Poverty in the UK is increasing after two years of heavy welfare cuts have helped to push hundreds of thousands of people below the breadline, according to an independent study of the coalition government’s record.
Although middle-earners saw incomes rise marginally after 2013, policies including the bedroom tax and below-inflation benefits rises have reduced incomes for the poorest, pitching an estimated 760,000 into poverty since the last official figures were produced, according to the New Policy Institute (NPI) thinktank.
Child poverty showed the biggest increase, with 300,000 youngsters moving into hardship, reversing a fall in the headline figure recorded in the coalition’s first year. NPI estimates 29% of UK children are in poverty after housing costs.
The study challenges Tory claims that child poverty has been reduced by 300,000 on the coalition’s watch. While that figure is officially correct, NPI says, the data on which it is based only applies to the three years between 2009 and 2012.
“The clear conclusion is that poverty in the UK is rising among all age groups,” the NPI’s research director, Tom MacInnes, told the Guardian.
“The trajectory over the second half of the coalition’s term has been a bad one. The next government, whoever wins next week, will be dealing with worsening, deepening poverty.”
NPI undertook the study after the government refused to bring forward the publication of official data which would have shown the impact on poverty figures of the major welfare reforms introduced in 2013, and enabled the coalition’s record to be properly scrutinised before the election.
Official poverty data for 2013-14 will not be published until June, while figures showing the coalition’s record in the final year of the parliament will not be available until June 2016.
Alison Garnham, chief executive of the Child Poverty Action Group charity said:
“This important analysis shows the weakness of the claim being put about by ministers that they have got child poverty down despite making wide-ranging and deep cuts to benefits and tax credits.”
Responding to the report, a Conservative spokesman repeated the claim that there were fewer people in poverty compared to 2010.
“The truth is that the best route out of poverty is work, and there are now a record number of people in work – 2m more since the last election and 700,000 fewer workless households.”
Labour’s shadow welfare minister, Helen Goodman, said:
“This report shows that increasing levels of poverty under this Tory-led government are leaving millions of families struggling to make ends meet.”
Child poverty fell in the first year of the coalition, under the tax and benefits framework inherited from Labour, and remained stable for two years as median incomes fell, the study says. It started to rise again after April 2013 when a series of benefit cuts were introduced, alongside increases in tax allowance.
The median weekly income fell from £425 in 2009-10 to £392 in 2012-13, inching up to £395 by the end of the parliament, says NPI, largely as a result of increased tax allowance and rising employment. But the weekly income of the poorest 10%, which was £174 five years ago, has fallen to £160.
The upward trend in relative poverty over the past two years has affected all groups, the study finds, including working families and pensioners, while the numbers of people identified as being in severe poverty also rose.
The Child Poverty Act requires the government to reduce relative child poverty to below 10%. Latest official figures, which differ from the NPI model in that they measure poverty before housing costs are taken into account, show that 17% of children are below the breadline.
Labour says it will keep the target, though admits it is “very unlikely to be met”.
The Conservatives say they will “work to eliminate child poverty”.
The Institute for Fiscal Studies has estimated that child poverty will rise to 23% by 2020.
A person is defined as in poverty if their household income is below 60% of the median, while “deep poverty” refers to people in households where income was less than 50% of the UK median.
The study, using a model developed by NPI, estimates income and poverty levels for 2013-14 and 2014-15 using 2012-13 data adjusted for changes in population, employment, earnings, benefits and prices.
According to NPI, the government said the decisions on publication dates were not political. But a spokesman for NPI said:
“Given the significance of recent policy changes and welfare reform to the poverty landscape, not publishing official statistics before the election is also political”.
Source – The Guardian, 29 Apr 2015
Families in poverty who are forced to switch off their gas and electricity supply because they are unable afford spiralling energy bills will be offered free charity fuel vouchers under a pilot scheme. The so-called “fuel banks” initiative will provide a £49 credit for struggling families who use prepayment meters in a move designed to address the austerity-era dilemma of “heat or eat”. It is being run by energy firm nPower and poverty charities including the food bank network Trussell Trust.
The vouchers, which will provide enough credit to restore power, and keep lights and heating on for up to two weeks, will be available to people in crisis referred to food banks by welfare advice agencies, GPs and social workers.
Labour MP Frank Field, who has campaigned against fuel and food poverty through his all-party Feeding Britain initiative, described the scheme as an “important breakthrough” that would help families who face an agonising choice between putting money in the gas meter or food on the table.
