Over a million more people face poverty by end of 2020, finds IPPR

The economic fallout of the pandemic could leave 1.1 million more people below the pre-COVID-19 poverty line at year end, including a further 200,000 children, according to analysis released by the Institute for Public Policy Research (IPPR think) tank.

Without urgent action to protect families from the financial hardship caused by the pandemic, this would bring the total number of children living in poverty in the UK to 4.5 million, an increase of almost five per cent, says the IPPR. 

The IPPR analysis provides the first projection of the poverty impact of the crisis since the pandemic began. It draws on Bank of England estimates showing that unemployment is likely to reach just under 10 per cent in the final quarter of this year (Q4). 

It finds that the number of children newly pushed into poverty since before the pandemic is likely to be 300,000 at the end of 2020. This number is partially offset by the 100,000 children likely to have moved out of poverty, due to emergency reforms to the Universal Credit system introduced in March. 

The increase in child poverty is driven by expected falls in income for 800,000 households with children. Those newly forced to rely on Universal Credit will experience a major hit to their living standards and this will be particularly damaging for households with high rents as a proportion of their incomes, or which have existing debts and low levels of savings.  

Even for many parents with jobs, returning to work is difficult or impossible while schools and childcare settings are only taking selected pupils, and are open irregular hours. 

The 1.1 million total of people below the pre-Covid poverty line will be some seven per cent more than the 14.7 million projected, had the crisis not occurred.  

The IPPR’s analysis finds that removing the two-child limit and the benefit cap, imposed in 2015 as part of the government’s austerity measures, combined with increasing Child Benefit by £5 per week per child, could entirely prevent the expected rise in child poverty – and could instead induce a modest fall. Further increases to Child Benefit would help stabilise incomes at a time of financial instability for many families. The IPPR is calling on the government to include measures to support children and families as  part of its planned economic stimulus package this summer.  

Clare McNeil, IPPR Associate Director and head of its newly launched Future Welfare State programme, said: “This analysis shows that hundreds of thousands of families and their children who may have been ‘just about managing’ before Covid now face being plunged into poverty. The government must apply the same level of ambition it had for supporting businesses and workers in the early stages of this crisis, to prevent a new generation of children and their families falling into poverty through no fault of their own.   

“The Chancellor must include in this summer’s stimulus a package of measures to support families alongside funding for physical infrastructure and job creation. This should include removing the Universal Credit austerity measures, supporting family and carer incomes and investing in childcare to open up more options for parents to return to work.” 

Henry Parkes, IPPR Senior Economist, said: “Our modelling shows that the government must do more to prevent rising poverty, now and in the future. Struggling families need the government to step in and boost the incomes of those who lose their jobs at this difficult time.” 

* Institute for Public Policy Research https://www.ippr.org/

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