The UK is entering this election year with unacceptably high levels of poverty, appallingly high for some groups. We need a coherent plan with creative policies to end poverty in the UK.
Executive summary
This will be the final UK Poverty report before the next general election. It is clear from the report that we are entering this election year with unacceptably high levels of overall poverty, including appalling levels for many groups. Since our last report was published a year ago, we have seen more and more evidence of the desperate measures that households struggling to make ends meet are having to take. At the same time, higher tides of insecurity have washed over more and more people.
This report looks across a range of data sources and published insights to build up a comprehensive picture of the current state of poverty across the United Kingdom (UK). We know poverty can lead to negative impacts at all stages of life, so it is critical to look closely at the available information to work out who is worst affected, determine how levels have changed over time and see what the future prospects are likely to be.
Poverty increased in the latest official data, returning close to pre-pandemic levels
More than one in five people in the UK (22%) were in poverty in 2021/22 – 14.4 million people. Of these, 8.1 million were working-age adults, 4.2 million were children and 2.1 million were pensioners. To put it another way, around two in every ten adults are in poverty in the UK, with about three in every ten children being in poverty. The number and proportion of children and pensioners in poverty rose between 2020/21 and 2021/22, as did overall poverty. This means that poverty rates across these different groups have returned to around their pre-pandemic levels. It may seem counter-intuitive that poverty increased as we came out of the pandemic, but this is consistent with incomes rising for middle-income households at the same time as a range of temporary coronavirus-related support was withdrawn. Children have consistently had the highest poverty rates, while pensioners along with working-age adults without children now have the lowest
Source: Households Below Average Income, 2021/22, Department for Work and Pensions (DWP)
It has been almost 20 years and six prime ministers since the last prolonged period of falling poverty
Taking a longer-run view, we can see that overall poverty has barely moved since Conservative-led Governments took power in 2010. The last period of falling poverty was during the first half of the previous Labour administration (between 1999/2000 and 2004/05), but it then rose in the second half of their time in power.
In part, this reflects the series of hits to living standards that have affected the whole population. Each of the five Parliaments since 2005 has recorded lower quarterly income growth than the last 13 Parliaments before 2005, stretching back to the start of available data in 1955. This started with the economic slowdown even before the global financial crisis and persisted through the crisis itself, then austerity, Brexit, the coronavirus pandemic and the current cost-of-living crisis. However, even with higher income growth in the 1980s, the-then Conservative Government under Margaret Thatcher saw an unprecedented rise in poverty, up from broadly flat levels of poverty of around 14% before 1979, meaning current levels of poverty are around 50% higher than they were in the 1970s. The large increase in poverty in the 1980s was because income growth was very unequally shared over this period.
Poverty rates grew rapidly under Margaret Thatcher’s administration and remained high, with only small decreases in subsequent administrationsPoverty is deepening
In 2021/22, 6 million people – or four in ten of those in poverty – were in very deep poverty, with an income far below the standard poverty line. More than twice as many (over 12 million people) had experienced very deep poverty in at least one year between 2017/18 and 2020/21.
Between 2019/20 and 2021/22, the average person in poverty had an income 29% below the poverty line, with the gap up from 23% between 1994/95 and 1996/97. The poorest families – those living in very deep poverty – had an average income that was 59% below the poverty line, with this gap increasing by around two-thirds over the past 25 yearsSome groups have wholly unacceptably high rates of poverty
We have already seen that children have higher risks of poverty overall (29% versus 22% for the whole population), but larger families with three or more children have consistently faced a higher rate of poverty (43% of children in large families were in poverty in 2021/22). This is because a number of benefit policies have a disproportionate impact on larger families. These include the two-child limit, which restricts eligibility for many child-related benefits to the first two children in a household, and the benefit cap, which limits the total income a household can receive in out-of-work benefits. Reductions in the poverty rate of children in large families drove child poverty downwards until 2012/13, but increases for this group have driven child poverty back up again since then.
Families with children also face additional challenges if childcare responsibilities limit their ability to undertake well-paid and high-quality work, which is often the case for lone-parent families and families with younger children; 44% of children in lone-parent families were in poverty in the latest data – 2021/22 – as were 32% of children in families where the youngest child was aged under 5.
