REDUCING POVERTY
IN THE UK: A COLLECTION
OF EVIDENCE REVIEWS
AUGUST 2014
CONTENTS
Click on the headings below to go straight to a particular section or
review.
Introduction
03
Chapter 1: The Bigger Picture
Foreword
Demographic change and poverty
Devolution and poverty
Gender and poverty
International anti-poverty strategies
Regeneration and poverty
Religion and poverty
Sexual orientation and poverty
Well-being and poverty
05
06
08
12
17
22
27
33
37
41
Chapter 2: Welfare and work
Foreword
Benefits take-up and poverty
Employment, pay and poverty
Means-testing or universalism and poverty
The informal economy and poverty
Universal Credit and poverty
Welfare to work policies and poverty
47
48
50
55
59
63
68
72
Chapter 3: Money and the cost of living
Foreword
Debt, credit and poverty
Early childhood education and care and poverty
Fuel and poverty
Savings, assets, wealth and poverty
The cost of living and poverty
Transport and poverty
77
78
80
84
89
93
98
103
Chapter 4: Education, personal relationships
and community
Foreword
Adult and tertiary education and poverty
Advice, support and poverty
Family structure and poverty
Personal relationships and poverty
Primary and secondary education and poverty
Social networks and poverty
The NHS and poverty
109
110
112
117
122
126
130
135
140
Reducing poverty in the UK
01
CONTENTS
Chapter 5: Complex needs
Foreword
Crime and poverty
Disability and long-term conditions and poverty
Economic migrants and poverty
Homelessness and poverty
Institutional care and poverty
Poverty among asylum seekers and refugees
02
Reducing poverty in the UK
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INTRODUCTION
Reducing poverty in the UK: a collection of evidence
reviews
JRF is developing the first comprehensive, evidence-based strategy to reduce
poverty for all age groups and each UK nation.
To help build the evidence, we commissioned researchers to carry out
reviews of existing policy and research on a wide range of social issues that are
related to poverty. The 33 studies in this collection are the findings of those
reviews, and there are links to more detailed reports by the research teams.
We’re also working with a diverse advisory group and a task group of
poverty experts, some of whom have written the forewords introducing the
different sections of this report.
We plan to publish our strategy for the UK at the end of 2015, with specific
activity for Wales, Northern Ireland and Scotland to follow in 2016.
Keep an eye on http://www.jrf.org.uk/topic/anti-poverty for updates, or
contact Chris Goulden, email Chris.Goulden@jrf.org.uk, tel. 01904 615946.
Reducing poverty in the UK
03
THE BIGGER
PICTURE
CONTENTS
Foreword
06
Demographic change and poverty
08
Devolution and poverty
12
Gender and poverty
17
International anti-poverty strategies
22
Regeneration and poverty
27
Religion and poverty
33
Sexual orientation and poverty
37
Well-being and poverty
41
The bigger picture
05
FOREWORD
While some of the issues that leave people vulnerable to poverty – and some
of the solutions – lie at an individual and family level, many of them are part of
far wider forces and relate to inequalities within society and the economy as a
whole. Several of the reviews looked at such wider, often over-arching, issues.
The review of poverty and gender draws attention to the many ways that
gender roles, relationships and social structures affect poverty. First, there is
an issue of who is at greatest risk. At the household level, lone parents (mostly
women) and single elderly women have high poverty rates. But poverty within
the household may be hidden, if resources are not equally shared, and one
partner’s financial dependence may create risks of future poverty if the
partnership later fails. This argues that attention should be paid to people’s
individual incomes and rights to incomes, including in the design of benefits
and tax credits. It also points to the need for a more equal distribution of caring
and earning within couples (enabled by greater access to affordable childcare
as well as a more equal distribution of parental leave).
Linked to this, the demographic review looks at how the country’s
demographic composition is likely to change over the coming decades, and so
change the balance of poverty risks. As well as a likely further rise in lone
parenthood, ‘new’ demographic changes that may affect poverty risk include a
further rise in people living alone, including men living alone in mid-life who
have never cohabited or fathered children, as well as men in young adulthood,
returning to their parents’ home following partnership breakdown.
