, could still make this a Parliament of fast-rising living standards and falling poverty.”
A Government spokesman said: “The Government’s number one mission is to deliver sustained economic growth – and with measures such as creating the National Wealth Fund, to reforming the planning system, and devolving power across the UK to drive local growth, we will spread opportunity and prosperity to every corner of the country.
“We will do this while reforming our welfare system, developing an ambitious strategy to reduce child poverty, and delivering new measures to make work pay.”