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Chapter 1

Introduction: why fight poverty?

People have been concerned about high levels of poverty for centuries, and that concern has been expressed in various ways throughout history.

Anxiety about how ‘the feral’ and ‘the untamed poor’ behave has jostled uneasily with a concern for morality, competed with a sense of shame, and even co-habited with guilt at the existence of hardship in a wealthy country.

The real nature of poverty has always been disputed and there has been a strong and compelling narrative about how personal character keeps people in poverty.

Persistently, through this age-old concern, there has been a desire to tackle and end it. Sometimes that desire has been expressed through a conviction that a free market will eventually lift everyone to at least a tolerable level. At other times it has taken the form of confidence in the abilities of individuals, charity or the state to achieve change.

But despite our continued efforts, poverty persists. This book explores this historic concern and how it has changed. It suggests that frequently it is our emotional responses and the stories we tell about poverty that stop us tackling it effectively.

Poverty and welfare reform

The current debate about poverty in the United Kingdom (Figure 1.1) is almost entirely dominated by welfare reform, a loose term for changes in how the state provides financial support for people who cannot support themselves. The social security system is important but it is not the whole story. This political debate about how to support people in a fair and comprehensible manner gets in the way of a larger truth.

Figure 1.1. Proportion of people living in absolute and relative poverty before and after housing costs (BHC and AHC). Source: Households Below Average Income, Department for Work and Pensions (figures are for Great Britain up to 2001/02 and for the United Kingdom thereafter).

For research shows that poverty is neither overcome by welfare, nor caused by it. The structure of society, the choices made and how money is allocated are much more significant in the long term. We know that offering £4bn to low-income families will not be enough to meet the child poverty target without also taking into account employment, training, education, childcare and so on.1

Assumptions and assertions about social security blind us to the real questions about poverty:

•How does a good society cope with the fact that some people do not have enough to meet their needs?

•What methods are most effective and what outcomes are acceptable?

•Where does the responsibility lie and who pays for it?

The focus on welfare has a long and enduring history. The Elizabethan Poor Law’s principle of ‘less eligibility’ stipulated that the pauper’s condition inside the workhouse should be less attractive than the poorest labourer’s situation outside the workhouse, otherwise poorer people would simply choose not to work. This principle continues, largely unquestioned, to this very day in attitudes towards poor and long-term unemployed people, the long-term unemployed and those on welfare. It is rooted in pragmatic (cost) concerns and deep emotional responses including shame, fear, disgust, mistrust and envy.

The only disagreement is about how minimal the provision for a life without work should be. The objective – ‘making work pay’ – that surrounds the debate over welfare reform policies is a twenty-first-century version of the long-standing idea that the only spur for poor people to work is the threat of even greater poverty if they do not. Benefit sanctions serve the same apparent objective. Whether they work to drive behaviour, or only result in ‘poor job matches, lower wages and higher turnover’,2 is a matter for loud political debate, but only occasionally the subject of careful analysis.

The welfare system undoubtedly needs massive reform. It has been criticized for trapping people in poverty and for demeaning those it seeks to help, and it is complex and expensive. In 2011–12 over £200 billion (or 13.5 per cent of GDP) was spent on social security benefits. This includes:

• £36,998m of benefits for families with children;

• £5,164m for unemployed people;

• £41,811m for people on low incomes;

• £85,011m for elderly people;

• £31,215m for disabled people; and

• £623m for bereaved people.3

The system is not fit for purpose, and it will need to adapt as we live longer and need more care. In an ever more volatile labour market, with changing family structures and working patterns, we need a more secure and flexible welfare system.

