An optimistic economist: I knew it would pass

‘We’ve a burgeoning tourism sector - but poverty still exists’ - Andrew Webb

Save The Children NI and the Child Poverty Action Group have warned that one in four children will be in poverty in Northern Ireland by 2024/25 unless the Executive takes action
A quarter of children in Northern Ireland are living in ‘relative poverty’ while thousands of others are in 'absolute poverty', a new report says

I took part in a panel discussion at the excellent Northern Ireland Hotels Federation (NIHF) Business Outlook Seminar just before Easter. It was an event that reflected on how far the sector has come in the 25 years the Federation has been with us.

Indeed, the industry has been transformed since 1999, investing over £1.5 billion and almost doubling the number of bedrooms.

Hotels now support 10,000 jobs directly and a further 5,000 indirectly in related industries. It is a success story that has potential for continued growth and further economic benefit to Northern Ireland.

Encouragingly, there are nine live hotel projects under way which represent £100 million in investment. There are pipeline developments that, if realised, will add a further £200 million to this.

Perhaps it was the heady mix of the positivity in the room that day, the recent return of the NI Executive, on top of a very welcome letter from my gas supplier about price reductions, that took hold of me, but during that panel session I outed myself as being optimistic about our economic prospects. It was a genuine, albeit unnatural, sentiment for an economist. On the surface, there are reasons to be optimistic.

The labour market has continued to perform well, our exports are improving, and the mood music on NI as a destination for inward investment is upbeat.

However, I knew I wouldn’t have to wait long for something to come along and restore my equilibrium. Newly released statistics on poverty here have served as a stark reminder of the economic challenges we face.

The annual Northern Ireland Poverty and Income Inequality report for 2022-2023 shows us that a quarter of children are living in ‘relative poverty’. Relative poverty is defined as an individual living in a household with an income below 60% of the UK median level in the year in question.

Absolute poverty is where a household has an income below 60% of the UK median income as it was in 2010/11. For reference, the absolute poverty threshold for a couple with no children was an income of £347 per week before housing costs. A single person without children is considered to be in absolute poverty with an income of £232.

Working all this through reveals that 18% of individuals in Northern Ireland, or 349,000 people, are in relative poverty.

Over the last 10 years, the proportion of individuals in relative poverty before housing costs has fluctuated between a high of 22% in 2014/15 and lows of 16% in 2017/18 and 2021/22, while absolute poverty (BHC) generally decreased slowly from a high of 21% in 2013/14 to a low of 12% in 2020/21 before increasing slightly to the current position of 14% in 2022/23.

Children in poverty is a particularly concerning statistic. In 2021/22, 18% of children were considered to be living in relative poverty.

Over the year to 2022/23, this has risen to 24%. That’s 109,000 children. More concerningly, there are about 27,000 children of this group living in what is called ‘food insecure households’ i.e. they have a risk of, or lack of access to, sufficient, varied food.

As I was writing this article, I recalled that I’ve written about our poverty statistics before. Looking back, I see I first did so in May 2016 and at various points since. Nothing has really changed during that time to alter the situation.

Andrew Webb
Andrew Webb

As I wrote then, poverty imposes significant costs, not just in economic terms, but in human terms - educational attainment is lower, health suffers and potential is wasted. Indeed, there is a life expectancy gap of five years for females and seven years for males between our most and least deprived areas.

It is difficult to fathom these statistics but unfortunately this is the situation we find ourselves in. With little prospect of any significant policy moves to alter it, I fear I’ll still be writing similarly downcast stories in the years to come.

  • Andrew Webb is chief economist at Grant Thornton