One of the major changes of recent years has been in attitudes towards
sexual orientation, with rising tolerance of difference. But stigma, harassment
and discrimination continue to affect people’s lives, increasing risks of lasting
disadvantage. The review of poverty and sexual orientation examined new
survey data on how people identified themselves, and the links between identity
and poverty risk. A striking finding – given that heterosexual couples are more
likely to have children, which would normally increase poverty risks – is that
poverty rates are higher for gay and bisexual men, and bisexual women, with
increased rates of means-tested benefit receipt for gay men. The review points
to policy agendas affecting bullying, homelessness, mental health and
employment discrimination and harassment.
The review of religion and poverty also focuses on differences in poverty
risk between groups, including the 50 per cent poverty rate for Muslims,
compared to 18 per cent for the population as a whole. It points to the
implications of this for training for employment, how childcare is provided
to encourage better use of free provision, and techniques such as using
blank-name application forms for employment.
As well as factors like these that cut across the population as a whole, the
political context is changing too. The devolution review points to the tensions
between factors that are best tackled at a UK-wide level – including
redistributive functions, in the authors’ view – and those where devolved or
more localised structures are appropriate. The devolved administrations have
used their powers to tackle poverty and adapt to/mitigate the consequences of
austerity in different ways, but there is only limited evidence of the different
nations of the UK learning from one another and attempting to replicate
successful ideas.
06
Reducing poverty in the UK
At a wider level, learning from the experience of others has been the aim of
the European Union’s requirement on member states to produce ‘national
action plans’ for tackling poverty and social exclusion. But the review of antipoverty strategies internationally points to the very mixed impact of these.
For some countries, producing a ‘national action plan’ has consisted of no
more than a listing of what was already happening, with no real connection
with overall political structures or commitments. As a timely reminder, the
findings of the review point to the ineffectiveness of ‘strategies’ that do not
have political or wider buy-in.
John Hills
Director of the Centre for Analysis of Social Exclusion at the London School of Economics
The bigger picture
07
DEMOGRAPHIC
CHANGE AND
POVERTY
Understanding past demographic change and its
association with poverty can provide valuable lessons
for the design of social policies aimed at addressing
poverty within an increasingly diverse population.
Key points
• Evidence on the link between population change and poverty is sparse. It is
important to take socio-economic differentials in mortality and fertility into
account, as poverty rates may be affected by changes in the composition of
the population, particularly where there is an increase in individuals with
‘excess poverty risks’.
• At the micro-level, the association between a number of demographic
characteristics and poverty is well-established. However, it is important to
consider how far people are in different family types (single parent,
cohabiting family, married family), according to, for example income,
education, ethnicity and extent of religious beliefs. Once this is taken into
account, the causal link between ‘demographic characteristics’ and poverty
is weakened; the direction of such links is complex.
• ‘New’ demographic changes associated with the risk of poverty include the
rise in living alone, particularly in men living alone in mid-life who have
never co-habited or fathered children, and in men in young adulthood who
are more likely to return home following partnership breakdown.
• Other future demographic changes that may influence poverty levels are
the rise in non-British-born individuals (given the continuing link between
ethnicity and poverty), and the rise in lone parents.
• Such changes reflect the increasing diversity of British society and the
need for social policy to address newer and more nuanced risks of poverty,
emanating from the interaction of various demographic characteristics.
The research
By Jane Falkingham, Maria Evandrou and Athina Vlachantoni, ESRC Centre for
Population Change and Centre for Research on Ageing, University of Southampton
08
Reducing poverty in the UK
BACKGROUND
The evidence on the link between population change and
economic growth is inconclusive. However the association
between demographic characteristics such as gender, age,
disability, ethnicity and particular family structures and poverty
is well-established. Policy also needs to reflect the growth in
diversity of family forms.
