Housing crisis fuels record in-work poverty

Devolution must benefit all corners of England and the UK.

BRITAIN'S HOUSING CRISIS has driven the number of people living in poverty despite being in a working family to a record 7.4m, according to new research.

The annual Monitoring Poverty & Social Exclusion report for the Joseph Rowntree Foundation shows that 3.8m workers are living in poverty, more than one in 10 of all people in employment. 

In total, 13.5m people - more than one in five of the UK's population - are living in poverty. Overall levels of poverty have remained flat compared to 2010, thanks to the economic recovery - but in-work poverty has risen by 1.1m over the same period.

The New Policy Institute, which carried out the study for the JRF, said the rise has been driven by the housing crisis and in particular high costs and insecurity in the private rented sector (PRS). Since 2004-05, the number of people living in poverty in the PRS has more than doubled from 2.2m to 4.5m.

Half of children in rented housing - 46 per cent in the PRS and 52 per cent in the social rented sector - also live in poverty.

Insecurity for renters has increased since 2010, the study said. Evictions by landlords have risen from 23,000 in 2010-11 to 37,000 in 2015-16. Over the same period, mortgage repossessions have fallen from 23,000 to 3,300.

The report also highlights significant regional variations in poverty. More than half of people in poverty live in London and Southern England - the East, South East and South West. The capital has the highest poverty rate at 27 per cent, six percentage points above the national average.

The NPI said overall poverty has been kept under control by a record high employment rate - 74.5 per cent - and unemployment of 1.6m, the lowest figure since 2007. Underemployment has also dropped for the fourth consecutive year to five million.

Meanwhile, the number of children living in a workless household has fallen to a record low of 1.4m.

But Helen Barnard, head of analysis at the JRF, said the UK economy "is not working for low-income families".

"The economy has been growing since 2010 but during this time high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow," she added.

"As it negotiates Brexit, it is vital that the Government does not allow its focus to slip from the domestic concerns that make a huge difference to people who are just about managing. This report shows that people on low-incomes cannot rely on economic growth and rising employment alone to improve their financial prospects. Families who are just about managing urgently need action to drive up real-term wages, provide more genuinely affordable homes and fill the gap caused by cuts to Universal Credit, which will cost a working family of four almost £1,000 per year."

Dr Peter Kenway, director of the New Policy Institute, said: "An adult in poverty today is much more likely to be young, working and a tenant living the private rented sector than 15 years ago. But modern poverty is also increasingly linked with disability. After allowing for the higher cost of living, half of those in poverty today are either sick or disabled themselves or live with someone else who is."

The report calls for an end to the freeze on working age benefits so they can rise with inflation and an extension of plans to tackle the UK's productivity crisis to low-wage sectors like retail, hospital and care, which account 24 per cent of UK jobs but a third of the productivity gap with other European countries.

It also urges the Government to invest an extra £1.1bn a year in affordable housing through a Living Rents scheme. This would deliver 80,000 "genuinely affordable" homes annually, link social rents to local wages, make homes affordable to people on the National Living Wage and cut the Housing Benefit bill in the long term.

Labour's shadow work and pension secretary Debbie Abrahams said the report shows the "true impact of six wasted years of Tory austerity".

"This Government has no plan to tackle stagnant wages and rising insecurity, choosing instead to make the poorest pay for their economic mismanagement," she added.

A Government spokesman said "Since 2010, the number of people living in poverty has fallen by 300,000 but we know there is more to do.

"We are increasing the National Living Wage and taking millions of people out of income tax, to make sure it always pays to be in work."