However, the current approach to reforming the system is piecemeal and frequently poorly evidenced. The cumulative effect is risky for individuals as well as the local and national economy. The development of Universal Credit is a welcome and potentially very important way of ensuring that people can cope with a fluctuating labour market. However, there are well-founded concerns about the ways it is to be implemented and the impact of the tapers. Research carried out before the implementation of Universal Credit reveals the risks of changing to monthly single payments and highlights the need for clarity over financial support.4

The move towards engaging with people mainly online will need sustained support. Changes to Working Tax Credits, Housing Benefit and many other benefits, along with caps on benefit uprating, will create significant social upheaval and hardship for individuals and communities.5

Furthermore, of course the role of welfare needs examination, but if we think poverty can be relieved by welfare alone we are missing the point. Poverty is much more complex and challenging than that. More than half of children and working-age adults in poverty are in working households,6 so while work is undoubtedly a way out of poverty for some, low pay and irregular hours mean that working poverty is a visible feature of our times (Figure 1.2). We will need to change how labour is rewarded, the type of work, opportunities for progression, stability and number of hours, as well as the cost of housing, food, fuel, childcare and other essentials.

Figure 1.2. In-work poverty. Source: Households Below Average Income, Department for Work and Pensions (figures are for Great Britain).

We need a much better understanding of how we support each other, and how money – and other support – is passed around in communities and within families before we can think about reducing poverty. We need to understand the very different experiences of poverty, and how gender, disability and ill health all influence someone’s chances of becoming poor. We need to know more about the role of culture, attitude and behaviour in shaping people’s experience of poverty.

During difficult times of labour market uncertainty, housing market volatility and increasing costs, we must not confuse the need for a well-designed social security system with the changes needed to end poverty.

Hard times

The global financial crisis of 2008 changed the United Kingdom dramatically. It is still too early to gauge quite how profound that change has been and what its long-term effects will be. The financial disaster was followed by a period of austerity and a government determined to reduce the deficit, with a relentless focus on the national debt, and a prevailing view that expenditure had to be reduced. Economists have promised little in the way of recovery. While a triple-dip recession has been avoided, there seems little prospect of a return to rapid sustainable growth in the foreseeable future.

Public spending cuts and the lack of growth in the economy are not the only reasons this is a tough time for people in poverty. The labour market is going through a major restructure and the resulting insecurity at the lower end of the market is creating a different sort of job offer.

Jobs are more short term than ever, with rapid movement between low-paid work and unemployment.7 Short-term or zero hours contracts, unreliable and variable hours and a big increase in casual labour are the hallmarks of a labour market that offers neither security nor progression. Equally, the growth of self-employment to 13 per cent, occasionally heralded as the resurgence of a new form of enterprise, may be revealed8 as simply a different form of casual labour.

There is a long-term trend of polarization in the job market, with more highly paid jobs and more low-paid jobs, but fewer and fewer in the middle. This makes it harder for people at the bottom of the labour market to progress into better-paid work (Figure 1.3) and can lead to some working below their skill level, making it even more difficult for those without qualifications to find jobs.9

Figure 1.3. Low pay over time. Source: Annual Survey of Hours and Earnings, Office for National Statistics (figures are for the United Kingdom).

The boundary between graduate and non-graduate work is becoming increasingly blurred. As more graduates enter the job market, they are increasingly taking jobs that were traditionally ‘non-graduate’. The percentage of graduates earning below the hourly wage has risen over the past 15 years, while the number earning above the hourly wage fell from 47.9 per cent in 1993 to 23.1 per cent in 2008.10

There has also been persistent exploitation in some sectors, particularly those characterized by long supply chains or demand for cheap labour.11 There is evidence that forced labour occurs in a number of sectors in the United Kingdom and often involves difficult, dirty and dangerous work, alongside threats or actual violence towards workers, and cramped, expensive accommodation. Migrant workers in particular are vulnerable to forced labour situations at the extreme end of a murky ­labour market.

In this context the government can intervene in the labour market to regulate employment or it can subsidize low-paid workers to enable subsistence. The alternative of doing neither results in people working without sufficient means to maintain themselves and their families.

The housing market is the second great contributor to high levels of poverty. Five per cent or 3.1 million more people experienced poverty in 2010–11 when housing costs had been taken into account.12 The United Kingdom housing market is as volatile as ever, with rising costs in London and the South-East and considerable pockets of decline elsewhere.

