What happened to poverty under the Coalition?
This report presents NPI’s estimates of the latest headline poverty statistics for the United Kingdom, for the financial year ending in March 2015. Starting with the latest published poverty statistics, for 2012/13, we have estimated the combined effects of the changes that have taken place since then in the size and mix of the population, the levels of employment and earnings, as well the value of benefits and tax allowances. The conclusion is clear: poverty in the UK is rising once more; it is rising among all age groups; and it is also deepening.
Why this data is needed
NPI, in conjunction with a number of other organisations, asked the government last summer to publish the 2013/14 poverty statistics before the general election. It declined on the grounds that decisions on publication were taken without regard to political considerations. Given the significance of recent policy changes and welfare reform to the poverty landscape, not publishing official statistics before the election is also political.
In support of our estimates, we point to the accuracy of the first set of estimates which we published last year1. Although wider in scope (and calculated on a slightly different basis), they are also close to estimates published recently by the IFS2.
What has happened to poverty?
Behind the overall headline that poverty is both rising and deepening, there are three specific points which mark 2013 as a turning point.
1. Incomes in the middle are rising once more; at the bottom they have fallen.
2. Pensioner poverty is rising after half a dozen years of steady and substantial falls.
3. Poverty among tenants in the social rented sector also rose, which can be linked to tax and benefit changes.
Poverty in the party manifestos
Poverty is mentioned in all the 2015 party manifestos. Both the Conservative and Labour ones cite headline poverty statistics. But they are badly out of date.
The Conservatives talk about child poverty being 300,000 lower than in the last year of the Labour government. This claim can be made only because the latest published data is for 2012/13. Our estimates show that child poverty has gone through three stages since 2009/10: falling in 2010/11, staying steady to 2012/13, and rising to 2014/15.
Our estimates also show that data for 2013/14 would have shown the shift. That is because April 2013 was a key moment, when many of the big welfare reforms took effect but also when the rest of the economy began to recover.
The Labour manifesto notes that half of those in poverty are in working families. Our estimates suggest that this is still broadly true – but the period during which in-work poverty was taking an ever rising share of total poverty has ended.
Labour also commits to keeping the child poverty targets and to asking the Office for Budget Responsibility to monitor progress. The OBR uses quarterly economic data that is typically available two months into the following quarter. It can’t do much with annual poverty data that is more than two years old before it comes out.
The challenge for the next government
In past recoveries, this is the moment when those on the lowest incomes get left behind as the top and the middle start to pull away. Because this recovery has been so delayed, the estimated poverty rate in the final year of this government is the same as it was in the final year of the last one. If a recovery takes hold, the next government will need explicit pro-poor policies to stop poverty both rising and deepening.