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Poverty in the United KingdomPoverty in the United Kingdom and the cost of living has increased steadily since early 2021. After Russia’s full-scale invasion of Ukraine, wholesale natural gas and oil prices soared, leading to more expensive bills for domestic consumers. The price of gas surged by 96% in a year and electricity has increased by 54% as it relies on gas for generation. Energy prices greatly impact the cost of living in the U.K., along with increasing prices of consumer goods such as food. The war in Ukraine has disrupted the country’s glass manufacturers, causing bottles for common products such as Coca-Cola to halt. According to the House of Commons Library inflation reached an astonishing 10.01% in July 2022, only dropping to 9.9% in August.

The U.K. remains at the high end of the worldwide inflation scale, ahead of the U.S. at 8.8% in April 2021, and 8.6% in the Eurozone from June. Low-income households spend more on housing, transport and food causing the high cost of living to disproportionately impact them, increasing poverty in the United Kingdom.

Movement in Geopolitics

Recent explosions of pipelines Nord Stream 1 which carried natural gas to Germany from Russia add pressure to the energy crisis. Although the pipelines have been inactive since early September, the accusations of sabotage of energy supply connections sparked anxiety in the U.K. and Europe. The fear has spread quickly as Norway, Europe’s largest natural gas supplier, has announced increased security on all of its gas and oil infrastructure. Panic could occur as millions are dealing with the mounting debt of rising food prices pitted against the high cost of energy bills.

Soaring costs of food and energy impact the most marginalized people the hardest. Bloomberg reports a peak inflation rate of 8.7% in June for low-income households. Whereas high-income households stood at 7.8% that same month. The data shows lived experience: if one earns more, one will likely have more to supplement rising prices; however, if one does not, one will likely fall short in purchasing power.

Confronting Crisis

Liz Truss’ tax cuts stunned economists and sent the pound into a free fall. On September 23, 2022, the British government announced a 45 billion pound tax cut ($48 billion USD) which caused the pound to drop to a record low of $1.03. In an unprecedented ‘mini-budget’ announced Friday, the government abolished the top 45% rate of income tax paid by the highest earners. As a result, YouGov polling shows that the Labour party has a 33-point lead over the Tories.

Only a year ago, Boris Johnson’s government made a decision to raise taxes to avoid public spending in the wake of the pandemic. Now the new government Truss has assembled caused markets to crash and investments in British industry to be withdrawn. In mid-September, the Bank of England announced that England might already be in a recession, as many are already feeling the sting of autumn without adequate heating.

Politico has quoted Truss in transit to New York this week saying, “Lower taxes lead to economic growth, there is no doubt in my mind about that,” although, with the value of the pound diminishing and the cost of goods, energy and transport already on a high the immediate effect is a negative one. The markets are one metric that helps weigh the viability of a Prime Minister. Currently, her reputation is not strong, even in her constituency. Truss has only two years to prove herself to voters with an election waiting around the corner in 2024.

Although Truss introduced the Energy Price Guarantee on September 8, 2022, which caps energy bills at 2,500 pounds ($2,788 USD) and went into effect on October 1, 2022. Even though this program will keep bills significantly lower than predicted, at least until January, many are skeptical of the Conservative government’s attempts to help people and businesses.

Charities Lending a Hand

Organizations such as Independent Age, Groundwork and the Smallwood Trust have stepped in offering grants for a range of people and communities affected by poverty in the United Kingdom. These grants will provide financial relief for material goods and basic essentials, as well as specialized needs.

Independent Age will give 25 grants of 45,000 pounds each to charities and community organizations helping older people through the crisis. Groundwork is partnering with One Stop Stores in awarding 1,000-pound grants to successful applicants. Smallwood Trust is focused on getting relief to women who need grants in the wake of the cost of living crisis. Women are especially important because they are underpaid and often overworked in society, on top of being the main caretakers in most households. As autumn begins, people are mobilizing to help each other through any difficult day, and that is always something to be thankful for.

During the period of volatility in the United Kingdom, the various organizations providing aid are extremely beneficial. Hopefully, with these charities’ continued efforts, poverty in the United Kingdom will reduce.

– Shane Chase
Photo: Flickr

POVERTY IN THE UNITED KINGDOMThe United Kingdom has a population of approximately 68 million people, many of whom are struggling to make ends meet and live in poverty. As of the parliament’s most recent studies in 2022, nearly one in five people live in poverty in the United Kingdom.

The Issue of Poverty

The issue of poverty has been a problem that has long plagued the United Kingdom. Many of these issues can be attributed to a decade of public service cuts. This has pushed many families to the brink of poverty and many others into poverty.

As of 2021, the poverty rate among working households is as high as it has ever been in Britain. Due to steadily increasing property prices, private sector rent hikes and record childcare costs, working families are adopting unhealthy lifestyles and using high-cost credit to pay off debts.

