Child poverty is on course for the biggest rise in a generation, reversing years of progress that began in the late 1990s, leading charities and independent experts claimed on Saturday.
The stark prognosis comes before the release of government figures which experts believe will show a clear increase for first time since the start of the decade.
Key policy decisions in the second half of the last parliament, including the introduction of the bedroom tax and cuts in benefits between 2013 and last year, are blamed for fuelling the rising number of families whose income is below 60% of the UK average – the definition of relative poverty.
Calculations from the Institute for Fiscal Studies (IFS) have suggested that progress between the late 1990s and 2010 has been reversed and that the number of children living in relative poverty rose from 2.3 million in 2013 to 2.6 million in 2014.
The Child Poverty Action Group says that with the government committed to implementing a further £12bn of benefit cuts in a new round of austerity, the problem of children living in poverty looks certain to grow for several more years.
Tens of thousands of people joined an anti-austerity march through central London on Saturday, Alison Garnham, the charity’s chief executive, said ministers were failing too many children in low-income families.
“The government can no longer claim that deficit reduction is about protecting children’s futures now that it’s being made to confront a child poverty crisis, with the biggest rise in a generation now expected of its own making,” she said.
“With child poverty expected to rise by nearly a third in the decade to 2020 as a result of its policies, it’s clear the government’s approach is failing.”
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
Real income in the North East has fallen by 5% in recent years, a detailed new study has found.
Cuts in income have been offset by a fall in the cost of housing – but only for homeowners benefitting from low mortgage interest rates, according to the report by the Institute for Fiscal Studies.
People who rent in the North East have found their housing costs going up slightly.
Perhaps surprisingly, poverty levels have either fallen or risen by a small amount, depending on which measure of poverty is used.
But the think tank, which specialises in UK taxation and public policy, warns that this will change in future years as people on low incomes are hit by benefit cuts, leading to an increase in poverty.
The Institute for Fiscal Studies (IFS) has produced a detailed study of changes in income and living standards across the United Kingdom in the wake of the banking crisis.
We’ve grown used to incomes rising in recent decades. Since 1961, the income of the median household has grown by an annual average of 1.3% in real terms (ie adjusted for inflation) each year.
But since the banking crisis, incomes have fallen.
Median income in the North East, after housing costs, fell by just over 5% in the period between 2007-8 and 2012-13, according to the IFS. Across the UK as a whole, median incomes after housing costs fell by 6%.
This highlights the important role low mortgage rates have played in protecting some households from the worst effects of the economic slowdown.
First-time buyers may be struggling to afford a property in many parts of the country, but existing homeowners have enjoyed low mortgage rates – helping them cope with the impact of a 9.4% fall in the pre-tax earnings of households nationwide.
The report states: “This came about despite a rise in the proportion of people employed, because the pay of workers grew much less quickly than prices.”
This also, perhaps, highlights the shock to the system some households will receive if interest rates rise in future.
In the North East, average housing costs between 2007–08 and 2012–13 fell by 15%, although they actually rose by a single percentage point for people who rent.
The IFS also recorded an increase in absolute poverty in the North East.
It measured this by looking at households with an income which is 60% or less of the median household income in 2010-11, adjusted for inflation. This is a measure used by the Department for Work and Pensions.
In the North East, the proportion of households in absolute poverty after housing costs rose from 22% in 2007-8 to 2009-10, up to 22.8% in 2010-11 to 2012-13.
Another commonly used measure of poverty is relative poverty, which simply measures households with an income which is 60% or less of the median household income at any given moment.
This doesn’t necessarily tell us whether poorer households are getting richer or poorer. Instead, it tells us whether they are catching up with the rest of society, or getting left further behind.
The main argument for looking at relative poverty is that society’s view of what constitutes an acceptable living standard changes over time.
It turns out that relative poverty has actually fallen – but only because incomes for people in the middle have fallen, which has closed the gap between middle earners and those on the very lowest incomes.
And this is going to change – because of benefit cuts which mostly came into effect after April 2013, including a three-year policy of increasing most working-age benefits and tax credits by 1% in cash terms (ie by less than inflation).
The report states: “Absolute and relative income poverty are set to increase after 2012–13 among both families with children and working-age adults without children.”
The people set to be hit hardest are “low-income households with children,” the report said.
And the study produced another worrying finding – that the downturn has been much harder on the young than the old.
The employment rate of those in their twenties has fallen, while employment among older individuals has not; and real pay among young workers has fallen much faster than among older workers. As a result, young adults’ real incomes have fallen much more than any other age-group.
Jonathan Cribb, a Research Economist at the IFS and an author of the report, said: “Young adults have borne the brunt of the recession. Pay, employment and incomes have all been hit hardest for those in their twenties. A crucial question is whether this difficult start will do lasting damage to their employment and earnings prospects”.
Source – Newcastle Journal, 23 July 2014
The North East has some of the highest levels of poverty in the country and is bucking the trend of falls elsewhere, new figures show.
Nearly a quarter of adults and a third of children in the region are classed as living in poverty, according to new Government statistics on household incomes. The region had also seen two successive falls in average household income in recent years, the figures show, though the number of pensioners in poverty has fallen and is now the lowest level in the UK.
The Government hailed national statistics which showed that the number of people in relative poverty has fallen by 100,000 over the past year to 9.7m.
But charities working to alleviate child poverty said the fact that 100,000 children in the region were living in poverty was “unacceptable”.
Matthew Reed, chief executive of The Children’s Society, said: “The Government’s claim that it is protecting the most vulnerable families from falling behind is not borne out by these figures, which show that an unacceptable number of children are still living in poverty in the North East. We know that children who grow up in poverty are more likely to suffer poor health and struggle at school.
“It needs to do much more to help those who are struggling against the brutal effects of welfare cuts, stagnant wages and rising food and fuel prices if it is to stop the continuing crisis of child poverty.”
The Gingerbread campaign group said the statistics showed a steep rise in child poverty for single parent households where the parent works full-time, climbing from 17% of households where the single parent works full-time in poverty in 2011-12 to 22% in 2012-13.
Almost one in four children whose single mother or father works full-time is now growing up poor, while nearly one in three with a single parent working part-time is in poverty, said the group.
Gingerbread chief executive Fiona Weir said: “It is deeply concerning that while the economy is on the up, hundreds of thousands of families remain trapped into poverty. For far too many single parent families, work offers no real promise of escape from hardship, as today’s figures show a rise in working poverty where a single mum or dad is working full-time.”
Prime Minister David Cameron’s official spokesman said: “Child poverty remains at its lowest level since the 1980s. It has fallen by 300,000 since 2009/10.
“Does the Government want to continue to do more in this area? Of course. Absolutely at the heart of improving prosperity across the country and for all is the importance of sticking to the long-term economic plan, because at the heart of dealing with poverty is work.”
The spokesman added: “In terms of wider poverty, the target established under the previous Government is one of relative income, and that stands at its lowest level since 1982.”
Source – Newcastle Journal, 01 July 2014