The independent Joseph Rowntree Foundation has analysed the impact of the Chancellor's failure to increase benefits in line with current inflation levels, along with the 1.25% increase in National Insurance and change to the earnings threshold at which it is paid.
As a result, around 600,000 people will be pulled into poverty, of which around a quarter are children.
JRF finds that families in poverty will be £445 per year worse off in 2022-23 compared to if benefits had been uprated in line with current inflation levels.
Households in poverty who are not in work – those who are either job seeking or unable to work due to ill health, disability or caring responsibilities – are particularly harshly affected by the changes.
|Family type||Impact of real-term cut to benefits||Impact of 1.25% increase in NICs||Impact of increase in NICs threshold||Overall annual impact|
|Households in poverty (including pensioners)||-£470||-£30||£55||-£445|
|Working-age households in poverty (all)||-£390||-£40||£80||-£350|
|In-work working-age households in poverty||-£335||-£75||£140||-£270|
|Non-working working-age households in poverty||-£465||£0||£0||-£465|
|Middle-income households (including pensioners)||-£390||-£170||£270||-£290|
|Middle-income working-age households||-£190||-£250||£400||-£40|
Notes on analysis:
- All figures rounded to the nearest £5.
- The figures do not include the impact of the cut to fuel duty, however this is set to benefit higher income households more than lower income households, due to different levels of vehicle ownership and different consumption patterns.
- They also do not include the doubling of the Household Support Fund, an additional £0.5 billion for local councils which must be applied for and is a fraction of the loss in the relative value of benefits estimated by the OBR to be £12.5bn.
- This also does not include the proposed reduction in the basic rate of income tax which isn’t proposed to come into effect until 2023/24.