Right Reverend Rose Hudson-Wilkin, a member of IPPR’s welfare state advisory panel states that these families “are trying as hard as they can but still finding it impossible to feed their families and provide a safe roof over their heads,” the Big Issue reports.

Many of these factors are financially related, such as spiraling housing costs among low-income households, as well as low wages and modest pay rises, according to The Guardian. Other factors are systemically based, such as a constant lack of flexible as well as affordable childcare and a social security system that has proven unable to keep up with rising rental costs. Families who are unable to buy a home have to rent from private landlords. These systemic issues affect them the worst due to a benefits system that rewards landlords as opposed to its citizens.

The Impact on Children

According to The Children Society of the United Kingdom, 4.3 million children live in poverty in the United Kingdom, as of 2021. These children are less likely to have a strong support system around them, due to their guardians devoting their energy to surviving with the few resources they have. This could put these children at an increased risk of homelessness, addiction and exploitation by criminal gangs, according to the Big Issue.

Solutions

Most experts agree that the key to reducing the poverty rate in the United Kingdom is reforming the welfare system. The Institute for Public Policy Research (IPPR) feels that “without long-term reforms, the government will face a perpetual choice between paying constantly rising social security bills or allowing the number of working families in poverty to increase unchecked, as is currently the case,” the Big Issue reports.

Thankfully, there are numerous organizations that are hard at work to ensure that the cycle of poverty in the United Kingdom comes to an end. The organization at the forefront of that fight is Oxfam. Since its establishment in 1942 it has been committed to “a kinder, fairer world – a world less divided by borders, money, race or gender” said Oxfam’s CEO Dhananjayan Sriskandarajah.

In the year 2021 alone, Oxfam assisted 12.8 million people who were at risk or facing poverty. With these far-reaching efforts in the face of such daunting statistics and the continued fight of the British people, the future of the United Kingdom appears much brighter than in recent memory.

– Austin Hughes
Photo: Flickr

Poverty in the UK
Approximately 14.2 million people live in relative poverty in the United Kingdom, which is about 22% of the country’s total population of 65 million. Of those living in poverty, 4.5 million are children, 8.4 million are of working age and 1.4 million are of pension age. The country’s poverty rate has not changed a great deal from what it was in the early 2000s (about 23%). There were some improvements in 2010 when the United Kingdom was attempting to make an economic comeback after the financial crisis, however, this decrease has since disappeared as poverty rates are on the rise once again.

For a country that many consider one of the richest in the world, having a poverty rate of this level seems somewhat unusual. For comparison, the United States has a 12.3% poverty rate – considerably lower than the United Kingdom – which begs the question, why the 10-percentage point difference?

Causes of Poverty in the United Kingdom

According to a report released by the United Nations earlier this year, poverty in the United Kingdom is due largely to the government’s continuous cuts to public spending and social programs which exist to benefit the poor. Poverty in the United Kingdom has reached such a level that many families must decide between basic needs such as heat and sustenance since they cannot afford both. Although the government may not have deliberately or willingly chosen to worsen the situation for its poor population, it is the main cause behind the rising poverty levels within the country.

Furthermore, the lack of steady income growth and the quick rise in living costs has furthered the need for the welfare benefits that the government has defunded. The government has attempted to remedy its cuts by replacing six benefits with one monthly payment instead, which has proven rather inefficient. This program, titled Universal Credit, has allowed for an increase in the number of people that seek out foodbanks, listing benefit delays or changes as a major cause for this increase.

Solutions to Poverty in the United Kingdom

Many of the policies the government has implemented over the years, which deeply affect the poor, often have easy solutions. For example, policies that include denying benefits to those who miss appointments or limiting the number of children that a claimant can have are rules that can be eliminated almost overnight with hardly any increase in costs.

Additionally, the government is also attempting to create more welfare independent households by focusing on reducing income inequality, increasing incomes overall and providing better long-term economically stable solutions for its citizens.

According to the Joseph Rowntree Foundation, the United Kingdom poverty issue can be addressed by following this five-point plan:

  1. Increasing incomes while reducing costs.
  2. Having a better and more efficient benefits system.
  3. Improving the educational system as well as the skills students acquire.
  4. Strengthening families and communities as a whole.
  5. Promoting economic growth for the long-term future that will benefit the whole population.

Positive Developments in Poverty Reduction Efforts in the United Kingdom

The Universal Credit benefit that the British government implemented recently will increase work allowances. Estimates have stated that this will raise 200,000 out of poverty. Additionally, changing how one measures poverty can change one’s perspective on the matter and help improve living conditions for citizens.

The report that the U.N. released focused on relative poverty rather than absolute poverty. Relative poverty refers to “any family that has 55% or less of what that median family has,” whereas absolute poverty differs in that the households the report is measuring are being compared to those of the median household in 2010/11.

Although the British government has many obstacles to overcome before it can see a reduction in its poverty rates, the U.N.’s report has shed light on an important issue in the United Kingdom Because of this, the government can now work even harder to eradicate poverty for its citizens.

– Laura Rogers
Photo: Flickr