‘Demographic change’ encompasses changes in the size and composition of
the population due to changes in births (fertility), deaths (mortality) and
migration (internal and international, inward and outward), as well as changes
in the family structure and living arrangements of the population through
changing patterns of partnership types (cohabitation, civil partnership and
marriage) and endings (separation, divorce and widowhood). ‘Poverty’ is also
broadly defined with the review examining links with absolute and relative
poverty and a wider set of indicators of deprivation and social exclusion, access
to social networks and social services.
The macro-economic story
Analysis has revealed that population growth alone has not inherently increased
or decreased economic growth. However other demographic changes can
affect the prospects for economic development and poverty reduction. Today,
most commentators agree that recent rapid fertility decline has made a
significant contribution to reducing poverty in developing countries. In
developed countries the longer term effect of demographic transition is
population ageing, with older people making up an increasing share of the
population. Some people argue that population ageing is associated with
declining economic growth and others that growth will increase as a
consequence of increased savings as a response to the prospect of higher life
expectancy and greater pension savings for retirement. There is, however,
agreement that population ageing is expected to put a strain on pension, health
and social care spending.
The micro story – demographic characteristics and
poverty
The association between a number of demographic characteristics and poverty
are well established, most notably individual characteristics such as age,
disability and ethnicity and family structures including lone parent families and
large families (i.e. with three or more children) and certain types of people
living alone. Evidence clearly demonstrates the tendency of individuals to be
in a particular family type (single parent, cohabiting family, married family)
depending on, for example, income, education or ethnicity. However, advanced
statistical methods analysis demonstrates a weaker causal link between
‘demographic characteristics’ and poverty, and the direction of such links is
complex.
The bigger picture
09
Population change over the past 30 years
The last century was a time of enormous demographic change. In 1901 the
population of the UK was 39.3 million; by 2001 it had reached 59.1 million. In
1901, the total fertility rate was 3.5; by 2001 it was 1.7. In 1901 the average
life expectancy for a man was 45; by 2001 it was 75. During the twentieth
century more people emigrated from the UK than immigrated; with the net
exodus from the UK over the entire century being 15 million.
One of the unanticipated demographic developments of the past decade
has been the increased level of migration, reflecting in particular the growth of
immigrants from the EU following accession of the A8 countries in 2004. In
2011 one in five persons (19.5 per cent) identified with an ethnic group other
than White British compared with 13 per cent in 2001, while the largest
absolute change in population size was among ‘White other’ reflecting the
growth in the number of migrants from the EU. Existing research clearly shows
that ethnicity has a relationship with poverty. For example, around two-fifths
of people from ethnic minorities live in low-income households, twice the rate
for White people, with the risk of poverty being highest amongst Pakistani and
Bangladeshi households. However the relationship is complex, reflecting
differentials in education, employment and family structures among other
factors.
The other unexpected trend has been the upswing in fertility. Since 2001
the number of births has risen steadily each year, and in 2012 the total fertility
rate reached 1.94, a level not seen since the early 1970s. This is due to more
women in the population currently in their 20s (born in the 1980s and 1990s)
having children than among previous cohorts and more women at older ages
(born in the 1960s and 1970s) having children after postponing childbearing.
Over the past 30 years there have been significant changes in living
arrangements with the emergence of new family forms including increasing
cohabiting couples, single-parent families and blended families. The proportion
of families with dependent children headed by a lone parent has tripled in
the last 40 years, rising from 8 per cent in 1971 to 26 per cent in 2005 and
22 per cent (1.9 million families ) in 2011; lone mothers tend, on average, to
experience a greater risk of poverty.
Another key change in living arrangements across the last 30 years has
been the rise of solo living. In 2013, 7.7 million people in the UK lived in single
person households. Although the proportion living alone is highest among the
oldest age groups, as a result of partnerships ending and different improvements
in life expectancy for men and women, nevertheless the steepest rise has been
seen among those aged 35–64, particular among men.
