New figures released by the Office for National Statistics yesterday heralded the good news that the UK has one of the lowest rates of persistent poverty in Europe. However, looking at the detail of the release paints a less positive picture of the UK’s insecure economy. Whilst, people in poverty are more likely to exit poverty in the UK than in the vast majority of EU countries, people outside of poverty are more likely to enter poverty than elsewhere.
Between 2011 and 2014 almost a third of the UK population (32.5%) experienced poverty at least once. Other research suggests that over the course of a lifetime almost half the population will at some point be forced to rely on social security for those on low incomes. New research from Turn2us shows that even Members of Parliament, who are more likely to come from privileged backgrounds, have previously relied on social security. When asked 29% of MPs said they had previous claimed Jobseekers Allowance and only 26% had never claimed any sort of social security payment at all.
There is little sign that the economy in the UK is about to become any more secure. For over a decade we have seen a consistent increase in self-employment. At the more extreme end the rise of zero hours contracts also adds to a lack of security.
At the same time as jobs become less secure, and families’ incomes often fall into poverty, the usual buffers against insecurity are also failing. Homeownership is falling, especially amongst young people, who are the most likely to be working insecure jobs. Savings aren’t increasing enough to make up the gap, and many on the lowest incomes are dealing with debt rather than building up savings.
This leaves social security system as the main safety net. However the safety net has become riddled with holes, as families with multiple children are penalised by reforms. The overall level of support is also falling meaning that each drop in income is that much more harmful for families who experience it.
It doesn’t have to be this way. More equal societies have more secure economies. They have lower levels of debt and are less likely to experience financial crises. One way we can start moving towards this more stable and equal economy is by letting people on the lowest incomes keep more of what they earn by cutting the aspiration tax. Letting low income people keep more of what they earn will help them achieve their aspirations of being able to save a little for a rainy day or eventually being able to afford a home.
Tim Stacey, Senior Policy and Research Advisor