High levels of growth unlikely to reduce poverty, charity warns Government

The Government “risks leaving millions behind” as even very high levels of growth are unlikely to reduce poverty, a charity has warned.

The Joseph Rowntree Foundation (JRF) said new research raised “questions about the Chancellor’s growth-first strategy”, as it showed a strong economy alone “will not move the dial on poverty during this Parliament”.

The anti-poverty charity said its analysis showed the “risks of the Government’s decision to pursue economic growth before improving the lives of families”.

The JRF said it was calling on the Government to “see poverty reduction as part of its approach to long-term and lasting growth”.

It added that investing in housing, welfare and public services “must be part of the strategy for securing lasting growth, not something that can wait to come later”.

The Government said it was “taking action” to tackle poverty, adding that the “best way to improve living standards for everyone is to get the economy growing”.

Analysis by the JRF based on the Office for Budget Responsibility’s (OBR) central estimates suggests poverty will remain broadly flat at around 14-and-a-half million people between 2024 and the end of 2028.

The JRF said that this does not improve “even if the UK has the highest GDP per capita growth in the G7 and achieves an 80% employment rate”.

The charity said analysis of a strong economy, using higher earnings and employment forecasts than the OBR’s, “does very little to reduce working age poverty or child poverty”.

This is because the gap in living standards between those on low incomes and middle incomes “remains broadly unchanged”, with the charity forecasting that working age poverty would remain broadly flat at just over eight million and child poverty would remain at around 4.3 to 4.5 million.

Alfie Stirling, director and chief economist of the JRF, said: “The Government’s current approach not only risks leaving millions behind who can least afford it, it also risks failing on its own terms to deliver sustained and resilient economic growth.

“Unless business investment is matched with stronger social foundations from the start, growth will be harder to achieve now, and easier to lose to the next economic shock.”

A Government spokesperson said: “We know the best way to improve living standards for everyone is to get the economy growing, and that is why the Chancellor has vowed to lead the most pro-growth, pro-business Treasury in the country’s history.

“We also recognise the dire inheritance we face with more people living in poverty now than 14 years ago.

“We are taking action to tackle this, including extending the Household Support Fund, developing a strategy to reduce child poverty, and taking first steps to deliver a genuine living wage – alongside measures to boost housing and improve public services.”