More than a million to be pushed into poverty, says think tankon March 24, 2022 at 8:07 am

More than a million people are set to be pushed into poverty amid the cost of living crisis, a think tank has said.

The Resolution Foundation said 1.3 million people would fall into absolute poverty next year, and not be able to afford basic necessities.

It said households would be squeezed by rising prices and a lack of support for those on low incomes.

The chancellor promised in his Spring Statement that the government would “stand by” struggling families.

But the think tank described the measures announced by the chancellor as a “big but poorly targeted policy package”.

On Wednesday, Rishi Sunak cut fuel duty by 5p and raised the threshold at which workers start paying National Insurance from £9,600 to £12,570.

Torsten Bell, the Resolution Foundation’s chief executive, said that those measures would provide “some help” to families on higher and middle-incomes.

But the chancellor resisted calls to scrap April’s National Insurance rise of 1.25p in the pound or to increase benefits in line with the rising cost of living.

The Resolution Foundation’s new analysis suggests that 1.3 million people, including 500,000 children, will be pushed into absolute poverty in the next financial year – the first time Britain has seen such a big increase outside of a recession.

Speaking to the BBC’s Today programme, Torsten Bell said: “It means we’re all getting worse off, and at the bottom end you’re having to cut essentials because you don’t have lots of luxury spending to go in the first place. I think that is really serious.”

The foundation, which focuses on poorer households, also said that the typical household income would fall by £1,100 next year after accounting for rising costs.

The chancellor announced during the Spring Statement that he would give an additional £500m to local councils to help vulnerable people.

But Mr Bell said: “I think when we look back it will look like an odd decision [not to provide further support], given we know where the impact of the next year is going to be felt.”

It comes after the independent Office for Budget Responsibility (OBR) warned that people face the biggest drop in living standards on record as wages fail to keep up with rising food, energy and transport costs.

Its latest forecast predicted that inflation, which measures the change in the cost of living over time, is set to hit a 40-year high of 8.7% in the final three months of 2022.

Rising prices and tax hikes mean living standards will not recover to their pre-pandemic level until 2024-25, it said.

Labour’s shadow chancellor Rachel Reeves said Mr Sunak had failed to appreciate the scale of the cost of living crisis facing workers and pensioners.

Responding to Rishi Sunak’s spring statement in the House of Commons, she said: “In eight days, people’s energy bills will be rising by 54%, two weeks today the chancellor’s tax hike will start hitting working people and their employers.

“His National Insurance tax rise was a bad idea last September and he’s admitted it’s an even worse one today.”

Mr Sunak promised the government would “stand by” families struggling with the cost of living and pointed to the energy bill rebate he had announced previously, as well as the higher National Insurance tax threshold that will give a tax cut in July.