UK government warned over sharp rise in child and pensioner poverty

Almost 400,000 more UK children and 300,000 more pensioners plunged into poverty in past four years, new study finds.

Photo credit: NEFATRON via photopin cc

Powered by Guardian.co.ukThis article titled “UK government warned over sharp rise in child and pensioner poverty” was written by Richard Partington, for The Guardian on Monday 4th December 2017 00.01 UTC

Hundreds of thousands of children and older people have been plunged into poverty in the past four years, according to a stark analysis laying bare the challenge to families trying to keep up with the cost of living in Britain.

The research from the Joseph Rowntree Foundation (JRF) found almost 400,000 more children and 300,000 more pensioners in the UK were living in poverty last year compared with 2012-13, the first sustained increases in child and pensioner poverty for 20 years. The foundation warned that decades of progress were at risk of being unravelled amid weak wage growth and rising inflation.

The thinktank urged the government to unfreeze benefits, increase training for adult workers and to embark on a more ambitious house-building programme to provide affordable homes for struggling families.

Frances O’Grady, general secretary of the TUC, seized on the report to call for the minimum wage to rise to £10 an hour and for the government to remove the cap on salaries in the public sector. “Working people are not getting a fair deal from the economy, with real wages still worth less than a decade ago,” she said.

The foundation’s latest research, titled UK Poverty 2017, found a gradual increase in poverty rates over the past four years, reversing a trend of falling numbers since the mid-1990s.

About a third of children were living in families lacking the resources for their minimum needs in 1994-95 before the rate fell to 27% in 2011-12 with the help of higher employment rates and tax credits introduced under the last Labour government. The proportion of pensioners living in poverty fell from 28% to 13% over the same period.

However, poverty rates increased to 16% for pensioners and 30% for children last year, while the charity also found as many as one in five people across the UK may be in poverty – which it defines as being when someone earns less than 60% of median earnings, adjusted for size and type of household.

The JRF chief executive, Campbell Robb, said: “These worrying figures suggest that we are at a turning 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.”

Recent analysis from the Institute for Fiscal Studies estimates the number of children living in poverty is set to rise to a record 5.2 million over the next five years, up from about 4 million at present. The thinktank said frozen benefits as well as the introduction of universal credit would contribute to the surge, which it said would be most profoundly felt in the most deprived parts of the country.

Tax cuts and minimum wage increases have proved beneficial to some families – as the government has raised the personal tax-free allowance and imposed a “national living wage” of £7.50 an hour – but the JRF report found the gains were outweighed by the reductions from benefit support.

What is universal credit?

Universal credit is the supposed flagship reform of the benefits system, rolling together six benefits (including unemployment benefit, tax credits and housing benefit) into one, online-only system. The theoretical aim, for which there was general support across the political spectrum, was to simplify the benefits system and increase the incentives for people to work, rather than stay on benefits.

How long has it been around?

The project was legislated for in 2011 under the auspices of its most vocal champion, Iain Duncan Smith. The plan was to roll it out by 2017. However, a series of management failures, expensive IT blunders and design faults have seen it fall at least five years behind schedule.

What is the biggest problem?

The original design set out  a minimum 42-day wait for a first payment to claimants when they moved to universal credit (in practice this is often up to 60 days). After sustained pressure, the government announced in the autumn 2017 budget that the wait would be reduced to 35 days from February 2018. This will partially mitigate the impact on many claimants of having no income for six weeks. The wait has led to rent arrears (and in some cases to eviction), hunger (food banks in universal credit areas report notable increases in referrals), use of expensive credit and mental distress.

Ministers have expanded the availability of hardship loans (now repayable over a year) to help new claimants while they wait for payment. And housing benefit will now continue for an extra two weeks after the start of a universal credit claim. However, critics say the five-week waiting time is not enough and want it reduced to two or three weeks.

Are there other problems?

Plenty.  Multibillion-pound cuts to work allowances imposed by the former chancellor George Osborne mean universal credit is far less generous than originally envisaged. According to the Resolution Foundation thinktank, about 2.5m low-income working households will be more than £1,000 a year worse off when they move on to universal credit, reducing work incentives. Landlords are worried that the level of rent arrears racked up by tenants on universal credit could lead to a rise in evictions. It’s also not very user-friendly: claimants complain the system is complex, unreliable and difficult to manage, particularly if you have no internet access.

 

Philip Hammond, the chancellor, unveiled an additional £1.5bn for reforming the rollout of universal credit, helping to cut waiting times for claimants. However, the government still plans to cut working-age benefits by nearly £12bn over the next five years.

The JRF analysis also found evidence that some families were trapped in poverty despite being in work, and were unable to progress much further. It found a rate of one in eight workers, or 3.7 million people, do not earn enough for their needs and that 40% of working-age adults living in poverty have no qualifications, making it harder to earn better pay.

Rachael Orr, head of UK programmes at Oxfam, said it was “deeply concerning” to see more evidence that having a job was not enough to escape poverty. “It’s not just working adults who are affected, but their children too, and it’s a real worry to see progress on child poverty going into reverse,” she said.

Alison Garnham, chief executive of the Child Poverty Action Group, said: “As today’s report shows, we know how to reduce child poverty in the UK – we’ve done it before. Yet at the start of a sustained rise in the rate of child poverty – bewilderingly – there is inaction. The question the report begs is why are we not investing in our children?

“Families with children have had a decade of cuts to their incomes and the damage is showing. Unless there is action now to protect the living standards of low-income families, we will pile up problems for future generations and for the UK economy.”

•Follow Guardian Business on Twitter at @BusinessDesk, or sign up to the daily Business Today email here.

  • How does Britain compare to other countries?
  • Why is poverty getting worse?
  • How is poverty defined?

 

guardian.co.uk © Guardian News & Media Limited 2010

Published via the Guardian News Feed plugin for WordPress.

SHARE