Rising prices ‘hit poor the hardest’

  • by James Reed, Political Correspondent

A new report suggests thousands more people are living in absolute poverty than recorded by official figures.

Research by the respected Institute for Fiscal Studies argues that Government statistics fail to take into account the fact that the rising cost of living hits poorer families harder than those on higher incomes.

It found households with the lowest incomes have seen prices rise by 50 per cent in the last decade compared to 43 per cent for the wealthiest.

That translates into an extra 300,000 people in absolute poverty, the IFS says in research published by the York-based Joseph Rowntree Foundation (JRF).

Katie Schmuecker, the JRF’s policy and research manager, said: “Costs rising faster than earnings causes problems for us all, but it is the poorest families who have faced the greatest pressure from rising prices over the past decade.

“Any plans at the next election to help improve family living standards must get to grips with the high cost of essentials, as well as how to boost wages and incomes.”

According to the research, the poorest families spend a bigger share of their wages on items such as energy bills and food which have risen quickly over the period while richer households spend on motoring and mortgages which have not increased as fast.

Shadow Work and Pensions Secretary Rachel Reeves, the Leeds West MP, said: “This report is further evidence of the huge pressures which families are facing as a result of David Cameron’s cost-of-living crisis.

“The Government’s failure to tackle soaring energy, childcare bills and low wages has led to millions struggling to get by. Earlier in the year the IFS said child poverty is set to rise 900,000 by 2020.”

The Children’s Society is today launching a campaign urging the Government to reverse a decision which could see around £16 million currently used by councils in the region to help families in emergencies cut from their budgets.

The Yorkshire Post revealed last year that council leaders in the region were furious at the Government’s decision to quietly scrap the local welfare assistance grant which they use to provide emergency food, heating and white goods to families struggling to make ends meet.

The Children’s Society said the money was used to help 132,000 families facing dire circumstances last year.