A NEW study shows poverty in the UK is on the rise due to welfare cuts introduced by the coalition government during the last two years of its tenure.
What happened to poverty under the Coalition? by the New Policy Institute presents NPI’s estimates of the latest headline poverty statistics for the United Kingdom, for the financial year ending in March 2015.
It found: ‘Over the last two years the total number of people in poverty in the UK has increased by 800,000, from 13.2 to 14.0 million. This represents a 1 percentage point increase in the poverty rate, from 21% to 22%. Deep poverty also increased by 1 percentage point to 15%, with 700,000 more people in deep poverty rising from 8.9 to 9.6 million people.
‘Regardless of age, poverty rose over the two years to April 2015. The rise was highest for children, with the poverty rate increasing by 2 percentage points to 29%. It rose very slightly among working age adults to 22% and among pensioners to 14%. The rise in pensioner poverty follows six years of falls.
‘The number in poverty in working families is up by 300,000 since 2012/13, while the number in workless families is up by 400,000. The increase in out-of-work poverty was concentrated in 2013/14 and is likely to be the result of the tax and benefit changes that were introduced in April 2013 (discussed below).
‘The rise in working families in poverty is due to the increase in employment overall as the poverty rate for this group remains unchanged. Poverty in the social rented sector (SRS) grew by 400,000, with the bulk of that change coming in 2013/14 which again is likely to reflect tax and benefit changes in that year.
‘In the past decade, poverty in the SRS has fallen considerably. Poverty in the private rented sector (PRS) also grew by 350,000, a continuation of a long-term trend reflecting the growth of the tenure.’
NPI said: ‘Starting with the latest published poverty statistics, for 2012/13, we have estimated the combined effects of the changes that have taken place since then in the size and mix of the population, the levels of employment and earnings, as well the value of benefits and tax allowances. The conclusion is clear: poverty in the UK is rising once more; it is rising among all age groups; and it is also deepening.
‘NPI, in conjunction with a number of other organisations, asked the government last summer to publish the 2013/14 poverty statistics before the general election. It declined on the grounds that decisions on publication were taken without regard to political considerations. Given the significance of recent policy changes and welfare reform to the poverty landscape, not publishing official statistics before the election is also political.
‘Behind the overall headline that poverty is both rising and deepening, there are three specific points which mark 2013 as a turning point.
‘1. Incomes in the middle are rising once more; at the bottom they have fallen.
‘2. Pensioner poverty is rising after half a dozen years of steady and substantial falls.
‘3. Poverty among tenants in the social rented sector also rose, which can be linked to tax and benefit changes.’
The NPI added: ‘Our estimates also show that data for 2013/14 would have shown the shift. That is because April 2013 was a key moment, when many of the big welfare reforms took effect but also when the rest of the economy began to recover.’
The NPI report said: ‘April 2013 was the point at which the major benefit changes began: the bedroom tax, the overall benefit cap and council tax support cuts. All of these have caused a fall in income for those affected. Meanwhile the personal tax allowance increased by £1,300 to £9,400, increasing the income of those affected.
‘Other benefits rose by 1% and average earnings by 1.6%, but both rose less than prices at 2.2% meaning that they fell in value. Finally the rise in employment increased the earned income of those families who started work. In the next year these trends broadly continue. The benefit cuts were maintained and in the case of council tax support got deeper. There was a further, smaller increase in the personal tax allowance whilst the employment rate grew slightly faster. Nonetheless, earnings and benefit increases did not exceed prices.’
An earlier report, written by the New Policy Institute on behalf of StreetGames, considered the level and trends in poverty among people aged 14 to 24 (referred to as ‘young people’). In notes as a benchmark: ‘A single adult with a disposable income of less than £130 per week in 2012/13 would be in poverty.’
The NPI said: ‘Of the 9.0 million young people aged 14-24 living in the UK, approximately 2.7 million, or 30%, are living in poverty. This includes 1.9 million young people with an income considerably below the poverty threshold (below 50% of median income). A further 740,000 young people had incomes just above the poverty threshold (above 60% of median income but below 70%).
‘13% of young people live in families that are unable to keep their accommodation warm enough. Among children aged 14 and over, 8% do not have local access to outdoor space in which to play and 9% lack leisure equipment because of cost. At 30% the poverty rate among young people is higher than any other age group. A decade earlier the children aged under 14 were more likely to be in poverty than young people, but this is no longer true. The poverty rate among 20-24 year olds grew by 6 percentage points in the last decade, more than any other age group.
‘Poverty among young people is highest in London at 38%, but the proportion of young adults in London claiming an out-of-work benefit is lower than much of the North or England. Estimates of poverty at the local area suggest that it is highest in the Welsh Valleys, cities across England and some coastal towns.
‘380,000 young people in poverty have a long standing illness or disability. Most young people in poverty are White-British (1.9 million), but the poverty rate for non-White British young people is almost double the rate for White British young people.
‘Of the 9.0 million people aged 14-24, 6.4 million live with their parents and 2.6 million do not. Just under half of all young people living with their parents (3.1 million) are classified as ‘dependent children’ (i.e. they were aged under 16, or aged 16-19, living with their parents and in full-time education).
‘Young people not living with their parents have a much higher poverty rate at 43% than those who do at 25%. But this gap is linked to tenure: young people not living with their parents are more likely to rent, and renters have a higher poverty rate. Just under 1.1 million young people in poverty live in private rented accommodation, compared to 960,000 in social rented and 680,000 in owner-occupied. The poverty rate for young people in owner-occupied housing is at 15% compared to close to 50% for renters.
‘More than half of 19 to 24 year olds with children are in poverty. But this only amounts to 370,000 young people, compared to 2.3 million in poverty without children. Young people with children are rarely teenagers and are much more likely to be in their mid-20s. Some 3.1 million young people in poverty are classified as dependent children’ (they are under 16, or up to 19, living with their parents and in full-time education).
‘They are more likely to be in poverty if none of their parents are in work but over two thirds of those in poverty have a working parent. Of the 5.9 million young people in poverty that are classified as ‘working age adults’ (aged 19 and over, or 16 and not in full-time education): 540,000 are in working, 420,000 are unemployed, 380,000 are inactive and 440,000 are students.
‘There are more 19 and 20 year-olds in poverty than young people of other ages. If full-time students who do not live with their parents were excluded this peak would disappear. But even excluding students the poverty rate for people in their early 20s is still 5 percentage points higher than for those in their late 20s.
‘Poverty among young people is higher than any other age group. A decade earlier this was not the case. Whilst the poverty rate for children under 14 and for pensioners fell, the poverty rate for young people increased. Part of the reason that poverty among young people is higher is that they are more likely to live in private rented accommodation and spend a greater share of their income on housing costs ‘But the age group 14 to 24 is diverse. The vast majority of 14 year-olds live with their parents and are in full-time education, whilst the opposite is true for 24 year-olds. In fact many of them will be parents themselves. The poverty rate for young people is high across the age group but their circumstances will be very different and efforts to tackle poverty need to reflect this.’
