Money Wellness
A daughter comforts her mum who has money worries
category iconcost of living
calendar icon10 Jun 2024

Those with the least ‘hardest hit by tax and benefit changes since 2010’

The poorest 40% of UK households have been hit hardest by tax and benefit changes made since 2010, according to a new report.

Research from the Institute of Fiscal Studies (IFS) paid for by the abrdn Financial Fairness Trust found that, although all but the richest 10% have gained from tax changes, this has been more than offset for the bottom two-fifths by cuts to benefits.

Chief executive of abrdn Financial Fairness Trust Mubin Haq said:

“It is those with the least who have faced the largest proportional cut to incomes.

“For the poorest tenth, this is an overall fall of over 15% in income, around £2,000 per year.

“This is surely key to the picture of rising acute hardship seen in recent years – a trend which must be an urgent priority for the next government.”

Families with kids have also fared badly

The report also found that families with children have fared particularly poorly as a result of benefit cuts.

Out-of-work families with kids have done the worst but working parents have also lost a lot too.

A single parent with two kids earning £35k has lost £5,200 a year in benefits – possibly more if they rent their home.

And a couple with two children where only one parent works bringing home a salary of £80k has lost all their benefits (worth £3,200 a year in 2010-11).

A few families have benefitted from increased childcare provision but this doesn’t come close to making up for the loss in benefits. There’s been a £17bn cut in cash benefits compared to childcare expansion worth £4bn.

Tom Waters, an author of the report and associate director at IFS, said:

“There has been a steady shift over the past 14 years from cash support for families with children to in-kind support through childcare.

“But the latter only offsets a small fraction of the former.

“Taken together with other benefit reforms, this has led to big declines in support for the poorest households.”

Support for parents who are struggling financially

If you’re a parent who’s really struggling to make ends meet, there are a number of places you might be able to get help:

Food banks

If you’re struggling to pay for groceries, you might be able to get help from a food bank. You’ll need a referral from someone like a GP or a staff member at your child’s school. Get in touch with your local food bank to find out who can make referrals in your area.

Local council

You may also be able to get help from your local council if you’re struggling to cover the cost of essentials. Every council in England has money set aside under the household support fund to help those worst affected by the cost-of-living crisis. Contact your local council to find out what help’s available where you are.

Energy supplier

If you’ve fallen behind with your energy bills, get in touch with your supplier. A lot of them have financial support schemes for customers who are really struggling.

Money Wellness

And if the rising cost of living means you can no longer keep up with all your financial commitments, it may be time to get in touch for free debt advice.

We can help with:

  • creating a realistic budget you can stick to
  • checking you’re getting all the benefits you’re entitled to
  • applying for grants
  • advising you on suitable debt solutions that could reduce your monthly payments and even write off some of what you owe

All of our advice is free and it's available online and over the phone. Some debt solutions are also free, for others there’s a fee. 

On top of this, there's lots of information on our website that you may find helpful, such as our guide on financial support for single parents.

 

Avatar of Rebecca Routledge

Rebecca Routledge

A qualified journalist for over 15 years with a background in financial services. Rebecca is Money Wellness’s consumer champion, helping you improve your financial wellbeing by providing information on everything from income maximisation to budgeting and saving tips.

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