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Middle-income families with children 'see benefits rise as home ownership falls'

Published 14/07/2016

Home ownership among middle-income families with children has fallen significantly over the last 20 years, according to analysis
Home ownership among middle-income families with children has fallen significantly over the last 20 years, according to analysis

Home ownership rates for middle-income families with children have fallen substantially over the last 20 years while their benefits have increased, analysis by an economic think tank shows.

The proportion of middle-income children living in an owner-occupied home has fallen from 69% to 50% since 1994-95, the Institute for Fiscal Studies (IFS) found.

Last year, the same families received 30% of their income from benefits and tax credits, up from 22% 20 years ago, driven by increasing generosity of benefits for middle-income families with children, particularly those in work, the IFS report said.

Middle-income families with children are now more similar to low-income families than they were 20 years ago, and increasingly unlike higher-income families, in terms of their sources of income and their home-ownership rates, the report concluded.

However this is not because middle-income families are poorer than they were 20 years ago, and in fact the median household income of children is around 40% higher than it was then, the figures show.

Children living in a workless household has fallen steadily from 23% 20 years ago to 15%, and for the poorest fifth of children that figure fell from 60% to 37% over the same period.

Meanwhile, the incomes of the poorest children have grown faster than those in the middle over the last 20 years, with falls in household worklessness an important driver of the change.

Overall, despite weak growth in incomes of families with children since the recession, median net household income for children rose by 39% since 1994.

The findings from the IFS's analysis on inequality in childhood form part of its forthcoming flagship annual report on Living Standards, Poverty and Inequality in the UK, funded by the Joseph Rowntree Foundation.

Jonathan Cribb, an author of the report and a senior research economist at IFS, said: "In a number of ways, middle-income children are more similar to low-income children than they were 20 years ago.

"This is partly due to higher income growth for poor families with children, driven by falls in worklessness. Combined with increases in the generosity of benefits for middle-income families, this means that the relative importance of employment income has increased for poor children, but has decreased for middle-income children.

"Moreover, falls in home-ownership have affected middle-income families much more than their high or low-income counterparts."

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