Poverty in the UK
The UK is in flux. A potential end to Covid-19 is in sight, but the virus’ damage will be deep and broad and will linger. Brexit, thus far, is a mess with an unclear future and the need for urgent surgery.
The conditions of today are fertile ground for poverty. Unfortunately, even before both the pandemic and Brexit, this was a significant problem.
Earlier this month the Joseph Rowntree Foundation (JRF) released its annual report on the nature and scale of poverty across the UK, saying that “too many of us entered the pandemic already at risk of being cast adrift into poverty, while often lacking secure housing, a reliable income or adequate support.”
Around one in five people in the UK live in poverty, a figure that has seen “little change in recent years”. Some signs indicate things have been getting worse. In 2019 – predating the pandemic – the number of people in the UK who were destitute (so at the sharp end of poverty) at some point in the year was 2.4 million, a 50% rise on the equivalent figure for 2017.
In Northern Ireland, the broad strokes of the situation are similar to (but perhaps a little better than) the UK overall. Again, around a fifth of the population – including one in four children - classified as in poverty.
In general the less an individual or family has, the more at risk of poverty they are. Per the JRF: “Most worryingly, even before coronavirus, incomes were falling – and falling fastest – for people with the lowest incomes.”
In its findings for its latest annual report, the JRF says: “The effect of the [Covid-19] outbreak on poverty is uncertain, but this will depend critically on how the outbreak affects five economic factors – employment, earnings, benefits, housing costs and inflation, as well as UK and devolved governments’ responses in each of these areas.
“It is clear that the coronavirus storm has battered the labour market, with increasing unemployment and falling earnings. The Government has rightly responded with an unprecedented range of labour market support and benefits changes.”
The JRF says rates of relative poverty may have fallen – temporarily – during the pandemic, because of the various statutory support schemes, and because average incomes fell overall. However, it expects any reduction in relative poverty to be reversed over the next few months and years.
“The period since July 2020 has been marked by a gradual reduction of government support through the labour market and benefit system, with much of the support planned to be withdrawn by April 2021. This means relative poverty is likely to be higher than before the coronavirus outbreak, with families who are already struggling to stay afloat becoming even worse off financially.
“These increases in poverty will be mainly among working-age families as they will be affected by the negative labour market changes. The Government needs to do the right thing and keep supporting people on low incomes. If it takes the lifeline away, people will be cut adrift and pulled deeper into poverty.”
JRF has suggested four policy decisions that could help reduce poverty – both alleviating it, to some degree, in the short-term, and reducing rates in the long-term.
- We need as many people as possible to be in good jobs. Despite government support to protect jobs during the pandemic, unemployment is still expected to rise in the coming months. Government has implemented a series of employability programmes, such as Kickstart, Job Entry Targeted Support and Restart, but there has so far been less investment in skills and retraining to help adults find work in new jobs and sectors. We need to see further bold action to retrain workers and create good quality new jobs.
- We need to improve earnings for low-income working families and ensure more people are in secure, good quality work. Government must support people in the lowest-paid jobs, or people working part-time, to move into higher pay and access sufficient and secure working hours. Progress on the National Living Wage is positive. Government must now bring forward the Employment Bill to reduce insecurity for low-paid workers by extending employment rights and investing in strong and effective enforcement.
- We need to strengthen the benefits system so that it provides an anchor that we can all depend on in tough times. At a minimum, we need the temporary £20 per week increase to Universal Credit and Working Tax Credit to be made permanent, extending this same lifeline to people on legacy benefits such as Jobseeker’s Allowance and Employment and Support Allowance. The Government will then need to consider further improvements to the current system, to ensure it gives adequate support and provides a better service for people using it. We also need to shift public thinking so that a poverty-reducing social security system is seen as an essential public service and receives sustainable investment.
- We need to increase the amount of low-cost housing available for families on low incomes and increase support for households who have high housing costs. Now is the time to invest in social housing as part of a stimulus package, and to reverse the long-term trend of falling availability of social housing. This has meant more and more people are stuck in the expensive private rented sector. We also need – at a minimum – to keep housing affordable for people whose income is already low or has fallen, by maintaining the link between benefits for housing and local rents.
Taken altogether, the solutions presented by JRF are unlikely to be embraced wholesale – or even in significant part – by the current government at Westminster. Simply put, this is not the cabinet’s vision for the UK.
The Northern Ireland Executive is, without doubt, broadly more amenable to these measures (albeit the Executive is a coalition of five parties and struggles to find consensus) but there are various barriers that make them difficult to implement.
One barrier is Westminster itself. London sets the tone for Belfast, both explicitly through reserved policies and implicitly through the tone of its governance. And, of course, Westminster effectively sets the budget for Stormont – with the latter having almost no borrowing powers or other financial flexibilities to strike out on its own.
But these are not the only barriers.
JRF’s first two bullet points can be taken together. Both revolve around good jobs.
Northern Ireland’s private sector is stuck in a low-skills, low-wages, low productivity cycle (see this paper from think tank Pivotal for a very solid summary of local challenges and also some suggested solutions that mirror some of what JRF has said).
Not only is this bad – it is a very stable situation. Raising wages is difficult without attracting better jobs. It’s hard to attract better jobs without the skills base to fill the roles. Upskilling takes time, and costs money.
NI has been trying to boost skills, boost innovation, raise wages and generate more good jobs for years, to little avail. This has not been made easier by the pandemic.
The JRF also calls for more affordable housing. Low housing costs, relative to other parts of the UK, are a large part of what keeps NI’s poverty levels in a decent place compared to the UK average. However, that relatively positive situation here continues to be stretched.
More social housing is required. The announced split of the Housing Executive offers hope. Stormont is skint and therefore limited in how many homes it can finance per year. If a new Housing Executive is able to borrow money – something Stormont cannot really do – more homes can be built, cutting waiting lists and reducing costs in all parts of the housing market (including private rentals).
Housing has another obstacle, however. NI’s wastewater infrastructure is at bursting point. Significant investment is required before major additional construction projects can freely be pursued.
Beyond all that, building new homes takes time.
That leaves the benefits system. It is the only truly short-term measure suggested by JRF. By and large, NI’s benefits system mirrors that of the wider UK – but the Department for Communities is able to provide extra help if it wants to.
In recent times, this has been the case - and Communities Minister Deidre Hargey told the Assembly this month that departmental officials are looking into how these can be expanded and/or continued.
This seems essential. Obviously, it costs money – something that Stormont has very little of. Striking the right balance is key for our elected representatives and their officials.
Recovering from Covid-19 requires a tricky balance of short- and long-term measures. The same thing is true of tackling poverty. The UK’s record on that front in recent years is poor. Let’s hope for better this time.
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