But critics said it was a public relations move that could not substitute for low wages and cuts to the welfare state hardship funds, or distract from the “profiteering” fuel prices charged by the Big Six energy firms – including npower.
Inability to afford even switch on the cooker or heat bathwater has been a striking feature of poverty in the UK in recent years, as low-income households struggle to cope with shrinking wages, rising living costs and welfare cuts such as the bedroom tax.
Last year it emerged that Trussell’s food banks were issuing special “kettle box” food parcels designed for clients who could not afford to cook, or in extreme cases, “cold box” parcels for those who could not even afford to heat water.
The fuel bank scheme is explicilty aimed at households who “self-disconnect” from prepayment meters to save money. Research by the Citizens Advice Bureau suggests more than 1.6 million people go without electricity or gas every year in the UK.
The scheme, which will be available to all referred people, not just npower customers, will be piloted in 21 locations across County Durham, Kingston-upon-Thames and Gloucester. If deemed successful, npower will roll out the initiative nationwide, with the aim of support up to 13,000 households in the first year.
The vouchers will be distributed using Trussell’s food bank protocols, to individuals and families referred to them after being identified by professionals as being “in crisis”. Clients would be allowed three fuel vouchers in a year.
David McAuley, chief executive of the trust, said:
“In many cases people coming to food banks can be facing financial hardship that leaves them both hungry and in fuel poverty. By providing npower fuel bank vouchers at food banks, we can make sure that people who are most vulnerable are not only given three days’ food, but can turn on the energy supply to cook it and heat their homes too.”
Matthew Cole, npower’s head of policy and obligations, said the energy company had always worked hard to help its most vulnerable customers:
“It [the fuel bank scheme] will provide immediate and hassle free support to households where often the choice is between food or warmth.”
Matthew Cole of the Fuel Poverty Action campaign said:
“These fuel banks will do nothing to hide the harmful actions of the Big Six, including home break-ins to install unwanted prepayment meters, visits by bailiffs, and energy supply disconnections to vulnerable households.
“Our current, for-profit energy system is broken – only an affordable, public, and renewable energy system will make a meaningful difference to those affected by fuel poverty and energy debt. With the huge majority of public opinion in favour of public energy, it’s no wonder the Big Six are trying to improve their image.”
The Trussell trust, which this week announced that its 445 food banks distributed enough emergency food to feed almost 1.1 million people for three days last year, said that it was looking to create more business partnerships. It already has a food collection partnership with Tesco.
Source – The Guardian, 23 Apr 2015
Shocking research published today reveals a sharp rise in the number of under 25’s and working people living in poverty in the UK.
The latest poverty and social exclusion report, written by the New Policy Institute (NPI) in partnership with the Joseph Rowntree Foundation (JRF), shows how under 25’s and people in work are now more likely to be living in poverty than pensioners.
There are now around 13 million people living in poverty in the UK, with half of those coming from a working family and 1 in 5 are working age adults without children.
In stark contrast pensioner poverty has fallen to a record low under the coalition, according to the report. The decline in pensioner poverty is attributed to targeted government support aimed at protecting older people from the worst austerity cuts.
A changing labour market and the prevalence of zero-hours contracts, part-time work and low-paid self-employment means that moving into employment is no longer a guaranteed route out of poverty.
According to the report, there are around 1.4 million zero-hours jobs that do not guarantee a minimum number of hours. Over half of these are in retail, admin, accommodation or the food and restaurant sector.
Around two-thirds of unemployed people who moved into work over the last year are paid below the living wage. And only a fifth of people in low-paid jobs have escaped poverty wages completely within 10 years, according to the report.
Incomes are lower on average than they were a decade ago with the very poorest taking the biggest hit. For the lowest paid men, their hourly pay has fallen by a shocking 70p per hour, while women have seen their hourly rate fall by 40p per hour.
The prospects for self-employed people isn’t any better either, because analysis shows they earn 13% less than they did just 5 years ago.
Failure of the welfare system means Jobseeker’s Allowance (JSA) claimants on the government’s controversial Work Programme are more likely to be sanctioned, or have their benefits docked/cut, as they are to find a job through the back-to-work scheme. And 60,000 disabled people are having to wait 6 months or more for their sickness benefit claim to be fully processed.
The report also highlights a ‘welcome’ drop in the number of people classed as unemployed. However, Welfare Weekly recently reported that as many as 500,000 job seekers could be ‘disappearing’ from official unemployment figures, due to cruel and unjust benefit sanctions.
Children in receipt of free school meals fail to attain five ‘good’ GCSE’s, highlighting a lack of social mobility among children from poorer families.