And with new caps to Local Housing Allowance, housing has become even less affordable. In 34 per cent of local authorities in England, the maximum Local Housing Allowance was not enough to cover the cheapest quarter of two-bedroom rents.13 London and the east of England had the highest proportion of local authorities where housing was largely unaffordable (17 out of 32 London boroughs and 8 out of 20 in the east of England).13 The costs of renting rose 3.5 per cent in May 2013 (7.2 per cent in London) and the average rent reached £737 in England and Wales.14

The third in this trinity of markets is the cost of essential items such as fuel, food, finance, council tax, domestic heating and power, transport and insurance. In 2012, these costs increased by 3.7 per cent, much faster than Consumer Price Index inflation. At the same time, nominal income growth was 1.6 per cent. Most significantly, wages have stagnated and costs of essentials have increased since 2008. JRF’s Minimum Income Standards research shows the cost of living has increased by 25 per cent since 2008.15 This has put particular pressure on low-income groups.16

In short, we have a more or less flat-lining economy, an increasingly polarized labour market and a highly regionalized, localized housing market, combined with stagnating pay and a rapidly increasing cost of living.

Although the context is difficult, the impact on the poorest people and places does not need to be so harsh.

In our recent past, in the wake of world wars, we have built housing, invested in our infrastructure and developed free health care to sit alongside our free education. Shared endeavour has resulted in substantial change.

We could forge a new, more resilient social contract, to commit to tackling poverty and ensuring the provision of a safety net for us all.

This is not happening at the moment. The National Centre for Social Research’s analysis of the British Social Attitudes surveys shows that attitudes towards people in poverty are increasingly unsympathetic.

In 2010, 23 per cent believed poverty was caused by character weakness or behaviour, compared to 15 per cent in 1994. This view was particularly strong among people aged over 65.17 The number of people who perceived social injustices to be the main cause of poverty decreased from 29 per cent in 1994 to 21 per cent in 2010.18 In 2011 two-thirds of people blamed parents’ behaviour and characters as the main cause of child poverty.19 At the same time, support for welfare spending has decreased, particularly among 18–24 year olds.

There is currently no shared belief or understanding about poverty and no shared endeavour to solve it.

Many people believe that poverty does not exist in the United Kingdom or that it does not matter – deeply held views that accord with their experience. Any attempt to address rising levels of poverty needs to understand these views, and take them very seriously indeed.

Does poverty exist in the United Kingdom?

In 2009, 39 per cent of people thought there was ‘very little’ real poverty in the United Kingdom and many strongly dispute the suggestion that it exists (Figure 1.4).20

Figure 1.4. Public perceptions of the level of poverty in Britain. Source: British Social Attitudes Survey, NatCen.

They argue that while there is real poverty in other countries, any poverty in the United Kingdom is less severe, and describing it as such is misleading and untruthful.

They are right to some extent. There is a world of difference between UK poverty in 2013 and 100 years ago, just as poverty in a village in Africa with no electricity and an absolute shortage of water and food is different from someone in Scotland living in a damp, poorly maintained home with insufficient to pay for their bus fare. There is also a world of difference in wealth. The middle-class homeowner of the 1920s would not understand or comprehend the income, assets and choices of their counterpart in the twenty-first century. Measurement of income and wealth are inevitably relative – and they are so regardless of the level of income or wealth.

All poverty is relative and needs to be seen in context. Needs are relative in every society and differ depending on the price of food and other goods, and social norms – the opportunity to participate in society, e.g. buying birthday presents for family members or social activities for children.

To fulfil these needs, people mainly need money, but also other formal resources, such as health services and education, and informal resources, such as informal childcare, borrowing money from a friend and so on.

The resources someone needs can change over time and vary between people and places, depending on the range, sustainability, quantity and quality of their resources, individual and family circumstances, and the choices people make. Because UK poverty is relative, it can be easier to ignore or dismiss – but it is real and affects a sizeable portion of our population, with implications for our whole society.