Research conducted by the ESRC Centre for Population Change found
that although partnerships ending is the main cause of living alone in mid-life,
a significant proportion of men who live on their own have never experienced
a co-residential partnership with 24 per cent of 55 to 64-year-old men living
alone having never lived with a partner or become a parent. In contrast, the
proportion of men and women living alone in young adulthood has actually
fallen over the past decade, in part reflecting the rise in the proportion of
young adults aged 20–34 living in the parental home.
One of the most dramatic changes in the UK population over the past
century has been the change in its age structure. In 1901 the proportion of
the population aged 65 and over was about 5 per cent, by 1941 it had doubled
to 10 per cent and by 1981 the proportion reached 15 per cent. Today just
over 16 per cent of Britain’s population is aged 65 and over, and the proportion
has been fairly stable for the last 20 years. Over the next 20 years, we can
expect to see a significant rise in both the absolute number and the proportion
10
Reducing poverty in the UK
of the population aged 65 and over. Since the late 1980s, the percentage of
pensioners below the relative poverty line has continued to fall, mirroring the
decline in poverty among working-age parents and children; the only group
where poverty has risen is among working-age non-parents.
Population change over the next 30 years
Forecasting the future is fraught with uncertainty. One area however where
we can have more certainty than others is the continued ageing of the
population and the growth of the oldest old. It is also likely that we will see a
continued growth in the diversity of the population. With rises in life expectancy,
more older people may expect to live as couples than alone, particularly in early
later life (65–74) with declining widowhood offsetting rising divorce rates.
However a significant minority will be living alone, with implications for the
availability of co-residential social care.
Although many demographic changes are not causally related to poverty,
the growth of groups that are known to be at a heightened risk of experiencing
poverty is a cause for concern. Single older pensioners and lone mother
families may be particularly disadvantaged. However policy also needs to reflect
the growth in diversity of family forms, with increasing numbers of parents
choosing to cohabit rather than marry and also the growth of hidden families
as adult children increasingly live with their parents well into their 20s and 30s.
Such changes are indicative of the changing nature of society, and of the
significant policy challenge lying ahead.
Percentage change in number of households by type, 2011 – 2021,
England
65+
0
5
10
15
20
25
Household interim projections, 2011-2021, England
About the project
This review was based on the expert-led analysis of academic and policy
literature on the relationship between demographic change and poverty
in the UK.
Read the full report.
The bigger picture
11
DEVOLUTION AND
POVERTY
This research assessed the impact of recent
anti-poverty strategies pursued by the devolved
administrations, and highlights whether there is the
potential for further devolution to enhance efforts
to reduce poverty.
Key points
• Headline levels of poverty across all four nations fell significantly until the
economic downturn but since then some of this progress has been eroded,
particularly in Wales and Northern Ireland. Different costs have affected
each of the nations in differing ways with rising housing costs hitting
England and Wales and rising fuel costs having a bigger effect in Northern
Ireland.
• While overall poverty trends have much to do with prevailing national and
international economic conditions, each of the devolved nations has taken
its own steps to develop anti-poverty strategies that address their own
particular priorities.
• While it is clear that devolved-level policies in recent years have gone some
way to mitigating certain impacts of welfare reform – and benefit reductions
in particular – it is not clear how far these plans can be seen to have tackled
or mitigated poverty in general.
• The redistributive functions of government require pooling risk across the
largest possible area to insure against the uneven impact of economic
shocks. And so for many aspects of the social security system – particularly
for cyclical and redistributory benefits – the role of central government
remains key.
• For housing benefit, for active labour market programmes, and for certain
social care payments, there is a strong case for further devolution as a
means of giving devolved nations more tools to address the tide of poverty
which is slowly rising again.
The research
By a team at the Institute of Public Policy Research North
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Reducing poverty in the UK
BACKGROUND
The devolved administrations exercise considerable autonomy
when it comes to tackling poverty. Consequently, devolution
has resulted in some notable policy differences across the
nations of the UK, although its impact on headline levels of
poverty is unclear.
