To be in poverty is to have resources that are well below minimum needs. Poverty is caused by a lack of resources – most obviously, income – but also by steep prices for essential goods and services. This definition puts individual experiences at the heart of poverty. Our risk of poverty is affected by who we live with and how resources are shared and needs met within our family, household and community. Poverty is dynamic; individuals and families move in and out of poverty; people move in and out of households.
As charted by JRF’s biennial monitor of poverty in Wales, compared with 10 years earlier there are now more people of working age (particularly young adults) in poverty and fewer children and pensioners.4 Overall, an average of 700,000 people were in poverty in Wales in the three years to 2014–15, equivalent to 23% of the population
Poverty is damaging to those directly affected and to our economy and society. Poverty is linked to additional public spending on health, education, social care and police and criminal justice services in Wales of around £3.6 billion a year,6 equivalent to over 20% of the Welsh budget, with additional costs from lost tax revenues and costs to the social security system. Poverty casts a long shadow over people’s lives. Children who grow up in low-income households have poorer mental and physical health than those who grow up in better-off families, and people who have experienced poverty or live in a deprived area have fewer years of life free from illness or disability and are likely to die sooner. At every stage of education, children from low-income backgrounds achieve worse results at school than those from better-off homes, increasing the risk that poverty will be passed from one generation to the next. And poverty acts as a brake on economic growth, limiting the skills and talents available to employers, reducing earnings potential which affects Treasury tax revenues, and diverting resources to top-up low wages that could be used in other ways.