Britain’s record on tackling poverty has reached a turning point and is at risk of unravelling. Almost 400,000 more children and 300,000 more pensioners are now living in poverty than in 2012-13. Since that year, there have been continued increases in poverty, across both age groups. Very little progress has been made in reducing poverty among working-age adults.
Twenty years ago, a third of children lived in poverty; this fell to 27 per cent in 2011-12. In 1994-95, 28 per cent of pensioners lived in poverty, falling to 13 per cent in 2011-12. These falls were achieved by higher employment rates, more generous support for families through tax credits and extra help for poorer pensioners.
Following the financial crisis of 2007-08 poverty rates remained stable. A combination of stronger than expected employment, tax and benefit policies that continued to support working and non-working households, and spells of low inflation helped negate the worst effects of the downturn for the least well-off families.
But changes to welfare policy – especially since the 2015 Budget – are reducing families’ financial breathing space, with wage growth at the bottom end of the jobs market failing to make up the difference.
Poverty rates rose last year – to 16 per cent for pensioners and 30 per cent for children – suggesting gains are at risk of being lost without immediate action. Some 14 million people live in poverty in the UK – over one in five of the population. This is made up of 8 million working-age adults, 4 million children and 1.9 million pensioners.
These worrying figures suggest that we are at a critical point in our fight against poverty. Political choices, wage stagnation and economic uncertainty mean that hundreds of thousands more people are now struggling to make ends meet. This is a very real warning sign that our hard-fought progress is in peril.
Action to tackle child and pensioner poverty has provided millions of families with better living standards and financial security. But record employment is not leading to lower poverty, changes to benefits and tax credits are reducing incomes, and crippling costs are squeezing budgets to breaking point. The Budget offered little to ease the strain and put low income households’ finances on a firmer footing.
As we prepare to leave the EU, we have to make sure that our country and our economy works for everyone and doesn’t leave even more people behind.
We could help solve poverty by doing three things to transform people’s living standards and prospects.
First, end the four-year freeze on working-age benefits and tax credits. The freeze is the single biggest policy driver behind rising poverty, hitting families in and out of work, and ending this should be prioritised over increases in the personal tax allowance to help low-income families, which do little to help the worst-off.
Second, invest in a more ambitious house-building programme that provides 80,000 new genuinely affordable homes to rent and buy every year that are in the reach of low income families.
Third, with people getting stuck in low pay and working poverty, why not use the industrial strategy to improve adults skills? We’re calling for a skills drive from government and business to double participation in digital, literacy and numeracy training to meet all basic skills needs by 2030 so people can get on at work and progress to higher wages.
With child and pensioner poverty rising and the country debating its future after Brexit, we have a choice whether want to fight the injustice of poverty, or leave millions of people behind.
Campbell Robb is chief executive of the independent Joseph Rowntree Foundation (JRF)