Poverty fear over benefit increases

from the Press Association

State benefit increases are failing to keep pace with earnings, leading to a growing gap between the rich and poor, a new study shows.

Child poverty could rise as a result of the imbalance between earnings and benefits, leaving the Government with an uphill battle to meet its target of halving the number of youngsters living below the poverty line by 2010, the report said.

The Joseph Rowntree Foundation study showed how the current uprating system, which for most benefits links increases to inflation rather than earnings, could lead to "unprecedented" levels of child poverty.

If current policies continue, the number of children living in poverty will rise from 18% to 33% over 20 years, according to the study.

It added that the fiscal drag caused by tax thresholds being increased at a slower rate than earnings will also reduce disposable income - hitting the poor harder than the rich.

The report's author, Holly Sutherland, said: "Adjusting many benefits in line with prices rather than household incomes in general has had and will continue to have a growing detrimental impact on the worst-off people.

"For example, if the amount of Jobseeker's Allowance received by a single unemployed person had kept pace with average earnings since 1971, it would be double the value it is now."

She said she was surprised at the scale of the problem of "benefit erosion" and added that it was a "real driver to pushing more and more people below the poverty line".

Children are defined as being below the poverty line if they grow up in a household with under 60% of the average income.

The Government has set ambitious targets of halving the number of children in poverty by 2010 and eradicating the problem by 2020.