The IPPR thinktank shows the UK’s poverty rate among working households last year reached a record high for this century.
Working people have come under increasing financial pressure during the last 25 years from soaring property prices, private sector rent hikes and crippling childcare costs.
An increase in relative poverty from 13% in 1996 to 17.4% of working households in the year to March 2020 illustrates the combination of low wage rises and the spiralling cost of living. Since 2010 the situation has deteriorated steadily to leave working families at the highest risk of falling into poverty since the welfare system was at its most adequate in 2004.
The report said four factors lay behind the growth in poverty:
Spiralling housing costs among low-income households.
Low wages and modest pay rises.
A social security system that has failed to keep up with rental costs.
A lack of flexible and affordable childcare.
Families unable to buy a home who rent from private landlords are among the worst affected following reforms to the benefits system that rewards private landlords, the IPPR said. House price growth was a key factor in driving poverty higher as more families came to rely on renting privately. Housing costs for private tenants have jumped by almost 50% above the general rate of inflation over the last 25 years. By 2025, one in four households will rent their home from a private landlord.
“Much of the multibillion pound benefits bill supports housing costs in the private sector, with any increase effectively channelled into the pockets of private landlords,” the report said, adding that £11.1bn of housing welfare payments went to private landlords last year.
Black, Asian and disabled tenants are disproportionately likely to face discrimination looking for a home, and to end up inhabiting shoddy, unsafe and unsuitable accommodation, according to the housing charity Shelter. High housing costs – and the failure of housing allowances to keep pace with rents – meant that for a fifth of people housing was a source of stress, while 14% admitted they cut back on food or fuel to prioritise paying the rent or mortgage. Shelter said the pandemic had shone a stark light on the state of Britain’s housing, with poverty and poor and overcrowded accommodation recognised as a key factor in many areas where Covid infections and deaths were highest.
Shelter’s survey found:
Black and Asian people were almost five times more likely to experience discrimination when looking for a safe, secure and affordable home than white people (14% versus 3%). More than one in 10 disabled people, and 7% of those earning under £20,000 a year, found it hard to find a safe and secure home.
Twelve per cent of black people and 14% of Asian people reported safety hazards in their homes, such as faulty wiring and fire risks – compared with 6% of white people. Fourteen per cent of black people and 16% of Asian people reported living in a property with significant defects with walls or roof, compared with 8% of white people.
Overall, 56% of black people were affected by the housing emergency, compared with 49% of Asian people and 33% of white people. More than half (54%) of disabled people were affected (compared with 30% of non-disabled people) and 58% of single parents.
Polly Neate, the chief executive of Shelter, said: “Decades of neglect have left Britain’s housing system on its knees. A safe home is everything, yet millions don’t have one. Lives are being ruined by benefit cuts, blatant discrimination and the total failure to build social homes.”
Working poverty rates among families with three or more children were the worst of any family group, up more than two-thirds over the past decade to reach 42%, though single parents and couples with a single earner also suffered sharply declining disposable incomes.
Clare McNeil, the head of the IPPR’s Future Welfare State programme, said, “It has trapped us in a vicious circle which, unless broken, will condemn us either to a constantly rising social security bill or to ever-increasing poverty among working households.”
The children’s commissioners of Wales, Scotland and Northern Ireland have written to the UK government calling on it to scrap the controversial two-child limit restricting the amount that larger families can receive in social security benefits.
In the joint letter to the work and pensions secretary, Thérèse Coffey, the three commissioners – respectively Sally Holland, Bruce Adamson and Koulla Yiasouma – argue the policy is a “clear breach of children’s human rights”.
“The tax and benefits system is harming children’s lives and prospects and that immediate action is required to significantly reduce rates of child poverty.”
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