Millions of people in UK would need to double their income to escape poverty, new report warns

Published

1 year ago

January 23, 2024

admin

Millions of Britons would need to more than double their income to climb out of poverty, according to a new report criticising “social failure at scale”.

According to the Joseph Rowntree Foundation, six million people were in very deep poverty in 2021-22 – 1.5 million more than 20 years ago.

This means they received less than 40% of the country’s median (middle) income after housing costs.

These people would need an additional £12,800 a year to reach the poverty line, which is defined as 60% of median income.

Giving an example of a couple with two children under 14 living in poverty, JRF suggested the average income for this type of family after housing costs was £21,900 – and they would need an extra £6,200 yearly just to reach the poverty line.

In the mid-1990s, the gap was £3,300 after adjusting for inflation.

The JRF has warned that the poverty gap – the amount of money needed to bring the incomes of those in poverty to the poverty line – has widened.

In 2021-22, 22% of the population (14.4 million people) were in poverty in the UK – including 8.1 million working-age adults, 4.2 million children and 2.1 million pensioners.

This equates to two in 10 adults, and three in 10 children.

There are many reasons why people are stuck in poverty – including illnesses or redundancies – but according to the Big Issue, “structural and systemic issues” worsened by increasing living costs create a “cycle that keeps people trapped” in hardship.

The JRF showed that poverty rates grew rapidly under Margaret Thatcher’s administration in the 1980s and remained high, with small decreases in following governments.

Its report urged political parties to include an essentials guarantee in Universal Credit, ensuring people always have enough to cover “life essentials like food and energy”.

Former prime minister Gordon Brown recently told Sky News that Universal Credit was “not working” and needed to be addressed after citing families unable to afford fundamental housing appliances and forgoing basic hygiene products like soap and toothpaste due to the cost of living crisis.

The Trussell Trust network, which supports more than 1,300 food bank centres across the UK, had forecast that more than 600,000 people would rely on food banks from December until February this year.

No stigma in baby bank ‘village’

Sky News correspondent Shingi Mararike visited Hartlepool Baby Bank in the North East – a corner of the country where the poverty being described by the Joseph Rowntree Foundation cuts through more than most.

With storerooms packed to the ceilings with boxes full of clothes and other baby items, founder Emilie de Brujin said everything they had stocked was neither “flash nor expensive” but the “essentials” that parents need to take care of their kids.

Socks, underwear, shoes, bibs and sterilisers were kept in one room; in another were “maternity packs” containing basics for every pregnant mum like nappies, cream, bed mats and breast pads.

Ms de Brujin said it was “hard work” to store everything as they couldn’t afford a bigger space and the centre now catered for older children too.

She said when the baby bank started, clothes were limited to 0-2-year-olds but after COVID, clothes extended to their siblings – children up to 12 years of age.

Ms de Brujin also said: “We didn’t want to say [to families] go here for one child, go there for another. No one’s got the time. Poverty is really time-consuming. Families don’t have cars and have to walk in all weathers.”

She added: “Nobody wants to use a baby bank but they have to and we make that as pleasant an experience as we can. All I ask from my volunteers is one thing – a smile.” She described the place as a “village” where no one should feel stigmatised.

The clothes mainly come from donors and are items their children don’t need. “It goes from one child to another which is lovely. We have people knit for us too and we’re lucky as our local community support us so well,” the founder said.

She said that the parents who frequented the baby bank weren’t just those on benefits or affected by immigration.

“We’ve seen parents where one hasn’t recovered job-wise since COVID, or hours have been cut due to business costs… so these are working parents. It’s a whole world scenario where everyone is touched by rising costs at the moment.”

Sky News spoke to one mum with seven children under one roof, and the additional struggles she would otherwise face had it not been for Hartlepool Baby Bank.

Hannah Southwell-Dymock said the centre was “very important” especially as a student where her finances “didn’t stretch at all”.

She says she saves £15 a week from not having to buy nappies – a significant amount given rising bills and necessities.

“We can actually get food”, she said. “If we didn’t have the bank it would be the case of what food we can get and survive off.”

Paul Kissack, JRF group chief executive, confirmed families were spiralling deeper below the poverty line.

He said: “Little wonder that the visceral signs of hardship and destitution are all around us – from rocketing use of foodbanks to growing numbers of homeless families.

“This is social failure at scale.”

Mr Kissack said political parties must set out their plans to “turn back the tide on poverty” as the country approaches a general election.

