Poverty is taking a hold on UK families – what can we do?

Today is the anniversary of the triggering of Article 50 – the result of a referendum which highlighted the divisions in our country between those for whom our globalised economy has brought tangible benefits, and those who have been locked out of opportunities.  

Our research into the drivers of the Brexit vote showed the divide between people on lower and higher incomes and living in places with concentrations of high or low skills. A crucial dynamic of the vote was the ‘double whammy’ faced by people whose lack of qualifications put them at a disadvantage in the modern economy, and also who lived in areas with few opportunities.

We do not know yet what the outcome of the Brexit negotiations will be – but we do know that we must design a post-Brexit economy that delivers for those who have been locked out and left behind.

Last week the Government released the latest set of poverty figures. These show just how many people in our society are struggling to make ends meet. It is very clear that high housing costs, low-paid work and a weakening support system are trapping families in poverty.

So what's happening?

  1. Low pay and unstable work means millions of families are struggling to put food on the table. 
    Despite record employment rates and the boost that the National Living Wage gives to pay at the bottom, many families are still at risk of poverty: two thirds of working-age adults and children in poverty live in working families. 

  2. Child poverty is on the rise in lone-parent families, driven by low-paid work, high rents and weakening support.
    Poverty rates for children in lone parent families have risen alarmingly in recent years: nearly half of children in lone parent families live in poverty. That is the fastest rise in child poverty for any group in the last decade, and the second fastest since these statistics began.

  3. Families with more than two children are being swept into poverty.
    The poverty rate for children in families with three or more children is also rising fast – up to 42%, from 35% in 2013/14.  The vast majority of these families have three children rather than four, five or more. This trend is particularly worrying as it does not yet reflect the impact of limiting benefits and tax credits to the first two children.

  4. London has the highest child poverty rate – but it is rising faster in other areas. 
    Child poverty has risen across the North of England, as well as in the West Midlands, the South East and Scotland. Child poverty in the North East of England has risen from 28% last year to 33%. 

  5. We are at a crossroads – we can choose to loosen the grip of poverty now, or see it tighten over the next few years. 
    Last week’s figures come from a survey covering 2016-2017. That means that they show the positive effects of real terms increases in pensioner benefits and the National Living Wage, as well as tax cuts. They also show the impact of the first year of the Government’s benefit freeze - an effective cut to most working-benefits of 2%. However, the biggest cuts to working-age benefits and tax credits will be seen next year and in future years. Next year’s figures will show the impact of an effective cut to benefits of 3%, as well as the introduction of the two-child limit and the further rollout of Universal Credit which cuts the support available to many families. We have a choice now; to take action to loosen the grip of poverty and unlock opportunity for families who are shut out. 

We all want to live in a society where everyone has the opportunity for a decent life. We know that it isn’t right that 14 million people live in poverty, even as the economy recovers and employment rises. It is imperative that we come together to change this. Government, employers and communities all need to act so that our post-Brexit economy delivers real improvements for those stuck at the bottom. We are calling for the Government to take two steps to deliver a better deal for those locked out:

  • Harness the potential of Universal Credit by allowing people to keep more of what they earn. Restoring Universal Credit work allowances would benefit more than three million low-income working households, and protect 340,000 people from falling into poverty in 2020/21. 
  • Use the forthcoming Social Housing Green Paper to tackle the lack of low-cost social housing which traps so many in unaffordable, poor quality homes.