Headline poverty rates in 2022-23 were similar to 2019-20 levels, but other measures of material wellbeing tell a different story.
New official household income statistics released today show that the real incomes of the poorest third of households were roughly the same in 2022-23 as in 2019-20, despite the Covid pandemic and the cost of living crisis. But other measures of material wellbeing released today, such as food security, and material deprivation, tell a different story. The proportion of individuals experiencing food insecurity rose by almost a half between 2019-20 and 2022-23 (8% to 11%), and the share in material deprivation rose from 15% to 19%.
Over the same period, the incomes of the top two-thirds of the income distribution fell in real terms. This puts this parliament firmly on course to be the worst for living standards since comparable records began in 1961.
Alongside this new official data, the IFS has today launched its new living standards, poverty and inequality in the UK page, featuring interactive data visualisations which showcase over 60 years of data on incomes, poverty and inequality in the UK.
IFS analysis of the new data, funded by the Joseph Rowntree Foundation and the abrdn Financial Fairness Trust, shows:
- Official income poverty rates are similar to pre-pandemic levels, but do not account for the sharper-than-average impact of the cost-of-living crisis on the budgets of low-income households, or fully capture the large increases in housing costs experienced by some mortgagors. Therefore, other measures of financial hardship may better reflect the living standards of poorer people than traditional income poverty rates in 2022-23.
- Alternative measures of financial hardship consistently show a large deterioration over the same period. The rate of food insecurity rose from 8% of individuals to 11% (equivalent to a rise from 5.2m to 7.3m), the rate of material deprivation from 15% to 19% (10 million to 13 million), and the proportion unable to heat their home more than doubled from 4% to 11% (from 2.9 million to 7.2 million).
- Pensioners also saw large increases along these measures. In particular, the share of pensioners unable to adequately heat their home more than doubled (250,000 to 550,000), even as their headline poverty rate fell very slightly.
Sam Ray-Chaudhuri, a Research Economist at IFS, and author of the report, said:
“Given the double whammy of COVID and the cost-of-living crisis, it may not come as a shock that this parliament is on course to be one of the worst ever for growth in household incomes. Perhaps more worrying is the evidence that official income statistics have understated the true increase in deprivation during this period. The cost-of-living crisis has seen alarming rises in the share of households facing food insecurity, or unable to adequately heat their home. With further poor income growth forecast, and an unenviable fiscal position, bringing about a substantial improvement in living standards will be a significant challenge for the next government.”
Living standards, poverty and inequality in the UK