Consumer champion Martin Lewis said the “stark reality” was that people’s incomes were less than their minimum necessary spend, despite help from money charities.

He said the JRF report must prompt policymakers and regulators to “sit up [and] take note and address these deep-rooted problems”.

A government spokesperson said: “We are continuing to support families with the cost of living backed by £104bn – and there are 1.7 million fewer people living in absolute poverty, including 400,000 children, compared to 2010.

“Children are five times less likely to experience poverty living in a household where all adults work, compared to those in workless households.”

The spokesperson added that taxes have been cut and inflation is being curbed “so hard-working people have more money in their pocket”.

Business

Economists say the cost of living crisis is over – here’s why many households disagree

Published

11 hours ago

July 14, 2025

admin

Economists say the cost of living crisis is over - here's why many households disagree

Talk to economists and they will tell you that the cost of living crisis is over.

They will point towards charts showing that while inflation is still above the Bank of England’s 2% target, it has come down considerably in recent years, and is now “only” hovering between 3% and 4%.

So why does the cost of living still feel like such a pressing issue for so many households? The short answer is because, depending on how you define it, it never ended.

Economists like to focus on the change in prices over the past year, and certainly on that measure inflation is down sharply, from double-digit levels in recent years.

But if you look over the past four years then the rate of change is at its highest since the early 1990s.

But even that understates the complexity of economic circumstances facing households around the country.

For if you want a sense of how current financial conditions really feel in people’s pockets, you really ought to offset inflation against wages, and then also take account of the impact of taxes.

That is a complex exercise – in part because no two households’ experience is alike.

But recent research from the Resolution Foundation illustrates some of the dynamics going on beneath the surface, and underlines that for many households the cost of living crisis is still very real indeed.

The place to begin here is to recall that perhaps the best measure of economic “feelgood factor” is to subtract inflation and taxes from people’s nominal pay.

You end up with a statistic showing your real household disposable income.

Consider the projected pattern over the coming years. For a household earning £50,000, earnings are expected to increase by 10% between 2024/25 and 2027/28.

Subtract inflation projected over that period and all of a sudden that 10% drops to 2.5%.

Now subtract the real increase in payments of National Insurance and taxes and it’s down to 0.2%.

Now subtract projected council tax increases and all of a sudden what began as a 10% increase is actually a 0.1% decrease.

Of course, the degree of change in your circumstances can differ depending on all sorts of factors. Some earners (especially those close to tax thresholds, which in this case includes those on £50,000) feel the impact of tax changes more than others.

Pensioners and those who own their homes outright benefit from a comparatively lower increase in housing costs in the coming years than those paying mortgages and (especially) rent.

Nor is everyone’s experience of inflation the same. In general, lower-income households pay considerably more of their earnings on essentials, like housing costs, food and energy. Some of those costs are going up rapidly – indeed, the UK faces higher power costs than any other developed economy.

But the ultimate verdict provides some clear patterns. Pensioners can expect further increases in their take-home pay in the coming years. Those who own their homes outright and with mortgages can likely expect earnings to outpace extra costs. But others are less fortunate. Those who rent their homes privately are projected to see sharp falls in their household income – and children are likely to see further falls in their economic welfare too.

Business

Lloyds Banking Group in talks to buy digital wallet provider Curve

Published

2 days ago

July 12, 2025

admin

Lloyds Banking Group in talks to buy digital wallet provider Curve

Britain’s biggest high street bank is in talks to buy Curve, the digital wallet provider, amid growing regulatory pressure on Apple to open its payment services to rivals.

Sky News has learnt that Lloyds Banking Group is in advanced discussions to acquire Curve for a price believed to be up to £120m.

City sources said this weekend that if the negotiations were successfully concluded, a deal could be announced by the end of September.

Curve was founded by Shachar Bialick, a former Israeli special forces soldier, in 2016.

Three years later, he told an interviewer: “In 10 years time we are going to be IPOed [listed on the public equity markets]… and hopefully worth around $50bn to $60bn.”

One insider said this weekend that Curve was being advised by KBW, part of the investment bank Stifel, on the discussions with Lloyds.

If a mooted price range of £100m-£120m turns out to be accurate, that would represent a lower valuation than the £133m Curve raised in its Series C funding round, which concluded in 2023.

That round included backing from Britannia, IDC Ventures, Cercano Management – the venture arm of Microsoft co-founder Paul Allen’s estate – and Outward VC.

It was also reported to have raised more than £40m last year, while reducing employee numbers and suspending its US expansion.

