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When work doesn’t pay

Record 7m people in poverty from working families
Ryan Fletcher, Friday, December 9th, 2016

More than 7m people from working families are living in poverty with high rents and insecure tenancies often to blame, a damning new study has found.


The report, carried out by the New Policy Institute and commissioned by the Joseph Rowntree Foundation, also showed that disabled people are increasingly bearing the brunt of poverty.


When the costs of living with a disability are taken into account, half of the 7.4m people – including 2.6m children – living in poverty in the UK are disabled or living with someone who is, the report said.


Despite nationwide poverty levels remaining flat since 2010, the number of people from working households living in poverty has increased by 1.1m, the report found. This means that 55 percent of the 13.5m people living in poverty are now from working families – a record high.


A major contributor for the rise in poverty for working families is insecure and expensive private sector tenancies, the research showed. Over the last decade the number people living in poverty in rented accommodation has doubled to 4.5m.


The study said, “Failures in the housing market are a significant driver of poverty. This is primarily, but not entirely, due to costs.”


The issue was starkest in London and the south east, said the authors, where rising housing costs equated with a poverty rate of 27 per cent – 6 per cent higher than the UK average.


Evictions – particularly from private sector housing – increased nationally by 60 per cent in five years to 37,000 per year, the study showed, whilst mortgage repossessions over the same period have decreased from 23,000 to 3,300.


Of the poorest 20 per cent who live in private sector housing, 73 percent are paying rent that totals more than a third of their income – compared to 50 percent of those renting social housing and 28 percent of people paying mortgages.


Benefit cuts

Benefit cuts are also driving poverty the report found, stating that “increasingly, the social security system does not cover the full cost of essentials for those on low incomes, such as rent and council tax.”


The reduction in the benefit cap is likely to plunge more people into financial hardship, the report said, because 112,000 families are expected to see their income reduced through the cap, up from the 20,000 who have already felt the pinch.


“The UK economy is not working for low-income families,” said Rowntree’s head of analysis, Helen Barnard. “The economy has been growing since 2010 but during this time high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow.


“As it negotiates Brexit, it is vital that the government does not allow its focus to slip from the domestic concerns that make a huge difference to people who are just about managing. This report shows that people on low incomes cannot rely on economic growth and rising employment alone to improve their financial prospects.”


A Department for Work and Pensions spokeswoman said the government is “increasing the national living wage and taking millions of people out of income tax, to make sure it always pays to be in work.”


However head of Unite Community, Liane Groves, said the Tories’ policies were making the opposite true.


“This report shows what the Tories have achieved during their six year austerity campaign — 7.4m people from working households living in poverty,” said Groves. “Nor did the current climate of stagnating wages and rising insecurity happen by accident.


“This government has chosen, and continues to choose, to punish the poorest for their own failed economic policies. It’s time the Tories changed tack by halting sweeping cuts, investing in the economy and embarking on a nationwide programme to build desperately needed public housing.”






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