Posted: 19 October 2018

2018 poverty line statistics

We’ve updated our poverty line calculator for 2018/19 and the results look stark. 

The tool allows you to see how much money a family has to live on if they are on the UK poverty line - which varies depending on family size and age – and shows how typical benefit levels compare.

Explore our poverty line calculator

Some families will now fall below half the income needed to clear the poverty line

When a family falls on hard times, we try to support them. Collectively, this means a system of social security that should ensure no one is left unable to afford the essentials.

But our calculator update shows that if a typical couple with two children find themselves out of work in 2018, their benefits could now cover less than half the amount they need to subsist on the poverty line. They would now receive just 47% of the income required to clear the poverty threshold, down from 63% in 2012 - a drop of a quarter over that period.

A significant driver of this is that even though the cost of living has been rising year on year, the value of most key benefits have been frozen since 2015. This followed a cap of 1% on increases from 2012. The effect has been an unprecedented erosion in the value of the safety net. In the past, most benefits increased in line with inflation, helping families keep pace with rising prices.

This general deterioration in value has been exacerbated for some families by other cuts to support, such as the ‘two-child limit’. For example, benefit support as a proportion of the poverty line has fallen by a third for a single parent with three children who is out of work (from 78% in 2012 to 52% in 2018).

*Couple with two children aged 14-17, living in a three bedroom property with rent of £151 per week (the average local housing allowance for a three bedroom property outside Greater London). Single parent with three children - one aged under 14 and the others aged 14-17 - again with rent of £151 per week.

Low income working families are feeling the squeeze too

Two thirds of children in poverty now live in working families. The benefits freeze affects many of them too because they rely on benefits to top up low wages in order to make ends meet.

At the same time, working families on Universal Credit are affected by another serious cut in the value of this new benefit:

‘Work allowances’ let families keep all their earnings up to a certain amount before their benefit starts to be withdrawn, making it easier to take on more work. However, these have been slashed since Universal Credit was first introduced. A working single parent could be almost £2,500 per year worse off than if work allowances remained at 2013 levels.

The Government can use the upcoming Budget to help restore the safety net

Our latest poverty line calculator demonstrates that the value of the safety net for families in or out of work has been seriously eroded over the last few years. But however much families are entitled to, it’s also crucial that they receive this support when they need it. The transition to Universal Credit puts this at risk because claimants have to wait at least five weeks to receive their first payment. Many are having to wait much longer due to delays and errors with the new system.

The Government must use this year’s Budget to resolve these problems:

  1. Unfreeze children’s benefits, allowing them to rise in line with prices once again.
  2. Return Universal Credit work allowances to their 2013 levels, helping struggling working families to keep more of what they earn.
  3. Provide an ‘Advance Grant’ to ensure that no one is left without the means to live or is forced to take on debt while they wait for their first Universal Credit payment.
By Iain Porter - Policy team
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