1.1 million more people face poverty at end of 2020 as a result of coronavirus pandemic, finds IPPR
The economic fallout of the pandemic could leave 1.1 million more people below the pre-Covid poverty line at year end, including a further 200,000 children, according to analysis released today (Thursday) by the IPPR think tank.
- 200,000 more children are among those expected to be below pre-virus poverty line, as job losses hit family incomes
- Government must act now to prevent this avoidable increase in family hardship, says think tank
Without urgent action to protect families from the financial hardship caused by the pandemic, this would bring the total number of children living in poverty in the UK to 4.5 million, an increase of almost 5 per cent, IPPR says.
The IPPR analysis provides the first projection of the poverty impact of the crisis since the pandemic began. It draws on Bank of England estimates showing that unemployment is likely to reach just under 10 per cent in the final quarter of this year (Q4).
It finds that the number of children newly pushed into poverty since before the pandemic is likely to be 300,000 at the end of this year. This number is partially offset by the 100,000 children likely to have moved out of poverty, due to emergency reforms to the Universal Credit system introduced in March.
The increase in child poverty is driven by expected falls in income for 800,000 households with children. Those newly forced to rely on Universal Credit will experience a major hit to their living standards and this will be particularly damaging for households with high rents as a proportion of their incomes, or which have existing debts and low levels of savings.
Even for many parents with jobs, returning to work is difficult or impossible while schools and childcare settings are only taking selected pupils, and are open irregular hours.
The 1.1 million total of people below the pre-Covid poverty line will be some 7 per cent more than the 14.7 million projected, had the crisis not occurred.
IPPR’s analysis finds that removing the two-child limit and the benefit cap, imposed in 2015 as part of the government’s austerity measures, combined with increasing Child Benefit by £5 per week per child, could entirely prevent the expected rise in child poverty - and could instead induce a modest fall. Further increases to Child Benefit would help stabilise incomes at a time of financial instability for many families.
IPPR is calling on the government to include measures to support children and families as part of its planned economic stimulus package this summer.
Clare McNeil, IPPR Associate Director and head of its newly launched Future Welfare State programme, said:
“This analysis shows that hundreds of thousands of families and their children who may have been ‘just about managing’ before Covid now face being plunged into poverty.
“The government must apply the same level of ambition it had for supporting businesses and workers in the early stages of this crisis, to prevent a new generation of children and their families falling into poverty through no fault of their own.
“The Chancellor must include in this summer’s stimulus a package of measures to support families alongside funding for physical infrastructure and job creation. This should include removing the Universal Credit austerity measures, supporting family and carer incomes and investing in childcare to open up more options for parents to return to work.”
Henry Parkes, IPPR Senior Economist, said:
“Our modelling shows that the government must do more to prevent rising poverty, now and in the future. Struggling families need the government to step in and boost the incomes of those who lose their jobs at this difficult time.”
Clare McNeil, IPPR Associate Director, and Henry Parkes, Senior Economist, are available for interview
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NOTES TO EDITORS
The IPPR tax benefit model simulates net household income for households in the 2020/21 financial year using the 2018/19 Family Resources dataset. Academics from Manchester Metropolitan University working with IPPR have updated the model to reflect the changes caused by the Covid-19 crisis, including by factoring in expected job losses consistent with unemployment at 9.8% in the last quarter of 2020, based on Bank of England estimates. The distribution of job losses is informed by recent Resolution Foundation survey evidence of job losses by income quintile, and is subject to considerable uncertainty. Estimates for those working reduced hours are not included in the model.
Poverty estimates are calculated based on the number of children/households with income under the estimated pre-Covid-19 poverty line, defined as less than 60 per cent of expected median equivalised income after housing costs in 2020/21 if the crisis had not occurred. Relative poverty reduces in the modelling due to reductions in the median earner income, but this does not capture welfare outcomes effectively in this context as the general price level is not expected to fall.
IPPR’s new Future Welfare State programme, launched last month, will listen to the thoughts and views of a wide range of individuals and groups across the country, seeking to understand the welfare state as experienced by the people who use it and work in it all over the country. We will draw on the experiences of a diverse charity network and our findings will be shaped by an advisory group whose members have been drawn from across society.
Read about the programme here https://www.ippr.org/future-welfare-state/
Its first report, Decades of Disruption: New social risks and the future of the welfare state, can be read and downloaded here https://www.ippr.org/research/publications/decades-of-disruption
Topics examined will include the future of income security, youth employment, personal debt, community resilience and re-evaluating the status and provision of care - both paid and unpaid. It will also take a longer lens on spending priorities for the welfare state, asking how to maintain spending on 'traditional' welfare priorities while being able to meet the demands presented by 'new social risks'.
Members of the programme’s advisory board include:
- The Rt Rev Rose Hudson-Wilkin MBE QHC, Bishop of Dover
- Kaliya Franklin, disability rights and welfare activist and blogger
- Lord Heseltine, non-affiliated peer, House of Lords
- Chris Naylor, Chief Executive of Birmingham City Council
- Rabbi Alexandra Wright, Senior Rabbi, Liberal Jewish Synagogue
- Dr Johnna Montgomerie, Head of European and International Studies Dept, Kings College London
- Yvonne Braun, Director of Policy, Association of British Insurers
- Joseph Harker, Deputy Opinion Editor, The Guardian
IPPR is the UK’s pre-eminent progressive think tank. With more than 40 staff in offices in London, Manchester, Newcastle and Edinburgh, IPPR is Britain’s only national think tank with a truly national presence. www.ippr.org
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