Category: Economy

In total, more than 16 million people are defined as living in poverty, or 24% of the UK population – the highest since comparable records began in 2000….reports Asian Lite News

More than one in three children and a quarter of adults are living in poverty in the UK as deprivation levels rise to the highest in the 21st century, according to a landmark report. 

The study by the Social Metrics Commission (SMC), which uses measures recently adopted by the UK government, found the cost of living crisis had plunged 2 million more people into severe hardship since 2019. 

In total, more than 16 million people are defined as living in poverty, or 24% of the UK population – the highest since comparable records began in 2000. 

Children accounted for the biggest rise of any social group falling into poverty, the report found, with an extra 260,000 on the breadline since before the Covid pandemic, meaning a record 36%, or 5.2 million children, were in deprivation. 

It is likely to reignite calls for Labour to scrap the two-child benefit cap as, of those 5.2 million children, more than half (55%) lived in families with three or more children. About one in four of the children in poverty lived in a single-child household, with the same proportion in a two-child family. 

Keir Starmer has resisted calls to abandon the policy – introduced by George Osborne when he was chancellor – saying the government would not take on the “unfunded pledge” without identifying a source for the £3bn annual cost. The prime minister launched a child poverty taskforce in July. 

The SMC report, seen by the Guardian, is significant as it measures a family’s resources, not just their income, and is widely accepted to be the most accurate definition of poverty in the UK. In June, the then Conservative government announced plans to adopt this broader definition of deprivation, called “below average resources”. It includes inescapable costs, such as childcare, the extra costs of being disabled, plus rent, mortgages and a family’s liquid assets, such as stocks and shares, that can easily be exchanged into cash. 

Under the government’s current definition, which measures only average income and housing costs, 18% of the UK population was defined as being in absolute poverty in the year to March 2023, including 3.6 million children. With the new model, which is set to be adopted by the Department for Work and Pensions (DWP), 1.6 million more children are in poverty than under the current definition. 

The findings cover a period when living standards suffered their biggest fall since modern records began in the mid-1950s, as the Covid pandemic followed by Russia’s invasion of Ukraine pushed the cost of goods to their highest level in four decades. 

The SMC is a non-partisan body set up in 2016 to develop a new measure of deprivation in the UK. Its commissioners include experts from the Sutton Trust, Institute for Fiscal Studies, Centre for Social Policy Studies, Trussell Trust and a range of respected academics. 

Philippa Stroud, the chair of the commission, said: “Whilst this report shows that poverty rates are now higher than at any point this century, they have never fallen below 21% over that same timeframe. 

“This shows the real challenge facing us all in ensuring that we move the dial on poverty in the UK and ensure that as many people as possible can enjoy a life free of poverty. My hope is that people and organisations across society can come together to work with governments of all levels to develop a strategy that can be successful in delivering a significant and sustained reduction in poverty.” 

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The analysis was published in a letter from Liz Kendall, the work and pensions secretary, on Tuesday, just as temperatures plunged and parts of the UK experienced their first snowfall of the year….reports Asian Lite News

Cuts to the winter fuel allowance could force 100,000 pensioners in England and Wales into relative fuel poverty, government analysis has shown, as ministers come under mounting pressure over measures in last month’s budget. 

Internal government modelling shows the decision to remove the benefit from millions of pensioners will push about 50,000 more people into relative poverty next year, and another 50,000 by the end of the decade. 

The figures, which are rounded to the nearest 50,000, take into account the impact of housing costs, but not of thousands more people claiming pension credit since a government campaign earlier this year. 

The analysis was published in a letter from Liz Kendall, the work and pensions secretary, on Tuesday, just as temperatures plunged and parts of the UK experienced their first snowfall of the year. The letter also coincided with a large-scale protest by farmers in Westminster, with thousands turning up to demonstrate against a rise in inheritance tax for agricultural properties. 

Kendall said in her letter to Debbie Abrahams, the Labour chair of the work and pensions select committee: “Means-testing winter fuel payments was not a decision this government wanted or expected to take. However, we were forced to take difficult decisions to balance the books in light of the £22bn black hole we inherited.” 

She added: “Given the dire state of the public finances, it’s right that we target support to those who need it most while we continue our work to fix the foundations and stabilise the economy.” 

Keir Starmer, speaking to reporters at the G20 in Rio, said: “We’ve had a campaign to drive up pension credit, to get more pensioners on to pension credit, which obviously is not only a guarantee of the winter fuel allowance, but also gives the credit itself. So there’s an additional benefit there.” 

He also claimed the tax rises and spending cuts in the budget had allowed Labour to raise the state pension by about £470, even though the party promised to do so in its election manifesto. He said: “Pensioners will be better off because we’ve stabilised the economy.” 

Abrahams said: “We remain concerned by the impact that restricting winter fuel payments might have on poorer pensioners. We’ll be watching the issue closely.” 

