The survey data that underpins the measurement of poverty in the
UK and covers the pandemic period will not be available until
2022. This is obviously too late for decision makers who are
seeking to ensure that the most vulnerable are shielded from the
worst impacts of the pandemic.
To fill the gap, this briefing presents the results of a
‘nowcasting’ exercise using the most up-to-date data on
employment, earnings, and Government policy available, along with
a range of assumptions, to model the likely level and
distribution of poverty in both Summer and Winter 2020.
The original analysis uses the Social Metrics Commission’s
approach to poverty measurement and is our best assessment of the
likely course of poverty since the start of the crisis, the
protective impact of Government action that has already been
taken, and choices that still need to be made.
Key findings
-
UK poverty is a significant long-term issue. Prior
to the pandemic, more than one in five people in the UK (22%)
lived in families in poverty. This has hardly changed over the
last 20 years. This means that prior to the pandemic 14.4
million people lived in poverty in the UK.
-
As well as significant health and social impacts, the
Covid-19 pandemic has had economic impacts. These have
most clearly been seen in falling employment levels, wage
reductions for furloughed workers and falling earnings for the
self-employed.
-
These impacts have not been evenly spread. Partly
as a result of the nature of the lockdowns needed to stem the
rise in infections (which, for example, have seen specific
sectors closed down completely for extended periods), the
economic impacts of the Covid-19 crisis have been felt
particularly hard in certain sectors and by people with a range
of specific characteristics. In general, those hardest hit have
been young workers, those in relatively low-paying employment
and those working in sectors such as hospitality and retail.
-
Poverty has risen as a result of the Covid-19
crisis. Compared to the situation where the Covid-19
pandemic had not hit the country, 440,000 more people were in
poverty in Summer 2020 and 690,000 more in Winter 2020.
-
The largest impacts have been seen in poverty amongst
working-age adults. The distribution of economic impacts
has meant that poverty has risen most amongst working-age
adults. Compared to the situation where Covid-19 had not hit
the UK, 640,000 more working-age adults are in poverty in
Winter 2020.
-
Government policy has insulated many families from
poverty. In an attempt to mitigate some of the financial
impacts of the Covid-19 crisis, the Government has introduced a
range of financial support for families and businesses. These
include a temporary increase of £20 a week to Universal Credit
and Working Tax Credits and the suspension the Minimum Income
Floor. We estimate that these policies alone have protected
some 690,000 people from poverty in Winter 2020.
-
Poverty has reduced amongst some groups. The
increases to benefits have also meant that some groups have
seen a fall in poverty. This is because many non-working
families have seen their benefits increase, meaning that they
are less likely to be in poverty than would have been the case
in the absence of the Covid-19 pandemic. Our projections show a
reduction of 100,000 in poverty amongst people living in
lone-parent families and a reduction of 170,000 in poverty
amongst people in workless families in Winter 2020, compared to
the case where the Covid-19 crisis and resulting increases to
benefit generosity had not happened. Conversely, there have
been significant increases in poverty amongst people living in
families that were working prior to the Covid-19 crisis. These
have resulted from job losses and earnings reductions that have
tipped them into poverty.
-
Poverty depth has also changed. Compared to the
situation where the Covid-19 pandemic had not impacted the UK,
270,000 more people are in the deepest form of poverty.
However, the majority of the increase in poverty is seen in the
shallowest form of poverty, with 370,000 more people in this
situation because of the impacts of the Covid-19 pandemic.
It is no surprise that the economic fallout from the Covid-19
pandemic has increased poverty in the UK. However, the strength
of reaction from the Government has insulated hundreds of
thousands of people from poverty. This shows that, with the right
tools and the right information, Government can ensure that, at a
time of crisis, many of those who are vulnerable to poverty are
protected. To ensure this continues as we begin to adapt to life
after, or living with Covid-19, there is a clear need for the
Government to push ahead with its creation of Experimental
Poverty Statistics and to place a comprehensive anti-poverty
strategy at the heart of its Covid-19-recovery response.
