As the Chancellor stands to make his Budget speech on Wednesday, there are two facts that should be at the front of his mind. First, that poverty in the UK is too high and has been for decades and, second, that the Government can do something about it.
These facts are important right now. Before the pandemic, the work of the Social Metrics Commission, of which I am Chair, showed that 2.4 million people in the UK were in deep and persistent poverty. These people were more than 50% below the poverty line and had been there for at least two of the last three years. It also showed that, despite the efforts of various governments, the overall rate of poverty in the UK had been pretty much static for the last 20 years.
This situation has now got worse. We know that the impacts of the pandemic – including health, economic, and social – have hit those on the lowest incomes hardest. Legatum Institute research suggests that, as a result of the economic fallout of the pandemic, 300,000 more people were in poverty in Winter 2020 than would have been the case had the pandemic not occurred. As the support provided by increases to benefits, the furlough scheme, and various business support schemes necessarily begins to be unwound, the reality is that this figure is likely to continue to rise over the coming months. As an example of the scale of the challenge, the Institute’s work also showed that, by increasing the support available through Universal Credit through the pandemic, Government action insulated more than 600,000 people from also moving into poverty. As such, if this support were to be unwound, we would expect a significant rise in poverty.
This risks more families and communities being left behind and, together, all of this means that as we look forward to a life with fewer restrictions, if we are serious as a country about building back better and meaningfully delivering levelling up, we must look to tackle poverty.
Whilst poverty in the UK is the responsibility of all of us, the Budget provides a vital opportunity for the Government to kick-start its levelling up agenda, and the Government’s recent actions provide a starting point for what could make a difference. The first step is to take forward its 2019 commitment to developing new experimental statistics on poverty. Any meaningful attempt to tackle poverty will require an understanding of the issue, including who is impacted and the experiences of poverty that they have. But the UK does not currently have an official measure of poverty, so policy makers are left feeling in the dark, unable to fully understand the issue or the extent to which their interventions are having an impact.
That is why it is so important to take forward the new measure to which the Government committed itself. Without it, it will be impossible to develop the second step of what is needed: a comprehensive anti-poverty strategy. Here, comprehensive is the key word. Of course, much can be done through a strong economy, with more jobs and increasing productivity leading to the better paid jobs that can tackle financial hardship. But the strategy must be deeper than this; tackling the resilience gap that we have observed amongst people in poverty. This would mean addressing poor educational and health outcomes as well as supporting community and family resilience. It would also mean ensuring that the benefits system provides the safety net that some families need. Recent data from the Social Metrics Commission showed that 42% of people in families where disability is a key factor are in poverty. This is not a sign of a benefits system that is adequately supporting a group in society who can clearly be seen to have been left behind.
This all shows that poverty, and by implication levelling up, is complex. There is not an easy answer, and all of us have a part to play, but as the support through the pandemic has shown, Government action can make a meaningful difference. Building on this to improve outcomes across the range of areas needed will take the focus of departments across Whitehall and, importantly, also rely on the actions of local government, communities, businesses, and those in poverty themselves. This means that the Chancellor cannot be expected to outline a full anti-poverty strategy at the Budget. But he can make a start. If the Government is serious about levelling up, it must be clear about what it is trying to achieve. Recommitting to a new robust measure of poverty, as the centrepiece of a drive to level up the country, is as good a starting place as any.