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Chapter 2

Does poverty matter?

There is a strong belief in some quarters that poverty is not really important at all. In any competitive and successful society, it is argued, there are some who will do better than others, which means that some will do much worse. Poverty is an inevitable by-product of our largely prosperous and successful economy, and, by and large, people of skill and determination will get themselves out of poverty.

There are others who believe that poverty does matter, but only for the individual and not for society, so any attempts to change the odds or interfere with people’s choices are unnecessary and unhelpful distortions to a market economy.

Sitting alongside these views is the frequently expressed belief that poverty’s continuing existence actually provides some benefit. It gives a dire warning of an alternative future so spurs people on to more effort.

More subtly, the debate revolves around how much political effort is needed to reduce poverty, and whether it deserves it. The issue at stake is whether poverty is some private, individual misfortune or a much wider, societal issue. C. Wright Mills describes it as follows:

When, in a city of 100,000, only one man is unemployed, that is his personal trouble, and for its relief we properly look to the character of the man, his skills, and his immediate opportunities. But when in a nation of 50 million employees, 15 million men are unemployed, that is an issue, and we may not hope to find its solution within the range of opportunities open to any one individual.21

The belief that poverty does not matter for society is linked with the belief that intervention may create a mollycoddled, dependent population, incapable of motivation and ambition. This is an increasingly prevalent attitude. In 2011, 54 per cent believed that if benefits were lower, people would stand on their own two feet, an increase from 33 per cent in 1987 (Figure 2.1).22 The argument is that someone’s ability to rise above their circumstances in life is the only answer to poverty, and, in a well-functioning free market, the clever and able will rise, and make provision for their own.

Figure 2.1. Public attitudes to the welfare state. Source: British Social Attitudes Survey, NatCen.

There have been enduring challenges to these views, however. Many politicians, philanthropists, practitioners and members of the public have long advocated that poverty not only exists meaningfully in the United Kingdom but that it also matters both for individuals and for society.

For centuries, reformers have argued – in different ways and from different perspectives – that there are hard-headed, pragmatic reasons for fighting poverty. They have pointed to the waste of human potential, and the opportunities lost by allowing people to remain in penury. They have argued too that those without sufficient income are unable to participate in an economy that requires consumption. They have identified the costs associated with high levels of poverty, noting the long-term costs to the economy of people and places blighted in this way. And they have noted the risks to our shared society of people whose lack of income ­effectively forces them to live outside social norms. Waste, cost and risk are balance-sheet concerns that have been documented by social reformers of all stripes, motivations and political persuasions.

Joseph Rowntree, a Quaker and industrialist, argued that the causes of poverty were primarily structural.

Seebohm Rowntree’s 1899 Study of Town Life examined poverty by surveying the minimum basket of goods and nutrition a household needed in relation to their income. He found that – in a striking parallel with the twenty-first century – over half of those in poverty were also in work.23

Beatrice Webb was concerned about the effect of poverty on people’s morality and capability. She argued that the Poor Laws resulted in a loss of self-respect and dignity, which increased the persistence of poverty, and further increased expense.24 The Poor Laws were also ineffective because they focused on individual behaviour, whereas Webb believed the main causes to be structural, or factors beyond individual control, such as illness. The waste of human life was also central in her concern; for example, unnecessarily high infant mortality due to parents entering the workhouse.

Webb advocated universal provision that did not separate destitute people from everyone else. Means testing cost more money and categorizing people was demoralizing and stigmatizing.

William Beveridge argued that unemployment was a problem because it left people without resources, wasted their skills, and, more importantly, left them outside civic life.25

He believed that any social contract should be based around mutual solidarity, contractual entitlement, active citizenship and altruism. He supported contributory principles that would help the individual, state and market to work together. Beveridge advocated solutions that would address what he perceived to be the root causes of poverty, while always focusing on the whole population, and resisting efforts to focus only on the poorest. He believed that improving morals without reorganizing industry would fail to create jobs, as ‘inadequate character’ was largely determined by adverse industrial conditions.26 He argued that people should always be better off in work than with social security and that any solutions to poverty should not undermine incentives to work. Subsidy would be minimal and there would be controls against fraud and abuse.27

All of these pioneering analysts avoided sentimentality. As we have seen from this briefest of overviews, those who wished to eradicate poverty had three main arguments; their concern was with the costs and waste of poverty, and with the risk both for the individual and society. They believed that interventions could reduce these.

