People on the lowest incomes have faced the worst of the pandemic’s economic bite, write Ian Hamilton and Aleks Collingwood
The covid-19 pandemic has shown that even though in some ways we have all been in the same storm, we haven’t all been able to weather it. Exactly who has been affected by the pandemic’s economic impact and how is the subject of a new report by the Joseph Rowntree Foundation (JRF). Even before covid-19, a staggering 14.5 million people in the UK were living in poverty—that’s one in five of the population. This is made up of 8.4 million working age adults, 4.2 million children, and 1.9 million pensioners.
The big increase in recent years has been poverty among people who are in work—often on zero hour contracts or in low paid temporary employment. The government frequently refers to work as the route out of poverty, which it can be, but only if the remuneration is sufficient to survive and secure permanent contracts are available for those that need them.
The JRF report found that those on the lowest incomes had faced the largest cut in hours and pay during the pandemic. These individuals and families were economically exposed before covid-19 so any reduction in income has been felt acutely. The unequal experience of covid is exemplified by the fact that four in ten workers on the minimum wage face a high or very high risk of losing their job during the pandemic. Compare this to just 1% of those earning more than £41 500 a year. We are clearly not all in this together as a recent Office for National Statistics report highlighted that those living in the most deprived communities were 2.5 times more likely to die due to covid-19 than those living in the least deprived.
Universal credit has had a vital role in keeping families afloat during this crisis, and the government was right to add an extra £20 per week—it has been a lifeline for many people as costs rise and opportunities for work diminish. That rise now needs to be made permanent. The British public are increasingly aware of how critical an issue poverty is and people recognise the need to support each other through difficult times—making the extra £20 permanent is an effective way for the government to respond to this.
By August 2020, claims for universal credit had risen by 90% from the start of the year, and this demand would have introduced many people to the benefit system who before covid had no experience of this. Some people manage the mandatory five week wait for the initial payment by borrowing money that can take 15 months to repay, eroding the support they receive in later months. This is a system designed by those familiar with a monthly salary, which is at odds with many claimants who are paid weekly. Removing this five week wait could help individual claimants avoid the need to borrow.
We already know that people from ethnic minority communities have been disproportionately affected by covid-19 both in terms of infection and mortality. The JRF report also found racial disparities in the pandemic’s economic toll, as ethnic minority individuals were 14% more likely to lose their employment. Compared to white people, they were also more likely to cut back on essential spending such as food, be behind with paying bills, and to have been forced to resort to borrowing money.
The report doesn’t just provide information about how poverty has affected people during the pandemic, it also offers four specific recommendations. Firstly, looking ahead, two important forms of state intervention are due to end in April: the furlough scheme and the additional £20 for those in receipt of universal credit. Pressure has been building on the government to extend the £20 addition to universal credit beyond March. Dame Louise Casey, former government adviser on homelessness, described the extra £20 as a “lifeline” to those living in poverty and said ending the payment would be “too punitive a policy right now.” This is also recommended in the JRF report, as is extending the furlough scheme, but these are merely temporary measures; it is the longer term structural aspects of poverty that the JRF are keen to resolve. These include encouraging the government to provide adults with training in skills that would lead to higher paid and more secure employment. Bringing forward the employment bill would also provide additional job security for the lowest paid employees who are on temporary or zero hour contracts.
In addition to recommending improvements to the benefit system, the report calls for a change in how we conceive of our country’s social safety nets. The system needs to be viewed as an essential public service and consequently have the necessary investment to match. Lastly, given the high proportion of income that the poorest people pay on private rent, an increase in social housing should be a priority if we want to reduce individual spend on rent and provide greater security of tenancy.
Without these changes, not only will the current unequal impact of covid-19 be felt by the poorest people in society, they will also be the last group to recover once the pandemic abates. Changing this requires all of us to demand an end to poverty. This is not a fantasy; it is achievable in a wealthy Western economy where there is sufficient resource to be shared. It’s a question of will, not possibility.
Ian Hamilton is an academic at the University of York with an interest in addiction and mental health. He previously worked as a mental health nurse with people who had combined mental health and substance use problems. Twitter: @ian_hamilton_
Competing interests: None declared.
Aleks Collingwood is an analysis manager in the evidence and impact team that leads the Joseph Rowntree Foundation’s data monitoring and analysis function. Her main role is managing the analysis and writing of JRFs annual flagship UK Poverty report. Twitter @jrfAleks
Competing interests: None declared.