INSPIRING SOCIAL CHANGE. Poverty in the UK Chris Goulden Policy & Research 28 November 2013.

INSPIRINGSOCIALCHANGE

Poverty in the UK

Chris GouldenPolicy & Research28 November 2013

• JRF publishes an annual review of progress made in fighting poverty and other forms of exclusion in the UK

• Range of indicators from low income & worklessness to ill health and homelessness

• Uses official statistics & datasets – retrospective

• 2013 report due out on Sunday 8 December

• Monitoring Coalition’s agenda on poverty and exclusion

Monitoring Poverty & Social Exclusion

Background


What I’m talking about…

• Poverty and incomes

different risks by age group

• Employment and low pay

• Impacts of welfare reform

Poverty and incomes

• In 2011/12, 13 million people living in poverty in the UK For the first time, more than half in a working family

• Pensioner poverty is at its lowest for almost 30 years For working-age adults without children, poverty is the

highest on record

• Average incomes have fallen by 8% since their 2008 peak 2m people have household incomes below the 2008

poverty line but not considered to be in poverty today


19801982

19841986

19881990

19921995/96

1997/98

1999/00

2001/02

2003/04

2005/06

2007/08

2009/10

2011/12

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

Poverty risk by age groupChildrenWorking-age with childrenWorking-age without childrenPensioners

% in

po

vert

y (A

HC

)


1982 1992 2001/02 2011/120

2

4

6

8

10

12

14

16

Fewer pensioners & more childless adults in poverty

ChildrenWorking-age with childrenWorking-age without childrenPensioners

Pe

op

le in

po

vert

y (A

HC

) m

illio

ns


2001/02 2002/03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 2010/11 2011/12

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

12%

Incomes at the bottom fell further and for longer

10th percentile30th percentileMedian90th percentile

% c

ha

ng

e in

ho

use

ho

ld in

com

es


Employment and low pay

• Labour market showing signs of revival Underemployment fallen slightly to 6.3m Young adult unemployment peaked at 21%

• More people in low-paid jobs Around 5 million people paid below the Living Wage

• Churn in and out of work is substantial 4.8m different people have claimed JSA in last 2 years


1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013 H1

0

1

2

3

4

5

6

7

Underemployment down (but room for improvement)

Unemployed Lacking but wanting Part-time wanting full-time job

Nu

mb

ers

un

de

rem

plo

yed

(m

illio

ns)


1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

0

5

10

15

20

25

Youth unemployment: still very high but stable

Aged 16 –24

Aged 25 – 64

% IL

O u

ne

mp

loye

d


2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120%

5%

10%

15%

20%

25%

30%

35%

40%

Low pay back on the riseMen

Women

% p

aid

be

low

the

livi

ng

wa

ge

(o

r e

qu

i-va

len

t)


1,800,000

1,500,000

1,500,000

4.8m on JSA in the two years to April 2013: 40% new

New claim, never claimed before

New claim, claimed previously before April 2011

Claiming at end of March 2011


Social security

• Reduction in incomes for many on means-tested benefits Doubling of sanctioned jobseekers to 800,000 Cuts big and small erode benefits Affecting those in and out of work

• Benefits for an out-of-work adult without children are 40% of what the public say is a minimum standard of living

Families with children = 60%

• National averages mask huge variations between areas in Unemployment FSM and educational achievement Life expectancy


2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 20120

200

400

600

800

1,000

1,200

1,400

1,600

1,800

Referrals and actual sanctions doubled since 2009

Referrals for sanctions

Reversals

Actual sanctions

Nu

mb

er

of s

an

ctio

ns

(th

ou

san

ds)



Date Change Numbers affected

Average weekly loss

Jan 2012 Under 35s only eligible for shared room rate of HB 62,500 £41

April 2012 Couples with children need to work 24hrs with at least one working 16hrs to qualify for working tax credits

212k families Up to £75

May 2012 One year limit on contributory ESA 700k by 2015/16

£36

April 2013 Under-occupancy penalty 660k £14

April 2013 LHA uprated by CPI rather than rents 1.39m LHA claimants

Notional loss

April 2013 CTB replaced by CTS 2.4m £2.65

April 2013 DLA replaced by PIP 450k lose by 2018

Avg DLA £78

April 2013 Benefits updated by 1% only 9.6m £3

April 2013 Overall benefit cap 40k h/holds £62 median

Welfare changes since 2012


Pensioner couple Working-age single Couple 2 children

Lone parent 1 child

0

20

40

60

80

100

Out of work benefits for single adults are 40% of a min-imum income standard; for families they are 60%

Food Water ratesFuel Travel costsPersonal goods and services ClothingHousehold goods and services Social and cultural participationAlcohol Benefits as % of Minimum Income Standard

% o

f Min

imu

m In

com

e S

tan

da

rd c

ove

red

by

the

p

ove

rty

thre

sho

ld a

nd

me

an

s-te

ste

d b

en

efit

s

Conclusions

The Good• Unemployment and underemployment falling• Headline poverty measure down• Improving educational attainment (but a fixed gap)

The Bad• The fall in poverty has to be qualified

2 years of falling average incomes (and poverty line) Many worse off than 5 years ago Since 2011/12, further falls in real wages and the real

value of benefits


Conclusions

The Ugly• Poverty is broader and, for some, more severe

More now living on incomes below the value of out-of-work benefits (far lower than the poverty line)

More jobseekers being sanctioned Private renters facing stricter caps on LHA Social renters paying under-occupancy penalty Low-income families paying Council Tax

• Welfare reform is by no means the solution to poverty but current changes are making poverty worse

• Positive labour market developments do not ‘balance’ the squeeze on incomes of the poorest


INSPIRING SOCIAL CHANGE. Poverty in the UK Chris Goulden Policy & Research 28 November 2013.

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