New Dispatches research highlights the shocking extent of the economic devastation suffered by the UK’s most vulnerable households, as the economy has struggled during this Coronavirus pandemic.

The number of households “living in destitution” across the UK is estimated to have more than doubled during 2020, from 197,400 to 421,500. That is an increase of over 220,000 households and represents well over half a million people.

Destitution is defined as serious poverty - two adult households living on less than 100 pounds a week, or 70 pounds for-single adult households.
Analysis for Dispatches by the National Institute of Economic and Social Research (NIESR) indicates that the number of UK households living “in destitution” rose from 0.7 percent of all households in 2019 to 1.5 per cent in 2020 – based on the widely-recognised Joseph Rowntree Foundation definition of destitution.

Across the North West of England – an area where successive lockdowns have been particularly prolonged, with local service and hospitality sectors hit especially hard – NIESR estimates that income levels among the poorest 10 per cent of households fell by 20 per cent in 2020. That compares to a 13 percent drop among the same lowest decile group across the country as a whole.

In the North West, the number of households living in destitution rose from 0.7 percent to 4.5 percent in 2020, according to NIESR estimates. That is a six-fold increase and three-times the UK-wide share of destitute households. NIESR predicts the number of households in destitution across the North West will reach 5.6 percent in 2021 – more than one in twenty, and up eight-fold since lockdown began.

Professor Jagjit Chadha, Director of NIESR, also said that the current official unemployment rate of 5 percent “seems to be under-reporting the true level of unemployment” and that a jobless total of 10 percent “wouldn’t be surprising”.

When asked if the Covid pandemic, and the disproportionate impact of lockdown on UK regions made the case for “levelling-up” more pressing, Professor Chadha replied: “It absolutely makes it more pressing”.

“As a result of lockdowns, levels of destitution seem to be rising across the country. But what’s terribly worrying is that in certain regions – in the North West in particular – we might see some 4, 5 or 6 per cent of the population living in destitution,” Professor Chadha told Dispatches.

“In places where income levels are relatively low compared to other regions, an economic shock drives more people into destitution and poverty. We’ve also been looking at the demand for food banks and that’s gone up at a really worrying rate over 2020. And I don’t see that that’s going to fall this year, particularly if furloughing or other forms of income support stop over the next month or two,” said Professor Chadha.

“Families who can't work, who work in the industries that are most affected by Covid – like hospitality, the restaurant trade, industries requiring social proximity, which account for around a tenth of all employment in this country – they will continue suffering for some time to come. It’s not just going to end when we’re all vaccinated”.

“The kind of unemployment numbers we’ve currently got seem to be underreporting the true level of unemployment. Given the level of activity we’ve had in the economy – the extent to which it’s fallen – unemployment could rise to at least 8 or 9 per cent, or even further if the furlough scheme or a robust successor doesn’t keep people in employment,” Professor Chadha said.

“Some parts of the country will be very resilient, like London and the South East. But some will not. The North West, for example, has not shown a great deal of resilience to shocks in the past. And that’s what we need to think about – how do we help these parts of the country that have not only fallen behind but have fallen behind further because Covid is a shock that interacts with poverty and bad outcomes and makes them worse”.

Interview with Alistair Darling:

“When I introduced Quantitative Easing in 2009 it was meant to last for a couple of years. I never imagined it would still be running 11 years later. I think quantitative easing played its part when I was around, you know, 10 or 11 years ago. It's certainly playing its part in the pandemic because these were and are truly exceptional events.

I don't think it's something you would want to be using routinely. You wouldn't want to do it. You know, as a matter of course, just running on and on. And of course, you have got to pay for this one day.”

Darling on levelling up, “You can't level up on the cheap. You’re kidding yourself if you think you can. Yes, it does need expenditure. But that sort of expenditure where you are rejuvenating the country and you get your tax back because people are going into work, they're paying taxes, they're earning higher wages and so on. It's a long-term commitment and yes, it involves expenditure, but you can justify that expenditure. It can be done. That’s the point.

We’re going to have to pay for this, there are going to be consequences of this pandemic, make no mistake about that.”

BRITAIN’S £400BN COVID BILL: WHO WILL PAY? CHANNEL FOUR DISPATCHES

MONDAY 22ND FEBRUARY 8PM

WRITTEN AND PRESENTED BY LIAM HALLIGAN

PRODUCED AND DIRECTED BY MARK ALDEN

EXECUTIVE PRODUCER: EAMONN MATTHEWS

COMMISSIONING EXECUTIVE: SARAH HEY

Notes to Editors:

The Joseph Rowntree Foundation defines “destitution” as a two-adult household living on under £100 a week and a single-adult household on less than £70 a week. There are 27.8 million households in the UK and 3.17 million in the North West of England (2019 estimates). The average UK household is made up of 2.3 people.

The National Institute for Economic and Social Research is among the UK’s most influential independent think-tanks. Based in Westminster, it was founded in 1938

NIESR was commissioned by Channel 4 Dispatches to investigate regional inequalities – particularly in the North West of England, where much of the upcoming episode of Dispatches was filmed. NIESR researchers employed dynamic microsimulations using the LINDA model, based on a representative population from the 6th Round of the UK Wealth and Assets survey to explore impacts on destitution and household income of recent economic trends among the bottom decile of the UK’s income distribution.

Additional analyses on the regional impacts of Covid-19 and Brexit on a number of aggregate economic indicators – gross value added, employment, labour productivity – as well as the effects on the poorest of the society can be found in NIESR’s recent UK Economic Outlook report.