Modern Britain: the sixth-richest economy in the world, with 12 million people living in absolute poverty.
The latest official figures showing the biggest increase in poverty in 40 years have been described by charity leaders and politicians as both “shocking” and “horrifying” in their confirmation of the devastating impact of the cost of living crisis.
It is a snapshot that will trouble Rishi Sunak in an election year, as he attempts to paint Britain as a nation on the mend, having been through the worst of the inflation shock triggered by the Covid pandemic and Russia’s war in Ukraine.
The consequences for UK households are clear. Absolute poverty, when households have less than 60% of the median income in 2010-11 after adjusting for inflation, grew for a second year in a row.
With an increase of 600,000 in the year to March 2023, the figures suggest a population larger than that of Sheffield have been pushed below the breadline of the government’s preferred measure of poverty. Half are children, with the total in absolute poverty now 3.6 million – enough to fill almost 130,000 classrooms.
Given the sharpest increase in inflation for 40 years, significantly outpacing pay growth for the average worker, the Institute for Fiscal Studies thinktank suggests it is hardly a big surprise that this parliament is on course to be among the worst in modern history in terms of growth in living standards.
Government support worth more than £100bn over the past two years helped soften the blow, curbing the rise in poverty through £3,400 worth of help for the average household over that period. Ministers argue the measures prevented 1.3 million people from falling into poverty.
However, charities have repeatedly said the help has been insufficiently targeted at the poorest in society, who bore the brunt of the inflation shock because they spend disproportionately more of their incomes on energy, food and basic essentials, the prices of which have increased most.
Research from the New Economics Foundation shows the sharpest rise in poverty levels has come in the poorest areas of the country. Child poverty has risen six times faster in the most deprived areas compared with the richest, the thinktank found, while 19 out of the 20 local authorities with the highest increases in child poverty were in the north-west of England and Midlands.
Even before the cost of living crisis, poverty levels were already high after deep cuts to benefits in the Conservatives’ post-2010 austerity drive. Studies have shown a clear link between Tory welfare changes and rising poverty, orchestrated in the name of cracking down on “shirkers” on the dole to encourage people to work. This is a position Sunak is hardly in a hurry to abandon.
Meanwhile, a decade of flatlining wage growth has left 1.6 million more people in relative poverty in a working household than in 2010, amid a worrying breakdown in the traditional routes out of destitution through employment.
Labour described the figures as “horrifying”, arguing that households were paying the price for the Tories crashing the economy. After Tony Blair promised in 1999 to eradicate child poverty within 20 years, it is clear that Labour – should it form the next government – will have a big job on its hands to make up for lost time.
However, critics say Keir Starmer lacks seriousness when it comes to tackling the problem, having insisted that his party would keep the Tories’ controversial two-child benefits cap – a policy academics describe as “poverty producing”.
Instead the leader of the opposition, and the prime minister, are focused on improving Britain’s growth potential as the most powerful way to help struggling households get back on their feet. However, most forecasters think economic growth will remain tepid at best for some time to come, and expect it will take several years for living standards to return even to pre-pandemic levels.
For whoever wins the next election, tackling the alarming levels of poverty will be a serious challenge.
