Emerging evidence on COVID-19’s impact on money and resources

Since May, the Health Foundation has been tracking emerging evidence on the impact of the coronavirus (COVID-19) pandemic on health and health inequalities. The evidence has highlighted the many unequal ways in which different groups are being affected by the virus and the measures to control its spread. The money and resources people have access to is one factor that is significantly shaping people’s current and future health prospects.

Incomes were suffering before the pandemic

Even before the pandemic hit, low-income families in the UK had experienced several years of particularly weak income growth, with incomes at roughly the same level as they were nearly 2 decades ago and one in five people living in poverty in 2019/20. The Joseph Rowntree Foundation are working to solve UK poverty. We’re passionate about everyone’s right to have a decent home, good living standards and prospects. Whether COVID-19 and its aftermath brings that vision closer or pushes it further away, is still to be decided.

People living in the deepest poverty have been hit particularly hard

Those living in the deepest poverty (more than 50% below the poverty line) already face exclusion from the opportunity to live a healthy and fulfilling life. Many of the groups most at risk of deep and persistent poverty have been especially affected by the pandemic.

A recent survey carried out by the Social Metric Commission suggests that people already in the deepest forms of poverty have experienced some of the worst employment impacts of the COVID-19 crisis. Two-thirds experienced a negative employment change during the crisis, either through losing their job, becoming furloughed or experiencing a change in hours or earnings. This contrasts with one-third of people living more than 20%clear of the poverty line.

Disabled people were more likely to have experienced a negative employment outcome than people without a disability, and black and Asian people were more likely to have been negatively impacted than those from white ethnic groups.

When it comes to spending and saving we are not all in the same boat

Low-income families have been forced to rely on emergency support and/or to cut back on essentials in the face of higher costs arising from the family staying at home. A poll of 3,000 families with children, claiming Universal Credit or Child Tax Credit, showed around 7 in 10 families reduced expenditure on essentials and activities for children such as books and toys. The most common way of saving money was cutting back on food, which 50% reportedly did. 6in 10 families have also been forced to borrow money since the start of crisis – with many relying on payday loans or credit cards.

This is in stark contrast to those higher up the income scale, 57% of adults in the top 20% of working-age family incomes are reporting falling spend and stronger balance sheets as a result of lockdown restricting non-essential spending.

The government’s response

The government has not ignored the pressures facing low-income households. Many families will have benefited from the job retention and self-employed income support schemes. Especially significant was strengthening the social security life raft, with the Universal Credit standard allowance rising by £20 a week and local housing allowance rates uplifted to match the rents of 3 in 10 homes in local areas. But there are significant gaps.

For example, many families most at risk of deepening poverty will not benefit from the increases because they are subject to the benefit cap. Migrants without recourse to public funds, many of whom will work in industries hardest hit by the lockdown, have also been left out in the cold. And millions of families reliant on the legacy benefit system did not receive the uplift channelled through Universal Credit and Working Tax Credit. Indeed, some families who, because they were in groups treated less generously by Universal Credit,  may now opt to migrate to Universal Credit because of its higher rates. This can be without realising this is an irreversible decision that – depending on their circumstances – could leave these families worse off in future than if they remain on the earlier system.  

Effects on people’s health

The effects on people’s health are still emerging but current evidence a presents a concerning picture. We know that adults with lower incomes tend to have worse outcomes including poorer health, lower life expectancy and lower subjective wellbeing than individuals with more money, although the causal links are stronger in some areas than for others. For example, having an adequate income can reduce the risk of stress and mental health problems such as depression and anxiety. The impact on children and young people is also concerning, leading many campaign groups to call for more targeted support aimed at families and children.

With the right action, the longer term impact on poverty and people’s health could be different. That is why the JRF are calling for ministers to make the temporary £20 per week uplift to Universal Credit and Working Tax Credit permanent, as well as extending this support to those on legacy benefits. The next stage of the economic response to COVID-19 also needs to prioritise pulling the towns and cities at greatest risk back from the edge of a wave of unemployment that will lead to surging levels of poverty. Different kinds of places will also need different responses. For example, places with high unemployment but strong job creation are likely to be good targets for retraining schemes, while the infrastructure spending being brought forward as part of the government’s ‘Plan for Jobs’ should focus on places with the fewest job opportunities. These measures are needed to help families ride out the storm and protect their future health.

Frank Soodeen (@franksoodeen) is a Deputy Director at the Joseph Rowntree Foundation and a member of the Collaboration for Wellbeing and Health, a collective initiative led by the Health Foundation to tackle health inequalities and improve health across sectors in the UK