30 Jan 2023 | Posted In Money advice news
- Around one in five of the UK population (20%) were in poverty in 2020/21 – that’s 13.4 million people. Of these:
- 7.9 million were working-age adults
- 3.9 million were children
- 1.7 million were pensioners.
- There was a reduction in the headline poverty rate and numbers between 2019/20 and 2020/21. This is likely due to changes to overall incomes, policy choices and how the pandemic affected population groups differently. A falling average income caused the relative poverty line to drop. At the same time, a range of temporary coronavirus-related support was introduced, including a £20 a week uplift to Universal Credit and Working Tax Credits.
- Poverty for families in receipt of Universal Credit or equivalents remained very high in 2020/21, at 46%. This is despite the temporary £20-a-week uplift and a resetting of Local Housing Allowance to reflect actual rents in an area.
- Poverty rates continued to be highest for people in the social rented and private rented sectors, and much higher for households including a disabled person or an informal carer.
- There remains huge variations in poverty rates by ethnicity. Around half of all people in households headed by someone of Bangladeshi ethnicity were in poverty in 2020/21. This figure was over four in ten for people in households headed by someone of Pakistani or Black ethnicity. This is over twice the rate of people in households headed by someone of white ethnicity.
- Families with three or more children still had much higher poverty rates than smaller families, but the rate in 2020/21 was much lower than in 2019/20. The rate for families with a child aged under four also fell more than for families with older children. Some of the increase in deep poverty since 2002/03 was also reversed in the latest data.
- The impact of the pandemic on the labour market was immense. Around 11.7 million jobs were furloughed, many on reduced pay. At the height of the pandemic, there were 929,000 fewer pay-rolled employees than before lockdown began. This has contributed to a fall in the share of people in poverty living in working households.
- The rate of deaths caused by Covid-19 was higher in the most deprived than in the least deprived areas in all nations of the UK. In England and Scotland, the death rate from Covid-19 in the most deprived areas was more than twice as high as in the least deprived areas. Working-age adults living in poverty are more likely to suffer from poor health more broadly. Evidence suggests low incomes are associated with potential symptoms of anxiety, such as lack of sleep, lacking energy and feelings of depression.
- For children there is a gap in young people’s educational attainment by parental income across all stages of education. The Covid-19 pandemic generally widened the attainment gap between the most and least disadvantaged pupils in the UK. This is likely driven by the digital divide, differences in home learning environments and falling incomes.
- Inflation is currently forecast to peak at around 11%, the highest rate for forty years. The speed of the increase in inflation made the effects of the withdrawal of the £20-a-week uplift to benefits in October 2021 even more severe. In April 2022, benefits only increased by 3.1% when inflation was much higher. This meant April 2022 saw the greatest fall in the value of the basic rate of unemployment benefits since 1972, when annual uprating began. As the cost of living has continued to rise throughout 2022, the real term purchasing power of households in receipt of benefits has continued to fall.
Across the poorest fifth of families, results from JRF’s cost of living tracker in October 2022 present a shocking picture:
- around six in ten low-income households are not able to afford an unexpected expense
- over half are in arrears
- around a quarter use credit to pay essential bills
- over seven in ten families are going without essentials
- half of the poorest fifth of families say they have reduced spending on food for adults
- around four in ten families with children are spending less on food for their children
- half are already reducing the number of showers they take
- around six in ten are heating their home less.
Low-income households have less of a buffer against rising costs or unexpected expenses, given that they are less likely than other households to have savings. In 2018-20, just over one in three people in the poorest fifth of households had less than £250 in liquid savings compared with one in fifty of the richest fifth. Amongst low-income households, those with children, single working-age adults, private and social renters, and households headed by someone sick or disabled were more likely to have low levels of savings.
This is the background to the growth in foodbank use, with the latest full year Trussell Trust data covering 2021/22 showing a much higher level of use than before the pandemic.
What JRF wants to see happen now
There are some elements designed into the benefits system that increase poverty which JRF say should be addressed. These include:
- the two-child limit in income-related benefits
- the benefit cap
- the five-week wait for the first Universal Credit payment
- unaffordable debt deductions from benefits
- Local Housing Allowance rates (frozen since April 2020) again breaking the link between housing costs and benefits.
Beyond this, JRF says it is clear that the basic rates of benefits are inadequate and do not allow recipients to meet their essential needs and that resetting basic benefit rates, and ensuring they cannot be brought below these rates through the repayment of advances or other deductions is critical to protect people who need benefits.
JRF recommends that the need to protect people in poverty from the worst impacts of the recession should be a principle running through all decisions to address these challenges. This means examining the building blocks of social and economic systems, be that the labour market, the housing market, the social security system or how we organise family life or care. This needs to be done to see how these can be made to work in the interests of poorer households so that there is a positive vision beyond simply getting through the current recession.