People in poverty must not pay the price for Brexit

Coalition demand Government action to protect struggling families.

A coalition of charities have urged the Government to take urgent steps to protect people and places in poverty from the financial consequences of Brexit, including no-deal.

The Joseph Rowntree Foundation (JRF), Shelter, Trussell Trust, Child Poverty Action Group, Action for Children, National Children’s Bureau, Poverty Alliance, Turn2us, Barnardos and ATD Fourth World have sent an open letter to all MPs, calling on the Government to address the risks facing low-income households, and step up their contingency plans as Whitehall prepares for no deal.

With 14 million people already living in poverty, they warn that the risks posed by leaving the EU without a deal could lead to economic uncertainty and increases in the cost of living – pushing more people into hardship at a time when benefits are frozen.

Analysis by the independent social change organisation Joseph Rowntree Foundation suggests that, even based on the Bank of England’s projected inflation in the event of a smooth exit from the EU, persisting with the benefit freeze for another year will result in 10.7 million people in poverty, including children, missing out on £220 per year to help cover the increased cost of living, and 200,000 more people being pulled into poverty. In the event of no deal, and potentially higher price rises, the impact could be more severe.

The open letter states:

“As organisations who speak with and support families up and down the country every day, we know that many people are already facing impossible situations such as struggling to pay their rent or put food on the table for their children. As a country that believes in protecting each other from harm, this is not an acceptable situation.

“There is widespread agreement that some level of economic and social disruption will follow Brexit at least in the short term and worst of all under a ‘no deal’ scenario. Low income families will be worst affected, having already endured years of benefit cuts and freezes. The public services they rely upon are also under pressure due to the consequences of rising poverty. We need a new deal for low-income families to cushion the blow and this has prompted us to write to you.

“Without pre-emptive action by the Government there is potential for the already shamefully high rates of poverty in the UK to worsen further in the face of price and income shocks.”

They add:

“We do not take a view on the merits of Brexit or otherwise. But we are clear we must protect people on low incomes from any short-term economic shocks. We believe these are appropriate and just measures. It is incumbent on the Government to protect struggling families in their no-deal contingency planning.”

In a joint letter sent to all MPs, the charities call for three urgent steps to be taken as a minimum:

  1. Lift the freeze on working-age benefits and tax credits on 8th April 2019. At the Spring Statement the Government should help low income families by pledging to end the freeze on working-age benefits and tax credits a year early and ensuring housing benefit covers people’s rents. The freeze was introduced in April 2016. Between then and November 2018, the cost of living for people on low incomes has risen by £900. Ending the freeze would protect families from any further increases in the cost of essentials. It is the right thing to do.
  2. Make urgent improvements to Universal Credit (UC), by ending the five-week wait for first payment, to prevent destitution. The design of UC includes a five-week wait at the start of a new claim, which is simply too long for families that experience job losses or a reduction in hours on low incomes to manage, especially since many will have few or no savings.
  3. Bring forward an emergency stimulus package for areas with high poverty and economies exposed to disruption in trade. Some parts of the country are more exposed to potential disruption in trade with the EU and elsewhere, particularly parts of Northern England, the Midlands, Wales and Northern Ireland. The Government has committed to creating a Shared Prosperity Fund, which will replace the funding economically worse-off places receive from EU Structural Funds from 2020 onwards. However, a no-deal Brexit could lead to increased need in these areas before this date. The government should therefore bring forward some of the funding for the SPF to provide a stimulus package of support for jobs and skills that is ready to deploy immediately.