New face of Britain: Middle earners are the '˜new poor'

The soaring price of property and rising living costs have seen more children than ever before caught in the poverty trap even though their parents are in employment.

While the proportion of children living in a household where no-one works has fallen from nearly one in four in 1994/95 to less than one in six a decade later, a “new poor” has emerged and they are people who tend to live in households where there is someone in work.

These are among the findings of a new report published today by IFS researchers, ‘Living Standards, Poverty and Inequality in the UK: 2016’, funded by the Joseph Rowntree Foundation.

According to the report, half of middle-income families rent their homes and while poorer families have become less reliant on benefits as employment has risen, middle-income households with children now get almost a third of their earnings - 30 per cent - from benefits and tax credits, up from 22 per cent 20 years ago.

Julia Unwin, chief executive of York-based Joseph Rowntree Foundation, said the report paints a stark picture of the new face of poverty in the UK.

She said: “Falling unemployment has helped many families to keep their heads above the water, but slow wage growth, benefit squeezes and rises in the cost of essentials means there are still a shamefully high number living in poverty in the UK today.”

New figures published separately by Homewise, the over-60s property advisers, suggests working parents are relying on older relatives to bail them out of trouble. More than half of grandparents in Yorkshire are giving money to families, costing them on average £571 a year, the research suggests.

Rob Jackson, Yorkshire area director at The Children’s Society, said: “In-work poverty is a growing issue and figures for Yorkshire have shown that nearly 68 per cent of more than 263,000 children in poverty live in a household in which at least one parent works.

“The Government’s four-year benefits freeze will only make this situation worse.”

Vivienne Cockcroft, a trustee of Leeds-based charity Poverty Aid UK, described local levels of poverty as “appalling”.

“We do get some families where one person has a reasonable job and yet they are going to food banks. The scale of poverty in our neighbourhood is much higher than people realise.”

The concerns come after the Labour Party announced plans yesterday to create a “bank of the North” in an effort to “unlock” £500bn of investment for struggling parts of the country.

The plan was unveiled by Shadow Chancellor John McDonnell during a visit to Sunderland. It focuses on small businesses in “left behind” communities which voted to leave the European Union and feel they have been forgotten by successive governments.