The report also reveals more people living in poverty in private rented housing. There are now as many people living in poverty in the private sector as in social housing, according to the report. Private landlord repossessions are now more common than mortgage repossessions – 17,000 compared to 15,000 in 2013/14. Private landlord repossessions are the most common cause of homelessness in the UK, say JRF.
Julia Unwin, Chief Executive of JRF, said:
“This year’s report shows a real change in UK society over a relatively short period of time. We are concerned that the economic recovery we face will still have so many people living in poverty. It is a risk, waste and cost we cannot afford: we will never reach our full economic potential with so many people struggling to make ends meet.
“A comprehensive strategy is needed to tackle poverty in the UK. It must tackle the root causes of poverty, such as low pay and the high cost of essentials. This research in particular demonstrates that affordable housing has to be part of the answer to tackling poverty: all main political parties need to focus now on providing more decent, affordable homes for people on low incomes.”
Tom MacInnes, Research Director at the NPI, said:
“This report highlights some good news on employment – but earnings and incomes are still lower than five years ago, and most people who moved from unemployment into work can only find a low paid job. Government has focussed its efforts on welfare reform, but tackling poverty needs a wider scope, covering the job market, the costs and security of housing and the quality of services provided to people on low incomes.”
TUC General Secretary Frances O’Grady said:
“This report highlights once again how ordinary working people are being excluded from the recovery and are becoming poorer in real terms.
“Our economy has become very good at creating low-paid, insecure jobs which are trapping more and more families in working poverty.
“The situation looks particularly bleak for young people – many of whom face decades of private renting and diminished career prospects.
“Without more affordable housing and quality employment opportunities, living standards for the many will continue their steep decline.”
A Government spokesman said:
“The truth is, the percentage of people in the UK in relative poverty is at its lowest level since the mid-1980s and the number of households where no-one works is the lowest since records began.
“The Government’s long-term economic plan is working to deliver the fastest growing economy in the G7, putting more people into work than ever before, and reducing the deficit by more than a third.
“The only sustainable way to raise living standards is to keep working through the plan that is building a resilient economy and has enabled us to announce the first real terms increase in the minimum wage since the great recession.”
> By the end of the statement, Government Spokesman’s nose had grown several inches longer…
Source – Welfare Weekly, 24 Nov 2014
300,000 more people could be living in “absolute poverty” in the UK than previously thought, according to a shocking new report.
Research from the Institute for Fiscal Studies (IFS) found that poorer households have experienced larger increases in living costs than richer households, mainly due to rises in food and energy prices.
> Well – who’d have guessed ?
IFS say that taking into account “differential inflation” since 2010-11, the number of people recorded as being in absolute poverty would be 300,000 higher in 2013-14 than official figures suggest.
Between 2002-03 and 2013-14 the poorest 20% of households saw prices increase on the typical goods they purchase by 50%, compared to richest 20% who saw prices rise by 43%.
According to the IFS, poorer households devote more of their income on things like food and energy, whereas the richest 20% of British society spend more on areas such as motoring and mortgages.
On average, the prices of goods purchased by low-income households have risen more quickly than those more commonly purchased by more affluent households. This is particularly apparent in the ‘wake’ of the 2008 recession, say IFS.
The government uses two different methods of measuring poverty in the UK. The first is ‘absolute poverty’, which is a measure of the number of people thought of as being below a poverty line, before housing costs, calculated using the Retail Price Index (RPI). Through this measure we can confidently say that 18.8% of individuals were living in absolute poverty in 2012-13, before housing costs.
Another method used by the government is relative poverty, which calculates the number of households earning less that 60% of the national median average. Using this method we can calculate that 15.4% of the UK population were living in ‘relative poverty’ (before housing costs) in 2012-13.
The IFS study also accounts for different inflation pressures felt by households depending on how they spend their income – a measurement not included in official poverty statistics. This new measurement found that absolute poverty is 0.5% higher in 2013/14 than standard poverty measures- the equivalent of 300,000 more households.
However, the IFS say this trend has not been consistent over earlier years, adding that “this new definition had been at times higher and at times lower”.
Peter Levell, a Research Economist at IFS said:
“In recent years, lower-income households have tended to see bigger increases in their cost of living than have better off households.
“Official poverty measures do not take this into account and hence have arguably understated recent increases in absolute poverty by a small but not insignificant margin.”
Rachel Reeves MP, Labour’s Shadow Work and Pensions Secretary, said:
“This report is further evidence of the huge pressures which families are facing as a result of David Cameron’s cost-of-living crisis.