Poverty rates are very high for some minority ethnic groups. In particular, between 2019/20 and 2021/22, around half of people in Pakistani (51%) and Bangladeshi (53%) households lived in poverty, with even higher poverty levels for children in those households (61% and 62% respectively). Around four in ten people in households headed by someone from an Asian background other than Indian, Pakistani, Bangladeshi or Chinese (39%) or households from Black African backgrounds (42%) were in poverty, with around half of children in these households in poverty. All these groups were much more likely than people in households headed by someone of white ethnicity (19%) to be in poverty (25% of children in households headed by someone of white ethnicity were in poverty). Minority ethnic groups with higher rates of poverty tended to also have higher rates of very deep and of persistent poverty. Disabled people face a higher risk of poverty and have done so for at least the past 20 years. This is driven partly by the additional costs associated with disability and ill-health, and partly by the barriers to work that disabled people face. However, the proportion of disabled working-age adults in work increased from 42% in 2010/11 to 51% in 2021/22, while poverty rates remained steady over that period. In the latest data, there were 15.7 million disabled people in the UK – that is, nearly one in four people (24%) – and just over a third of all families contained at least one person who was disabled. The poverty rate for disabled people was 31%, 12 percentage points higher than the rate for people who were not disabled. Nearly half of all people who were disabled and living in poverty had a long-term, limiting mental condition – around 2.3 million people. The poverty rate for this group was 38%, compared with 31% for people with a physical or other type of disability.
Similarly, informal carers are much more likely than those with no caring responsibilities to be living in poverty (28% compared with 20%). In 2021/22, nearly one in ten adults (4.8 million) were informal carers, with six in ten of these carers living in families where someone was disabled. Their reduced ability to work means informal carers face a financial penalty, with unpaid social-care givers experiencing an average pay penalty of £414 a month (nearly £5,000 a year).
People in workless households also face a higher risk of poverty, with more than half of working-age adults (56%) in workless households being in poverty in the latest data. However, because such a high share of the population is in work, around two-thirds of working-age adults in poverty actually lived in a household where someone was in work, despite these households having a much lower poverty rate of 15%. The poverty rate for part-time workers was double that for full-time workers (20% compared with 10%) and self-employed workers were more than twice as likely to be in poverty as employees (23% compared with 10%). Workers in the administration and support activities sector had the highest poverty rateat 22%.
There is also a link between tenure type and poverty. In 2021/22, more than four in ten social renters (43%) and around a third of private renters (35%) were in poverty after housing costs. Within this group of renters in poverty, around a third of social renters and half of private renters were only in poverty after their housing costs were factored in, and so appear to be pushed into poverty by the amount of money they have to spend on housing. Among homeowners, around one in seven (15%) of people who lived in a home that was owned outright were in poverty, while one in ten people living in a home being bought with a mortgage (9%) were in poverty. Finally, the poverty rates of people claiming different income-related benefits are much higher than the national average poverty rate. On the one hand this is to be expected given the ‘low income’ eligibility criteria for claiming these benefits, but on the other hand it demonstrates that the level of benefits available is frequently not sufficient to enable recipients to escape poverty. Indeed, the basic rate of Universal Credit is even below destitution thresholds.
Poverty rates vary significantly between UK nations and regions
In the latest data, the average poverty rates in England (22%), Wales (22%) and Scotland (21%) had converged to around the same level, although poverty rates were much lower in Northern Ireland at 16%. These variations in poverty rates across the different nations of the UK are driven by differences in labour markets (including the levels of employment, the sectors worked in and rates of pay), housing markets (the mix of tenures and housing costs) and rates of benefit receipt, alongside wider demographic factors (age, family types and sizes). The greater reliance on renting and the higher costs of housing are a substantial driver in larger cities in particular, while lower rates of employment, with fewer employment opportunities alongside a greater concentration of employment in lower-paid roles and sectors, are more significant drivers of poverty across many post-industrial and coastal areas.
Child poverty rates in Scotland (24%) remain much lower than those in England (31%) and Wales (28%) and are similar (if slightly higher) than in Northern Ireland (22%). This is likely to be due, at least in part, to the Scottish Child Payment. This highlights the effect benefits can have in reducing poverty.