Author: David Gordon, Director of the Bristol Poverty Institute
The Labour Government was elected in 2024 on a manifesto which promised to; ’develop an ambitious strategy to reduce child poverty’ and ’slash fuel poverty’ and ‘create a world free from poverty on a livable planet’. After the election, Kier Starmer argued that ‘no child should be left hungry, cold or have their future held back’ and Liz Kendall (DWP Minister) said ‘We will turn the tide on rising poverty levels, so that every child no matter where they come from has the best start in life.’
However, the details released in March about the cuts/changes to disability and health benefits show that poverty and inequality will rise over the next four years to help fund increases in military expenditure. The cuts are estimated to reduce the social security budget by £4.5 billion by 2029/30 and 3.2 million families incomes will fall, with an average loss of £1,720 per year.
The Department for Work and Pensions (DWP) Impact Assessment estimates that the changes will result in an additional 250,000 people (including 50,000 children) in low income poverty (After Housing Costs) by 2029/30.
The DWP’s poverty baseline model assumes that the previously announced changes in both the Labour and Conservative government’s budgets will be implemented and predicts that child poverty will increase by more than half a million by the end of the decade. The model thus includes the proposed Conservative Government’s changes to the Work Capacity Assessment (WCA) which were found to be unlawful by the High Court in January 2025. The WCA changes would have reduced the benefits of over 400,000 disabled people and resulted in an additional 150,000 working aged adults and 50,000 children living in poverty by 2029/30.
Including the proposed Tory WCA changes, which were never going to be implemented by Labour, in the baseline DWP poverty model obscures the scale of the health and disability benefit cuts and their poverty impacts.
The New Economics Foundation (NEA) estimates that the ‘true’ amount of the health and disability benefit cuts is £6.7 billion and this will increase poverty by 340,000 people by 2029/30.
Even before these benefit cuts, the number of poor children (4.5 million) was higher than at any time during the past 30 years.
Almost all the families that lose financially have someone with a disability in their household. Joseph Rowntree Foundation funded research has shown that even before these latest benefit cuts, half of the people receiving the health-related element of Universal Credit (LCWRA) are either unable to heat their home, behind on bills, or have low or very low food security. Similarly, a quarter of working-age adults in a family receiving health-related UC have had to use a foodbank in the last year.
The benefit cuts and budget changes will also result in greater inequality, with the poorest 33% of people seeing their incomes fall by 8%, while the richest 33% do not lose any income on average (see Figure below)
The incomes of poor households (After Housing Costs) will also fall i.e. the poor will become poorer.
The Labour Government is actively working on a child poverty strategy as they promised (I am one of many academic advisors they have consulted). However, poverty was mentioned only once in Rachel Reeves budget speech in October and the health and disability cuts in the Spring Statement will both increase child poverty and reduce the incomes of tens of thousands of children in households where someone is disabled. There will be more poor children and some of the poorest children will become even poorer.