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UK poverty: the facts, figures and effects

The Covid-19 crisis has driven disadvantaged households further into poverty. These are the facts you need to know

The UK has long had a poverty problem, with a decade of public service cuts pushing families across the country further into hardship.

The Covid-19 crisis made life even harder for many after thousands were made redundant, lost income on the furlough scheme and faced higher living costs in lockdown.

It means many struggle to afford the food they need, forced to rely on food banks. Some will find it difficult to pay for fuel bills, transport or internet connections.

Here we explain the facts and figures, and how the experts say we can end UK poverty for good.

How many people are in poverty in the UK?

Up to 14.5 million people were in poverty before the pandemic, the Government estimates, when taking housing costs into account. With the UK population currently at nearly 67 million, that’s one in every four or five people.  

But the economic impact of the pandemic has pushed another 700,000 people into hardship, according to the Legatum Institute. That includes 120,000 children. This means more than 15 million people are living in poverty in the UK – 23 per cent of the population.

What causes poverty?

Some drivers of poverty are life events, like illness or redundancy. But most are structural, and exacerbated by increasing living costs, creating a cycle that keeps people trapped in hardship. 

That can include unemployment and low-paid, insecure work. Some areas have higher rates of work without decent pay – the worst affected are the south east of England, Wales and the West Midlands, according to Trades Union Congress research. People who have not had easy access to training or education can struggle to land a secure job, making it harder to escape poverty.

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The UK’s welfare system also makes it difficult for those struggling to get a decent income. Social security is not enough for people in work, looking for work or dealing with health issues to avoid poverty, according to the Joseph Rowntree Foundation (JRF). Seven in ten people claiming Universal Credit were in work or looking for work in November last year, JRF research showed.

Benefits can be difficult to access, and in some cases mean people risk lowering their income by getting a job.

It’s particularly difficult for people dealing with mental health issues like addiction to escape poverty, and people who have been in prison can find it difficult to get a job to support themselves.

What are the consequences of poverty?

Poverty drives chronic stress as a result of worrying about how to afford living costs day to day, increases feelings of hopelessness, makes it more difficult to access healthcare and lowers self esteem. 

That stress – and difficulty affording nutritious food – also means those living in poverty are more likely to experience health problems, while finding it tougher to get treatment.

People in poverty are also less likely to have strong social support networks around them because all their energy has to be used to survive with few resources. This puts them at higher risk of homelessness and addiction problems.

How is UK poverty measured?

The criteria of relative poverty is in flux and depends on the economy, unlike absolute poverty. It looks at how many people might be just managing but who can’t afford the normal activities and opportunities that average earners have access to, known as an ‘ordinary living pattern’.

Households in relative poverty earn 60 per cent of the median earnings at the time. However the figures are adjusted according to how many people are in a household since their income needs will differ.

For example, a two-parent family with two children currently needs to earn £20,852 in order to stay out of relative poverty. For a single parent with two children, they need to earn £1,287 a month. 

The UN’s definition of absolute poverty means someone cannot afford basic essentials like food, clothing and housing. This measure makes it easier to compare conditions between countries – as the minimum income to keep up with basic living standards differs depending on where you are. 

Westminster defines absolute poverty earnings worth less than 60 per cent of the median annual income in 2010-11.

The Social Metrics Commission calculates poverty taking into account costs like childcare and expenses linked to living with a disability. They also look at liquid assets, like savings and shares, that could act as a financial safety net.

Who is most affected by poverty?

There is a high poverty rate among families with children due to a combination of extra costs and childcare responsibilities. This means around 4.2 million children live in poverty in the UK. This impacts single parent families more, with 44 per cent of children with lone parents in poverty according to the Child Poverty Action Group.

Discrimination plays a big role in poverty. Gender affects poverty – three million women are in low paid jobs compared to 1.9 million men. Women were more likely to be made redundant in Covid-19 lockdown too, JRF figures showed. This was largely because they were more likely to be balancing childcare responsibilities with work.

Disability also significantly increases someone’s chances of falling into poverty. It means extra living costs, care costs and difficulty finding suitable work.

Ethnic minorities face high poverty rates in the UK, with 46 per cent of children in BAME households affected compared to 30 per cent of all kids.

Poverty significantly impacts migrants too. The Government’s no recourse to public funds policy locks people out the social security system depending on their immigration status. It drives high poverty rates and puts them at an elevated risk of homelessness.

What would it take to end poverty?

Most campaigners agree reforming the welfare system is key to cutting UK poverty rates.

The five-week wait for a first Universal Credit payment has been shown to push people deeper into debt, driving food bank use and rent arrears. The two-child limit, which restricts the amount a family can receive in benefits to the first two children in a family should be scrapped too, experts say, if struggling families are to have enough money to live on. That’s along with the benefit cap, limiting the total amount people can receive regardless of what their full entitlement is.

In March last year, the Government introduced a £20-a-week increase to Universal Credit payments in response to the Covid-19 crisis. But unless the Government changes its mind, this will end in April. Despite repeated calls by campaigners, ministers have refused to commit to making the increase permanent. Families on the controversial benefit payments could lose £1,040 per year.

Up to 700,000 people were prevented from falling into poverty by the uplift, the Legatum Institute said.

Crucially, the Government did not give this increase to people on so-called “legacy benefits” like Employment and Support Allowance. They DWP pays these to people whose disabilities make it difficult for them to work. Campaigners want the increase to be extended to them to cover higher living costs as well as pandemic expenses.