Philippa Stroud is CEO of the Legatum Institute.
Much has been said about the Chancellor’s Budget earlier this week, but too little has been said about poverty. In fact, the action taken by Jeremy Hunt has, and will continue to have, some of the biggest impacts on poverty of any Chancellor in recent memory. This action also follows other significant action during the pandemic and cost-of-living crisis that has protected hundreds of thousands of people, their families and children, from the damage that poverty brings.
The broader context is the fact that the UK has a long-standing and ingrained problem with poverty. Over the last few decades, Governments of all colours have sought to tackle the issue, but with very little impact overall. While poverty rates for some groups have fallen, the overall level of poverty in the UK had largely flatlined for two decades.
That was until the pandemic. The labour market impacts of the Covid-19 pandemic and subsequent cost-of-living crisis have had a profound impact on poverty. Nowcasting by the Legatum Institute at the time of the 2022 Autumn Statement showed that poverty rates rose to unprecedented levels, with more than 15.6 million people across the UK expected to be living in poverty this year.
Since then, the softening of the energy market has supported a reduction in poverty, and the Chancellor’s actions have turbo-charged that reduction. Overall, our estimates suggest that the number of people in poverty is some 450,000 lower than we feared at the time of the Autumn Statement. On its own, the continued support that the Government is providing families through the Energy Price Guarantee has reduced the number of people expected to be in poverty by 90,000.
Further, in line with the Prime Minister’s five key priorities, the Chancellor’s attempts to boost labour supply must be congratulated. Even more so because they are targeted at groups, including families with children and disabled people, where poverty rates are amongst the highest. Our estimates are that with ev a relatively modest impact on labour supply amongst these groups, poverty rates over the next Parliament could drop by 200,000.
The impacts for these families should not be underestimated. Whilst leading a grass roots project in Birmingham, I have seen at first hand the debilitating impact of poverty on people’s ability to make ends meet and the knock-on impacts on their family stability, health, resilience and prospects for the future.
However, the importance of this goes beyond those immediately impacted by the announcements at the Budget. Overall, there are two wider lessons we need to learn. The first is that a Conservative Government can, and should, take action on poverty. For too long, action on poverty has been the preserve of parties of the Left. The Government’s actions over the last three years have shown that does not need to be the case and that Conservative values can underpin a long-term and sustained attack on poverty in the UK.
Of course, at times of crisis, it is the Government’s responsibility to provide a safety net, as it did so effectively with the Furlough Scheme, with temporary boosts to Universal Credit and a range of support since then to manage the cost-of-living crisis. But as Conservatives we know that, as well as dealing with crises, we must provide the foundations of an approach to poverty that does not solely rely on continued handouts from Government to allow people to make ends meet. As the Chancellor highlighted, independence is always better than dependence.
What this points to is an approach that empowers people to make the right decisions and build resilience, supports families to be stronger and helps businesses and communities to take the action they can to support the drive to reduce poverty. Those are the foundations of an effective and sustainable approach to reducing poverty.
They are also some of the guiding principles that are emerging from the work of the Poverty Strategy Commission, of which I am Chair. Most importantly, these recognise that central and local government both have a role to play, but they are not the only ones who need to act. Indeed, quite often, they are also the least well placed and least effective actors.
The challenge then, of course, is building a cross-societal strategy that is based on an understanding of what each of those other actors can do, when they should do it and how they can be supported to do so. Delivering on this strategy requires a clear understanding of poverty; who is in poverty, why they are in poverty and the challenges that need to be tackled if they are going to get out of poverty in future. In short, as I have argued before, it requires a clear, robust and comprehensive measure of poverty for the UK.
While such a measure has been designed by the Social Metrics Commission, and has won widespread support from across the political spectrum and from organisations who work with and for people in poverty, it has not yet been implemented by the Government as the UK’s official measure.
This is problematic for two reasons. First, because it means that it cannot underpin the kind of strategy that is needed to tackle poverty. Second, it also means that the Government cannot celebrate the positive impact it is having on poverty, and show that it is Conservative values that are at the core of action on poverty.
All this means that the Chancellor should be congratulated for his actions at the Budget. We must also, as Conservatives, celebrate the actions of the last three years, which have protected some of the most vulnerable people in society, during some of the most challenging times the country has faced.
However, with the next general election approaching, there is a clear need tp set out the case that it is a Conservative Government that can navigate through the cost-of-living crisis, grow the economy and ensure that, over the course of the next Parliament, an anti-poverty strategy underpinned by Conservative values can deliver significant reductions in poverty. In practical terms, this will mean going further than the steps taken at the Budget. The first step would be to adopt the SMC’s measure of poverty as a national statistic. This could underpin the foundations of a cross-societal anti-poverty strategy and allow us all to celebrate the measured impacts that this Government is having on poverty.