Beveridge’s predecessors were dismayed when they encountered rickets-ridden young men incapable of fighting in the Boer War, so they instituted free school meals as a way of overcoming malnutrition. In the same way, we are concerned about the waste of skills, opportunities and creativity that poverty creates today.

The current costs of poverty

Recent research supports the view that poverty squanders human ability, capability and potential.

Pupils eligible for free school meals are almost half as likely to achieve five or more A*–C grades at GCSE compared with those who are not eligible.28 Figures from the Office for National Statistics reveal that the number of underemployed workers now stands at 3.05 million (2012), a rise of nearly 1 million since 2008 (Figure 2.2). Nearly three-quarters say they want to work more hours in their current job, although this may mean they want to earn more rather than work longer hours.29 Poverty is wasteful to a country in desperate need of the skills and capacity needed to compete globally.

Figure 2.2. Underemployment. Source: Labour Market Statistics, Office for National Statistics (figures for the United Kingdom).

Child poverty costs an estimated £29bn a year, which includes public spending to deal with its effects, e.g. the cost of social services, education, police and criminal justice. The £8.5bn of lost earnings to individuals affects GDP and £5.9bn is spent on extra benefits and lower tax revenues for adults who grew up in poverty.30

Kyle, 23, living in a deprived area in Knowsley, unable to find a job despite his enthusiasm:

‘The worst thing about it is you start getting used to [not having a job]. Yeah you just get depressed.’

Very low-paid work costs us all dear too – in the last couple of decades, tax credits have been needed just to achieve a level of subsistence pay for unreliable work that offers no progression to more secure or well-paid employment.

There is a strong relationship between growing up in poverty and being unemployed or in low-skilled, low-paid jobs in later life, even when background and education are accounted for. There is also a relationship between a childhood in poverty and being poor in later life.31

Disability and poor health are linked to and contribute to poverty. People in families where someone is disabled made up 34 per cent of all people in poverty in 2010–11 (Figure 2.3).32 Unemployment is strongly related to health – having a health problem that is classed as disabling doubles the level of unemployment to 50 per cent.

Figure 2.3. Proportion of families living in poverty where someone is disabled. Source: Households Below Average Income, Department for Work and Pensions (figures for Great Britain up to 2001/02 and for the United Kingdom thereafter).

Seventy-five per cent of disabled people who have a mental health problem do not work.33 Of those who can work, there is a higher proportion of low-paid disabled workers than non-disabled workers.34 Although more research is needed on the links between poverty and mental health (and vice versa), it is clear that 24 per cent of adults in the poorest fifth of the population are likely to be at risk of developing mental health problems, compared with 14 per cent of those on average incomes.35

Dec, a resident and community volunteer on the Marsh Farm estate in Luton:

‘[There are] suicidal people [on Jobseeker’s Allowance], people with mental health issues, and if they didn’t have them, they have them now, because they’re being so degraded, so run down in life.’

Poverty is also linked to health inequalities that are both costly to society and wasteful of human life (Figure 2.4). People in the most deprived neighbourhoods live – on average – seven years less than those in the richest neighbourhoods. They spend an average of seventeen years longer with a disability.36 This amounts to 1.3 million years of life lost (each child could expect to live two years longer).37

Figure 2.4. Expected age at death at age 65 for men and women. Source: Inequality in Disability-Free Life Expectancy by Area Deprivation: England, 2001–05 and 2006–09, Office for National Statistics (May 2012).

These health inequalities carry a significant cost – £31–33 billion of lost productivity per year in addition to lost taxes and higher welfare payments of £20–32 billion per year, plus NHS healthcare costs.37

Poverty is strongly associated with offending and antisocial behaviour. Evidence looking at the United States may not transfer directly to the United Kingdom but does indicate that people growing up in deprived areas have a greater chance of being a victim of crime. There is also a strong association between experiencing crime as a victim and becoming an offender.38 One does not necessarily cause the other, although evidence suggests that poor family functioning and low self-­esteem, fuelled by child poverty, can contribute to ­antisocial behaviour.39

Poverty has an enduring and scarring effect across the lives of people who experience it. This varies depending on the persistence and depth of poverty. People in poverty say that it wastes their capability and skills, erodes hope and ambition, and makes it hugely difficult to make long-term plans or move on.

Despite an increase of education courses, the poverty in Barkerend lays waste to ability. A youth and community worker says:

‘At the end of it there’s nothing [for the young people] and it all seems pointless to them.’ 46