Poorest Women Will See Their Living Standards Drop by 21% Unless Government Acts Now, warns WBG

The poorest women are set to face a staggering 21% drop in living standards, equivalent to £5,404 per year, due to tax and benefit changes and public spending cuts since 2010, reveals new research from the Women’s Budget Group (WBG).

In response to these findings, the feminist economics think tank urges the new government not to delay investment in social infrastructure and to restore the social security system to adequate levels, warning that without intervention, vulnerable women in England will face deeper financial hardship towards the end of this parliament.

These findings are part of a new report titled “Where do we go from here?” released today by WBG that sheds light on the impact of 14 years of austerity on women. The report looks at the combined impact of changes to tax and benefits plus changes to public services from 2010/11 projected to 2027/28 broken down by gender, income, race/ethnicity, disability and household type.

Key findings

• Overall and on average, women experience a higher annual loss in living standards than men, losing 9.4%, equivalent to £3,162 per year, to men’s loss of 5.8% (£2,395 per year).
• The on-and-off freeze on working-age benefits is the primary driver of income loss for women since 2010.
• Families with children are among the most affected, with single mums facing a 18% drop in living standards, equivalent to a loss of £10,689 per year.
• The poorest women lose out the most, with a 21% reduction in their living standards, a loss of £5,404 per year, while men in the wealthiest decile experience a 2.8% loss.
• Women from Black and Asian backgrounds are facing a 13% decline in their living standards. In cash terms, Black, African, Caribbean, and Black British women experience a cut of £5,399 per year, and Asian and Asian British women £4,259.
• Disabled women stand to lose 11% of their living standards, equivalent to over £4,000 a year, compared to 8% for Disabled men and 5% for non-Disabled men.

Ignacia Pinto, Senior Research and Policy Officer at WBG, said,

“Our findings show very clearly that unless the new Government takes action now, invests in our social infrastructure and restores our social safety net, the poorest women will be over 20% worse off towards the end of this parliament than they were when Labour was last in office.

“We know that after 14 years of reckless underinvestment in our public services and punitive changes to benefits, this is a dire inheritance for the new government. While ‘fixing the foundations’ is the right approach, this starts with investing in the people and the public services that keep our economy running. We can’t have a healthy economy when millions of people are forced to rely on foodbanks to feed their families and more and more children are growing up in poverty.

“Delaying investment under the argument that the economy is not strong enough overlooks a critical point: public services are the backbone of a strong economy, not a consequence of it. Our economy is being held back because people can’t access social care, get the right medical treatment when they need it, or because they are struggling to secure a nursery place for their child.

“In just a few weeks’ time, Chancellor Rachel Reeves will have the chance to show that she is truly committed to making the economy work for women. The path forward is clear: reverse these devastating impacts and protect the most vulnerable from further financial hardship. It’s up to this Government whether they choose to restore the living standards of those bearing the brunt of past government failure – Disabled women, single mums, Black, Asian and Ethnic Minority women and poor women – or continue the legacy of making them pay the price for ‘tough’ fiscal decisions.”

Sarah Lambert, Head of Policy at single parent charity Gingerbread, said,

“Every day we hear from single parents who are forced to make impossible choices as they simply don’t have enough money to support their family. It has become unworkable for many to stretch a single income to cover a whole household’s expenses and there appears to be little hope that things will get better.

“We know that single parent families are nearly twice as likely as two-parent families to be living in poverty. This must change. If our Government is serious about its commitment to tackle child poverty it must take action now to transform our social security system so that it provides an effective safety net for those who need support.”

Dr Shabna Begum, CEO of Runnymede Trust, said,

“This report makes clear the racialised and gendered nature of hardship and suffering that is inflicted by austerity.

The conditions that have kept so many women of colour in poverty have been manufactured through policies designed and delivered for decades now, by successive governments. There can be no plea of ignorance, or denial of the harm that is inflicted – the numbers are stark – women of colour are losing more money, every year. For Black women this can mean over £5000 less per year and contributes to a 13% depreciation in their living standards. Many of these women have borne the brunt of multiple and intensifying crises over the last few years and it is simply untenable to expect that these hardships can be suffered for longer.

“It is urgent that the new government recognises this profound and ongoing harm and addresses the issues in their upcoming budget with policies that can correct the inequalities that are confirmed here.”

Kym Oliver, Disabled Women’s Collective Sisters of Frida, said,

“Disabled Black & Brown Women, in all their expansive identities, have been suffering at the sharpest edge of the government’s unethical austerity measures, even prior to the Covid-19 pandemic. They, alongside the wider Disabled community, have long been trying to warn local authorities, media, and the government of the long-term dangers to other members of the population, should Disabled people become a ‘necessary sacrifice’ for so-called reductions in government spending. The government, instead of revising its approach, doubled down on its refusal to address the ableism, racism and misogyny that drive the policies which are leading its citizens into ruin, and in many cases an early grave.

“Laws like the Equality Act 2010 do not by themselves protect the wellbeing and or security of this nation’s most marginalised people. We cannot legislate our way into an equitable society. We require robust, transformational policies, rooted in an understanding of equity and the diversity of experiences within this nation; policies and interventions led and developed by those who live at the intersections of oppression. The government must invest in relevant research conducted by Disabled scholars from marginalised backgrounds, as well as provide long-term funding to grassroots community organisations – many of which have stood in the gap, and continue to develop strategies for communal care, in an age of rugged individualism.”

Based on today’s findings, WBG calls on the new Government to

• Make substantial changes to the social security system including
• Increasing the real value of benefits and retaining regular uprating of social security benefits to at least match cost-of-living increases.
• Abolishing punitive policies such as the two-child limit, the benefit cap and the ‘No Recourse to Public Funds’ condition, ending the Universal Credit five-week wait and introducing a second-earner work allowance.
• Abolishing the High-Income Child Benefit Charge and increase Child Benefit to £50 per child per week.
• Raising the Local Housing Allowance to the 50th percentile of rents with regular uprating to continue to match local average rents.
• Retaining PIP and related disability benefits as cash payments and as a vital contribution towards the additional costs of disability.
• Introduce fairer taxes to increase revenue such as equalising Capital Gains Tax and Income Tax rates and introduce taxation of wealth.
• Invest in public services to promote gender equality, including prioritising the building of more social housing, and increase public service spending to at least pre-austerity levels.

ENDS

Notes to editors

• Read the full report  here.
• This report examines the cumulative impact of changes to social security, taxes, and public service spending between 2010/11 and 2027/28 in England. It is an update on our previous work in 2017 with Runnymede Trust, which focused on the impact of austerity on Black and minority ethnic women in the UK (Intersecting inequalities: The impact of austerity on Black and Minority Ethnic women in the UK).
• Microsimulation and distributional analysis by Howard Reed, Landman Economics.
• For this report, living standards were measured by combining net income with the cash-equivalent value of public services. This method acknowledges that living standards depend not only on financial resources but also on the availability and access to essential services such as transport, health and social care, and education.
• To arrive at the figures, we compared two scenarios: one with the impact of policy changes as they have happened since 2010 and are planned until 2027/28, and another hypothetical scenario as if those changes hadn’t happened. All monetary values are in April 2024 prices.
• For further information, please see the Methodology Appendix and the Technical Note.

Spokespeople are available for interviews.

Please contact

Viktoria Szczypior at press@wbg.org.uk / viktoria.szczypior@wbg.org.uk / 7553663144