Philippa Stroud is CEO of the Legatum Institute.
Much has been said about the Chancellor’s Budget earlier this week, but too little has been said about poverty. In fact, the action taken by Jeremy Hunt has, and will continue to have, some of the biggest impacts on poverty of any Chancellor in recent memory. This action also follows other significant action during the pandemic and cost-of-living crisis that has protected hundreds of thousands of people, their families and children, from the damage that poverty brings.
The broader context is the fact that the UK has a long-standing and ingrained problem with poverty. Over the last few decades, Governments of all colours have sought to tackle the issue, but with very little impact overall. While poverty rates for some groups have fallen, the overall level of poverty in the UK had largely flatlined for two decades.
That was until the pandemic. The labour market impacts of the Covid-19 pandemic and subsequent cost-of-living crisis have had a profound impact on poverty. Nowcasting by the Legatum Institute at the time of the 2022 Autumn Statement showed that poverty rates rose to unprecedented levels, with more than 15.6 million people across the UK expected to be living in poverty this year.
Since then, the softening of the energy market has supported a reduction in poverty, and the Chancellor’s actions have turbo-charged that reduction. Overall, our estimates suggest that the number of people in poverty is some 450,000 lower than we feared at the time of the Autumn Statement. On its own, the continued support that the Government is providing families through the Energy Price Guarantee has reduced the number of people expected to be in poverty by 90,000.
Further, in line with the Prime Minister’s five key priorities, the Chancellor’s attempts to boost labour supply must be congratulated. Even more so because they are targeted at groups, including families with children and disabled people, where poverty rates are amongst the highest. Our estimates are that with ev a relatively modest impact on labour supply amongst these groups, poverty rates over the next Parliament could drop by 200,000.
The impacts for these families should not be underestimated. Whilst leading a grass roots project in Birmingham, I have seen at first hand the debilitating impact of poverty on people’s ability to make ends meet and the knock-on impacts on their family stability, health, resilience and prospects for the future.
However, the importance of this goes beyond those immediately impacted by the announcements at the Budget. Overall, there are two wider lessons we need to learn. The first is that a Conservative Government can, and should, take action on poverty. For too long, action on poverty has been the preserve of parties of the Left. The Government’s actions over the last three years have shown that does not need to be the case and that Conservative values can underpin a long-term and sustained attack on poverty in the UK.
Of course, at times of crisis, it is the Government’s responsibility to provide a safety net, as it did so effectively with the Furlough Scheme, with temporary boosts to Universal Credit and a range of support since then to manage the cost-of-living crisis. But as Conservatives we know that, as well as dealing with crises, we must provide the foundations of an approach to poverty that does not solely rely on continued handouts from Government to allow people to make ends meet. As the Chancellor highlighted, independence is always better than dependence.
What this points to is an approach that empowers people to make the right decisions and build resilience, supports families to be stronger and helps businesses and communities to take the action they can to support the drive to reduce poverty. Those are the foundations of an effective and sustainable approach to reducing poverty.
They are also some of the guiding principles that are emerging from the work of the Poverty Strategy Commission, of which I am Chair. Most importantly, these recognise that central and local government both have a role to play, but they are not the only ones who need to act. Indeed, quite often, they are also the least well placed and least effective actors.
The challenge then, of course, is building a cross-societal strategy that is based on an understanding of what each of those other actors can do, when they should do it and how they can be supported to do so. Delivering on this strategy requires a clear understanding of poverty; who is in poverty, why they are in poverty and the challenges that need to be tackled if they are going to get out of poverty in future. In short, as I have argued before, it requires a clear, robust and comprehensive measure of poverty for the UK.
While such a measure has been designed by the Social Metrics Commission, and has won widespread support from across the political spectrum and from organisations who work with and for people in poverty, it has not yet been implemented by the Government as the UK’s official measure.
This is problematic for two reasons. First, because it means that it cannot underpin the kind of strategy that is needed to tackle poverty. Second, it also means that the Government cannot celebrate the positive impact it is having on poverty, and show that it is Conservative values that are at the core of action on poverty.
All this means that the Chancellor should be congratulated for his actions at the Budget. We must also, as Conservatives, celebrate the actions of the last three years, which have protected some of the most vulnerable people in society, during some of the most challenging times the country has faced.
However, with the next general election approaching, there is a clear need tp set out the case that it is a Conservative Government that can navigate through the cost-of-living crisis, grow the economy and ensure that, over the course of the next Parliament, an anti-poverty strategy underpinned by Conservative values can deliver significant reductions in poverty. In practical terms, this will mean going further than the steps taken at the Budget. The first step would be to adopt the SMC’s measure of poverty as a national statistic. This could underpin the foundations of a cross-societal anti-poverty strategy and allow us all to celebrate the measured impacts that this Government is having on poverty.