Families trapped in poverty will see no Brexit dividend –
unless the Government changes course on domestic policies,
according to a new assessment by the leading authority on poverty
in the UK, the independent Joseph Rowntree Foundation
(JRF).
In new analysis published today, JRF warns that poverty and
the cost of living are likely to increase and real wages to fall,
even if favourable trading arrangements are
agreed, as the country leaves the EU. This is
at a time when we are already seeing the first sustained rises in
child and pensioner poverty, and there are more workers living in
poverty than ever before.
The analysis, by Cambridge Econometrics, models a range of
post-Brexit trading arrangements, providing detailed results on
the potential impacts on the cost of living, wages, and
employment looking ahead to 2030. This ranged from staying in the
single market (a ‘Norway’ scenario) to ‘no deal’, taking into
account tariffs, non-tariff barriers to trade, immigration and
investment.
In all scenarios, the cost of living is likely to
rise and real wages to fall after the UK leaves the EU in the
immediate period, however a ‘No Deal’ scenario is likely to have
the largest negative effect on costs and wages.
It also found that:
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The driving forces of poverty will not be addressed by
Brexit, highlighting why urgent action is needed now on
domestic policies.
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Many of the impacts of Brexit are fairly evenly
distributed across the population. Living costs for low-income
households are estimated to increase by £480 per year in
a ‘No Deal’ scenario. Future governments
could choose to protect low income households from the impacts
of rising prices.
Supporting analysis by JRF finds that:
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Low pay, high housing costs and freezes and cuts to
benefits and tax credits ahead of the referendum were leading
to rising poverty.
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There is a risk that the number of people in poverty
could rise by 200,000 if the government uprated benefits and
tax credits by 2%, rather than keeping up with the anticipated
higher inflation caused by Brexit. If a future government
uprated benefits and tax credits by less than 2% the rise in
poverty could be much larger.
JRF analysis shows the impact of three illustrative
scenarios on poverty, comparing changes to housing, employment
and social security to the possible impact of Brexit. It
demonstrates that it is vital to maintain a focus on domestic
policy, alongside negotiating Brexit and agreeing a framework for
our post-Brexit economy.
Campbell Robb, chief executive of the independent Joseph
Rowntree Foundation, said:
“Many people on low incomes backed Leave after being
locked out and left behind for too long. Since the vote to leave
the EU, families have been hit by price rises in the shops, seen
their wages eaten up by crippling housing costs and had their tax
credits pared back.
“It’s hard to take control and build a better life when
you’re juggling the bills and high costs are pulling you under.
Two years on from the vote, this is unacceptable. And it will not
change unless the Government gets a grip and delivers for people
on low incomes. We need a bold package of domestic reforms, not
just favourable trade terms.
“The Government must fix this and right the wrong of
in-work poverty. At the last General Election, low income voters
made it clear they wanted more than Brexit delivered, demanding
action on living standards too. Failing to meet their
expectations of a better life after Brexit would be costly for
the political parties. And it would mean millions of families
being let down – and seeing no Brexit dividend.”
As part of a new deal for low income families after Brexit,
JRF recommends the Government:
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Build 80,000 affordable homes a year at Living Rents –
linking rents to the wages of people on low incomes.
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Ensure social security keeps up with the rising cost of
living and families keep more of their earnings under Universal
Credit by boosting in-work support such as the Work
Allowance.
-
Deliver the Shared Prosperity Fund promised to left
behind town and cities, to create more and better jobs with
repatriated EU funding.
