Relative poverty among working families has hit a new record high this century, with the first ever comprehensive research of official DWP data showing that 17.4% of working households are living below the breadline.
The data also reveals that the working poverty rate among families with three or more children has risen to a shocking 42%, up more than two thirds over the past decade alone.
Closer look at the data shows that working poverty rates have risen across the entire country but are highest in London, Wales and the north of England.
The spiralling rate of in-work poverty is revealed in a report by the IPPR think tank, which highlights soaring house prices, low wages and a poor welfare system as being some of the main drivers behind working poverty.
In particular, the report, ‘No Longer Managing’, warns that the social security system is failing to keep up with rental costs, as well as a lack of flexible and affordable childcare.
High house prices have pushed more families into renting privately and housing costs for private tenants have risen by almost half (48%) in real terms over 25 years. One in four households is projected to be renting from private landlords by 2025.
The IPPR report highlights how much of the multi-billion pound benefits bill finds its way into the pockets of private landlords. In deed, the thinktank estimates that £11.1 billion of housing support spending went to private landlords in the last year.
The report calls for new and different long-term targets for welfare, economic and housing policy, which reflect housing, childcare and travel-to-work costs as a percentage of families’ income.
It adds that the UK Government’s “levelling up” agenda is “unlikely to benefit working families if it remains largely focused on physical infrastructure” and fails to address social inequalities.
In the short-term, the report calls for increases in local housing allowance and childcare payments made through Universal Credit, and a 20% higher minimum wage for those in zero-hours jobs.
Clare McNeil, IPPR associate director and head of its Future Welfare State programme, said: “These shocking new figures should be a wake-up call for everyone concerned about our future.
“The UK economy’s dependence on ever-rising house prices, and the lack of affordable housing, have trapped us in a vicious circle which, unless broken, will condemn us either to a constantly rising social security bill, or to ever-increasing poverty among working households.
“A growing private rented sector coupled with high rents enriches property owners at the expense of renters, and represents a transfer of wealth away from people who already have very little, into the hands of others who are steadily accumulating more.
“We need an alternative to what the government calls ‘levelling up’. That should look beyond headline incomes to the true costs and obstacles people face when struggling to make work pay.
“Otherwise more and more families who were once ‘just about managing’ will join the growing number who are ‘no longer managing’.
“Short-term fixes are needed to alleviate the immediate crisis, but to solve the underlying problem we need a far deeper rethink of housing, childcare, social security and work.”