Poverty in Northern Ireland

The results – at first glance at least – are surprising, but not in a way you might expect. They suggest that in the period leading up tp the pandemic poverty rates were actually falling in Northern Ireland.

This seems to be caused by the combination of both rises (however slow) in both incomes and employment rates, coupled with the relative affordability of housing in this part of the world. This is in sharp contrast to the rest of the UK which has had the opposite experience, driven by social security cuts and increased housing costs.

It is really important to note that the report comes out just as people are facing one of the most acute squeezes on living standards in recent memory – and the impact of this has yet to be felt.

Inflation is likely to be running at 5% plus for some time, much of it caused by spikes in energy prices. These will cause those in poverty to face up to unpalatable choices and when you consider both how low average earnings are in Northern Ireland and how inadequate social security is the impact is likely to be severe.

That said exploring why poverty rates have been falling here in contrast to the rest of the UK is still of great importance, because it should feed back into policy development specifically as it relates to the bad experience of others.

First let’s look at the scale of the problem. As Northern Ireland entered the pandemic, nearly one-in-five people in Northern Ireland lived in poverty, including over 100,000 children. That is 330,000 people, or 18% of the total population. This figure consists of 110,000 children, 190,000 working-age adults and 30,000 pensioners. Of these pensioners have the lowest poverty rate (12%), followed by working-age people (17%). Poverty is highest among children – around one in four children in Northern Ireland are living in poverty (24%). Overall poverty in Northern Ireland is the lowest of any country within the United Kingdom, with a similar if slightly lower poverty profile to Scotland. England and Wales both have rates above 30%.

And explain what poverty means in this context. The Joseph Rowntree Foundation describes it as “Poverty means not being able to heat your home, pay your rent, or buy the essentials for your children.”

Put a slightly different way people who can’t afford to participate in society are in poverty. Beyond the bare minimum of food, clothing, housing and energy, families need to be able to spend money on other areas and goods and services such as transport, communication and household goods. These things allow a basic level of socialising, such as buying small Christmas gifts for loved ones or the ability to organise a birthday meal for your child.

JRF’s analysis shows the key drivers of changes in poverty levels. They are:

• Changes in employment rates, where improvements will reduce poverty.

 • Changes in earnings. This will improve poverty if earnings increase more for lower income households than middle-income households.

 • Changes in benefits, where improvements in levels will reduce poverty.

 • Changes in housing costs, where increases will increase poverty.

And so the reason why poverty in Northern Ireland has improved boils down to improving employment income for lower-income families and reducing housing costs.

Changes in the benefit system have had a detrimental effect, but not enough to reverse progress.

The net impact has been for Northern Ireland to improve its position compared with the rest of the UK.

But this is not a cause either for rejoicing or complacency.

And Northern Ireland still significantly lags other parts of the UK as regards earnings and employment rates.

This means more people either have to rely on social security for their income, putting them at very high risk of poverty, and also that the income they are able to secure through work is lower than it would be elsewhere in the UK. This makes people here especially vulnerable to inflation, expected to inflict further damage to the economy over the next 12 months.

Remedial action to alleviate damage to stressed household will inevitably be retrospective.

However these factors also provide a policy route as well. They show how we might be able reduce economic inactivity, close employment gaps, and bring down poverty by simply paying the low paid more.

Whilst this will increase the cost of some goods and services, we pay more for them anyway by effectively subsidising employers to pay workers less than they need to live on.

Then there’s housing and associated costs. It sometimes appears as if we collectively care more about rentiers and other beneficiaries of property booms than we do about those in need. Yet their role in rising poverty levels in England and elsewhere is to be learned from.

There are relatively high rates of poverty among renters. Almost three quarters of social sector renters and just over half of private sector renters are in the bottom 40% of incomes before housing costs. This means that over a third (37%) of social renters and three in ten (29%) private renters are in poverty compared to around one in ten of those who own their home.

In Northern Ireland 9% of people in both the social and private rented sectors are pulled into poverty by the costs of their housing. The figure across the rest of the UK ranges from 14% to 18%.

What is important is that housing costs for social renters have gone up far less than they have in England, for example.

This has protected some families from falling into poverty. However we should view recent rises in house prices here with alarm. The report  concludes: “the housing market in Northern Ireland is at a fragile point. The overreliance on a poorly regulated private rental market means that people often have insecure tenure, poor-quality housing, and are more likely to see rises in their rents…Further investment in social housing as well as properly regulating the private rented sector must, then, be seen as a key priority for the next Executive.”

Meanwhile Chancellor Rishi Sunak has produced a mini budget. He claimed it would help hard-working families through the month’s ahead. It won’t.

Analysis from the Resolution Foundation suggests the package will throw 1.3 million more people into poverty next year as we face into the biggest drop in living standards since records began.