Poverty Afflicts Almost 20% of Britons in Wage-Earning Homes

(Bloomberg) -- Almost one in five Britons living in wage-earning households was in relative poverty in 2017, according to the Institute for Fiscal Studies.

In a report published Wednesday, the think tank said in-work poverty now affected around 8 million people, up sharply from the early 1990s.

But while rising housing costs and weak wage growth were partly to blame, the increase also reflected the fact that many more people are now in work, including those on low incomes such as lone parents, the IFS said.

The hardship facing working households is a big political issue in the U.K. as wage stagnation and welfare cuts leave many unable to afford an average standard of living. Households are deemed to be in poverty if their disposable incomes are below 60% of the national median.

A generation ago, the challenge facing governments was poverty in old age and households where no one held a job. Now, with fewer workless households and many fewer poor pensioners, 58% of people in poverty are children or working-age adults in homes where someone is in paid work. That compares with 37% in the mid-1990s.

The IFS said rising pensioner incomes have had the effect of raising the poverty line, meaning more people are now below it than would otherwise be the case.

To contact the reporter on this story: Andrew Atkinson in London at a.atkinson@bloomberg.net

To contact the editors responsible for this story: Fergal O'Brien at fobrien@bloomberg.net, Brian Swint, David Goodman

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