Socialist Worker

Handling of virus will mean millions more in poverty

by Isabel Ringrose
Issue No. 2733

Millions will sink into poverty because of job losses and cuts to benefits

Millions will sink into poverty because of job losses and cuts to benefits


The economic crisis, exacerbated by the Tories’ mishandling of the pandemic, has plunged people into poverty.

The Legatum Institute found that the number of people living in poverty had risen by almost 700,000—to 15.2 million people—due to the impact on jobs and wages.

But the New Economics Foundation (NEF) warns that the number of people falling below the “minimum socially acceptable standard of living” this November could reach 20.6 million. 

That would be a rise of 800,000 compared with September, and will continue to rise to 22.5 million by April 2021.

And NEF predicts that by April more than half of those living in poverty would be living on less than 75 percent of the minimum-income standard (MIS).

Philippa Stroud is the chief executive of the Legatum Institute and Tory peer in the House of Lords.

She claims that the rise would have been twice as high if it wasn’t for government action, such as raising universal credit payments temporarily by £20.

Inadequacy

But no one would be suffering in poverty if it wasn’t for Tory greed.

NEF said its research showed the inadequacy of the welfare system and millions are still set to be hit by hardship.

The wages of an estimated two million workers fell below minimum wage during the first wave of the pandemic. 

The number of people claiming universal credit doubled and food bank use soared.

NEF said, “The slew of hastily assembled crisis protection schemes were not enough to paper over the cracks of the Britain’s threadbare safety net, starved of resources after a decade of austerity.”


Young and low paid being hit hardest by the slump

The Legatum Institute found that working adults who had previously been in jobs accounted for the largest rise of people living in poverty.

Those hardest hit by the economic crisis were young workers, people in low-paying jobs and workers in hospitality and retail.

Of the 700,000 people the Legatum Institute predicted to be newly in poverty, just over half had incomes up to 25 percent below the poverty line. 

Around 160,000 were between 35-50 percent below, and 270,000 had fallen more than 50 percent below—known as “deep poverty”.

The analysis does not include the impact of the benefits cap, which will throw tens of thousands more households into poverty when the nine-month “grace period” ends. Drops in living standards are a result of the pressure placed on family incomes by cuts to jobs, pay and hours.

Furloughed

It is also a result of furloughed workers being forced to live on 80 percent of their wages.

The New Economics Foundation says if the temporary improvements to universal credit were extended beyond March 2021, around 800,000 people would be lifted above the minimum socially acceptable standard of living. But it warns that this extension is not enough. It would still mean a rise of 1.7 million people falling below 75 percent of the MIS compared with September.

NEF calls for a minimum income guarantee with winter, meaning every working-age adult is entitled to apply for weekly payments of £227. And this payment should not be deductible from other benefits.


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