The Poverty Strategy Commission’s final report, launched at the House of Lords, urges employers to pay wages that prevent poverty and support employee health, wellbeing, and financial resilience.
The report sets out a framework that the Commission says could eradicate deep poverty in the UK and deliver the lowest overall poverty rate on record, with raising incomes through a social contract driving action from individuals, employers, and government.
It emphasises that a steady income growth depends on people working and saving for the future, employers providing stable jobs with clear paths to progress and a social security system that protects families from falling into poverty.
The report warns that many working-age families don’t have enough savings to cover even three months of living costs, leaving a £74 billion gap and pushing some into expensive credit. It therefore suggests expanding workplace savings schemes, offering more help to low-income households and making emergency funds and affordable credit easier to access.
It also calls for improved workplace health, particularly around mental and physical wellbeing support, sickness absence management and income protection. These changes would be part of a Health at Work Guarantee by 203,0 which is aimed at making work safer, fairer and more secure for everyone.
Nest Insight director of policy Will Sandbrook welcomed the inclusion of savings in the report’s recommendations.
He says: “Among the many proposals it was great to see one around scaling workplace emergency savings solutions – along with a reference to our work in this area. This is an important report and it highlights something we’ve said many times before: scaling workplace savings is a contributory solution to many different social policy objectives.”
Sandbrook adds that while mandating pension providers to offer savings products has been suggested as a way to increase provision, the bigger issue is employer demand rather than supply.
He says: “Credit unions, fintechs and some banks already offer versions of workplace savings, but few employers take them up. The Department for Work and Pensions’ most recent survey found only 7 per cent of employers currently offer payroll savings. Employers tell us that unless they can automatically enrol workers into a savings tool, take-up is likely to remain low.”
He argued that allowing employers who want to introduce auto-enrolled savings schemes to do so voluntarily would be a more effective first step than a supply-side mandate. He says this could stimulate demand and innovation while avoiding risks to the success of pensions auto-enrolment.
Sandbrook also points out that many pension providers are not FCA-regulated to hold cash deposits, which means a wider range of delivery models will be needed to ensure savings are accessible and flexible.
The Commission says that implementing its proposals will involve short-term costs for government and business. But it also stresses that long-term gains, such as higher productivity and less pressure on public services and a more resilient workforce, will outweigh them.
It says: “Overall, with all actors in society upholding their part of the social contract, the implementation of our approach would mean that deep poverty is completely eradicated, and the overall level of poverty very significantly reduced.”