Ministers have been under pressure for months to explain the full impact of the winter fuel cuts, which the chancellor, Rachel Reeves, announced in July after identifying what she said was a £22bn hole in the public finances. 

Reeves said at the time that the allowance would go only to those on pension credit, reducing the number of eligible people from 11.4 million to 1.5 million. Those who have lost the benefit will be feeling the impact from this month, when the first winter payments are made. 

Downing Street admitted in September it had not done an impact assessment before making the change, although Labour said in opposition that such a move would lead to the deaths of 4,000 people. Kendall’s letter on Tuesday marks the government’s first attempt to quantify how many pensioners will be seriously affected. 

The analysis shows that by 2030, 1% of those who have lost their allowance are likely to be pushed into relative poverty – defined as households with less than 60% of that year’s median income. This will have the effect of putting up the relative pensioner poverty rate by 0.6 percentage points. 

Only half that number will be force into absolute poverty, however, defined as households with less than 60% of the median income of 2010/11. 

The cuts to winter fuel allowance are unpopular with Labour MPs and supporters. One MP defied Labour whips to vote against the cut in September, while another 12 missed the vote without permission. Later that month, party members voted for a motion calling on ministers to reverse it. 

The Scottish Labour leader, Anas Sarwar, pledged to reinstate payments in Scotland should his party win the 2026 Holyrood election, saying it would mean a “fairer system” for Scotland and show the public that “we have listened”. 

The pledge comes days before another set of council byelections in Glasgow and after polling suggesting the unpopularity of UK government policies is harming Scottish Labour’s vote. At the general election Scottish Labour was well ahead of the SNP, but that lead has collapsed. 

Sarwar said he had been “clear from the outset” that he thought Reeve’s pension credit threshold was too low and that he planned to reintroduce a universal payment for all pensioners, but tapered like child benefit is so that wealthier people receive less. 

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That would be a rise of £19 a year, a 1% increase, compared with the current typical annual bill of £1,717, it said, with little chance of a big drop in the foreseeable future….reports Asian Lite News

High domestic energy prices are likely to be “the new normal” with a slight rise predicted for January, according to consultancy Cornwall Insight. A home using a typical amount of gas and electricity will pay £1,736 annually from the new year, according to the forecaster. 

That would be a rise of £19 a year, a 1% increase, compared with the current typical annual bill of £1,717, it said, with little chance of a big drop in the foreseeable future. Energy regulator Ofgem will announce the next official quarterly price cap on Friday, with some charities concerned about how less well-off households will cope during the colder months. 

The energy cap limits the maximum price that can be charged for each unit of gas and electricity, rather than the total bill. This means people in larger properties will tend to pay more overall owing to higher energy usage, and those in smaller properties tend to pay less. 

The energy watchdog Ofgem’s price cap affects about 27 million households in England, Wales and Scotland. Different rules apply in Northern Ireland. Dr Craig Lowrey, principal consultant at Cornwall Insight, said that while bills will remain “largely unchanged” from October, the news that prices will not drop after rises were seen in the autumn will still be “disappointing” for many. “What we’ve been looking at were prices well above the historic norms,” he said. 

He added that there “doesn’t seem to be any sign of a return to pre-energy crisis levels”. Prices jumped in 2022 when the conflict between Russia and Ukraine broke out. 

The consultancy, which is held in high regard for its accurate predictions, also expects that prices will remain higher due to geopolitical tensions, bad weather and maintenance taking place on Norwegian gas infrastructure. The market is still “very sensitive” to global events, it said. 

Peter Smith, director of policy at the National Energy Action charity, said that many people were already “rationing their energy use” or building up debt to try to keep warm. “With increased wholesale prices in the last few months, there won’t be any let up in the unaffordable cost of energy,” he said. 

Further ahead, Cornwall Insight anticipates the energy price cap will drop slightly in April 2025 and again in October 2025. It suggested that it may still be important for the government to consider “ways to protect the vulnerable” from higher energy bills, such as social tariffs. 

The new Labour government has faced criticism for its decision to withdraw the winter fuel payment for millions of pensioners. At Chancellor Rachel Reeves’ first Budget, it was confirmed that future payments would only be made to those getting pension credit or other means-tested help. 

The government has said the move was necessary in order to address what it has called a financial “black hole” it inherited from the Conservatives. But other politicians and unions have warned that older or vulnerable people with disabilities could risk their health by cutting back on heating their homes as a result. 

In Scotland, a couple has been given permission to proceed with their own legal challenge against both the UK and Scottish governments over the changes to the benefit.

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A gauge of job security also declined, which could be driven by the increase in employer National Insurance contributions announced in the Budget…reports Asian Lite News

The latest poll of consumer sentiment, just released by data firm S&P Global, shows that households reported that their current finances continued to deteriorate in November, while pessimism about the financial outlooks for the year ahead has risen. 

