Marcus Rashford’s work challenging the government over food vouchers during school closures is just one of a series of recent issues that continually challenge my thinking around our economic priorities, and our seeming inability to really tackle deprivation and poverty.
Other things that have brought this conundrum of where should we devote our economic policy efforts into sharper focus of late include: the debate around the fate of the £20 per week Universal Credit boost that was introduced at the start of lockdown and is due to expire soon; a new Joseph Rowntree Foundation annual report on poverty; and learning how Virgin Money have set themselves an aspiration that by 2030 none of their customers will pay a poverty premium.
A poverty premium is, in simpler terms, the extra costs that people in poorer households bear compared to the higher income households. The areas where a poverty premium come into play are plentiful. In fact, the last estimate I found suggests that the poverty premium costs an average of £490 per year. This is made up from three main factors:
- The choices low-income households need to make as a result of strict monthly budgeting, e.g. low-income households often pay car or home insurance monthly (which incurs a premium) because they could not afford to pay annually upfront or prepayment electric and gas meters, predominantly used in lower income households, which charge more per unit that Direct Debit customers.
- Market practices which impose additional costs on low-income households, e.g. insurance companies apply area-based premiums for insurance cover in higher risk areas, where low-income households are more likely to live.
- Market practices which exclude low-income households, e.g. the cheapest fuel tariffs are accessed by regularly comparing tariffs and switching online, but high rates of digital exclusion makes it difficult for low-income households to switch fuel tariffs.
Not only does it cost more to be poor, there are significant health inequalities at play in areas of deprivation. This has been highlighted by Department of Health Coronavirus and health inequality work. Using data up to the end of October, which was the latest available at the time of the research, the research finds that the infection rate is highest in the 10% most deprived areas (3,052 cases per 100,000 population). This rate is 64% higher than the rate in the 10% least deprived areas (1,859 cases per 100,000 population) and 55% higher than the Northern Ireland average (1,972 cases per 100,000 population). The death rate is almost two-fifths higher than the rate in the 10% least deprived and almost one and a half times the NI average. While we have to consider that deprived areas might have other characteristics that speed transmission rates, the fact remains that these grim figures are showing a greater impact of Covid-19 in deprived areas.
A further challenge that we haven’t grasped with respect to poverty is housing. The Housing Executive has compiled statistics that identify 38,745 people waiting for a house. 27,745 are deemed to be in housing stress. 16,802 households are presenting as homeless.
We don’t yet have any statistics on what the Covid-19 crises has done to poverty statistics. The latest statistics we have to draw on were published in May last year but relate to 2018/19. Those statistics revealed that more than 300,000 people here are living in absolute poverty (defined as being incomes that are 60% below the UK average). One in five of these are children and the figures represent 16% of the population, up from 14% on the previous data.
How the pandemic impacts on these figures is uncertain but will be determined by how the pandemic impacts on employment, earnings, benefits, housing costs and inflation. We have already seen a disproportionate impact on lower paying occupations such as those in the culture, leisure and hospitality sectors. The longer restrictions last, the greater the risk of more permanent economic scarring on the labour market, and thus poverty levels.
I spend a fair amount of time attending meetings and hearing how, across all areas of Northern Ireland, hundreds of millions of pounds is set to be invested in ‘game changing’ initiatives like innovation centres/centres of excellence, tourist attractions etc. and hundreds of thousands of square feet of new office and retails blocks. I’ve even been involved in supporting the development of these ideas. I know economic drivers are all interlinked and we can pursue more than one initiative at a time but I do wonder if we run to the ‘easy’, or perhaps more accurately, the shiny stuff a bit too readily – building roads, greenways and tourist attractions is the fun part. Tackling deeply ingrained challenges less so. I struggle to shake this niggling feeling that our focus is wrong and we should throw the kitchen sink at solving the various poverty challenges that continue to face us.