Poverty Strategy Commission: Interim Report Press Release

Interim Report press release – published 5^th September 2023

Commission calls for a new approach to tackle persistently high levels of poverty

• The cross-party Poverty Strategy Commission has identified a “missing” £36 billion in resources* needed to eradicate poverty in the UK.
• Poverty rates remain stubbornly high, at between 21% and 24%, since the early 2000s. One in three children live in poverty and nearly one in ten people (7%) live in deep poverty.
• Commission says poverty in the UK is a whole-society issue, and must be underpinned by a comprehensive, sustainable and fair social contract.

The Poverty Strategy Commission, an independent, cross-party group Chaired by Baroness Stroud, has today (5^th September 2023) published its first report, “A new framework for tackling poverty”, highlighting the scale of the resources gap that must be closed if poverty is to be successfully alleviated in the UK. The “missing” £36 billion is equal to an increase in resources of £6,000 a year for each of the six million families living in poverty.

It highlights that action is needed as reductions in poverty made since the turn of the century have now started to be reversed:

• In 2000-01, pensioners faced a poverty rate of 18%. By 2014-15, this had fallen to 9%, but had risen again to 12% in 2019-20.
• Although poverty rates for lone-parents fell by 14 percentage points between 2000-01 (61%) and 2013-14 (47%) progress has since stalled, with the rate rising to 52% by 2019-20.
• 6 million more people were in deep poverty in 2019-20 (that is, more than 50% below the poverty line**) than in 2000-01.

The Commission’s research highlights that the cost-of-living crisis is also contributing to this worsening picture, with private renters living in poverty spending close to half (47%) of their net income on housing costs and families in poverty spending 16% of their household net income on childcare, compared to 7% for those not in poverty.

Baroness Stroud, Chair of the Poverty Strategy Commission, said:

“The Commission’s rallying cry is this: together we can tackle poverty. The status quo is unacceptable but not inevitable, as the work of the Commission shows.

“We can make a once-in-a-lifetime impact on poverty in the UK if all key actors play their part. Today’s report is the first step in setting out a plan for how this can become a reality.”

Today’s report sets out the need for significant and sustained action from businesses, civic society, individuals, and families in poverty themselves, as well as action from central, national, and local governments. It recommends the creation of a comprehensive, sustainable, and fair social contract.

The Commission’s research shows that making headway in tackling poverty at a societal level means a focus on incomes alone will not be enough. Beyond the cost-of-living impacts, financial resilience, improved mental and physical health, better qualifications, more stable families and stronger communities and better labour market opportunities are all important ways in which poverty can be tackled. The report analyses the impact of different approaches to addressing this:

1. An increase in net income (earnings or benefits): increasing earnings by 5% for people in poverty would mean the number in poverty falls by 515,000; increasing benefit awards by 5% for people in poverty could see a reduction of 725,000 people in poverty.
2. An increase in liquid assets. A family in poverty may not be able to save or accumulate assets, however, saving in good times can insulate them against future shocks. Ensuring that people build up savings buffers before they are in poverty could reduce the numbers in poverty by 415,000.
3. A reduction in costs. A fall in the costs of housing, childcare and disability can help to reduce poverty. Lowering housing costs by 5% for people in poverty could reduce poverty numbers by 355,000.
4. Improving the lived experience. Enhancing relationships and networks; education and qualifications; physical and mental health; financial capability; and labour market outcomes can affect the experience of poverty and the ability of people to create their own pathway out of poverty. For example, ensuring that everyone in poverty has at least some basic formal qualifications could reduce the number of those in poverty by 115,000.

The report “A new framework for tackling poverty” sets out a range of analyses, like those illustrated above, showing how changes to incomes, assets and debt, costs, and the lived experience of people in poverty could drive significant reductions. It also emphasises the importance of developing a comprehensive, sustainable and fair social contract, to underpin any effective poverty alleviation strategy. The Commission believes that where all parties are upholding their part of the social contract, no-one should be in poverty. For example, this would mean that:

• Those working as much as expected by the new social contract, should not be in poverty;
• Those that the new social contract suggests should not be expected to work (because of disability or caring responsibilities), should not be in poverty;
• Pensioners who have contributed as much as required by the new social contract in their working lives, should not be in poverty; and
• No-one should be in deep poverty.

Creating and articulating a new social contract will require government to bring together a range of views on the balance of responsibilities between different parties. However, adopting even these topline principles would mark a significant divergence from the way policy is currently made.

David Laws, Schools Minister 2012-2015, and Executive Chairman Education Policy Institute, commented:

“The reduction in UK pensioner poverty over the last 20 years demonstrates that high rates of poverty are not inevitable and that concerted action by government and society can reduce poverty significantly.

“Recent trends in poverty are, however, disturbing – child poverty in the UK is shockingly high, and deep and persistent poverty has risen significantly.

“Poverty matters not only because it ruins lives but because it damages opportunity and social mobility. Societies with high income inequality tend to be those where being born into poverty becomes a life sentence.”

Stephen Timms MP, Chair of the Work and Pensions Select Committee, added:

“For too long, politics has been used to distract attention from the poverty around us in the UK.  The Commission’s work has shown the potential for consensus around a fresh approach to tackling poverty, across political lines, amongst experts and with people in poverty themselves.

“This new approach requires a new social contract, creating a framework within which to eradicate deep poverty in the UK, and to reduce overall poverty significantly and sustainably.”

Helen Barnard, Director of Policy, Research & Impact, The Trussell Trust, said: 

“Increasingly, families on the lowest incomes are being forced to the doors of food banks to get by. These findings make it clear that poverty is not an isolated problem but rather a whole-society issue that can only be addressed with comprehensive, sustainable, and equitable solutions.

“No one should have to experience poverty and hunger. If we are to end the need for food banks, we need action from government, businesses, civil society and communities themselves. That must include a social security system that’s accessible, easy to navigate and ensures that people’s core needs are met.”

Miatta Fahnbulleh, Managing Director of the New Economics Foundation, added:

“Everyone in 21st century Britain should be able to afford the basics they need to avoid poverty. It’s shameful that instead millions of families are on the edge of destitution.

“In recent years, we’ve made little progress in tackling the causes of poverty: low wages, an inadequate social security system and sky-rocketing housing costs. As the Commission shows, the solutions are there to tackle these issues – what we need now is the collective will.”

The Commission’s Final Report, to be published in early 2024, will set out a range of interventions and actions for business, civil society, people in poverty themselves and central, national, and local governments.

Notes:

* This £36 billion is not a spending ask of government or business. Increases in resources can come via a range of routes including reduced costs, increased working hours, improved health, greater family stability, higher productivity, and reduced debt. As well as reducing poverty, many of these would simultaneously improve economic growth and benefit the Exchequer.

** The report uses the measurement of the poverty line put forward by the Social Metrics Commission. More information is available here.