The ‘huge income slowdown’ since 2005 has been driven by pay rises drying up, according to the Resolution Foundation. Photograph: Bloomberg/Getty Images
Two decades of weak pay growth have left poorer households stuck, Resolution Foundation says, fuelling political unease
It would take 137 years for lower-income families in the UK to see their living standards double at the current rate of growth, according to a thinktank.
A two-decade stagnation in disposable incomes has created a “mood of unease” across the country, the Resolution Foundation says, warning of the risk of “further political disruption” unless pay growth accelerates.
In the 40 years to 2005, the typical disposable income of working-age families in the poorest half of the population doubled, after growing by 1.8% a year on average once adjusted for inflation, according to the thinktank. In the final decade of that period, growth in disposable incomes rose by 4% a year and looked on course to double within 18 years.
Since 2005, however, there has been a significant slowdown. The rate of growth in disposable incomes – measured after taxes and housing costs – has increased by just 0.5% for lower-income families. The Resolution Foundation said: “If progress continues to crawl in the way it has since the mid-2000s, a further doubling would take over 130 years.”
Keir Starmer says that the Labour Party under his leadership is intensely relaxed about assaulting those least able to defend themselves – the very poorest and most vulnerable.Keir Starmer, Angela Rayner and Rachel Reeves wear the uniform of the rich and powerful. They have all had clothes bought for them by multi-millionaire Labour donor Lord Alli. CORRECTION: It appears that Rachel Reeves clothing was provided by Juliet Rosenfeld.Keir Starmer commits to play the caretaker role for Capitalism through the “hard times”.
New government statistics released today show the reach of the two-child limit. There are 1,665,540 children in England, Scotland and Wales living in households affected by the two-child limit, an increase of over 35,000 from the same time in 2024.
The two-child limit restricts means-tested child benefits to the first two children in a household, subject to some exceptions.
Its sister policy, the benefit cap, affects over 115,000 households, including 300,000 children. It routinely pushes families into deep poverty, far below the standard poverty line of 60% of median income.
The benefit cap places a limit on the total amount a household can receive if no-one in the household earns a minimum amount, again subject to some exceptions linked to receipt of disability benefits.
Get your news from actual experts, straight to your inbox.Sign up to our daily newsletter to receive all The Conversation UK’s latest coverage of news and research, from politics and business to the arts and sciences.
Over the past five years, we have been part of a team of academic researchers investigating the impact of both policies on families with three or more children. We’ve found that these policies drive up poverty, creating deprivation and hardship. This in turn causes sustained and severe harm to children and their families.
The two-child limit and benefit cap leave many families living with extreme financial insecurity. They harm parental mental health, as mothers and fathers struggle to try and make an inadequate income stretch to meet the needs of their children.
In addition, these policies do not fall evenly across the population when looking at ethnicity. Overall, 70% of the families affected by the two-child limit are white, as are 66% affected by the benefit cap. But our new analysis shows that children from an ethnic minority are up to three times as likely as white children to be affected by the two-child limit. They are also up to four times as likely to be affected by the benefit cap.
Alongside administrative statistics, we have analysed household survey data, published today as a policy brief. We find that one in five children from Pakistani families and one in four children from Bangladeshi families are now affected by the two-child limit.
Rising poverty
Our analysis also indicates that these policies are contributing to very high and rising levels of poverty. We estimate that 66% of Bangladeshi children, 60% of Pakistani children, and nearly half (48%) of black children live in poverty. This compares to one in four (24%) white children living below the poverty line – still far too many.
This new analysis provides us with better understanding of where the damage done by both policies is falling. It’s an important reminder of how the two-child limit and benefit cap directly conflict with ambitions not only to act on child poverty, but also to reduce systematic inequalities linked to ethnicity.
Scrapping the two-child limit would give larger families access to benefits they currently miss out on – but it would not have any effect on smaller families living in poverty, so isn’t the only policy solution needed.
Nonetheless, analysis by the Resolution Foundation has shown that getting rid of the two-child limit – which would cost £1.4 billion – is by far the most cost-effective way to reduce the number of children living in poverty. Spending £1.4 billion in other ways – for example by increasing benefits for all families – would make less difference to child poverty than if the two-child limit were ended.
It’s also important to keep in mind the impact on the depth of poverty. Larger families tend to be living further below the poverty line. Scrapping the two-child limit will make a big difference in many households, even if they are not lifted out of poverty as a result.
