I am pleased to share the following press release from the Joseph Rowntree Foundation. I am a non-executive director of Cambridge Econometrics:
Families trapped in poverty will see no Brexit dividend — unless the Government changes course on domestic policies, according to a new assessment by the leading authority on poverty in the UK, the independent Joseph Rowntree Foundation (JRF).
In new analysis published today, JRF warns that poverty and the cost of living are likely to increase and real wages to fall, even if favourable trading arrangements are agreed, as the country leaves the EU. This is at a time when we are already seeing the first sustained rises in child and pensioner poverty, and there are more workers living in poverty than ever before.
The analysis, by Cambridge Econometrics, models a range of post-Brexit trading arrangements, providing detailed results on the potential impacts on the cost of living, wages, and employment looking ahead to 2030. This ranged from staying in the single market (a ‘Norway' scenario) to ‘no deal', taking into account tariffs, non-tariff barriers to trade, immigration and investment.
In all scenarios, the cost of living is likely to rise and real wages to fall after the UK leaves the EU in the immediate period, however a ‘No Deal' scenario is likely to have the largest negative effect on costs and wages.
It also found that:
- The driving forces of poverty will not be addressed by Brexit, highlighting why urgent action is needed now on domestic policies.
- Many of the impacts of Brexit are fairly evenly distributed across the population. Living costs for low-income households are estimated to increase by £480 per year in a‘No Deal' scenario. Future governments could choose to protect low income households from the impacts of rising prices.
Supporting analysis by JRF finds that:
- Low pay, high housing costs and freezes and cuts to benefits and tax credits ahead of the referendum were leading to rising poverty.
- There is a risk that the number of people in poverty could rise by 200,000 if the government uprated benefits and tax credits by 2%, rather than keeping up with the anticipated higher inflation caused by Brexit. If a future government uprated benefits and tax credits by less than 2% the rise in poverty could be much larger.
JRF analysis shows the impact of three illustrative scenarios on poverty, comparing changes to housing, employment and social security to the possible impact of Brexit. It demonstrates that it is vital to maintain a focus on domestic policy, alongside negotiating Brexit and agreeing a framework for our post-Brexit economy.
Campbell Robb, chief executive of the independent Joseph Rowntree Foundation, said:
“Many people on low incomes backed Leave after being locked out and left behind for too long. Since the vote to leave the EU, families have been hit by price rises in the shops, seen their wages eaten up by crippling housing costs and had their tax credits pared back.
“It's hard to take control and build a better life when you're juggling the bills and high costs are pulling you under. Two years on from the vote, this is unacceptable. And it will not change unless the Government gets a grip and delivers for people on low incomes. We need a bold package of domestic reforms, not just favourable trade terms.
“The Government must fix this and right the wrong of in-work poverty. At the last General Election, low income voters made it clear they wanted more than Brexit delivered, demanding action on living standards too. Failing to meet their expectations of a better life after Brexit would be costly for the political parties. And it would mean millions of families being let down — and seeing no Brexit dividend.”
As part of a new deal for low income families after Brexit, JRF recommends the Government:
- Build 80,000 affordable homes a year at Living Rents — linking rents to the wages of people on low incomes.
- Ensure social security keeps up with the rising cost of living and families keep more of their earnings under Universal Credit by boosting in-work support such as the Work Allowance.
- Deliver the Shared Prosperity Fund promised to left behind town and cities, to create more and better jobs with repatriated EU funding.
ENDS
JRF's UK Poverty 2017 analysis showing the groups affected by poverty is available here https://www.jrf.org.uk/press/uk-poverty-2017-country-reaches-turning-point
Analysis of the Brexit vote and people in poverty was carried out by Matthew Goodwin and Oliver Heath in 2016 and is available here: https://www.jrf.org.uk/report/brexit-vote-explained-poverty-low-skills-and-lack-opportunities
Cambridge Econometrics has produced the following note on this study:
This is, in other words, a good go at a best case scenario.
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It is becoming quite clear that the Conservative Party feels that with the help of its allies in the print and TV media it no longer needs to pander to the poorer echelons of society and can continue in power by constantly repeating the mantra that Labour spent all the money. They have won the propaganda war and today’s report is tomorrow’s chip wrapping.
Quite interesting. I notice the report avoids using the terms ‘inequality’ and ‘relative poverty’ as much as possible and goes straight to the jugular by using the new language we now expect. And also there is rightly no discussion of how other non-EU territories in Northern and Western Europe are addressing these issues. We really are on our own.
Very disappointed to see Cambridge Econometrics believe that tax revenues fund government spending.
They don’t
But they know they’re part of the fiscal formula
And that is undeniable
We know it doesn’t have to be the way it is….
…but where are we to find a government with the desire to run the country for everyone….and with the wit to know how to do it ?
None in the offing but a Labour Government would be a small step in the right direction. They would stop digging the present hole.
34 Bridge Street
Why are you going all formal on us?
£4, Bridge strret \?
No. The reply was Labour Government ? Maybe. Not convinced, but better than the alternative probably. (less bad)
Commendable proposals but Cambridge Econometrics makes explicit assumptions about investment, exchange rates and tax revenue; implicit is that the slaughter of pollinators, soil deterioration etcetera are not in the frame. Climate impacts are increasing in frequency and severity; for instance, food production has been hammered this year.
The government has today announced energy price caps — which will help the poor but accelerate climate change. Greenhouse gas emissions must be cut – and fast. Tradable Energy Quotas (TEQs) could achieve that – and transfer funds from the wealthy to the poorest; a policy tool that is surely worthy of consideration.
JRF recommends 80,000 houses a year. That’s good — if the energy costs of building are ignored – but nowhere near fast enough. Tradable Housing Quotas (at present just a figment of my imagination) would rapidly release some empty houses, second homes and oversized dwelling on to the market — as well as shifting resources to those who need to buy.
Whatever else is considered, the environment must take precedence.
This is why I have said that those who voted for BREXIT will only learn that they have been exploited – by things getting worse. It is a harsh lesson I know but…………..
Having said that, then fascism comes in with a list of other people to blame so that the exploitation continues.
I cannot see any benefit at all in leaving. Never have.