The Austerity Generation: the impact of a decade of cuts on family incomes and child poverty

Our new research, conducted with the Institute for Public Policy Research, models the impact of cuts to social security over the decade. You can read the report here

The report looks at both the world of tax credits and the new Universal Credit (UC) system, and finds that:

  • Working families stand to lose £930 a year on average from cuts in the tax credit system and £420 a year from cuts to Universal Credit – these are losses across the population, so the losses for tax credit and UC recipients would be much higher.
  • Freezes and cuts to Universal Credit work allowances will leave lone parents worse off by, on average, £710 a year, couples £250 a year.
  • Work allowance cuts have the greatest impact in cash terms on households in the second and third deciles (the ‘just about managing’ group).
  • While work incentives may have improved for some families, big falls in family income caused by cuts and changes to Universal Credit have left many worse off overall, overwhelming any gains from increases in the ‘national living wage’, personal tax allowances and help for childcare.
  • The poorest 10 per cent will lose 10 per cent of their income (£450 a year) on average compared with what was promised by Universal Credit.
  • The average family with three children will be 10 per cent (£2,540 a year) worse off, and the average family with four or more children 19 per cent (£5,000 a year) worse off due to Universal Credit cuts.
  • Families containing someone with a disability will be £300 a year worse off due to Universal Credit cuts; families containing someone with a severe disability will be £530 a year worse off.
  • Uprating decisions will cost the average single parent family on Universal Credit £710 a year, with the average couple with children losing £430 a year.
  • The cuts to Universal Credit would put 1,000,000 children in poverty and 900,000 in severe poverty by the end of the decade, assuming the absence of tax credits.