Patterns of poverty in the UK nations
The nations of the UK have seen significant decreases in headline levels of
poverty over the past two decades, particularly in the years before the
economic downturn. Since 2007, the path of poverty has shifted, from a
general picture of falling poverty levels to a more nuanced one. Poverty levels
in England have resumed their gradual downward path, while the lowest levels
of poverty in the UK, found in Scotland, have levelled off in the last three years.
In Wales and Northern Ireland, increases in poverty have been more marked;
in the former they appear to have stabilised, in the latter they appear to be
falling once again.
There are significant differences between the different nations before and
after housing costs. The highest levels of poverty are found in Northern Ireland
before housing costs and in Wales after housing costs. Yet the extent of
housing cost-induced poverty is most evident in England. The English housing
market has typically higher rents and house prices than the other parts of the
UK and England shows a six percentage point difference in poverty levels
before and after housing costs.
Drivers of poverty
Median household income – which includes benefits and earnings – has been
particularly badly hit in Wales and Northern Ireland since 2007/8. There has,
however, been a significant downturn for all four nations, especially with cuts
to benefit entitlements and stagnant earnings in the past 2–3 years. Workless
households have a particularly high risk of poverty. Levels of unemployment
have all increased and been remarkably similar between nations. That the levels
of unemployment in each nation appear so closely synchronised is profoundly
important for the devolved nations’ poverty strategies, as it suggests that there
is a strong link between national and regional economies and so their ability to
control overall levels of poverty is contingent on the wider macro-economic
context both in the UK and globally.
The bigger picture
13
Poverty reduction strategies in the devolved nations
Each of the devolved nations has taken different approaches to tackling
poverty. Key themes are discussed below.
Prevention: Each of the devolved nations is moving towards an increased
emphasis on early years action and early intervention within public services.
Early years interventions are a particular cornerstone of the Welsh antipoverty strategy, including through its Flying Start programme. By contrast,
despite steps in the right direction through its Delivering Social Change
framework, much more remains to be done on this issue in Northern Ireland,
especially to better integrate early years and childcare provision.
Economic development: The Scottish government has played a role in
driving economic development through successful inward investment
initiatives, supporting threatened jobs and building the skills base. In Northern
Ireland, however, economic and social policy strategies have been less linked,
and economic policy prioritised over social policy.
Cost reduction and universalism: Each of the devolved nations has brought
in measures to help with cost of living. For example free prescriptions, and in
Scotland and Northern Ireland also some free care for the elderly and reduced
tuition fees. These have the potential to help the poorest but they are not
well-targeted policies, or necessarily the most effective use of limited
resources. Free prescriptions may be politically popular, but their costs are not
a substantial element of the outgoings of many low-income people.
Mitigation: The Northern Irish and Scottish governments have made
significant attempts to mitigate the welfare reforms enacted by Westminster.
In Scotland this included establishing a £20 million emergency fund to mitigate
the problems associated with the so-called bedroom tax. Northern Ireland has
deviated from the rest of the UK in respect of the bedroom tax with the
Treasury agreeing to let the Northern Ireland government waive the benefit
reductions for existing tenants, though it still applies to new ones. One of the
main drivers behind the deal was that Northern Ireland does not have enough
smaller dwellings to meet demand.
Institutional approaches to tackling poverty: Compared with the other
devolved nations of the UK, and the Westminster government, Wales
arguably has the strongest and most explicit institutional commitment to
tackling poverty, including leadership at the highest level and a co-ordinated,
cross-government action plan.
Disconnect between reserved and devolved powers
There was evidence of a number of disconnects, and even clashes, between
devolved and reserved powers, for example Scotland’s decision to spend some
of its block grant on mitigating the impacts of the bedroom tax. This means
less funding for other priorities. A more fundamental clash has arisen due to a
legal interpretation of European Social Funding rules, with Work Programme
participants being unable to take part in certain devolved employment support
programmes due to double funding issues. Another example is that while the
devolved nations have quite distinct housing markets, and substantial policy
powers to affect those markets, the revenue aspect of government spending
on housing, perhaps most able to affect poverty, remains held at Westminster.
14
Reducing poverty in the UK
Further devolution of welfare?
