We risk an economic recovery built on rising poverty – JRF reaction to the Autumn Statement

Responding to the Autumn Statement, chief executive of the independent Joseph Rowntree Foundation (JRF), Julia Unwin, said:

“George Osborne has high hopes for 2020, but we know for the worst off families the forecasts are heading in the wrong direction, with one in four expected to be living in poverty by then. There was little in this Statement to tackle the causes of poverty and it was a missed opportunity to support low income families. Without action, we risk an economic recovery built on rising poverty and insecurity.

“Raising the personal tax allowance is an expensive way of helping the working poor – most of the additional money will actually go to better off families, while poorer families only keep a third of the tax cut. Raising the Work Allowance would have been a much more effective way of making work pay for those in poverty. Stamp Duty is a long overdue reform, but the measure stokes demand and does little to boost supply, which is badly needed to end the housing crisis and bring down the high cost of housing.”

JRF’s recent state of the nation report written by the New Policy Institute sets out how the economic recovery is affecting people and places in poverty. The report shows there has been a vast increase in insecure work – zero hours contracts, part time work and low-paid self-employment, which means that getting a job does not necessarily mean getting out of poverty: 

  • Two thirds of people who moved from unemployment into work in the last year are paid below the Living Wage 
  • The long term prospects for people in low paid work are not good either: only a fifth of low paid employees have left low paid work completely 10 years later
  • The average self-employed person earns 13% less than they did five years ago
  • There are around 1.4m contracts not guaranteeing a minimum number of hours, and over half are in the lower-paying food, accommodation, retail and admin sectors

The extra support for childcare costs for low income families will be paid for by making savings elsewhere within the Universal Credit budget, by freezing the Work Allowance. JRF has argued the help should not be funded at the expense of other poorer families, and the balance of funding between poorer and better off families looked at again.