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Sunak Claims Poverty is Down Under the ConservativesBut Relative Poverty is Up
Though absolute poverty has decreased since 2010, relative poverty is rising just as the cost of living crisis starts to bite, reports Sian Norris
Chancellor Rishi Sunak has told the BBC that the number of people in poverty has decreased under recent Conservative Governments – but his comments focused on absolute poverty rather than relative poverty, in contrast to leading anti-poverty charities.
Each year, the Government publishes a survey of income poverty in the UK called Households Below Average income (HBAI). This survey sets the poverty line in the UK at 60%t of the median UK household income. If a household’s income is less than 60 per cent of this average, HBAI considers them to be living in relative poverty. In contrast, absolute poverty is where a household’s income is less than 60% of the median as it stood in 2011.
Sunak’s comments were made on Sunday Morning in an interview with Sophie Raworth. Questioned about the cost of living crisis and his plans for this week’s spring statement, Sunak said: “the actions of this Government and previous Conservative Governments over the last 10 years have meant there are fewer people living in poverty today, over a million people fewer living in poverty today”.
Sunak was referring to the 1.2 million decrease in absolute poverty after housing costs. However, his comments ignore how relative poverty has increased.
According to the Joseph Rowntree Foundation (JRF), which measures relative poverty, in 2018/19 some 14.5 million people in the UK are living in poverty – or one in five of the population. This figure was made up of 8.4 million working-age adults, 4.2 million children and 1.9 million pensioners.
Last year, the JRF also found that “there has been little change in overall poverty levels for more than 15 years” – a statement at odds with the Chancellor’s claim that the Conservative Governments have reduced poverty.
Boris Johnson has been criticised for his use of inaccurate poverty figures.
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Child Poverty Increase
In 2010, 2.3 million children were living in poverty – today that number has increased to 4.3 million children in relative poverty after housing costs, or just under one-third.
There are currently 1.8 million children living in households in the “deepest poverty” – an increase of 500,000 children between 2011/12. Deepest poverty means that a household cannot cover the most basic essentials.
Conservative Government statistics state that the number of children in poverty rose by 600,000 between 2011 and 2019. The difference in numbers may reflect changing ways of measuring poverty since the 2010 figures. In just one year of Conservative rule – 2013-14 – the number surged by 250,000. Another 150,000 children have been living in poverty since the pandemic.
Of these, 49% are children in single-parent households, and children from black and minority ethnic groups are more likely to be in poverty: 46% are in poverty, compared with 26% of children in white British families.
Now the cost of living crisis is set to put added pressure on the poorest families, with the charity Gingerbread reporting that already one-quarter of single parents have gone without food in order to make sure their children have enough to eat. Over half of single parents (52%) have seen their financial situation worsen over the past 12 months and 42% expect things to get even worse over the coming year.
Chief Executive of Gingerbread, Victoria Benson, said: “I’ve heard heart-breaking stories of single parents not eating so they can afford food for their children, families living in single rooms, as that’s all they can afford to heat, and parents at breaking point because of the mental load they carry. Children shouldn’t be forced into poverty just because of the shape of their family, parents shouldn’t experience depression because they can’t see a way out of the desperate financial situation they’re in”.
In-Work Poverty
As well as his comments on poverty decreasing, Sunak mentioned the Conservative’s track-record on getting people into work, with the recent increase of payrolled employees.
The Chancellor told Raworth that he spends every hour of the day thinking about how to get people into well-paid work.
But on this metric, the Government is failing. In-work poverty is on the rise, with the number of working households relative poverty reaching a record high of 17.4% in the year to March 2020.
The number was higher for larger families with three or more children – in-work poverty rates among families with three or more children reached 42% in 2021, an increase of more than two-thirds in the past decade. That increase is likely linked to the decision to cut child tax credits for the third or subsequent child in 2017.
In-work poverty is likely to increase in 2022 due to the decision to remove the £20 uplift from Universal Credit at a time when energy and food costs are soaring, and inflation is on the rise.
What Support?
Sunak told the BBC the Government was providing £9 billion of targeted support that would disproportionately help those on the lowest incomes with rising energy costs.
This includes a £150 council tax rebate to cushion the blow of gas and electricity bills going up. The Energy Bills Rebate will provide around 28 million households with an upfront discount on their bills worth £200, with energy suppliers applying the discount to domestic electricity customers from October and the Government meeting the costs.
Households will have to pay this money back, with the discount automatically recovered from people’s bills in equal £40 instalments over the next five years, after 2023.
In April, households in England that are in council tax bands A-D will also receive a £150 rebate. This will be made directly by local authorities and will not need to be repaid. While this will not apply to the richest 20% of households in England, it does of course benefit many people on comfortable incomes and who own property.
The support follows the much-criticised decision in October to cut the £20 Universal Credit uplift, brought in during the early stages of the Coronavirus pandemic. The cut meant 5.5 million families losing £1,040 from their annual income and risked pushing a further 500,000 people into poverty.
Alongside the cut, the Department for Work and Pensions reduced the Universal Credit taper rate, as well as implemented an increase to claimants’ work allowances, meaning almost two million of the lowest-paid in-work claimants would be around £1,000 a year better off.
According to statistics published in November 2021, 3.6 million children were in families relying on Universal Credit, which will rise by 3.1% in April this year. This is far below the predicted inflation rate rise – currently projected to be around 8% – making this a real-terms cut following the existing £20 uplift cut.
As a result, the value of Universal Credit for families with children will fall by around £570 a year, on average.