In total, the company has raised more than £200m in equity since it was founded.

Curve has been positioned as a rival to Apple Pay in recent years, having initially launched as an app enabling consumers to combine their debit and credit cards in a single wallet.

One source close to the prospective deal said that Lloyds had identified Curve as a strategically attractive bid target as it pushes deeper into payments infrastructure under chief executive Charlie Nunn.

Lloyds is also said to believe that Curve would be a financially rational asset to own because of the fees Apple charges consumers to use its Apple Pay service.

In March, the Financial Conduct Authority and Payment Systems Regulator began working with the Competition and Markets Authority to examine the implications of the growth of digital wallets owned by Apple and Google.

Lloyds owns stakes in a number of fintechs, including the banking-as-a-service platform ThoughtMachine, but has set expanding its tech capabilities as a key strategic objective.

The group employs more than 70,000 people and operates more than 750 branches across Britain.

Curve is chaired by Lord Fink, the former Man Group chief executive who has become a prolific investor in British technology start-ups.

When he was appointed to the role in January, he said: “Working alongside Curve as an investor, I have had a ringside seat to the company’s unassailable and well-earned rise.

“Beginning as a card which combines all your cards into one, to the all-encompassing digital wallet it has evolved into, Curve offers a transformative financial management experience to its users.

“I am proud to have been part of the journey so far, and welcome the chance to support the company through its next, very significant period of growth.”

IDC Ventures, one of the investors in Curve’s Series C funding round, said at the time of its last major fundraising: “Thanks to their unique technology…they have the capability to intercept the transaction and supercharge the customer experience, with its Double Dip Rewards, [and] eliminating nasty hidden fees.

“And they do it seamlessly, without any need for the customer to change the cards they pay with.”

News of the talks between Lloyds and Curve comes days before Rachel Reeves, the chancellor, is expected to outline plans to bolster Britain’s fintech sector by endorsing a concierge service to match start-ups with investors.

Lord Fink declined to comment when contacted by Sky News on Saturday morning, while Curve did not respond to an enquiry sent by email.

Lloyds also declined to comment, while Stifel KBW could not be reached for comment.

Business

UK economy figures not as bad as they look despite GDP fall, analysts say

Published

3 days ago

July 11, 2025

admin

UK economy figures not as bad as they look despite GDP fall, analysts say

The UK economy unexpectedly shrank in May, even after the worst of Donald Trump’s tariffs were paused, official figures showed.

A standard measure of economic growth, gross domestic product (GDP), contracted 0.1% in May, according to the Office for National Statistics (ONS).

Rather than a fall being anticipated, growth of 0.1% was forecast by economists polled by Reuters as big falls in production and construction were seen.

It followed a 0.3% contraction in April, when Mr Trump announced his country-specific tariffs and sparked a global trade war.

A 90-day pause on these import taxes, which has been extended, allowed more normality to resume.

This was borne out by other figures released by the ONS on Friday.

Exports to the United States rose £300m but “remained relatively low” following a “substantial decrease” in April, the data said.

Overall, there was a “large rise in goods imports and a fall in goods exports”.

A ‘disappointing’ but mixed picture

It’s “disappointing” news, Chancellor Rachel Reeves said. She and the government as a whole have repeatedly said growing the economy was their number one priority.

“I am determined to kickstart economic growth and deliver on that promise”, she added.

But the picture was not all bad.

Growth recorded in March was revised upwards, further indicating that companies invested to prepare for tariffs. Rather than GDP of 0.2%, the ONS said on Friday the figure was actually 0.4%.

It showed businesses moved forward activity to be ready for the extra taxes. Businesses were hit with higher employer national insurance contributions in April.

The expansion in March means the economy still grew when the three months are looked at together.

While an interest rate cut in August had already been expected, investors upped their bets of a 0.25 percentage point fall in the Bank of England’s base interest rate.

Such a cut would bring down the rate to 4% and make borrowing cheaper.

Analysts from economic research firm Pantheon Macro said the data was not as bad as it looked.

“The size of the manufacturing drop looks erratic to us and should partly unwind… There are signs that GDP growth can rebound in June”, said Pantheon’s chief UK economist, Rob Wood.

Why did the economy shrink?

The drops in manufacturing came mostly due to slowed car-making, less oil and gas extraction and the pharmaceutical industry.

The fall was not larger because the services industry – the largest part of the economy – expanded, with law firms and computer programmers having a good month.

It made up for a “very weak” month for retailers, the ONS said.