2012 Autumn Statement ‘will increase child poverty’

Tax and benefit changes announced by the Chancellor in his 2012 Autumn Statement will mean an extra 200,000 children living in poverty by 2017-18, according to a new analysis from the Institute for Public Policy Research think tank.

The Autumn Statement announced several important changes to the tax and benefit system from April 2013 – including a higher personal tax allowance and a 1 per cent cap, for three years, on the annual uprating of most working-age benefits and tax credits.

Key points

  • The amount of real-terms support given to low-income families will fall significantly as a result of the changes, pushing many families and children into relative poverty. The numbers of children, adults and households in poverty will all rise by 200,000 by 2017-18.
  • Reforms to personal taxes will provide the greatest benefit to those on middle incomes: even so, they will not reverse the impact of real cuts to benefits/tax credits.
  • The combined changes to taxes and benefits will have the greatest impact on those people who are out of work, who will see their incomes fall on average by 0.44 per cent. But in cash terms, families who are in work will lose more – an average of £1.50 a week, compared with £1.37 for families out of work.

Source: Spencer Thompson, Analysis of Tax and Benefit Changes in the Autumn Statement, Institute for Public Policy Research