Number of people ‘living in destitution’ more than doubles and unemployment ‘under-reported’

An explosion in the number of people “living in destitution” is piling pressure on Rishi Sunak not to abandon help schemes in next month’s Budget.

The total leapt from 197,400 to 421,500 households in 2020 – a rise of more than 200,000 in a single year – amid the devastating slump triggered by the Covid-19 pandemic, research has found.

Destitution is defined as serious poverty, meaning two adult households living on less than £100 a week or £70 in the case of a single adult.

The National Institute of Economic and Social Research (NIESR) said the crisis would worsen if the Chancellor ends the furlough scheme, or cuts Universal Credit.

It also raised the alarm over stark regional disparities – with the north-west among the hardest hit – and official unemployment statistics failing to reflect the worrying reality.

“As a result of lockdowns, levels of destitution seem to be rising across the country,” Professor Jagjit Chadha, the NIESR’s director.

“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.”

And he added: “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 research has been carried out for a Channel 4 Dispatches investigation to be broadcast tomorrow, entitled ‘Britain’s £400bn Covid Bill: Who Will Pay?’.

The chancellor is keen to start plugging that £400bn budget black hole, but is under pressure to extend the furlough scheme beyond its current expiry at the end of April.

A plan to extend the £1,000-a-year boost to Universal Credit by only a further six months is certain to provoke a major row on Budget day, on 3 March.

The analysis found that, across the UK, the proportion of households living in destitution rose from 0.7 per cent to 1.5 per cent in 2020.

Prof Chadha also warned: “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.”

Louise Casey, Boris Johnson’s former adviser on homelessness, is pressing for a Commission along the lines of the 1940s Beveridge Report to examine the growing crisis.

“Government can, if it wants to, do something on a different scale now,” she said.

“The nation has been torn apart and there’s no point being defensive about that. We’ve got to work out how not to leave the badly wounded behind.”