Almost 700,000 driven into poverty by Covid

A new report says almost 700,000 Britons have been forced into poverty by the Covid pandemic, including 120,000 children.

The report from the Legatum Institute think tank added that a further 700,000 people have been saved from poverty by the measures taken by the Chancellor’s £20 a week boost to Universal Credit introduced in April to help claimants fight the financial effects of the virus.

Below the breadline

Overall 23% of the UK’s population – more than 15 million people – have fallen below the breadline under the measures developed by the Independent Social Metrics Commission.

Commenting on the findings Legatum’s chief executive, Conservative peer Philippa Stroud, said they showed ‘a clear need for a comprehensive anti-poverty strategy to be placed at the heart of the UK’s Covid recovery response’.

Maintain

Along with many other campaigners Lady Stroud has called for the Government to maintain the £20 increase in Universal Credit for a full 12 months after its due end date of April next year. The government has said the situation will be reviewed in January.

The institute figures have been produced by ‘nowcasting’ techniques which look at employment, earnings data and the impact of government policy to produce what it says are up-to-date and robust estimates as official figures for the effect of the pandemic are not due until 2022.

Hardest hit

The report says that the hardest hit groups have been young workers, those in relatively low paid jobs and those working in hospitality and retail. Elderly people have been the least affected.

Of those pushed into poverty, just over half had incomes 25% below the poverty line, 160,000 were between 35% and 50% below and 270,000 had slipped into deep poverty, defined as move than 50% below the poverty line.

Raised

But some non-working claimants who have been receiving the extra £20 have been raised above the poverty line in recent months. Analysis showed 120,000 were single parent families and a further 170,000 were in families where no-one was in work.

It added: “Conversely, there have been significant increases in poverty amongst families that were working prior to the Covid-19 crisis.

These have resulted from job losses and earnings reductions that have tipped them into poverty,”

Impacts

Lady Stroud commented: “Given the well-documented impacts that the pandemic is having on jobs and earnings for families right across the UK, it comes as no surprise that poverty is rising.

“However, our analysis shows that, at a time of crisis, government action can protect many of those who are vulnerable to poverty, but it needs to have the right tools and the right information at its disposal.”

Threatens

That analysis does not include the potential effects of the up-coming cap on benefits which threatens to plunge tens of thousands more households below the breadline in the next few months when their nine month benefits ‘grace period’ ends, potentially leaving them hundreds of pounds a month worse off.

Poverty line

The UK poverty line is set at 54% of the median UK income of around £325 a week for a single parent family with two children, £439 a week for a couple with two children and £239 a week for an elderly couple.

A government spokesman said: “We are wholly committed to supporting people on lower incomes and have paid out more than £100 billion in welfare support this year.

The £20 increase to Universal Credit continues to be in place until the end of March 2021.”