UK poverty: the facts, effects and solutions in a cost of living crisis
The cost of living crisis is driving disadvantaged households further into poverty. These are the facts you need to know
by: Hannah Westwater, Ella Glover, Isabella McRae
26 Jan 2023
Millions more people are being pushed into poverty because of the cost of living crisis.
Poverty is deeply rooted in the UK, with a decade of cuts meaning millions of families across the country are struggling through financial hardship. Many more are being pushed below the breadline as the cost of living crisis hits low-income households the hardest.
Around 13.4 million people were living in poverty in the UK in 2020/2021, according to the Joseph Rowntree Foundation. That includes 3.9 million children.
The cost of living crisis will worsen poverty rates, with more than one million people expected to be plunged into poverty this winter. Many will struggle to afford the basics to live and rely on food banks and warm banks to survive.
Here we explain the facts and figures, and what the experts say needs to be done to tackle UK poverty for good.
How many people are living in poverty in the UK?
Around 13.4 million people were living in poverty in 2020/2021, according to the Joseph Rowntree Foundation’s annual poverty report. Around 7.2 million people have been going without basics such as meals, showers and heating, and 4.7 million have fallen behind on their bills.
The Trussell Trust saw record numbers of people seeking help between April and September last year, with 320,000 people forced to turn to the charity’s food banks. That is a 40 per cent increase in comparison to the previous year.
According to the latest government statistics, 4.2 million people (6 per cent) were living in food poverty in 2020 to 2021. It includes 9 per cent of all children.
Analysis by the Resolution Foundation predicts that 1.3 million more people will be plunged into absolute poverty over the course of winter, including 500,000 children.
What causes poverty?
Life events, like illness or redundancy, can cause poverty. But it is mostly caused by structural issues, and exacerbated by increasing living costs, creating a cycle that keeps people trapped in hardship.
That can include unemployment and low-paid, insecure work. People who have not had easy access to training or education can struggle to land a secure job, making it harder to escape poverty.
The UK’s welfare system also makes it difficult for those struggling to get a decent income. Social security is not enough for people in work, looking for work or dealing with health issues to avoid poverty, according to the Joseph Rowntree Foundation.
Benefits can be difficult to access, and in some cases mean people risk lowering their income by getting a job. It’s particularly difficult for people dealing with mental health issues like addiction to escape poverty, and people who have been in prison can find it difficult to get a job to support themselves.
How has the cost of living crisis affected poverty?
The £20 uplift in universal credit during the pandemic took some families out of poverty – but this help was taken away as the cost of living rose.
Benefits are set to rise in line with inflation in April, but in the meantime poverty rates are worsening and many are now unable to afford the essentials such as food, hygiene and warmth.
One in four households with children experienced food insecurity in September 2022 – affecting four million children.
The TUC has found one in seven people across the UK (14 per cent) are skipping meals or going without food because they can’t afford the essentials. And over two-fifths (44 per cent) of Brits are having to cut back on food spending.
What are the consequences of poverty?
Poverty drives chronic stress as a result of worrying about how to afford living costs day to day, increases feelings of hopelessness, makes it more difficult to access healthcare and lowers self esteem.
That stress – and difficulty affording nutritious food – also means those living in poverty are more likely to experience health problems, while finding it tougher to get treatment. This is worsened by soaring fuel bills amid the energy crisis.
People in poverty are also less likely to have strong social support networks around them because all their energy has to be used to survive with few resources. This puts them at higher risk of homelessness and addiction problems.
The life expectancy for people living in the most deprived areas of England is at the lowest rate since 2011. Between 2018 and 2020, women were expected to live for nine fewer months and men for four fewer months than they had been in 2011 to 2013. In England and Scotland, the death rate from Covid in the most deprived areas was more than twice that of the least deprived areas.
What is the poverty line and how is UK poverty measured?
Households are below the poverty line if they earn 60 per cent of the median earnings at the time. However the figures are adjusted according to how many people are in a household since their income needs will differ.
The Minimum Income Standard identifies what incomes different households require to reach a minimum socially acceptable living standard. You can calculate how much you need to earn for a decent standard of living using the Joseph Rowntree Foundation’s calculator.
For example, a two-parent family with two children in primary school currently needs to earn £42,418 between them so that your income, after tax and benefits adjustments, is enough to cover what is needed for a minimum decent standard of living.
