Chancellor’s new package of benefits will shield 650,000 from poverty

A new briefing by the Legatum Institute’s UK Poverty Unit finds that 650,000 people will be shielded from poverty due to the package of measures announced by the Chancellor.

The analysis models a comparison between the number of people who would be in poverty under current benefit levels, without further support, against the number of people who will be in poverty after the introduction of the Chancellor’s measures.

Breaking down the data, the briefing finds that:

• The majority of those shielded from poverty are in families with a disabled person.
– 390,000 of those protected would be in families that include a disabled child or adult. Six-in-ten of the 650,000 protected from poverty are in such families.

• Nearly a quarter of a million pensioners will be shielded from poverty.
– 240,000 pensioners will be protected from falling into poverty.

• Nearly half of those affected are in working families.
– 310,000 of those protected from falling into poverty are in working families, while only 130,000 of those affected are in workless families. The remaining 210,000 are in families in which all adults are retired.

• The areas which would benefit the most are all red wall seats.
– Nearly quarter of a million people (220,000) in Northern England would be shielded from poverty – more than in any other region.

Baroness Stroud, Conservative Peer and CEO of the Legatum Institute, said: “The government has today rightly prioritised the nation’s most vulnerable families. The package of one-off grants for those on benefits, pensioners and the disabled will make a considerable difference to people who are in deep poverty and would otherwise have been facing hard choices between paying for food or fuel.”

“Legatum Institute data shows that half of those in poverty in the UK, around 7 million people, have at least one disabled member in their family. The extra support of £150, on top of money already set aside for those receiving benefits, will be critical and is something I particularly welcome.

“However, the Government should have gone further. Providing all households, regardless of their financial circumstances, with £400 of support is poorly targeted and potentially inflationary, risking further fuelling the cost-of-living crisis. This money should also have been targeted on those families struggling most to make ends meet.”

“Looking further forward, having set out measures to take the sting out of the immediate crisis, we must now look for solutions which will address the longer term root causes and unleash the potential of Britain’s economy in the future.”

This briefing uses the Social Metrics Commission’s measure of poverty as the basis of its analysis. The SMC was established in 2016, as a response to the fact that the UK no-longer has official poverty measures agreed and used by Government. It is hosted by the Legatum Institute and is dedicated to helping policymakers understand and take action to tackle poverty and build prosperity. Its membership includes people from across the political spectrum as well as poverty and measurement experts. The Commission’s primary goals have been to develop new poverty metrics for the UK which both:

• Have long-term political support; and

• Effectively identify both those who are in poverty and their experiences of poverty.

The SMC’s landmark report in 2018 outlined a new approach to measuring poverty. As well as looking at incomes, this approach allows us to account for a range of inescapable costs that reduce people’s spending power, and the positive impact of people’s liquid assets on alleviating immediate poverty. These inescapable costs include rent or mortgage payments, childcare and the extra costs of disability. Liquid assets include savings, stocks and shares. The measure also takes account of overcrowding in accommodation. As well as a more accurate reflection of a family’s ability to make ends meet, the SMC’s poverty measure tracks:

• The degree to which a family is below the poverty line

• The length of time that a family is below the poverty line

• The experience of living in poverty.

Following the 2018 report, and an update in 2019, the Commission’s approach received support from across the political spectrum and from a wide range of experts and people involved in taking action to tackle poverty.