- PM urged to make good on promise ‘to make Britain work for everyone’
- Responsible capitalism needs to end the scandal of people in poverty paying more for everyday goods and services
- £20m fund announced to tackle ‘poverty premium’
A new ‘long term deal’ to solve poverty – between governments, business and the public - is needed to solve poverty in a generation, so the first cohort of ‘Brexit children’ starting school this Autumn grow up and enter adult life in a UK that is prosperous and poverty-free.
The independent Joseph Rowntree Foundation (JRF) today launches a five-point plan to solve poverty by 2030. It is the most comprehensive strategy of its kind to set out how to solve poverty across all groups in the UK.
The first priority is a reboot of markets towards a more responsible capitalism that benefits people on low incomes. JRF is calling for government, regulators and companies to work together to end the ‘poverty premium’, where people on low incomes pay more for goods and services such as fuel and credit.
Households in poverty are four times more likely to be behind with at least one bill and the ‘poverty premium’ can add as much as 10% to a minimum household budget.
The strategy sets out a target where the first generation of children starting school this year enter adulthood in 2030 in a UK where:
- No one is ever destitute;
- Less than one in ten of the population are in poverty at any one time; and
- Nobody is in poverty for more than two years.
It comes as new polling shows that over two thirds of the public believe that poverty has increased in the past decade, while half the public think it is harder to escape poverty now than it was a decade ago. Three fifths of the public feel that poverty will rise in the next 20 years.
Launching the strategy today in Westminster, Julia Unwin, chief executive of JRF, said:
“It’s shameful that in the 21st century, 13 million people in our wealthy country are living in poverty. A new ‘long term deal’ to solve poverty is urgently needed so the first generation of ‘Brexit children’ starting school this week grow up in a country where no matter where they live, everyone has a chance of a decent and secure life. Previous approaches have been too piecemeal, failing to deal with issues such as the high cost of living.
“Poverty divides communities and generations; it harms people’s potential and strains families; it drains the public purse and holds back our economy. The Prime Minister has made a promise to make Britain work for everyone and reform capitalism. As Westminster reconvenes this week, I urge her to deliver on this promise. If we don’t take action now, poverty is set to increase for children and working-age adults. Poverty is the biggest social evil of our time – we must act now.”
Poverty costs the UK £78 billion a year, £1,200 for every person and equivalent to 4 per cent of the UK’s GDP. £69 billion of this figure is spent on public services needed to pick up the pieces dealing with poverty – £1 in every £5 spent on public services. A further £9 billion is lost tax revenue and additional benefits spending due to the knock-on effects of poverty later in life.
JRF’s plan demonstrates that with vision and commitment and by working with governments, businesses and communities, we can solve poverty once and for all.
The strategy describes the human toll of poverty on people from ‘cradle to grave’:
- Among children, those born into poverty and starting school this week are some way behind their richer peers. By age three, a child born into poverty is significantly behind in their cognitive development – a gap that widens by the time they are five.
- Among working age adults, four out of five low-paid workers fail to escape low pay completely after 10 years.
- After retirement, someone born in a deprived neighbourhood will die an average of nine years earlier than a child born in a wealthier area.
To solve poverty, JRF’s plan focuses on five key areas of action:
- Boost incomes and reduce costs:
- End the poverty premium – where people in poverty pay more for everyday goods and service.
-Invest an extra £1 billion per year to build 80,000 genuinely affordable homes to rent and buy in England each year
- Deliver an effective benefit system:
- Reboot Universal Credit to make work pay and provide a strong safety net
- Reform job centres to support people into secure and better-paid work – not just any job
- Improve education standards and raise skills:
- Improve educational attainment among children growing up in poverty
- Double investment in basic skills training so 5 million more adults have basic literacy, numeracy and digital skills by 2030.
- Strengthen families and communities:
- Radically overhaul the childcare system to give children the best start in life and to make work pay for parents
- Support strong families and relationships by establishing a family hub in every area
- Promote long-term economic growth benefiting everyone:
- Employers support and train their lowest paid staff to get on at work into better paid and secure jobs
- Give mayors and town halls the incentives, powers and budget to help create more and better jobs and connect people in poverty to economic opportunities
The call comes as new polling to coincide with JRF’s launch shows an overwhelming majority of the public want the UK to get to grips with the high levels of poverty – which is holding back the country’s potential - to make good on the promise to make Britain work for all:
- The public see poverty as ‘everybody’s business’. 90% see national government as having an important role in dealing with poverty, compared to 85% for local government, 71% for people living in poverty themselves and 70% a job for businesses.
- Solving poverty has the backing of the public. 71% say poverty is a big problem for the country, including the wealthiest people: 64% of people earning more than £62,000 a year agree poverty is a big problem for the UK.
- Over two thirds of the public believe that poverty has increased in the past decade, while half the public think it is harder to escape poverty now than it was a decade ago. Three fifths of the public feel that poverty will rise in the next 20 years.
To mark the launch of this significant strategy, JRF has teamed up with Big Society Capital, to work towards raising up to £20m of social investment to tackle the ‘poverty premium’. The initiative will support charities and social enterprises to develop solutions.
Cliff Prior, CEO of Big Society Capital, said:
“How can it be that thousands of people living in poverty pay more than £1,000 extra each year for even the most vital services such as gas, electricity and loans? It’s a scandal that must be ended – and we believe that’s possible. So Big Society Capital is keen to work with JRF and our co-investors, to support charities and social enterprises in financing ventures that can provide fair and affordable alternatives. We want to prove that people on lower incomes can be served fairly, and to encourage companies, government and regulators to do the same.”