Britain’s record on tackling poverty has reached a turning point
and is at risk of unravelling, following the first sustained rises
in child and pensioner poverty for two decades.
Almost 400,000 more children and 300,000 more pensioners
are now living in poverty than in 2012/13. Since that year, there
have been continued increases in poverty, across both age groups.
Very little progress has been made in reducing poverty among
working-age adults.
The warning comes in a state of the nation report by the
independent Joseph Rowntree Foundation (JRF), the leading
authority on poverty in the UK. UK Poverty 2017 examines
how UK poverty has changed over the last 20 years, providing the
most comprehensive and up to date picture of the challenges and
prospects facing low income families in modern
Britain.
In November, the Institute for Fiscal Studies (IFS)
forecast that child poverty will continue to rise until the end
of this Parliament.
Campbell Robb, chief executive of the independent Joseph
Rowntree Foundation, said:
“These worrying figures suggest that we are at a
turning point in our fight against poverty. Political choices,
wage stagnation and economic uncertainty mean that hundreds of
thousands more people are now struggling to make ends meet. This
is a very real warning sign that our hard-fought progress is in
peril.
“Action to tackle child and pensioner poverty has
provided millions of families with better living standards and
financial security. However record employment is not leading
to lower poverty, changes to benefits and tax credits are
reducing incomes and crippling costs are squeezing budgets to
breaking point. The Budget offered little to ease the strain and
put low income households’ finances on a firmer
footing.
“As we prepare to leave the EU, we have to make sure
that our country and our economy works for everyone and doesn’t
leave even more people behind.”
Twenty years ago, a third of children lived in poverty;
this fell to 27% in 2011/12. In 1994/95, 28% of pensioners
lived in poverty, falling to 13% in 2011/12. These falls were
achieved by higher employment rates; more generous support for
families through tax credits; and extra help for poorer
pensioners.
Following the financial crisis of 2007/8 poverty rates
remained stable. A combination of stronger than expected
employment; tax and benefit policies which continued to support
working and non-working households; and spells of low inflation
helped negate the worst effects of the downturn for the least
well-off families.
But changes to welfare policy - especially since the 2015
Budget – are reducing families’ financial breathing space, with
wage growth at the bottom end of the labour market failing to
make up the difference.
Poverty rates rose last year - to 16% for pensioners and
30% for children – suggesting gains are at risk of being lost
without immediate action. 14 million people live in poverty in
the UK – over one in five of the population. This is made up of
eight million working-age adults, four million children and 1.9
million pensioners.
New threats are emerging to people in the poorest fifth of
households. The squeeze on living standards now risks storing up
problems for the future, with people being caught in a
‘standstill generation’ - unable to build the foundations for a
decent, secure life. People on low incomes are
increasingly:
-
Trapped in in-work poverty and unable to
progress. 8 million live in families where at least
one person is in work. One in eight workers, 3.7 million
people, live in poverty and 40% of working-age adults with no
qualifications are living in poverty - facing a barrier to work
or better pay.
-
Struggling to afford a home. Almost half
on the lowest incomes (3.2 million working-age people) now
spend more than a third of their income on housing. Falling
homeownership means that in the future more older people are
likely to rent and have higher housing costs in
retirement.
-
Facing rising costs. Since 2003, people
in the poorest fifth of the population have experienced a
higher rate of inflation than the rest of the country in every
year except 2010. Food and energy bills take up a larger share
of incomes, leaving people on low incomes with little room for
manoeuvre when prices rise.
-
Falling behind with bills and unable to put away
for a secure retirement. 2.2 million of the poorest
households have ‘problem debt’ and 70% of people in work in the
poorest fifth of the population are not contributing to a
pension, around 2.3 million people.
JRF says the Government must end the four-year
freeze on working-age benefits and tax credits. The
freeze is the single biggest policy driver behind rising poverty,
hitting families in and out of work, and ending this should be
prioritised over increases in the personal tax allowance to help
low-income families, which do little to help the
worst-off.
It also urged the Government to invest in a more ambitious
house-building programme that provides 80,000 new
genuinely affordable homes to rent and buy every year that are in
the reach of low income families, over cuts to stamp
duty that benefit people who own or can already afford to
buy.
With people getting stuck in low-pay and working poverty,
JRF is calling for the Government and businesses to drive
up adult skills. It could use the industrial strategy to
double participation in digital, literacy and numeracy training
to meet all basic skills needs by 2030 so people can get on at
work and progress to higher wages.
