Our Churches have called for concerted action to turn the tide on poverty and put us on the path to a poverty-free Britain. Despite the Chancellor’s upbeat tone, the Autumn Statement offered little sign of this message yet being heeded.
14.4 million people in the UK are currently experiencing poverty, and 3.8 million people are now living in destitution, without the basics to keep warm, dry, clean and fed. This most degrading form of poverty had once been all but eradicated in the UK, but has tripled over the last seven years[1]. The numbers experiencing poverty are steadily increasing, and poverty is deepening for those at the very bottom.
Neither the Chancellor’s Autumn Statement, nor the Shadow Chancellor’s response, recognised that reality. While there were some welcome measures included in the statement, the medium-term outlook is for a stagnant economy, falling living standards, and cuts to public services budgets. Many will be disappointed at its poverty of ambition.
Economic context and falling living standards
The economic backdrop is gloomy. The economy is not doing well, nor, despite the headline measures, is it expected to do much better over the next few years. The Office for Budgetary Responsibility (OBR)’s growth and inflation forecasts were tweaked to be marginally more pessimistic about the next two years.
Average living standards remain on roughly the same downward trajectory as has been the case since the pandemic. The OBR calculates that between 2019 and 2024 real living standards will drop by on average 3.5%, the largest fall since records began in the 1950s. That fall is not spread evenly. Because of high interest rates, those with financial assets will gain considerably, and those with the lowest incomes and without assets will see the greatest falls in their standard of living.
Changes to wages and benefits
Benefits are being uprated in line with September’s CPI inflation rate, as normal. While there is some relief that the lower October figure has not been chosen instead,[2] this still keeps them at their current inadequate level, where around half of adults receiving Universal Credit regularly go without food because they can’t afford it. As food inflation is higher than CPI, uprating in this way means that the buying power of low-income families will marginally fall. The changes were also accompanied by prior announcements about harsher measures for some benefits claimants.
Good news for people on low incomes was that the minimum wage will increase by 9.8% to £11.44, and those aged 21 and 22 will now be entitled to this higher rate too. This is expected to benefit over 2.7 million low paid workers.
It is also welcome news that Housing Benefit rates are being linked again to rents. The link was broken in 2019 when Local Housing Allowance rates were frozen, but since then, rents have increased by well over 10%. The result was that by 2022, only the cheapest 18% of homes were affordable to families receiving Housing Benefit. The situation is worse in expensive areas like central London where only 2% of housing is affordable with housing benefit[3]. Re-linking rates to rents means that from April next year, 30% of housing[4] nationally will become affordable, giving families more of a chance of finding something suitable when they need it.
Redistributing tax rises and quietly cutting public services
The proportion of the economy being taken in taxes is going up to 37.7%. This is the highest level of overall taxation in the UK since the 1948, but unexceptional by the standards of other developed economies.
The decision taken in 2020 to allow the value of tax-free allowances and income tax thresholds to be eroded by inflation will increase the government’s total tax take by around £50 billion a year. The “fiscal headroom” that the Chancellor spent in this Autumn Statement was largely the result of higher inflation forecasts speeding up this process of erosion.
The other effect of the higher inflation forecast is to erode the value of the money budgeted for public services, such as the police, NHS[5] and especially capital investment. These budgets do not automatically increase with inflation, so those services will end up with less spending power – a cut -of around £20 billion.
Alongside the £50 billion in tax increases occurring in the background, around £20 billion of tax cuts were announced[6], half via a 2p cut in the personal rate of National Insurance[7] (NI) and half via “full expensing” of business investments. For most individuals, the large inflation-driven income tax rises will be partially offset by lower National Insurance payments. As with any cut on a tax levied on income, the poorest do not benefit, as it gives only to those in work. The vast majority of the cash will go to the top half of earners.
Let’s End Poverty
The Chancellor said that this Statement was intended to stimulate growth. The opposition parties agreed with the aim but not the method. Politicians will tell you that they can pay for things with growth, and perhaps they will be right, but we also need to ask what they would prioritise if they can’t.
This winter, between December and February the Trussell Trust will distribute one million food parcels from their largely church-based network of foodbanks. This Autumn Statement will not change that reality.
That’s why Churches have helped instigate the ‘Let’s End Poverty’ movement, bringing together individuals and groups from across society who believe that this level of desperate need and growing poverty is unacceptable in the UK. It has a vision for a UK where poverty can’t keep anyone down.
With a General Election on the horizon, we want to see our political leaders step up, take responsibility for rising poverty in our communities and take action to address it. They should be using the tools at their disposal to take a stand and demonstrate more ambition to help our communities to thrive. The human cost of neglecting policies which address rising poverty is too big and too damaging to ignore.
[1] Joseph Rowntree Foundation, Destitution in the UK (2023)
[2] It had been leaked that Treasury was considering uprating in line with October’s inflation rate, instead of September. This would have meant ignoring the impact of September 2022’s price rises – which included the doubling of the energy price cap a measure which impacted the poorest most.
[3] JRF (2023) Government must raise housing benefit as crisis deepens for private renters
[4] Housing and total Benefit caps reduce this proportion significantly, especially for those in expensive areas and/or those with larger families.
[5] NHS spending still rises but at a lower rate
[6] From the OBR’s 2027-28 figures.
[7] Alongside some changes to how the self-employed pay national insurance.
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