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Poorest families hit hardest by Covid-19 ‘economic storm’

The third lockdown, while necessary to save lives, could push many families to the brink, warns the Joseph Rowntree Foundation.

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Poorest families hit hardest by Covid-19 ‘economic storm’ (Joe Giddens/PA)

Poorest families hit hardest by Covid-19 ‘economic storm’ (Joe Giddens/PA)

Poorest families hit hardest by Covid-19 ‘economic storm’ (Joe Giddens/PA)

The poorest families have been worst affected by the coronavirus pandemic’s economic fall out and are likely to find it harder to recover as society rebuilds, a new report warns.

People already trapped in poverty when Covid-19 hit were the most financially vulnerable and they tend to work in the sectors which have been hit hardest, the Joseph Rowntree Foundation (JRF) said.

The third lockdown, while necessary to save lives, could push many families to the brink amid the “economic storm’, it warns in a new report.

In 2018/19, 14.5 million people were in poverty in the UK – more than one in five of the population.

The report sets out how, before the pandemic, the standard of living was falling fastest for people on the lowest incomes, while child poverty and in-work poverty had been steadily rising.

The Government needs to do the right thing and keep supporting people on low incomesJRF report

Almost a quarter (23%) of workers in the lowest paid sectors of retail, accommodation and food were living in poverty in 2018/19. They were also more likely to be women, young people and from ethnic minorities, it said.

When the pandemic hit, workers on the lowest incomes experienced on average the largest cut in hours and were more likely to have their hours or pay cut, according to a Social Metrics Commission report.

It found that 81% of those working in hospitality and leisure have been negatively financially impacted, compared with just 16% of those in financial services.

The JFR said younger workers were more likely to have been furloughed or made redundant as they are more likely to work in accommodation, food and retail sectors.

Workers from black and minority ethnic backgrounds were 14% more likely to be made unemployed and 13% less likely to be furloughed at the start of the pandemic, while 45% of disabled people in employment at the start of 2020 reported no earnings by the middle of the year.

The JRF said ministers must make tackling poverty an economic priority in 2021, and give urgent support so that the lowest earners can recover from lockdowns and job losses.

This includes making permanent the £20 weekly uplift to Universal Credit payments, which is in place until the end of March, and extending the uplift to those on legacy benefits.

It is a damning indictment of our society that those with the least have suffered the most before the pandemic and are now being hit hardest once again by the pandemicHelen Barnard

It said in its report: “The Government needs to do the right thing and keep supporting people on low incomes.

“If it takes the lifeline away, people will be cut adrift and pulled deeper into poverty.”

JRF director Helen Barnard said: “It is a damning indictment of our society that those with the least have suffered the most before the pandemic and are now being hit hardest once again by the pandemic.

“The Government must now make the right decisions to avoid another damaging decade.

“It’s unacceptable that certain groups are bearing the brunt of the economic impact of Covid-19 and are now reeling from the latest blow of this third lockdown.

“We all believe in justice and in looking out for each other, and we support policies that reflect these values. Ministers were right to increase Universal Credit by £20 a week and they must now make it permanent and extend this support to legacy benefits.”

The Local Government Association said free school meals and the Universal Credit uplift have protected many families most at risk and must continue.

Anneliese Dodds, Labour’s shadow chancellor, said the report confirms the human cost of the economic downturn, which has been made worse by the Government’s “irresponsible, last-minute decision making”.

She said: “Now the Chancellor is pushing ahead with a triple hammer blow on family finances, of tax rises, pay freezes and social security cuts. It’s astonishing that Rishi Sunak thinks struggling families across the country should carry the can for his mistakes.”

Action for Children’s director of policy and campaigns, Imran Hussain, added: “This analysis is a disturbing warning that a generation of children face having their life chances harmed by the benefit freeze, the economic and mental health effects of the pandemic, and the choices the Chancellor now makes.”

A Government spokesman said: “We are committed to supporting the lowest-paid families through the pandemic and beyond to ensure that nobody is left behind.

“That’s why we’ve targeted our support to those most in need by raising the living wage, spending hundreds of billions to safeguard jobs, boosting welfare support by billions and introducing the £170 million Covid Winter Grant Scheme to help children and families stay warm and well fed during the coldest months.”

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