EMPLOYMENT levels are at a record high; so the UK must now reshape its labour market to deliver even greater reductions in poverty than those seen over the past 20 years, a report published earlier this month from the Joseph Rowntree Foundation (JRF) says. It warns that the country is at a “turning point” where progress on tackling poverty is going into reverse.
The report, UK Poverty 2017, notes that in the past 20 years the UK has “dramatically reduced” poverty among people who had traditionally been most at risk: pensioners, and families with a lone parent or three or more children. The falls were achieved, it says, by higher employment rates (accompanied by rising skills levels and the introduction and raising of the National Minimum Wage), more generous support for families through tax credits, and extra help for poorer pensioners. But poverty rates rose last year, to 16 per cent of pensioners (from 13 per cent in 2011), and 30 per cent for children (from 27 per cent).
The figures suggest that the UK is “at a turning point in our fight against poverty”, the chief executive of the JRF, Campbell Robb, said. “Record employment is not leading to lower poverty; changes to benefits and tax credits are reducing incomes; and crippling costs are squeezing budgets to breaking point.”
The Bishop of Durham, the Rt Revd Paul Butler, said that he was “deeply concerned” by the findings, and reiterated his call on the Government to ensure that Universal Credit would “make work pay and reduce poverty” (News, 6 November, 2017)
The JRF uses a relative definition of poverty: household income which is less than 60 per cent less than the median, adjusted for household size and type. It says that just seven per cent of people were in “persistent” poverty (lasting for at least two of the preceding three years) in 2015.
Its analysis highlights the degree to which work gives “strong protection against poverty”, as long as it is full-time or, for couples, one full-time and one part-time worker. Overall, 30 per cent of children live in poverty, but this rises to 72 per cent of those in workless households, and falls to just five per cent of those in households where both adults work full-time.
Although many lone parents now work, the report says, “recent changes to benefits and tax credits have meant that this is providing less and less protection from poverty”. Forty-seven per cent of children in lone-parent families are in poverty, falling to 28 per cent if the parent is in full-time work, and 36 per cent if the parent is in part-time work.
“The question facing the UK is how to shape a labour market that will deliver even greater reductions in poverty, particularly given that the UK already has historically high employment and a rising minimum wage,” the report says. “Many of those who are now out of work are disabled or have health conditions, have young children, or are caring for disabled adults. This makes it far harder for them to find and sustain work, and more likely that when they do get work it is low-paid and part-time.” It highlights a “jobs gap” affecting 17 per-cent of people (about 7.6 million in total), who cannot get work, or as much work as they would like.
Among the successes noted is the fall in the proportion of working-age people with no qualifications: from 20 per cent to eight per cent in the 20 years to 2016. “Education and skills are the biggest factors predicting whether individuals are likely to experience poverty,” the authors write. But they note that the gap in attainment between students from richer and poorer backgrounds “remains stubbornly large”, and that qualifications are “far less effective in improving pay prospects for people working part-time”. Low pay “remains endemic” in the UK, it says, and three out of four low-paid workers are still low-paid after ten years.
Among the recommendations are an improvement in education and skills, and working with employers to create “more and better jobs where they are needed, and to offer more opportunities and better pay to people who currently struggle to enter and gain from work — particularly disabled people, those caring for adults or children, and part-time workers”.
Launching the report, the Conservative MP for Harlow, Robert Halfon, who chairs the Education Select Committee, said that “social injustice is still endemic in every part of our education system”. He noted that a child living in one of England’s poorest areas is 27 times more likely to go to an inadequate school than a child living in its richest areas. He also spoke of a skills deficiency: more than a quarter of all working-aged adults have low literacy and/or numeracy skills, and the need to make sure that a technical education “carries the same prestige and opportunity as its academic cousin”. Among the solutions was more “degree apprenticeships” at universities.
The Institute for Fiscal Studies (IFS) says that the incomes of low-income households have risen faster than median income since the recession of 2007-08, resulting in a decrease in inequality.
In the past decade, the National Minimum Wage (introduced in 1999) has meant that earnings have increased fastest for employees with lower-paid jobs. The IFS expects the percentage of children living in poverty to rise sharply by the end of the decade: tax and benefit reforms account for 40 per cent of this rise, and the remainder is due to stronger earnings growth among middle-income households, causing a bigger gap between poor and higher earners.
Commission resigns. Five days after publishing a report that warned that many parts of Britain were being “left behind economically and hollowed out socially”, the entire membership of the Social Mobility Commission resigned, earlier this month (News, 1 December).
In a resignation letter to the Prime Minister, the chairman, the former Labour minister Alan Milburn, wrote that the Government was “understandably focused on Brexit and does not seem to have the necessary bandwidth to ensure that the rhetoric of healing social division is matched with the reality. I do not doubt your personal belief in social justice, but I see little evidence of that being translated into meaningful action.”
The Bishop of Burnley, the Rt Revd Philip North, told BBC Radio 4’s Sunday programme that he shared Mr Milburn’s frustration, “because things are getting worse. Social inequality is growing. The plight of the poor is getting worse in this country.” Referring to the Prime Minister’s speech about “burning injustices”, made outside No.10 Downing Street in 2016, he said: “I’ve no doubt whatsoever that she entirely means it . . . but the attention of the Government is so solely on Brexit that it seems that many areas of government are just falling off the end of the table.”