The Shocking Reality of Poverty in the UK today

7th August 2017

Blog

By Gerri McAndrew, Chief Executive Buttle UK

On 4th August this year, we released our report The Real Face of Child Poverty in the UK in 2017. Whilst it is certainly worth delving into the minutiae of the statistics and analysis of 125,000 grants over a 10- year period, it is the real human cost that they illustrate that is, in my view, shocking. The most shocking statistic for me personally, is that from our figures, we have extrapolated that 400,000 children in the UK do not have a bed to sleep in. How can we allow this to continue?

What our report shows is that the plight of these, the most disadvantaged and vulnerable children in the UK is deteriorating, and that there are now more children living in poverty than at any time in the last 10 years. One of the more worrying trends of the report shows that increasingly, it is those in work that are feeling the pinch, with it emerging in a recent report that two thirds of children living below the government’s own absolute poverty line come from a household where at least one parent, if not both are in work.

If money is tight then it can often lead to behaviours that trap families within a cycle that exacerbates extra costs. This is often termed the “poverty premium.” This is because the ability to shop around for better rates of interest on bank accounts or loans and cheaper energy tariffs, or save up for one off expenditures is often excluded from people on lower incomes.

A calculation by the End Child Poverty coalition found this potential poverty premium could be around £1,700 a year for a typical low-income family.

Of the recipients of Buttle UK grants that were surveyed in December 2016:

  • 78% said that they had found it more difficult to afford food, clothing or heating in the last 5 years.
  • 66% used a pre-payment meter for gas or electricity.
  • A third said that they had had to resort to payday loan companies.
  • Two thirds of referrals made to Buttle had an income of less than £10,000 a year.

School holidays can put extra strain on a family’s finances as they struggle to provide meals that might otherwise be provided for free by a school. Some parts of the country report up to a 17% increase in food bank referrals over the summer.

A further financial strain on budgets has been the real term’s decrease in the value of the benefits and tax credits on which many struggling families rely. To put this in perspective, whilst there has been a 2% increase in child benefit since 2010, between 2010 and 2020 inflation is expected to increase by 35%.

What this means is that necessary, emergency expenditures for low-income families can cause false economies that make further necessary emergency expenditures more likely over time. Hopefully what this illustrates is that escaping this poverty cycle can become exceptionally difficult without outside intervention.

Buttle UK’s grant programmes help provide this in two ways.

Firstly our small grant programs can help ward off potential disaster when just such an unforeseen expenditure on an essential item – for instance, a broken cooker – arises. Without this a family might be forced further along a cycle of debt to replace the item – or as is often the case, simply make do without.

Secondly, as is the case with our expanding Chances for Children grants, we look to remove some of the barriers to education, training or domestic stability that arise from having to constantly budget on a knife-edge. A simple example of this might be in funding a laptop so an estranged young person can study a course, helping them secure better paid employment in the future.

As our latest report shows, interventions like these can have sizeable, long-term results.

  • Our economic impact assessment has found a 6:1 ratio for investing in targeted, timely grants. For every £1 Buttle UK spends, £6 of public expenditure savings could be achieved.
  • Over a 15- year period, a single grant of around £1,500 could make an average public expenditure saving to the government of £8,923 for a struggling family.
  • For a family escaping domestic abuse this could be £7,650.
  • For an estranged young person this could be £6,739.

Government actions that would have a positive effect on the lives of those that Buttle UK helps and that could be taken immediately would be ending the freeze on Child Benefit and Child Tax credits. The link between annual increases in these and inflation should also be reinstated. It is equally important to ensure that support with housing costs for families renting privately rise in line with local rent costs.

Buttle UK, like our founder Frank Buttle, is taking responsibility also to help solve these issues?

  • Our Chances for Children campaign ultimately aims to raise £20 million, with a target of  £10 million over the next 5 years. This could save the government £110 million in spending on health, policing and welfare spending over a 15-year period.
  • Coupled with the added PAYE, NI, and indirect tax revenue of beneficiaries entering or returning to work and this figure could be as high as £133 million.

So, while the challenges we face as a society are significant, I believe what Buttle UK is learning and what is shown in this report deserves critical attention by all those responsible for policy, practice and service delivery. Whilst we have not yet reached a ‘State of Emergency’, there are some very serious indicators that some of the actions that we have outlined need to be taken urgently.  We must not rest until this has happened.

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