Labour came into government on a manifesto of “change”, and Keir Starmer has promised to be “laser-focused” in his commitment to drive down poverty.
Labour have already said that they want to get rid of the two-child limit, arguing that they just need to find the money to do so. The government has established a child poverty taskforce, due to report in the autumn, and made a first concrete policy commitment with the extension of free school meals provision for families in England. But there is no alternative to serious action on social security benefits if significant progress is to be made.
Keir Starmer says that the Labour Party under his leadership all feel a small part of Scunthorpe.Keir Starmer explains that he feels no shame or guilt benefitting personally from gifts from the rich and powerful while insisting on policies of severe austerity causing suffering and death.
WORKING-AGE households are set to be an average of £400 worse off in the year ahead amid income squeezes and bill hikes, the Resolution Foundation has warned.
A new report by the think tank estimates that the disposable income of a typical household will fall by 1 per cent, while those across the poorest half of Britain are set for a sharper 2 per cent fall, losing the equivalent of £300.
One contributing factor is council tax rises, with households facing an £80-per-year average increase as rates rise by 5 per cent across most of England, 7 per cent in Wales and 9 per cent in Scotland.
Above-inflation increases in water charges will hit even harder, pushing bills up by an extra £120 on average.
Ofgem’s 6.4 per cent increase in the energy price cap adds another £111 a year on average from this month, although the Resolution Foundation believes that the impact of the change will be limited, with prices expected to fall in July.
Working-age benefits will not keep pace with inflation this year, the think tank warned, with April’s 1.7 per cent boost falling short of the 3.2 per cent consumer prices index rate projected for this year.
Meanwhile, private rents have risen by 9 per cent since the local housing allowance was last set.
Keir Starmer, Angela Rayner and Rachel Reeves wear the uniform of the rich and powerful. They have all had clothes bought for them by multi-millionaire Labour donor Lord Alli. CORRECTION: It appears that Rachel Reeves clothing was provided by Juliet Rosenfeld.
THE number of children living in poverty in Britain has reached a record high of almost 4.5 million, official figures revealed today.
Data from the Department for Work and Pensions (DWP) showed 4.45 million children in households with relative low income after housing costs in the year to March 2024, up from 4.33m the previous year — the highest since records began in 2002-03.
A household is considered in relative poverty if its income falls below 60 per cent of the median after housing costs.
The official figure comes a day after government estimates showed that its welfare cuts will push 50,000 more children below the poverty line by 2030.
And a Resolution Foundation analysis said a weak economic outlook and benefit cuts will disproportionately impact lower-income families, reducing the average income for the poorest half by £500 on average over the next five years.
The think tank also said that Chancellor Rachel Reeves’s welfare cuts amount to £8.1 billion — far exceeding the £4.8bn stated by the government.
Keir Starmer says that his Labour Party is intensely relaxed about assaulting the very poorest and most vulnerable.Keir Starmer explains that he feels no shame or guilt benefitting personally from gifts from the rich and powerful while insisting on policies of severe austerity causing suffering and death.
Rachel Reeves delivering her spring statement in the Commons. Photograph: House of Commons
Labour is braced for a backlash from its MPs over welfare cuts called ‘appalling’ by a foodbank charity
Rachel Reeves was accused of balancing the books at the expense of the poor in her spring statement, as official figures showed three million households could lose £1,720 a year in benefits.
The chancellor confirmed welfare cuts of £4.8bn, but insisted the government’s priority was to restore stability to the public finances in the face of rising global borrowing costs.
Economists warned Reeves could be forced to come back with more tax rises in the autumn, with the Office for Budget Responsibility (OBR) saying that any tariffs imposed by Donald Trump may upend their forecasts.
…
Ruth Curtice, the director of the Resolution Foundation thinktank, said while Reeves was right to balance the books, she was “wrong to do so on the backs of low- to middle-income families, on whom two-thirds of the welfare cuts will fall”.
Helen Barnard, the director of policy at the food bank charity Trussell, said: “The insistence by the Treasury on driving through record cuts to disabled people’s social security to balance the books is both shocking and appalling. People at food banks are telling us they are terrified how they’ll survive.”
…
Keir Starmer confirms that he’s proud to be a red Tory continuing austerity and targeting poor and disabled scum.Keir Starmer says pensioners can freeze to death and poor children can starve and be condemned to failure and misery all their lives.
