Number of people in poverty fell during first year of pandemic
Incomes for poorer families rose in 2020/21 thanks to state support, but experts say the Universal Credit cut makes their prospects ‘much bleaker’.
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Your support makes all the difference.The number of people in the UK living in poverty fell during the first year of the coronavirus pandemic, figures show, but experts warn that the axing of Government support and rising inflation are pushing many back over the brink.
A total of 13.4 million individuals were estimated to be in relative low income – below 60% of average household income – in the year to March 2021.
This was down from a record high of 14.5 million the previous year, but higher than the equivalent figure of 13 million a decade earlier in 2010/11.
As millions struggle with spiralling costs, we know the picture will worsen
The number of children living in poverty also fell in 2020/21, down year on year from 4.3 million to 3.9 million, meaning some 400,000 children were pulled out of poverty.
The figures, published by the Department for Work and Pensions, show that average household income fell during the first year of the pandemic, from £478 a week in 2019/20 to £472 in 2020/21, after housing costs.
But poorer households actually saw their incomes rise, from £192 a week to £200.
Jonathan Cribb and Thomas Wernham, from the Institute for Fiscal Studies (IFS), said: “This is almost certainly driven by the substantial increases in the generosity of Universal Credit and other benefits that poorer households are particularly reliant upon for their incomes.
“This growth comes in stark contrast to the very low income growth for poor households in prior years – which averaged only 0.5% between 2011 and 2019.
“However, with the end of the temporary uplift to Universal Credit in autumn of 2021, and rising inflation meaning benefits are not keeping up with inflation currently, the prospects for lower income households in 2021–22 and 2022–23 are much bleaker”.
They added that “it is a testament to the support provided by Government through the furlough scheme and other forms of economic support that average incomes did not fall by more”.
IFS director Paul Johnson tweeted: “Household incomes held up incredibly well during the pandemic despite the deepest economic contraction in 100+ years. Incomes of the poorest actually rose.
“A tribute to the power of state support. But not a signal that govt can always protect us from becoming poorer.”
The estimated proportion of UK children living in relative poverty in 2020/21 after housing costs was 27%, while the equivalent figure for all UK individuals was 20%.
At 3.9 million, the number of children in poverty in 2020/21 was still 300,000 higher than in 2010/11.
Child Poverty Action Group said the Government’s decision to cut Universal Credit in October will have pushed many children back below the poverty line.
The charity’s chief executive, Alison Garnham, said: “Today’s figures show that Government has the power to protect children from poverty. But in a week when the Chancellor made clear he was comfortable with his choices and the Prime Minister claimed child poverty had been left out of his plan for the country ‘by accident’ it looks like ministers have turned their backs on low-income families.
“Many of the children who were lifted out of poverty by the £20 increase to Universal Credit have already been forced back over the brink by the Government’s actions.
“And as millions struggle with spiralling costs, we know the picture will worsen. Government must step in to support hard-pressed families by increasing benefits by 8% to match inflation”.
Her comments were echoed by Action For Children, which said “the Treasury’s relative inaction to help families on low incomes in today’s cost-of-living crisis is likely to see any progress lost and child poverty climb again”.
Imran Hussain, director of policy and campaigns, said: “Unless the Government chooses to shield them now by protecting benefits from rising inflation, it will fail on its manifesto pledge to cut child poverty and millions of families will continue to face years of miserable hardship”.
Some 7.9 million working-age adults were estimated to be living in poverty in 2020/21, down slightly from 8.1 million in the previous year.
The estimate for pensioners was 1.7 million, down from 2.1 million.
Comparable figures for UK households with below average income began in 2002/03.
The landscape now is vastly different, and it is right that our focus has shifted to filling the record number of vacancies
The Department for Work and Pensions said the data should be treated with caution, especially when compared with previous years, due to changes in data collection during lockdowns, which affected the sample size and composition.
A Government spokesman said: “Latest stats show there were two million fewer people in absolute poverty after housing costs than in 2009/10, and 600,000 fewer compared to 2019/20. These figures reflect the temporary emergency support we provided during the pandemic.
“The landscape now is vastly different, and it is right that our focus has shifted to filling the record number of vacancies as we know that work is the best and most sustainable route out of poverty.
“This is backed up by over £22 billion of targeted investment to support low-income households.
“We have made permanent changes to Universal Credit that mean claimants in working households are £1,000 better off on average, cut fuel duty by 5p a litre and set out our £9.1 billion energy rebate.
“This support is all in addition to a rise in the minimum wage to £9.50 from tomorrow (April 1) and cutting national insurance for more than 30 million people from July.”