If the candidates to be prime minister have an eye on what the public cares about, they will know that the cost of living is the number one issue.
None more so than for the seven million low-income families already going without essentials such as a warm home, basic toiletries or enough food, according to a recent JRF survey. Just let that sink in for a moment: that is the equivalent of every household in the North of England.
Two million of those households were in deep hardship—far from choosing between heating and eating, this group was going without both. With another massive hike to energy prices on the way and inflation almost into double figures, this will be the most immediate challenge facing our next Prime Minister. It is essential they get to the root of the problem, and it has deep roots, as a new JRF report on deepening poverty in the run up to the pandemic reveals.
Households in very deep poverty have an income of less than 40 per cent of the median, as opposed to the 60 per cent threshold that defines the standard poverty line. Over the past 20 years, the headline rate of poverty has been pretty stable, but dig beneath the surface and the number of people in very deep poverty has soared. Warning lights have been flashing for a while: rocketing foodbank use, rising homelessness and increasing rates of malnutrition in hospitals. By the eve of the pandemic, 6.5m people were in very deep poverty, an increase of 1.8m since 2002/03. That leaves people facing the grim choice of getting into debt to cover the bills, falling into arrears or deciding which of life’s essentials to go without. Sleepless nights worrying about the bills and living with the stress and shame of being unable to afford to shower or relying on charity to feed your family takes an untold mental toll.
But not only has the rate of very deep poverty increased, the demographics of those affected have changed. Over the last 20 years, large families (with three or more children) became much more likely to have a very low income, as did lone parents. They were joining in ever greater numbers the people in workless households and from some ethnic minority backgrounds, who have long been overrepresented in very deep poverty. Where families have disabled members, their risk of having very low income is high, and has increased sharply.
One consequence of this is more children growing up experiencing great hardship. Looking at access to the barest of essentials—enough food, a warm home, keeping up with bills—the same groups are much more likely to be going without. Take for example people in lone parent families. Even before the pandemic they were three times more likely to be behind on bills or living in a cold house, and five times more likely to be unable to afford to eat properly than couples with children. People in large families were twice as likely to going without these basics than people in smaller families with children.
Far from choosing between heating and eating, people in deep hardship were going without both.
So, what is at the root of this deepening hardship? One clear culprit is a decade of cuts and freezes to benefits, some of which have explicitly targeted these groups. Rather than social security protecting people from poverty, when we compare the basic rate of benefits to the very deep poverty line, it is notable that many family types do not even clear the low bar of very deep poverty if they have to rely on benefits. In particular, people with no children or three or more children fall short. Policies such as the household benefit cap or debt deductions (for example to repay an advance to cover the five week wait for a first Universal Credit payment, or past overpayments) mean the amount actually received can be lower still, making a bad situation even worse.
This period of social security retrenchment has been followed by a pandemic that dragged more low-income families into debt and arrears and now a cost-of-living crisis that has led to millions going without essentials.
The government’s welcome Cost of Living Support Package is starting to reach families on means tested benefits, but it will only offer brief respite, not least because the next energy price hike is likely to be around £600 higher than previously expected. In addition, energy is not the only essential going up, with food also putting pressure on budgets, especially as parents navigate the long summer holidays.
So far, the contenders to be our next prime minister have talked about tax cuts as a way to ease the cost-of-living, but this is not an effective way to target help at those that need it most. A holiday from VAT on energy bills would favour those that use the most energy, rather than those that are struggling most to pay, while only £1 in every £7 spent on scrapping the national insurance rise would go to those in the bottom half of the income distribution. Instead, they must stand ready to ratchet up the targeted help to low-income families.
Ultimately, we need to stop lurching from emergency to emergency and from crisis payment to crisis payment. Instead, our next prime minister must set about rebuilding our eroded social security system so it provides genuine security.
