When he delivered his Budget, the Chancellor promised to ‘Continue doing whatever it takes to support the British people and businesses through this moment of crisis', below we use the Joseph Roundtree Foundation’s five tests to look at whether the measures announced will help tackle poverty in the region.
1. Has the Chancellor extended the £20 uplift to Universal Credit and Working Tax Credit for at least another year?
The Government’s decision to cut Universal Credit and Working Tax Credit in six months will coincide with when the furlough scheme ends and unemployment is likely to peak – nationally it is predicted to pull 500,000 people including 200,000 children into poverty as we head into winter.
In Shropshire: The Universal Credit cut will affect more than 800,663 households across the Midlands and take millions out of Shropshire’s local economy.
In the Midlands, 800,663 households were on Universal Credit as of November 2020. The largest group were single person households (44%)who received on average £500 per month, followed by single parent households with dependent children (25%) who received on average £1,000 a month. Citizens Advice Shropshire report that some areas of the county saw a percentage increase of as much as 119% in Universal Credit caseloads.
The cut will also have a significant impact on the Shropshire economy. Research from Citizen’s Advice Shropshire has shown removing the uplift could take around £4,700,000 out of the local economy in Ludlow, £6,900,000 in North Shropshire and £6,900,000 out of the local economy in Shrewsbury.
2. Has the Chancellor announced measures to protect jobs and help the unemployed back into work?
The decision to extend furlough until the end of September is welcome and will continue to protect more jobs until the economy reopens. The importance of flexibility in the timings set out for unwinding the scheme has been stressed, with many urging the Government to adapt to any changes to the proposed roadmap out of lockdown.
In Shropshire: The county’s workforce has been disproportionally affected by Covid and needs additional support to recover
The ONS estimates that as much as 12% of the workforce in the West Midlands was furloughed in December 2020.
The Budget did not add to the employment and training support programmes already announced last year and gaps remain, particularly for people who need to retrain in order to change sectors. We know that the self-employed, small businesses, retail and manufacturing have been some of the hardest hit sectors since the start of the pandemic. The gap in support programmes is particularly significant for Shropshire which supports a primarily small business economy. More than nine out of 10 enterprises in Shropshire employ less than 10 people, self-employment is high and there are comparatively few large employers. Key employment sectors include health, education, retail and manufacturing.
3. Has the Chancellor announced measures for England to support those in rent arrears and at risk of eviction?
The Chancellor did not announce any details on the 700,000 households already in rent arrears. The Local Housing Allowance will be frozen from April which will mean further costs for renters on low incomes. Most evictions are paused until March 31st, 2021, but it is unclear if the ban will be extended beyond this point.
The Stamp Duty Holiday was extended, and a new 95% mortgage guarantee scheme was launched. Many argue these policies will compound the UK’s housing crisis, driving up house prices and making it harder to address the issues faced by people in poverty.
In Shropshire: Housing is a key issue and homelessness is increasing
Shropshire Council’s draft housing strategy released in March 2020 reported one in 400 households in the county are categorised as homeless. It highlighted the problem of rising house prices and rental costs. In Shrewsbury, the average house price is 6.7 times the average household income. At the time of publication there were more than 5,000 households on the housing register requiring affordable housing. The new Budget does not seem to offer a solution to this growing problem.
4. Has the Chancellor set us on a course for recovery that leaves no one behind?
The Joseph Roundtree Foundation’s analysis sets out that most of the new spending announced is targeted at supporting incomes while pandemic restrictions continue as the economy begins to reopen, with little new fiscal stimulus focused on restoring growth afterwards. They argue that the Chancellor is relying on a quick recovery driven by consumer spending and increased business investment.
This approach could risk an unequal recovery that excludes low-income households. A spending-led recovery would be driven by wealthier households who have built up savings during the pandemic, while the bottom 40% of households have depleted savings or gone into debt to keep their heads above water.
In Shropshire: the gap between low- income and higher-income households could widen
Whilst many areas of Shropshire are very affluent, there are wards that rank highly on the Index of Multiple Deprivation, and this approach is likely to widen the gap between these areas.
5. What does the Chancellor’s Budget mean for poverty in the UK?
Many anti-poverty charities and organisations would like to see a recovery that is characterised by good jobs and investment in people and their skills. Affordable housing should be a priority and where social security is there for us when we need it and feel this Budget did not deliver on these core elements.
In Shropshire: the county needs continued, bold support to help recover from the pandemic
Key issues facing Shropshire are not addressed by this Budget, housing, secure employment and social security. In the challenging months ahead The Shropshire Food Poverty Alliance will continue to work towards our Menu For Action, building on what we already have to support people in food crisis, preventing people falling into food poverty and strengthening partnership working.