Over a million more people will be in poverty this April, as new data-led analysis from Policy in Practice finds that people in the UK are all, on average, worse off compared to a decade ago.

Our analysis finds that the value of wages overall has fallen by 2% in real terms over the last decade. When this year’s inflation rate is factored in poverty is expected to rise by 8.5% this April, or 1.9 percentage points, to 24.2%.

Deven Ghelani, Director of Policy in Practice said:

The Chancellor should use the Spring statement to boost economic growth and alleviate cost of living pressures so that people can start to see their standard of living improve.

The government recognised austerity was the wrong approach to take during the pandemic and the same is now true as energy and food costs rise. We were already experiencing the highest cost of living increase in 30 years and expecting further rises, and this may now be even higher due to the war in Ukraine. Benefits are too low for people to weather the coming storm.

We’ve seen how Universal Credit can be increased rapidly. Restoring the £20 per week uplift is now the right thing to do. It would target support to almost six million low income households, and to people in low earning work and unable to work, and help almost 200,000 households stay above the poverty line.

Understanding why over a million more people will be in poverty in April

Prices (28.8%) have increased faster than both wages (25.9%) and benefits (14.2%) over the last decade, making all of us worse off.

Relative poverty rates before housing costs have risen by an estimated 3.4 percentage points since before the pandemic.

With the cost of living expected to increase further, and the expectation that household incomes will not keep up, poverty is expected to rise by a further 1.9 percentage points in the coming months. In total, this is an increase from 18.9% to 24.2% since early 2020, or a rise of 28%.

Policy in Practice’s analysis is based on London data that shows a further 185,500 households in poverty from the beginning of the pandemic to April 2022.

If the same is true for the rest of the UK, poverty will have increased by 1.5 million households in the UK from the beginning of the pandemic to mid-2022.

Around half a million of that increase will happen in the coming months, given the cost of living pressures.

Reinstating the £20 Universal Credit uplift or other policy alternatives could reduce the expected increase in poverty in the coming months by two-thirds. Indeed, better use of Universal Credit can help to tackle the cost of living crisis.

Quarter% in relative poverty in LondonRise in relative poverty in London% in relative poverty nationwideTotal households in relative poverty in LondonTotal households in relative poverty nationwideTotal people in relative poverty nationwideNew households in relative poverty nationwideNew people in relative poverty nationwide
Q1 202018.9%18.0%661,5005,004,00012,009,600
Q1 202120.3%7.4%19.3%710,5005,374,79812,899,511370,796889,911
Q1 202222.3%9.9%21.2%780,5005,904,21414,170,113529,4171,270,602
Q2 202224.2%8.5%23.0%847,0006,407,25315,377,407503,0391,207,294

How we created these estimates

Analysis by Policy in Practice comparing the cost of living to benefits and wage rises is based on data from the House of Commons Library projected out to 2022, and is available here.

Analysis of poverty rates is based on administrative data from 15 London Boroughs, supported by a grant from Trust for London and is available here.

Analysis of administrative data allows Policy in Practice to analyse the change over a year before the release of official statistics. Official data for 2021 is due to be announced on 31 March 2022.

Because administrative data doesn’t cover the whole population, we split the analysis into three groups. Increases in poverty rates are based on people whose incomes we can directly observe and model in the administrative data. We then extrapolate this to people on Universal Credit, assuming 10 percentage point lower poverty rates, and for the wider population we take the same poverty rates as reported in HBAI.

How organisations can help

Join our webinar, How low-income families can benefit from social tariffs, on Wednesday 30 March from 14:00 to 15:45 where we’ll be discussing our latest analysis of the cost of living crisis and how better take-up of social tariffs can support vulnerable families. We will be joined by guest speakers from Energy UK and Good Things Foundation. View details and register here.

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TitleDateStart TimeDurationRegister
How to identify and support Just About Managing households using data The government has said it wants to make life easier for the 'squeezed middle' or people who are just about managing. These are the families who are not rich and they are also not those on the lowest incomes. Despite most being in work, they are struggling to meet their cost of living and it is no wonder.

The cost of living hit a 30-year high in February with inflation running at 6.2% and outpacing wage growth. Electricity bills were up nearly 20% in the year to January 2022, and gas bills by 28%, with further rises expected. Private rental prices across the UK went up by 2% in the year to January, the highest rate for five years; in the East Midlands that figure was 3.6%.

We know that one in five UK adults (10.3 million people) have less than £100 in savings, one in ten have no savings at all and more than a quarter have less than £500. Many are one broken appliance away from slipping into debt.

Local authorities want to help families who are struggling now to avoid a crisis down the line yet they have little or no visibility over people who are not already claiming benefits. Now though, analysis of other datasets can be used to get a clearer picture of families who are just about managing.

Join this webinar to learn:

- Who is just about managing now but at risk in the future due to the rising cost of living
- Which datasets can be used to identify families in danger of debt
- How local authorities can target support to avert crisis
29/6/202210:30 BST1.3 hours
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