Households across the UK reported further pressure on their everyday spending, which ate into the amount of cash they had available to spend. It has fallen again this month, at a faster rate than in October. Debt levels rose in November for the first time in three months, the survey found. 

A gauge of job security also declined, which could be driven by the increase in employer National Insurance contributions announced in the Budget. The poll shows that the budget, at the end of October, has not lifted confidence among households. 

Worryingly, confidence dropped this month despite the Bank of England cutting interest rates two weeks ago, just as S&P Global began polling households. 

Chris Williamson, chief business economist at S&P Global Market Intelligence, said, ““November is seeing households grow somewhat gloomier again, failing to build on the underlying improvement seen in the months leading up to the General Election. Consumer confidence has fallen back since spiking higher in July amid the election buzz, as ongoing pressure on household finances has resulted in squeezed spending, higher debt and lower savings.” 

A key concern going forward will be the labour market. Rising incomes and busier workplaces have underpinned much of the improvement in consumer sentiment over the past two years, but job security is showing signs of waning. Any intensification of job worries, spurred perhaps the recent measures announced in the Budget, including higher employer National Insurance contributions, could result in a further loss of consumer confidence. This would likely in turn hit consumer spending and economic growth. 

Meanwhile, in their outlook for the UK economy next year, just released, Goldman say they think growth is likely to cool later in 2025. 

They believe that wage growth will slow, as firms pass on the impact of higher NICS bills onto their workforce. 

Goldman say, “We expect consumer spending growth to moderate in H2 next year as real disposable income growth falls back. This partly reflects slowing real wage growth; we expect private sector pay increases to cool, partly because of the employer National Insurance Contributions increase being passed on to consumers. Net interest is likely to become a headwind as effective mortgage rates continue to drift up while deposit rates gradually decline. And there is likely to be a continued drag on disposable income from the ongoing freeze on personal income tax thresholds.” 

Trade tensions under the Trump administration will also hurt the UK economy next year, Goldman predict, even if Britain avoids tough new tariffs. 

They say, “Although our base case is that the US only imposes very limited tariffs on the UK, the threat of more significant tariffs is likely to generate uncertainty in the near term, which should weigh on demand. And we expect that uncertainty around tariffs will notably reduce Euro area growth, which is likely to generate spillovers to the UK.” 

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National secretary Councillor Alex Kerr said the move would “protect the long-term finances of the party”….reports Asian Lite News

The SNP’s ruling body has proposed cutting the number of staff at its headquarters by more than a third, from 26 to 16. The party’s national executive committee (NEC) agreed to a proposal to “streamline” staffing during a meeting on Saturday. A voluntary redundancy scheme has been opened. 

National secretary Councillor Alex Kerr said the move would “protect the long-term finances of the party”. The SNP, which has been in power since 2007, faces a resurgent Labour Party which increased its Scottish seats at Westminster from one to 37 in the summer’s general election. 

Kerr said: “The national executive committee has been tasked with delivering a modern, dynamic election-winning party to win in 2026 and beyond – and today’s agreement to consult on a new structure at headquarters makes key progress to deliver on that aim. 

“The proposal, agreed by the SNP National Executive Committee today, would get HQ into shape for future elections and for the fight for independence. It would mean that not everyone currently employed at HQ will continue with us but a streamlined headquarters protects the long-term finances of the party and delivers on the modern, professional, election-winning organisation Scotland needs.” 

Kerr said the SNP’s success was built on the work of many people – at headquarters, in local campaign teams and those in elected office. He also thanked those who worked for the party and supported its aim of an independent Scotland. 

The party suffered a heavy defeat in July’s general election and was left with nine, MPs compared to 48 in 2019. Along with the loss of its status as the third biggest party at Westminster, the SNP also lost out on a bulk of its so-called short money. 

This is provided to opposition parties to allow them to carry out their parliamentary duties. Last month the SNP’s chief executive Murray Foote quit the post after 14 months. 

The former newspaper editor said that he “could not make the necessary personal commitment” to leading a reorganisation of the party after their disappointing election performance.The SNP has also struggled for substantial donations in recent years, relying instead on membership fees. It is the biggest political party in Scotland, with figures from June showing it had 65,000 members. But falling membership numbers have triggered a drop in income. 

The current membership is roughly half what it was after a surge following 2014’s independence referendum. This year, 81% of the party’s funding came from membership fees, compared to just 35% in 2015 – the year former First Minister Nicola Sturgeon led it to a massive 56 seats in the general election. 

The party’s finances have been improving recently and its most recent accounts showed it was in surplus. Meanwhile, there is an ongoing police probe into the SNP’s finances. 

The party’s former chief executive Peter Murrell, who is married to former first minister and ex-SNP leader Nicola Sturgeon, has been charged with embezzling party funds. The Crown Office are currently considering whether there is enough evidence to prosecute Murrell, and whether a prosecution would be in the public interest. 

Sturgeon and former SNP treasurer Colin Beattie were also arrested and released without charge, pending further investigation. 

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