The social security system is one key area of poverty alleviation where powers
are largely held in Westminster, but where there might be more scope for
greater devolution. Exceptionally, Northern Ireland has power over social
security although it has to meet additional costs resulting from deviation from
the rest of the UK and there has been little variation to date. There is a strong
case for devolving control of distributive public services because the devolved
institutions are best placed to ensure these services most effectively reflect
local preferences and meet local conditions, whereas it is normally held that
redistributive functions – which entail the transfer of resources from one
section of the people to another – are best exercised at the UK level. The UK
government, for example, can draw on a wider tax base to fund redistribution,
and social security in this sense is a form of sharing resources and pooling
the risk.
However, this is not to suggest that there is no role for the devolved
governments in social security. In Canada employment insurance is a nationwide
scheme, though its rules vary regionally. Canada also illustrates how policy
innovations in one branch of government are taken up more widely; health
care, pensions policy, and child care policies all started as initiatives in one
province before becoming much more widely adopted. The positive example of
a policy innovation by one government can affect others, and create a different
sort of policy competition; in effect, it can drive a race to the top rather than
to the bottom.
To assess which benefits might be best transferred to devolved
governments, a number of criteria were developed. These included whether a
benefit was cyclical in nature; how it might relate to, or overlap with, existing
devolved functions; how far it might be ‘place-related’; and whether it was
particularly redistributive or contributory in nature.
These criteria ruled out the majority of benefits; however, there is a more
compelling case for devolving certain dimensions of the welfare system.
Housing benefit – poverty data shows that housing costs are a key component
of household expenditure and could have a significant bearing on tackling
household poverty. Housing benefit is self-evidently a place-related benefit
and already varies by place to take account of local market conditions as well
as being locally administered. If housing benefit was devolved it is argued
that devolved administrations could better plan and target investment
in affordable housing. Over the long run this could increase the supply of
affordable housing and reduce government expenditure on subsidising
private rented accommodation. It would, however, require housing benefit to
be removed from Universal Credit.
Employment support – although not a ‘benefit’ as such, active labour market
programmes form a key part of the social security system and call for the
joining up of a range of areas of government action. The Work Programme
has had some significant problems in most places but the fact that getting
people back to work – especially those furthest from the labour market –
requires a joined-up approach across agencies makes a compelling case for its
devolution.
The bigger picture
15
An alternative approach to devolving individual benefits would be to enable
devolved governments to supplement UK benefits where they see a case for
doing so (for example where local circumstances make it beneficial to do so).
Any top-up would be funded exclusively from devolved budgets. In this
approach the level of benefits set by the UK government would serve as a
floor, but not a ceiling, for devolved welfare. The upshot would be that devolved
governments would be able, within the overall framework of UK policy, to
choose their own distinct approach to social policy, using cash benefits as
well as other policy levers, provided they bore the burden of paying for
their decisions.
About the project
The research analysed variations in levels of poverty across the UK focusing
particularly on the period since 2010, the impact of the economic downturn
and cost of living issues. The research also considered how the different
approaches to tackling poverty had varied across the UK in recent years and
assessed the appetite in the devolved institutions for further devolution to
enhance their efforts to reduce poverty. This was based on desk-based
research and a dozen semi-structured interviews in each of the devolved
nations with senior civil servants, academics and other local experts including
within the voluntary and community sector.
16
Reducing poverty in the UK
GENDER AND
POVERTY
A gender perspective is generally missing from
policy debates about poverty. Yet the causes and
consequences of poverty, and the routes in and out,
are profoundly affected by gender roles and
relationships and the ways in which social structures
position women and men. This means that poverty is
gendered.
Key points
• Poverty is usually measured at household level. When measured in this way,
the evidence for most countries reveals more women than men in poverty.
• Lone parents and single elderly women are often particularly likely to be
living in poverty – though risks are also increasing for some men.
• However, this gives an incomplete picture of the links between gender and
poverty, because:
– when family income is not shared fairly in couples, this may result in
hidden poverty;
– women often manage family poverty, and suffer the costs of doing so;
– gender disadvantage can be a key reason for both members of a couple
living in poverty;
– one partner’s financial dependence on the other incurs a risk of future
poverty.
