The cost of living is creating a poverty sinkhole

In the past two decades, the number of people in the UK living in deep poverty has increased by 40%.

In 2002-03, 4.7 million people lived in deep poverty. In 2019-20, that number was 6.5 million. Deep poverty here is defined as households with income below 40% of the median, after housing costs.

These figures come from Going without: deepening poverty in the UK, a report published this week by the Joseph Rowntree Foundation (JRF UK).

Why deep poverty? Why not just poverty, in general? That question cuts to the heart of this paper, and why it is so important.

The report notes that headline poverty figures have actually held quite steady since 2002.

JRF UK has its own tracker of poverty figures, which looks at poverty for the overall population, as well as subgroups including children, pensioners, working-age adults with children, and working-age adults without children.

The tracker starts in 1994-95 and all the lines go up and down but without a clear, significant trend shift over the next 25 years (with the exception of pensioners, for whom poverty rates decreased significantly in, roughly, the noughties).

That’s why looking at deep poverty is so important. Because, while overall poverty has oscillated around a fixed point, destitution is on the rise.

Report

Per the report: “The pressure of the pandemic, and the spiralling cost of living, have made things worse. But the truth is, the UK came into this series of crises in bad shape, as this paper shows. Too many households were already struggling to meet the cost of essentials…

“Looking at the period running up to the pandemic, destitution was rising and warning lights were flashing. Around 2.4 million people experienced destitution at some point during 2019 – a shocking increase of 54% over two years since 2017.

“Rough sleeping more than doubled between 2010 and 2019. The number of food parcels distributed by the Trussell Trust rocketed from 1.1 million in 2015/16 to over 2.1 million today. The recorded diagnosis of malnutrition among people admitted to hospital has tripled between 2007/08 and 2020/21. These indicators all point to deepening poverty.

“But you can’t see much evidence of any of this in the headline poverty numbers, which have been held fairly steady by counter veiling trends. So JRF’s new analysis looks beneath the surface to track the trends in very deep poverty – people with less than 40% of median income after housing costs, rather than the usual 60% benchmark.

“We look at the period between 2002/03 and 2019/20 (the start of the pandemic). What we find is a steady growth in the number and proportion of people in very deep poverty: an increase of 1.8 million, from 4.7 million to 6.5 million people, or from 8% to 10% of all people, a rise of a fifth.”

Figures

JRF UK says that deep poverty “is not randomly spread across society, but heavily concentrated” and that people in workless households, those living in a family with a disabled family member, or in a family headed by someone who is not white, are significantly overrepresented among people in very deep poverty.

It also says that several ethnic groups including people from black; Bangladeshi; Asian backgrounds other than Indian, Pakistani or Chinese; and ‘minority ethnic groups not from Asian or black backgrounds’ face the highest risk of deep poverty, while people from white and Indian backgrounds have the lowest risk.

The paper says, however, that “the face of deep poverty is changing”, and that between 2002-03 and 2019-20 the risk of living in deep poverty has:

• Increased by over half for people living in large families (three or more children), to reach 18% or 1.1 million people
• Increased by a third for people in families with a disabled person, to reach 15% or 2.3 million people
• Increased by a third for people in lone-parent families, to reach 19% or 900,000 people

It is a well-known fact that plenty of people who find themselves in poverty already live in working households, meaning that employment is not necessarily a way out of poverty. This is also true of deep poverty.

“Despite the high – and rising – risk of very deep poverty for those in workless households, as of 2019/20, more than half of those in very deep poverty lived in working families. Very deep poverty has increased by more than half for couples with a single breadwinner working full-time (their risk up from 7% to 12%), and for those in families with only part-time workers (up from 14% to 20%).”

This report only looks at the UK as a whole so, while the central trends are likely to be similar here, there could be granular differences. NI broadly has lower numbers of ethnic minority people per head of population, when compared with the rest of the UK.

Poverty in NI is also quite complicated. In terms of general poverty, NI actually had low rates of poverty compared with the rest of the UK, pre-pandemic, despite being a relatively poor region.

However, this was largely due to low housing costs. Those costs have risen significantly, which could cause huge issues here, while rises in energy prices are also likely to hit hard given the low levels of cash in many NI households.

What now?

Immediately prior to the pandemic:

• People in large families (with three or more children) were twice as likely to be behind on their essential bills, living in a cold home, or not eating properly compared to people in smaller families with children
• People in single adult families with a disabled family member were four times more likely to be behind on bills, six times more likely to be living in a cold home and nine times more likely to be unable to afford to eat properly, compared to those in families where no one is disabled
• Lone-parent families were three times more likely to be behind on bills or living in a cold house, and five times more likely to be unable to afford to eat properly compared to couples with children
• Families where no one works were four times more likely to be behind on bills or to be living in a cold home and six times more likely to be unable to afford to eat properly compared to people in working families

“Clearly there was deepening poverty and hardship before the pandemic. This has been followed by a pandemic that dragged many low-income families into deeper debt and arrears, £20 per week being added to Universal Credit and Working Tax Credit only to be cut again just as energy costs started soaring, and the start of the most significant cost of living crisis in 40 years.

“The combined effect can be seen in the very high levels of deprivation currently being experienced. In May this year, 7 million low-income households had gone without the essentials, 4.6 million were in arrears on at least one household bill or borrowing repayment, and 1.3 million had used credit to cover the cost of essentials. The Cost of Living Support package announced in May 2022 will provide some welcome – if temporary – relief, but for many, the one-off payments will barely touch the sides.

“Ultimately we need systems in place that provide a greater level of genuine security. This includes our social security system, which should pool risks across different stages of life, and be there for us when we need it, should we find ourselves sick, disabled, caring for others, looking for work or low paid. Instead, the erosion of social security has played a central role in the deepening poverty we track here. Our analysis of basic benefit rates in 2019/20 compared to cash thresholds for destitution and deep poverty finds people without children are left facing destitution, while people with children are on the cusp of very deep poverty.

“Without committed longer-term action, poverty will intensify further, and destitution will rise as a result.”

Who is going to do anything about this? In the short-term, no-one. We are not on the cusp of some economic miracle; any fix requires moves by the state. Stormont is in a state of collapse and yet somehow appears less chaotic than Westminster.

This illustrates the need for functioning government somewhere. In Belfast or London – but ideally both.