The UN measures poverty in a different way. Its definition of absolute poverty includes people who cannot afford basic essentials like food, clothing and housing. This measure makes it easier to compare conditions between countries – as the minimum income to keep up with basic living standards differs depending on where you are.
The Social Metrics Commission calculates poverty taking into account costs like childcare and expenses linked to living with a disability. They also look at liquid assets, like savings and shares, that could act as a financial safety net.
Who is most affected by poverty?
There is a high poverty rate among families with children due to a combination of extra costs and childcare responsibilities. Almost 40 per cent of children in a lone parent family are in poverty.
Disability also significantly increases someone’s chances of falling into poverty. It means extra living costs, care costs and difficulty finding suitable work.
Ethnic minorities face high poverty rates in the UK, with 46 per cent of children in Black, Asian and minority ethnic (BAME) households affected compared to 30 per cent of all kids.
Around half of all people in households headed by someone of Bangladeshi ethnicity were in poverty in 2020/21, according to the Joseph Rowntree Foundation. This figure was over four in ten for people in households headed by someone of Pakistani or Black ethnicity. This is over twice the rate of people in households headed by someone of white ethnicity.
Poverty significantly impacts migrants too. The government’s no recourse to public funds policy locks people out of the social security system depending on their immigration status. It drives high poverty rates and puts them at an elevated risk of homelessness.
Gender affects poverty, with three million women in low paid jobs compared to 1.9 million men. Two-earner families where one partner works full time and the other works part-time are twice as likely to be pulled into poverty now compared to two decades ago, according to IPPR.
How does debt affect poverty?
Poverty can often cause a vicious cycle of debt. People on low incomes can be forced to rely on loans and credit to get by, racking up interest and arrears over time which amounts to more than they can afford to work their way out of. The UK’s debt is rarely shared equally, affecting poorer people more than it does the wealthy.
Household debt was on the rise even before the pandemic and cost of living crisis . Seven million people were stuck in problem debt in 2018, according to the Centre for Responsible Credit, handing out more than a quarter of their income to pay off debt.
The UK’s poorest households accounted for nearly half of those hit by debt and were paying out three times more than indebted households with the highest incomes. It was down to low pay, cuts to the welfare system and insecure work, according to debt campaigners Jubilee Debt, accusing lenders of exploiting the desperation of people in poverty by charging extremely high interest rates.
What would it take to end poverty in the cost of living crisis?
Most campaigners agree reforming the welfare system is key to cutting UK poverty rates.
The five-week wait for a first universal credit payment has been shown to push people deeper into debt, driving food bank use and rent arrears. The two-child limit, which restricts the amount a family can receive in benefits to the first two children in a family should be scrapped too, experts say, if struggling families are to have enough money to live on. That’s along with the benefit cap, limiting the total amount people can receive regardless of what their full entitlement is.
In March 2020, the government introduced a £20-a-week increase to universal credit payments in response to the Covid-19 crisis. But ministers cut the benefit back to pre-Covid levels in October 2021.
Crucially, the government did not give this increase to people on so-called “legacy benefits” like employment and support allowance. The DWP pays these to people whose disabilities make it difficult for them to work. Campaigners want the increase to be extended to them to cover higher living costs as well as pandemic expenses.
But without long-term reforms the government will face a perpetual choice between paying “constantly rising” social security bills or “allowing the number of working families in poverty to increase unchecked, as is currently the case,” according to their report.
Peter Matejic, chief analyst at the Joseph Rowntree Foundation said: “Governments are far from helpless and none of this is inevitable. The £20 uplift was the right political choice which clearly made a huge difference during the pandemic and may have prevented what were tremendously difficult years becoming a complete disaster for families around the UK.”
He said the relief provided by this measure, taken away just as the cost of living crisis hit, demonstrated that the standard rates of social security are “fundamentally not fit for purpose”, with millions now going without essentials such as food, heating and cleanliness.
“These problems can be solved,” Matejic added, “but it takes the political will and imagination to tackle multiple injustices at once – and all of us need a government and an economy that works for us when times are hard.”
Your local vendor is at the sharp end of the cost-of-living crisis this Winter. Prices of energy and food are rising rapidly. As is the cost of rent. All at their highest rate in 40 years. Vendors are amongst the most vulnerable people affected. Support our vendors to earn as much as they can and give them a fighting chance this Winter.