• Anti-poverty policies aiming to break the links between gender and poverty
should be assessed for their impact on individuals and their trajectories over
the life course, not just on the household at one point in time.
• It is important to consider the impact of policies on gender roles and
relationships, financial security and autonomy for women and men, caring
responsibilities and inequalities within the household both now and in the
future.
• Measures are required to:
– ensure access to an adequate independent income for women and men
over the life course;
– share caring and the costs of caring more fairly, both between women
and men and more widely in society.
The research
By Fran Bennett and Mary Daly, University of Oxford
The bigger picture
17
BACKGROUND
This review analysed the evidence on, and discussed possible
reasons for, the links between gender and poverty, and
examined the impact of relevant policies. Rather than solely
counting women and men in poverty, or studying their
individual characteristics, the focus was on how gender affects
processes leading to poverty and routes out of it. These
‘gendered’ effects were also recognised as being affected by
other differences and inequalities such as ethnicity, disability
and age.
Gender and poverty: the household
According to the latest figures, women were more likely than men to live in
poverty in the UK in 2011/12 (with the poverty threshold as 60 per cent of
median equivalised disposable household income). Before housing costs,
16 per cent of women were living in poverty compared with 15 per cent of
men. After housing costs, the proportions were 20 per cent for women and
19 per cent for men. Across the European Union (EU) in 2011, women were
also slightly more likely to be in a situation of material deprivation.
But this data does not fully reveal the contribution of gender factors to
poverty. The higher prevalence of poverty among women reflects the greater
risk run by single adult households, especially lone parents and single elderly
women. This means that variation between countries and over time is due in
part to different proportions of the population living in such households.
In addition, these and almost all statistics assume that resources are shared
within households so that everyone living in them has the same standard of
living. But a recent study suggested this might not be true for 30 per cent of
couple households in the EU assumed to do this. Even leaving this aside, gender
factors are also relevant to the situation of couples living in poverty. One study
of 12 EU countries found that in most of them women workers’ likelihood of
experiencing ‘in-work poverty’ related more to their own employment
characteristics and low earnings, while men’s related more to household
factors (including their partner’s employment situation).
18
Reducing poverty in the UK
Family, labour market, welfare state
The two most visible systems of distribution of resources and responsibilities
are the market, especially the labour market, and the welfare state. The
differing impact and functions of these for men and women are widely
recognised. However, a comprehensive perspective on gender and poverty
needs to add the family as a third such system, given its significance in
organising responsibilities (for caring for children and ill/disabled/elderly
people in particular) in addition to redistributing resources.
Tracing trajectories over the life course can track key life events in relation
to the family, labour market and welfare state and their impact on the gendered
risks and incidence of poverty.
Gendered experiences of poverty
The review found women are more likely to manage the household budget
when finances are tight, and to go without so that the children and partner
have enough, with implications for their mental and physical health as well as
their access to personal resources. For men, poverty tends to be associated
more with social isolation (especially for single men), and shame about the
inability to provide.
Policy review
Policies in the UK have not explicitly targeted links between gender and
poverty, and evaluations seldom have this focus either. Neither do assessments
of the impact of policy routinely examine what goes on inside the household
or over the life course.
Maximising the available evidence, the review found that the significant
reductions in relative income poverty among lone parents and single elderly
women in the 2000s in the UK resulted from a mix of policies, including
increases in employment and in universal child benefit for lone parents, and
improvements in means-tested benefits/tax credits for both groups. These
policies were also significant in narrowing the poverty gap between women
and men, and continuing to reduce persistent poverty. With many benefits and
tax credits now being cut, including those for children, poverty for those below
pension age is forecast to increase.
The evidence suggested that the links between gender and poverty could
be tackled through policies to ensure:
• access to an adequate independent income over the life course for women
and men;
• fairer sharing of caring, and the costs of caring, both between women and
men and more widely in society.