“The Government’s failure to tackle soaring energy, childcare bills and low wages has led to millions struggling to get by. Earlier in the year the IFS said child poverty is set to rise 900,000 by 2020.
“A Labour Government will do more to help families who are struggling to make ends meet so that every child gets the best start in life. We will freeze energy prices, raise the minimum wage, extend free childcare provision, scrap the Bedroom Tax and introduce a Compulsory Jobs Guarantee to get people off benefits and into work.”
> But getting people off benefits and into work doesn’t mean those people will necesserily be any better off. Maybe Labour should really be thinking about capping rents, energy, public transport and food prices ? But of course they won’t really change anything much, they’ve bought into the system too far to do that.
Source – Welfare Weekly, 05 Nov 2014
Britain’s richest 1% have accumulated as much wealth as the poorest 55% of the population put together, according to the latest official analysis of who owns the nation’s £9.5tn of property, pensions and financial assets.
In figures that also lay bare the extent of inequality across the north-south divide, the Office for National Statistics said household wealth in the south-east had been rising five times as fast as across the whole country.
The average wealth of households in the southeast had surged to £309,000 at the end of 2012, up 30% since the first wealth report published by the ONS covering 2006-8 – while the average rise in England was only 6%.
But wealth in the north-east had fallen, the only region where it did so, to an average of just under £143,000. In Scotland the figure was £165,500.
Northern regions lost out after a dramatic rise in stock market values that was grabbed mostly by households in the south east, the ONS figures show.
The situation is likely to have worsened following an 18% surge in house prices over the past year in the south-east and even higher at the top end of the market.
A rush to save among richer households as the recession deepened boosted the nation’s total wealth and ensured Britain’s long-established financial inequality remained in place, with the top 10% laying claim to 44% of household wealth – while the poorest half of the country had only 9%.
Rachael Orr, Oxfam‘s head of poverty in the UK said the figures were a “shocking chapter in a tale of two Britains“.
The charity recently reported that five billionaire families controlled the same wealth as 20% of the population. “It is further evidence of increasing inequality at a time when five rich families have the same wealth as 12 million people,” she said.
“We need our politicians to grasp the nettle and make the narrowing gap between the richest and poorest a top priority. It cannot be right that in Britain today a small elite are getting richer and richer while millions are struggling to make ends meet.”
Duncan Exley, director of the Equality Trust, said: “The grotesque concentration of wealth in the hands of a tiny minority is fracturing our society, weakening our economy and giving disproportionate power to the richest. Unless policymakers adopt a clear goal of reducing the gap between the richest and the rest, they will have to govern an increasingly dysfunctional nation.“
The report comes after French economist Thomas Piketty has ignited international debate about inequality by documenting the rapid accumulation of assets by the top 1% over the four decades since the 1970s.
Britain’s top 1% saw their share of wealth increase slightly in the four years before 2012, grabbing the same share as 54.9% of the population, up from 54.2% in 2008/10.
But the Treasury said the report showed that wealth inequality had remained the same throughout the six years up to 2012 while income inequality had declined to levels last seen in 1986. A spokesperson said the government’s efforts to protect the poorest during the recession had worked.
“The effects of the Great Recession are still being felt which is why we have taken continued action to help hardworking people by cutting income tax and freezing fuel duty.
“And we want to help more people to save for their future or own their own home which is why we are giving people more flexibility over their pensions and introducing Help to Buy. At the same time we have introduced new higher rates of stamp duty on the most expensive homes and done more than any previous government to crack down on tax evasion and avoidance in order to ensure that everyone pays their fair share in tax.”
> If the government executed every poor person in the UK, a government spokesman would then be wheeled out to claim that by killing everyone they had in fact improved the victims lot, since they would no longer have to buy food, heating, housing, etc, thereby making everyone better off.
And dead, of course, but you can’t have everything…
Critics of the wealth report said it failed to capture the huge diversion of wealth to offshore tax havens, which account for trillions of pounds worth of savings.
A series of investigations into offshore tax havens have documented the success of their banks in attracting a steady rise in the savings and financial assets of the richest 1%.
There was also a clear disparity between women and men over who owns the most homes, pensions, cars and stocks and shares. The average value of men’s total pension wealth was nearly twice as high as women’s in 2010/12 – £63,000 compared with £34,800.
The power of the grey pound is highlighted in the report by several measures, including one showing that couples without children, where one person is over and the other under the state pension age, have the highest total wealth at £607,800, up from £452,000 in 2006.
Source – The Guardian, 15 May 2014