Monitoring Poverty and Social Exclusion 2014
Monitoring Poverty and Social Exclusion is an annual, independent assessment of poverty and other forms of disadvantage across the United Kingdom.
The report uses official data from a range of sources to look at trends and patterns across different indicators. Different indicators reveal different patterns, allowing us to get a better understanding of the contemporary nature of poverty and exclusion. This year’s key themes are money, housing, work, benefits, and services.
- Household incomes fell in real terms for the third year in a row. Median income in 2012/13 was 9% below where it was in 2007/08 and 4% lower than a decade ago. Incomes of the bottom tenth have fallen further and for longer and are now 8% below their level a decade ago and 12% below their peak.
- Unemployment fell by 300,000 in the last year and the number unemployed for over a year fell for the first time in a decade. The number of people working part time but wanting a full time job also fell, by 50,000, also the first fall in ten years.
- Wages have fallen, for men and women, working full and part time, and for low and high earners. The average male full-time hourly pay fell from £13.90 to £12.90, after adjusting for inflation over the five years from 2008 to 2013. For women, it fell from £10.80 to £10.30.
- The report shows the movement between worklessness and low pay - two thirds of those in work now but unemployed a year ago are in low paid work.
- Changes to the way the welfare system operates have worsened the experience of poverty for many of those affected – whether through rising sanctions, longer waits for assessment, or poor job outcomes through welfare to work programmes.
- Legal support for social welfare cases has been almost completely withdrawn. In 2012/13 there were 280,000 social welfare cases, covering housing, debt and benefits, granted legal aid last year, compared to 50,000 in 2013/14
- There are now as many people in poverty in the private rented sector as the social rented sector (around 4 million in both). The private rented sector is insecure – the number of repossessions in the private rented sector is rising while mortgage repossessions are falling.
- Child poverty is still highest in cities, but urban areas now appear to be better at providing a decent level of education than rural areas. Unemployment rose right across the country during the recession with some of the biggest rises in places where unemployment was already high. Smaller cities and towns also saw some big rises.
The background to this report is the continuing fall in household incomes. In 2012/13, average incomes fell for the third year in a row. They are now 4% below their level of a decade ago and some 8% lower than the peak in 2008. Incomes further down the distribution fell further and for longer – the bottom tenth of the income distribution is now 9% below where it was a decade ago and 12% below its peak.
The measure of poverty used in this report is based on average incomes – if someone is sufficiently far below the average they are considered to be in poverty. So when average incomes fall, so does this poverty threshold. The result is that the overall level of poverty has remained unchanged in recent years.
What has changed is the composition of those in poverty. Over the last decade, the number of people in working families living in poverty has risen, while the number in workless or retired families has fallen. Poverty among 16-25 year olds has risen, while it has fallen among the over 65s. The number or people in poverty living in private rented accommodation has risen, while the number in social rented has fallen.
This rising “in work poverty” has long been a feature of this series of reports. Firstly, we should note that the number of people in work, and so the number of working families, is actually very high. Unemployment fell by 300,000 between mid 2013 and mid 2014; the number of people working part time but wanting full time work - also fell, for the first time in a decade.
So why is this increasing work not sufficient to lift a family out of poverty? There are a range of factors. The number of families where the main earner is self-employed has risen, but self-employed earnings, already low relative to employee earnings, have fallen.
The other part of the equation is low pay. Hourly wage rates have fallen for men and women, at different points of the pay spectrum. Average male hourly pay fell from £13.90 to £12.90 between 2008 and 2013. For women, it fell from £10.80 to £10.30. By 2013, around one in four women and one in six men in paid work were paid less than the living wage.
It would, though, be a mistake to see the in-work poor and the workless poor as distinct groups. There is substantial movement between them – of those currently in work who were unemployed a year ago, over 60% are in jobs that do not pay the living wage. While around 1 million currently claim Jobseeker’s Allowance (JSA), over 4 million have claimed it at some time in the last two years.
By the middle of this year, the number of people claiming JSA had fallen from 1.5 million in 2012 to just over 1 million. This ought to be a simple good news story – people moving off benefits and presumably into work. However, aspects of the sanctions system for JSA claimants – whereby a claimant can have their benefits stopped if it is felt they are not looking hard enough for work – should raise concerns that people are not getting the benefits and associated support they are entitled to.
In 2013/ 14, the number of JSA claimants being referred for sanctions hit a record level – there were over 1.7 million referrals over the year. Of these, around 800,000 resulted in a claimant having their benefits stopped, itself the highest number on record. Some 440,000 referrals resulted in no sanction. But the number of claims that were reversed or cancelled – essentially, the claimant leaving JSA rather than wait for the outcome of the sanction process, was 500,000. So in addition to 800,000 people having their benefits stopped, a further half a million may have simply left JSA altogether.
One of the leading causes of sanctions is failure to attend the Work Programme. But the Work Programme itself is struggling – less than one fifth of JSA claimants found work through it over the course of a year. The result is that more JSA claimants are sanctioned for not attending the Work Programme than get work through it.
An increasing number of people applying for Employment Support Allowance (the out of work benefit for disabled people) are having to wait longer for their claims to be assessed. In the last year, more than 60,000 people had to wait over nine months for their claim to be processed, with 50,000 eventually finding out they were entitled to the support they were seeking.
Welfare reform has been the key strand of the government’s anti-poverty approach, with the now-delayed Universal Credit system at its heart. But these examples show that administrative problems are undermining such aims. At the same time, legal aid for welfare cases has been withdrawn. There were 50,000 social welfare cases, covering housing, debt and benefits, granted legal aid last year, compared to 280,000 the year before.
Services such as legal aid are vital for tackling poverty, as they give individuals the opportunity to challenge and correct unfair decisions made against them.. Looking more broadly at services, both public and private, for people in poverty, we see a mixed picture.
Take, for instance digital inclusion, where the proportion of low income families lacking domestic internet access has fallen from 85% to 50% since 2004, even if the gap with higher income families has grown. People in more deprived areas are more likely to rate local childcare services as poor than people in other areas, although they rate the affordability as better than average.
Education remains the public service where the impact of poverty is most clearly acknowledged. The government’s pupil premium is specifically targeted to reduce the attainment gaps between low income children and their classmates. Still, though, in some parts of the country, three out of four children receiving free school meals do not get 5 GCSEs (including maths and English) at A*-C. Notably, these areas are all counties – the large cities do much better in terms of providing a minimum level of education for their poorer children.
These regional and local differences are visible across different measures of poverty, but the pattern is not consistent. Child poverty remains a largely urban phenomenon, but as we have noted, poor children in cities tend to attain better at school than their rural counterparts. Moreover, this geography may well be changing. The map below looks at the increase in unemployment between the three years to 2007 and the three years to 2013.
Most of the country has seen a rise, but not everywhere. The largest rises have been in the north east of England, west of Scotland and south Wales, in many places where unemployment was already high. But there have also been big rises in the coastal towns of south east England, which previously did not have especially high unemployment.