🚨 New Substack: Higher energy prices could leave typical British households £480 worse off this year
@mikebrewerecon.bsky.social and the RF team unpack what higher bills mean for living standards ⤵️
Yes removing the 2 child limit will have a big impact on poverty in 2026-27. We won't get the official numbers for this year until 2028, but we can project them (see here: bsky.app/profile/alex...). Data revisions can shift the line a bit but a policy as big as the 2cl removal guarantees a big fall
Happy new tax year to all who celebrate! Here's a quick 🧵on the tax and benefit changes coming in this month in the context of rising energy bills. www.resolutionfoundation.org/publications...
Hi Steve, I shouldn't think so. DWP has been using benefit admin data combined with modelled entitlement for a while to calculate take up (for PC/HB, they haven't yet published UC take up figures)
Better data is welcome, but it's no cause for complacency. Poverty remains high, measurement is not yet complete, and urgency must not slip. Repealing the two-child limit is the right next step. Read more here: www.resolutionfoundation.org/comment/a-cl...
As well as under-reported benefit income from families in the survey, the current sample undercounts benefit-claiming families relative to the population. Plans to improve weighting to match benefit caseload could mean more families below the poverty line are counted next year.
And importantly, weighting improvements due next year could mean poverty rates are revised back up:
Crucially, this data revision should not be mistaken for real-world progress. Child poverty in the UK remains high: Internationally comparative figures use a slightly different measure to UK stats, but a similar revision would put us as the 4th worst country in Europe rather than the 2nd worst.
Most notably, past years' relative poverty rates have been revised down: by 2.8pp for children, 1.2pp for working-age adults, and 3.3pp for pensioners in 2023-24. That means ~500,000 fewer children in poverty in 2023-24 than previous estimates: 4.0m rather than 4.5m.
This improvement is welcome, but there are some important things to be aware of...
The headline: we now have a clearer picture of household incomes than before. The old survey data was missing around £40-54bn each year in benefit income. Linking admin records fixes around half of that.
🧵 New HBAI data out yesterday from DWP and it comes with a big methodological upgrade. For the first time, Family Resources Survey responses have been linked to benefits admin records, fixing years of benefit under-reporting. Here's what it means for how we understand poverty in the UK...
This makes a very good point. Although a world where we only ever indexed welfare to prices would be one with ever increasing income inequality offset in part by ever improving public services.
(Our income projections here use a concept of income consistent with the DWP's HBAI dataset. See our overnight response document for how this compares with RHDI, a different living standards measure that the Government tends to headline on (plus lot's more great stuff on this "non-event"!))
...however, our projected annual rate fall of 0.1 ppts falls short of the 0.3 ppt and 0.4 ppt falls achieved by those Governments
This flatters the Government's (projected) record on child poverty compared to past Govts. Our projected annual fall of around 50k children in poverty this Parliament would exceed the 19k and 37k annual declines achieved by the Labour Governments of the 2000s...
This modest fall contrasts with a more substantial projected fall of 260k in the number of children in poverty. Much of this is driven by an expected 600k fall in the UK child population from 2024 to 2029. Without this decline, we estimate the number of children in poverty would fall by 70k instead
And after big success on child poverty in 2026-27 thanks to scrapping the 2 child limit, progress is set to stall across the rest of the Parliament as the rate creeps up, leaving projected child poverty in 2029-30 just 0.5 percentage points below what the Government inherited in 2024-25.
This is largely driven by OBR’s pessimistic wage growth forecast. Using the Bank of England's more optimistic forecast of 3.5% real pay growth over the next 3 years (vs 1.4% for the OBR) would mean the median non-pensioner incomes grows by £200 between 2026-27 and 2028-29, instead of falling.
And after next year, the outlook for the rest of the Parliament is gloomy even before considering events in the Middle East. Income growth is set to turn negative across the distribution, with median incomes for non-pensioners falling by 0.5% (£150) between 2026-27 and 2028-29.
But events in the Middle East could undermine this. If higher energy prices seen so far are maintained it could add £500 to typical energy bills for households on a price cap tariff. This would disproportionately impact lower income families, who spend more of their income on energy
There was strong income growth in the first year of the Parliament, especially for the top half, thanks to strong wage growth and the last Government's NICs cuts. And we project strong progressive income growth in 2026-27, driven by the repeal of the 2 child limit and the above-inflation UC increase
Our updated living standards projections based on the OBR's new forecasts show that, if these forecasts were to hold, the answer would be "yes" for the typical family when we compare the end of the Parliament with the start. But the full story is more nuanced...
In her speech yesterday, the Chancellor said the question people will be asking themselves at the next election is "are me and my family better off?"
So what is the answer likely to be? 🧵
I'm now officially a substack guy...
Excited to be finally launching our new report on agricultural decarbonisation tomorrow morning - 9:30 online or in person for anyone who wants to join!
🐑🚜🐮
www.resolutionfoundation.org/events/net-z...
We're almost a week away from the biggest event of the year: The @resolutionfoundation.org Unsung Britain conference, where we'll be telling you all about the book we're launching on the 13 million working-age families across the poorest half of the country. Be there or be 🟦. Sign up here:
Multiple people not including me as I knew how to spell it already
According to Jonny Roberts, a @changingrealities.bsky.social participant and Universal Credit recipient, the system is too often defined by a lack of trust.
But there are better (and simpler) ways of doing things, especially when it comes to childcare ⤵️
@lalithatry.bsky.social Just to be clear, I was saying pay cheque not paycheck, despite what the subtitles say
