‘One in eight workers in poverty’

A record high of 55 per cent of people in poverty are in working households, according to a new report.

Monitoring Poverty and Social Exclusion 2016, an annual state of the nation report written for the independent Joseph Rowntree Foundation by the New Policy Institute, says that 13.5 million people, 21% of the UK’s population, are living in poverty, a figure that includes one in eight workers.

It adds that, since 2010/11, when the economic recovery began, in-work poverty has increased by 1.1 million people.

The report says the rise is being driven by the UK’s housing crisis, particularly high costs and insecurity in the private rented sector (PRS), with the number of people living in poverty in the PRS doubling in a decade. Almost three quarters (73%) of people in the bottom fifth of the income distribution and living in the PRS pay more than a third of their income in rent. This is compared to 28% of owner occupiers and 50% of social renters with similar income levels.

It says half of children living in rented homes (46% in the PRS and 52% in the social rented sector) live in poverty and that half of those in poverty are disabled or living with a disabled person. The report also states that insecurity for renters has risen since 2010, with the number of evictions by a landlord rising from 23,000 in 2010/11 to 37,000 in 2015/16. Over the same period, mortgage repossessions have fallen from 23,000 to 3,300.

More than half of people in poverty in England live in London and southern England (the East, the South East and the South West), and London has the highest poverty rate at 27%, 6% above the UK average.

Helen Barnard, Head of Analysis at the Joseph Rowntree Foundation, said: “The UK economy is not working for low-income families. 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. Families who are just about managing urgently need action to drive up real-term wages, provide more genuinely affordable homes and fill the gap caused by cuts to Universal Credit, which will cost a working family of four almost £1,000 per year.”

The report calls on the Government to reverse cuts to the Work Allowance element of Universal Credit, end the freeze on working-age benefits so that they can rise in line with inflation, create a targeted plan to support low-wage sectors like retail, hospitality and care,  cut costs for renters and build more affordable homes and support regional growth.

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