Poverty in the U.K. Impacted By COVID-19

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LONDON, United Kingdom — COVID-19 has had a significant effect on the poverty levels of citizens all around the globe. The United Kingdom has not been an exception. The impact of COVID-19 on poverty in the U.K. has focused on low-wage workers, young workers and workers in jobs that were hardest hit by the lockdown, such as hospitality or retail.

Increase in Poverty Rate

The economic crisis caused by the COVID-19 pandemic pushed almost 700,000 people in the U.K. below the poverty line. This includes 120,000 children. Thanks to a £20 per week increase in universal credit, this number of newly impoverished people was not doubled. However, the number of British citizens living in poverty has increased to 23% of the population.

Out of the 700,000 newly impoverished, more than 270,000 were more than 50% below the poverty line threshold. According to experts, workers prior to the pandemic who received support were more significantly affected than those who were out of a job and received help from the government because of COVID-19.

Impact on Income

Weeks after the first lockdown, more than seven million households were already losing all or most of their income. Moreover, 3.1 million households are experiencing severe financial difficulty, while 4.6 million households are “struggling to make ends meet.” In addition, 10 million households are potentially exposed to financial dangers, such as low savings.

Solidarity in the U.K.

The impact of COVID-19 on poverty in the U.K. has been a subject of interest for many organizations and governmental offices. The Office for Budget Responsibility predicted that unemployment will increase by 500,000 people at the end of 2021. Families caring for children will suffer more severely than those without children. Such social impact has awakened a feeling of solidarity among British citizens.

For example, 35% of the population now believe benefit levels are not high enough. They call on the government to sustain and maintain the modifications implemented as a result of the pandemic. One of these modifications is Universal Credit. If its basic rate is increased, the overall adequacy of Universal Credit payments will improve. However, Universal Credit is not adapted to families with children. To protect families with children and those at an increased risk of falling into poverty, the government could make some supportive changes. Some changes are already seeing implementation.

Policy Changes

Changes the government could enforce to alleviate poverty include:

  • Direct antipoverty intervention for low-income families who receive Universal Credit. One example, the Scottish Child Payment system, which started on Feb. 15, 2018. This initiative, stemming from the Tackling Child Poverty delivery plan, commits to introduce income supplements between 2018 and 2022. The Scottish Child Payment is for low-income families with children younger than six. Social Security Scotland administers the money and application process. Recipients get £40 per month for each eligible child.
  • Improving specific measures under Universal Credit that tackle child-caring situations.
  • Removing the Benefit Cap limit, by which single parents are the most impacted. Most of those affected have not benefitted from previously implemented reforms like the £20 uplift. The two-child limit affected one million children and 60% of working households.
  • Increasing Child Benefit. Child Benefit is a system that assists families with children younger than 16 years old or 20 years old if the child is still in approved education or training. It is paid every month, and there is no limit to how many children someone can claim it for. Additionally, Child Benefit offers National Insurance credits that count toward State Pension. The child will automatically receive a National Insurance number at age 16. However, parents who earn more than £50,000 may have their Child Benefit taxed.

Conclusion

The impact of COVID-19 on poverty in the U.K. has been parallel to that of similar countries. COVID-19 has fixated particularly on low-wage workers, young people looking for a job or recently in possession of one and those who have protected characteristics. Figures portray an image of unsuitable welfare state provisions and reflect a severe situation for parents. Children are most at risk of suffering from the consequences of unemployment and low wages. Henceforth, policies directed toward establishing safety networks that ensure children’s wellness during their education and training years are vital. Initiatives, particularly the Scottish Child Payment, are examples of policies that will improve poverty in the U.K.

Álvaro Salgado
Photo: Wikimedia

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