Liz Truss has been warned that she will push 200,000 more children into poverty unless she abandons her plan to impose real-terms benefits cuts in the coming weeks.
The Child Poverty Action Group (CPAG) has spoken out against fuelling an existing “catastrophe”, with struggling families already unable to afford clothes or pay bills.
No 10 is desperate to bank savings for its promised tax cuts by only increasing payments in line with wages rather than with inflation, which is much higher – despite Boris Johnson having promised earlier this year to raise them in line with inflation.
But the CPAG said that low-income households – who spend a higher proportion of their income on energy and food, both of which are soaring in price – are already subject to higher inflation than the average family.
“The UK already faces a child poverty catastrophe, and the government will ruin the lives of many more children unless it takes action,” said Alison Garnham, the charity’s chief executive.
“Struggling parents need reassurance now that their children are not on the list for efficiency savings. The chancellor must honour the promise to uprate benefits in line with inflation.”
Low-income parents are warning the charity that they will have to “cut back on everything” and are plagued with “constant worry”. CPAG reported one parent saying: “I wake up every morning worrying about where the money is coming from to pay the next gas/electricity bill.”
The hint of a U-turn on the promise made earlier this year – after the last rise in benefits fell woefully short of inflation – has provoked a furious cabinet row. But the prime minister has yet to row back on the idea, with Downing Street sources suggesting she is ready to go into battle with her party despite the political crisis she is in.
Earnings are currently rising by around 5 per cent, which is just half of the inflation rate of roughly 10 per cent. Raising benefits by the same amount as wages would therefore mean a potential saving of billions of pounds for the cash-strapped government.
It has been suggested that disability benefits might be increased by the promised amount, allowing ministers to claim that they had protected the most vulnerable and that other claimants could find a job or work longer hours to make up the difference.
But the CPAG analysis found that almost all of the further 200,000 children who would be plunged into poverty under the government’s plan belong to families in which at least one parent is working.
Average inflation for all households between 2022 and 2024 is forecast to be 16 per cent – but it will be around 19 per cent for low-income families, who spend a higher proportion of their income on essentials such as energy and food, according to the analysis.
Furthermore, a benefits rise of only 5 per cent would mean the poorest households receiving 10 per cent less in social security in real terms than two years ago – the biggest such cut in history.
Next April’s benefit levels would normally be expected to be announced in November, taking into account earnings and price data from September.
The Department for Work and Pensions said: “The secretary of state commences her statutory annual review of benefits and state pensions from late October, using the most recent prices and earnings indices available.”
