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Rising in-work and benefit poverty ‘a damning indictment of society’ – report

Last-minute government U-turns are putting extra pressure on families in poverty already struggling to pay bills, the Joseph Rowntree Foundation said
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People in work and on benefits are increasingly also trapped in poverty, a new report has warned, in “a damning indictment” of society and the Government’s handling of the pandemic.  

Eight in ten people claiming Universal Credit in November were in work or looking for work, according to the Joseph Rowntree Foundation’s annual report, and the pandemic has “exacerbated the pre-existing barriers to work as a route out of poverty”.

“It is a damning indictment of our society that those with the least have suffered the most before the pandemic and are now being hit hardest once again by the pandemic,” JRF director Helen Barnard said. “The Government must now make the right decisions to avoid another damaging decade.”

Childcare and transport costs were already keeping workers on low incomes locked in poverty, making it difficult for them to increase their hours or get to higher-paying, more secure jobs. 

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But the Covid-19 crisis and closed schools made covering bills even more difficult for workers in poverty, the charity’s annual report said, and women were more likely to be made redundant because of their childcare responsibilities.

“It’s unacceptable that certain groups are bearing the brunt of the economic impact of Covid-19, and are now reeling from the latest blow of this third lockdown,” added Barnard.

The coronavirus pandemic has devastated the UK economy as economic forecasters predict the biggest recession in 300 years. Unemployment hit 4.9 per cent in October but could rise as high as 12 per cent by the summer, according to the Office for Budet Responsibility.

The charity praised the Government’s early action but warned unemployment and poverty could soar after April, when the furlough scheme and temporary £20 increase to Universal Credit are both set to end, if ministers do not take “bold and compassionate” action.

The JRF called for the Universal Credit increase to be made permanent and for cash payments to replace the free school meals system.

The job situation is pretty bleak. I’m at a loss about what to do next

A quarter of workers in low paid sectors like retail and food lived in poverty in 2019, meaning thousands were financially vulnerable when Covid-19 shut down the economy. Despite being among the lowest paid in the UK, over 80 per cent of retail staff faced lost income lockdown.

And four in ten workers on minimum wage faced a high risk of losing their jobs in lockdown, compared to just one per cent of those earning more than £41,500 a year.

“I know this lockdown is necessary but it’s also another thing to battle through after all the struggles of the last year,” said Melanie, a former HR consultant in Surrey, who is part of the JRF poverty grassroots action group.

“I want the system to work much better for people in my position once we get through this.”

JRF said support measures consistently rolled out “at the eleventh hour” put extra pressure on those struggling in what is already a highly stressful time. 

Ministers must give urgent support to people on low incomes to help them recover from lockdown and job losses, researchers said – as well as ensuring Brexit does not keep people “locked out of prosperity”.

“2020 was an extraordinarily difficult year for all of us and has shifted the dial in terms of what support is possible,” Barnard said. “Learning from this, there are serious injustices we cannot put off tackling any longer. We must not rest until everyone, regardless of their background, is able to achieve a decent life.”

Black and minority ethnic workers were 13 per cent less likely to be placed on the furlough scheme by their employer. They were 14 per cent more likely to lose their jobs entirely.

Meanwhile nearly half of disabled people who were employed at the beginning of 2020 were earning nothing by the middle of the year.

With 35 per cent of private renters working in sectors hardest hit by Covid-19, 700,000 were in arrears by autumn.

“Since I was made redundant in the financial crash I have been working whenever I can and I set upcf a new business in 2018, but the work dried up during the first lockdown and we had to close,” Melanie said. 

“I have been caring for my 88-year-old father as well as bringing up my son and I haven’t been working since October. The job situation is pretty bleak. I’m at a loss about what to do next.”

“One thing that has helped a little is the temporary £20-a-week uplift in Universal Credit,” added Melanie, who chose not to give her last name. “That extra £20 gave me a little bit more wiggle room, we’ve relied more on corner shops because they had the stock (in the first lockdown). They were a lifeline when the supermarkets were running out. 

“But my £50 weekly shop went up to about £80. All the offers and discounts stopped – the £20 didn’t go that far but it did make a difference. I always needed that extra money to get me through.” 

Locking down again – this time in the heart of winter – will hit people in poverty even harder, JRF warned. Families can expect higher food, fuel and digital costs.

To tackle this, the Government commit to keeping the £20 weekly increase in Universal Credit, JRF said. The temporary support measure was introduced at the beginning of the pandemic last year.

The majority of the public backs making the uplift permanent, giving ministers an “opportunity to align with the public’s values”, the report added.

Ministers should also protect renters, support people experiencing homelessness and rapidly improve device and internet provision for children in poverty trying to learn from home, JRF said in a series of recommendations.

The charity previously warned Brexit would have greater impact on disadvantaged areas around Northern England, the Midlands, Wales and Northern Ireland, where people have already been exposed to the worst of the Covid-19 recession.