Posted: 04 October 2017

Uncovering worrying trends with our poverty line calculator

Four million children in the UK are currently living below the poverty line. With this number expected to rise to five million by 2020, it’s clear we have a big problem. 

But when is a family defined to be ‘in poverty’? And how much money does a UK family need in order to be above the poverty line?

Worrying trends

Our calculator allows you to explore where the poverty line is for a given family type and how different benefit levels compare.

EXPLORE OUR POVERTY LINE CALCULATOR

We explored the calculator ourselves and found some troubling new trends in the results.

Larger families are being hit hard by benefit cuts

The calculator highlighted how children in larger families are being hit particularly hard by recent welfare reforms.

To illustrate, we looked at a couple that:

  • live on basic out of work benefits
  • live in private rented accommodation outside of London
  • claim housing benefits at the average Local Housing Allowance (LHA) rate for the relevant household size.

*Couple in private rented accommodation with maximum number of bedrooms for each family type under LHA rules. Assumes family claims average LHA rate outside of London for property of relevant size and that LHA covers rent in full.

As you can see, even with no children they receive £145 per week less than the amount needed to subsist on the poverty line. This benefit shortfall has grown by 28% since 2012.

If they were to have two children the benefit shortfall would be £186 per week - 77% worse than 2012. With four children, they would suffer a £396 per week shortfall, which is a staggering 247% worse than 2012.

With two children, this illustrative family is now hit by the lower benefit cap introduced in 2016 and even larger families that manage to avoid the cap are still caught by this year's introduction of the two child limit on tax credit.

The benefit cap now affects families nationwide

The benefit cap, introduced in 2013, limits the total amount of benefits that most out of work households can receive.

Initially the benefit cap mainly affected people living in London with higher rent costs. But since the cap was lowered in 2016, it is now affecting families nationwide.

We compared families receiving housing benefits at the LHA rate in each of the 152 rental areas in England.

Some households receive just 17% of the income required to meet the poverty line threshold

In 2015, a couple with two children would have been hit by the benefit cap in 19 areas (including all 14 London areas). In 2017, this family would now be capped in 103 areas across England.

Number of rental areas hit by benefit cap - illustrative couple with two children

Created with Highstock 5.0.142015Family hit by benefit capFamily not hit by benefit cap
Created with Highstock 5.0.142017Family hit by benefit capFamily not hit by benefit cap

Housing benefit based on local housing allowance (LHA) rate for a three bedroom property in each rental area. Assumes LHA covers rent in full.

Even more shockingly, a couple with three children would now be capped in 124 areas, with some receiving just 17% of the income required to meet the poverty line threshold.

The benefit freeze has dramatically reduced support levels

In the past, most benefits rose in line with inflation each year, helping families manage the rising cost of living. However, for three years - from 2012-2015 - increases in most key benefits were capped at 1% per year, no matter how much prices increased. This was followed by the four year benefit freeze, meaning support for low-income families won’t increase at all from 2015 levels - until the end of the decade.

Created with Highstock 5.0.14Benefits as % of poverty lineEffect of benefit freeze and 1% uprating capBenefits as % of poverty line (couple with 3 children)201220132014201520162017626466687072

Assumes rental costs are fully covered by housing benefit.

Our chart strips out the impact of other benefit cuts to show the pure impact of the benefit freeze over the last two years and the 1% cap that preceded it on a couple with three children.

The impact is even greater than the calculator suggests

It’s clear that the value of the welfare safety net has been severely eroded.

For a couple with three children, the freeze (and 1% uprating cap) alone has reduced base benefits from 71% of the poverty line in 2012 to just 63% in 2017.

This analysis assumes rent is fully covered by the housing benefit. In reality, the freeze combined with rising private rent means that many families face rent shortfalls. The impact is therefore even greater than the calculator suggests.

The Government must help struggling families

This year’s poverty line calculator hammers home how recent welfare cuts are pushing families deeper into poverty. If, as it claims, the Government is serious about helping struggling families, it must:

  • Rethink its approach to the two-child limit
  • Exclude children’s benefits from the scope of the benefit cap
  • End the four year freeze to children’s benefits and increase them in line with inflation.

EXPLORE OUR POVERTY LINE CALCULATOR

By Iain Porter - Policy team
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