In his address to the Tory Party Conference on Wednesday (October 7), prime minister David Cameron insisted that in order “to make Britain greater”, social problems had to be tackled including the “scourge of poverty”.
But a new report published in the wake of Cameron’s speech (October 8) reveals that the Tory government’s policies – instead of tackling poverty – will in fact greatly amplify it.
The Resolution Foundation, whose current chair is a former Conservative minister David Willetts, found in its analysis that the total number of households who are both in work and below the poverty line will rise by 200,000 to an astounding 2m by the end of the decade.
In 2016 alone, 200,000 children, many of whom come from working households, will be plunged into poverty as a direct result of changes to tax credits and benefits announced by chancellor George Osborne in the summer budget. This figure even takes into account the lauded National Living Wage, set to rise to £9 an hour by the end of the decade.
The number of children in both working and non-working households who will be below the breadline will reach nearly 4m by 2020 – 600,000 more than was projected prior to the summer budget.
Senior economic analyst David Finch at the Resolution Foundation emphasised that the high-profile pay rise for minimum wage workers presented as a ‘National Living Wage’ would not make up for cuts announced in the summer budget.
“The summer budget included a surprise and welcome pay boost to the UK’s lowest earners,” Finch said. “But it won’t be enough to prevent up to 200,000 working households falling below the poverty line as a result of welfare cuts announced alongside it.
Even harder for families
“Many of those looking forward to a pay rise this April will soon learn that those gains will be dwarfed by reductions to tax credits,” he added. “And by weakening work incentives in the benefits system, the government has made it even harder for families to earn their way out of poverty.”
The Resolution Foundation was also highly critical of the way in which the government has scrapped child poverty targets and has changed the definition of poverty altogether.
The employment and welfare reform Bill has withdrawn income as a way to assess poverty and instead will use range of different measures, including educational attainment and the number of children living in workless households.
“Too narrow a focus on incomes has drawbacks when assessing poverty, but removing any focus on incomes makes very little sense,” Finch noted. “The choice of replacement measures appears incomplete and the removal of an income measure is likely to obscure the potential degeneration in the poverty picture we expect over the rest of this decade.
“This matters not just because some measures may capture poverty better than others, but because it has implications for government policy,” he added. “The risk is that the government will do little to improve incomes for the working poor by focusing on worklessness.”
Finch noted that, as the number of people who are in poverty while also working rises, the issue of worklessness has become less and less important in assessing real poverty.
Unite assistant general secretary Steve Turner highlighted too, that work is no longer an antidote to poverty – and that Cameron’s failure to understand this will harm working people the most.
“It is utterly laughable that the Prime Minister is styling his party as the party of working people,” he said.
“These latest figures add to the growing mountain of evidence that it is working people who will suffer most under Tory rule. Cameron says that the only way out of poverty is work.
“How is it, then, that in five years’ time, two million working households will be below the breadline? Most outrageous of all, many of those who will suffer as a direct result of the government’s policies will be children.
“It’s easy for Tory ministers to sit comfortably and slash tax credits that support low-income families whose only options are jobs that offer poverty pay,” Turner added.
“These ministers have never had to choose between heating and eating, and they’ve never known the indignity of working outrageous hours under terrible conditions just to put food in their children’s mouths.
“If Cameron is really interested in fighting the scourge of poverty, he’d support trade unions instead of choking them with legislation,” he went on to say.
“He’d demand that profit-flush companies actually pay their way in tax, and that they pay their workers a true Living Wage. Most of all, he’d reverse the austerity cuts that have not only plunged so many into poverty but have actually been the main driving force behind the slowest economic recovery in history.”