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: Isabella McRae, Hannah Westwater, Ella Glover
27 Apr 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 14.4 million people are living in poverty in the UK in 2021/2022, according to the government’s official statistics. That is around one in five people. Around 4.2 million children are affected.
These harrowing figures were captured before the cost of living crisis took its toll on the country, driving hundreds of thousands more people into poverty.
Many people are struggling to afford the basics to live and rely on food 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 14.4 million people were living in poverty in 2021/2022, according to the government’s annual ‘households below average income’report.
This includes 4.2 million children, which is almost one in three (29 per cent). There are also 8.1 million working-age adults and 2.1 million pensioners living in poverty.
Over the last decade the number of children living in poverty has risen by around 600,000, and the number of pensioners living in poverty has risen by around 500,000.
Overall poverty rates in the UK have been fairly persistent for the last three decades, showing poverty in the UK is deeply entrenched.
There are high rates of poverty for people in work too. Over a half of people in poverty lived in a family where at least one adult is in work (54 per cent). Over two thirds of children in poverty lived in a working family (71 per cent).
The cost of living crisis means the current poverty figures are likely to be much higher. It is driving hundreds of thousands more people into poverty.
The Trussell Trust saw record numbers of people seeking help between April 2022 and March 2023, with more than 760,000 people forced to turn to the charity’s food banks for the first time. That is more than the population of Sheffield.
These figures represent just a fraction of the situation. Many more people cannot afford food and are sacrificing meals and going hungry, without going to a food bank.
A total of 9.3 million adults experienced food insecurity in January 2023, the Food Foundation reports. Around 3.2 million adults reported not eating for an entire day because they could not afford food.
Analysis by the Resolution Foundation predicts that 800,000 more people will be plunged into absolute poverty over the course of 2023/24 Child poverty in 2027-28 is forecast to be the highest since 1998/99, with 170,000 more children in poverty than in 2021/22.
What causes poverty?
Life events, like illness or redundancy, can cause poverty. But it is mostly caused by structural and systemic 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.
Universal credit claimants are £35 of the money needed to afford essentials each week, the JRF and Trussell Trust have found. This means they do not have enough money to survive.
Benefits can also 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 cost of living crisis is having a substantial impact on poverty rates in the UK, with hundreds of thousands of people being plunged into poverty.
The Office for Budget Responsibility (OBR) has forecasted that living standards will fall by 5.7 per cent during the 2022/23 and 2023/24 financial years. That is the largest two-year drop in living standards since records began.
The £20 uplift in universal credit during the pandemic took some families out of poverty – but this help was taken away in October 2021, just as the cost of living crisis started hitting people’s bank accounts.
Benefits rose in line with inflation in April 2023, but it is still not enough to cover the cost of living.
Universal credit claimants are £140 short of the money needed to afford the essentials each month even after benefits increase, according to recent analysis from the Trussell Trust and JRF. As a result, people are struggling to afford food, heat their homes and pay rent.
Benefits claimants are 6 per cent worse off in real terms than they were in 2019, according to the Institute for Fiscal Studies (IFS). Find out more here.
What are the consequences of poverty?
Poverty impacts people’s mental and physical health, putting further pressure on an NHS which is already at “breaking point”. The NHS Confederation warned last year that “there is a risk of devastating and long-lasting impacts on people’s health and wellbeing” as a result of the cost of living crisis.
Poverty is linked with malnutrition, obesity, eating disorders and depression. This in turn impacts the demand for NHS services to treat the acute and chronic conditions caused by hunger and unhealthy diets. NHS spending on obesity is expected to rise to £9.7 billion per year by 2050 and malnutrition is estimated to cost the NHS £19.6bn per year.
Poverty drives chronic stress as a result of people 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.
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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.
Scope has found disabled households now face, on average, extra costs of £975 per month. This means disabled households would have to find an average of almost £12,000 more a year to achieve the same standard of living as non-disabled households.
A third of people living in a household with a disabled child were living in poverty (33 per cent), according to government statistics. That is the highest level since 2008/09.
Ethnic minorities face high poverty rates in the UK. In 2021/22, poverty rates were highest for people in households where the head of the household is from the Pakistani or Bangladeshi ethnic groups and lowest for those from White ethnic groups.
Around half of all people in households headed by someone of Bangladeshi or Pakistani ethnicity were in poverty in 2021/22, according to the Joseph Rowntree Foundation. 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?
Reforming the welfare system is key to cutting poverty rates in the UK.
Benefits are not enough to cover the cost of living. More than 90 charities and organisations are currently calling on political leaders to guarantee that people will be able to afford the basics they need to live.
“We must remind political leaders that, whether they like it or not, this is driving millions of people into hardship and it is not a problem that will go away without bold and concerted action,” Katie Schmuecker, the principal policy adviser at JRF, said.
“It is time to build a system that is needs-tested – where the support people get is linked to the actual costs of essentials to meet basic needs rather than the baseless system people have to suffer now.”
Sabine Goodwin, coordinator at the Independent Food Aid Network, added: “Guaranteeing people can afford essential costs shouldn’t be in question. We need a social security system that’s fit for purpose and ensures people can live and thrive whether they can or can’t work.”
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.
Increasing wages across the board – as well as strengthening the welfare system and reforming the rental market – is key to cutting poverty. Experts agree that the cost of living crisis will not be fully over until wages catch up with inflation.
The Big Issue’s #BigFutures campaign is calling for investment in decent and affordable housing, ending the low wage economy, and millions of green jobs. The last 10 years of austerity and cuts to public services have failed to deliver better living standards for people in this country. Sign the open letter and demand a better future.
Urgent action is needed to prevent even more people being pushed into homelessness. A secure home is the first step in addressing the cruel cycle of poverty to ensure people can fulfil their potential. Join us to keep people in their homes.