How did recent policies measure up, and how are future policies likely to
do so? A review of the available evidence underscores key findings and lessons
for the future.
• Assured access to adequate independent income: Employment is now the
key policy focus for tackling poverty. Such policy is gendered in its impact.
The national minimum wage and increases in it benefit women in particular
because of their low pay. But ‘welfare to work’ policies often take insufficient
account of the constraints on employment and other opportunities
imposed by gender roles and relationships. Tax credits have been praised
The bigger picture
19
for promoting employment among ‘first earners’ and lone parents but
criticised for blunting incentives for ‘second earners’, hindering their efforts
to lift their families out of poverty now and reduce their own risks of poverty
in the future.
Non-means-tested benefits provide an independent income for adults
out of work. Access to some of these benefits has been improved, but
recently additions for dependants have been removed and contribution
conditions tightened. The new single tier state pension from 2016 will
benefit many women, but survivors’ pensions are being abolished and caring
is taken into account in the pension reforms only partially.
Child Benefit gives valuable access to income within the family. But paying
Universal Credit (the new means-tested benefit) into one account for couples
risks creating or worsening an imbalance of power, and paying it monthly in
one lump sum makes day-to-day budgeting (usually done by women) harder
for many.
Principles and priorities for the future should include providing assured
access to adequate income, as far as possible independent of the presence,
actions or resources of a partner. This could include increases in the national
minimum wage, and in pay for caring jobs (e.g. through public contract
conditions).
Given increasing family fluidity, basing benefits on marriage/partnership
increases risks of poverty. Individual benefit entitlement for a partner out of
the labour market (on parental leave, unemployed or incapacitated) can reduce
‘in-work poverty’ for couples, as well as giving the individual an independent
income within the family.
The increasing debate across the political spectrum about reviving
contributory benefits needs to recognise caring as a form of contribution, as
has happened in pension provision (albeit partially), and ensure that carers’
benefits are improved.
• Fairer sharing of caring and the costs of caring: caring for children or
adults often restricts opportunities to gain a secure income from
employment and/or the welfare state in the longer term, although benefits
paid for children can help reduce the risk of mothers going without. Child
maintenance can be important to parents living below the poverty line,
but there is little analysis of the impact of paying it on the incomes of
non-resident parents (usually men).
The most significant costs of caring centre on the difficulties of combining
it with paid work. Child care and social care services help with this, but current
systems to help with costs are complex and inadequate, and UK policies work
against parents sharing family leave entitlements more equally. Flexible working
is largely taken up by mothers. This may help them stay in work but can also
maintain the gendered division of labour. The UK allows only a right to request
flexible working, not to have it, meaning fathers can feel less justified in
asking. Rights to paid leave for carers for ill/disabled/elderly people lag even
further behind. Improving job progression could stop women getting trapped
in part-time, low-quality jobs.
Principles and priorities for the future should include encouragement of
more flexible gender roles, by schools, employers and services, which would
help with combining work and care. The decision to identify one partner as
‘lead carer’ in a couple with caring responsibilities for young children and
subject to universal credit conditions is an example of inflexibility, and could be
reconsidered in this context.
20
Reducing poverty in the UK
Evidence suggests that increased pay during parental leave, and a ‘use it or
lose it’ policy, would encourage fathers to take it up. Leave for carers for
disabled/elderly people needs to be improved. Education and training are
important for all, but especially for women who have focused their energies
on caring and for men with outdated skills. Local quality jobs and child care,
affordable and accessible transport, and free/low cost local learning
opportunities, are crucial. Shifting the emphasis in support for childcare costs
to subsidies to providers would mean fewer parents caught in the meanstesting trap.
Conclusion
A focus on gender is long overdue in anti-poverty strategies in the UK.
Disentangling the links between gender and poverty inside the household and
across the life course would give a fuller picture of relevant issues, and reveal
the gender impact of associated policies. The right mix of policies would mean
that gender is no longer a primary determinant of poverty in the UK. This
review aims to contribute to that end.
About the project
This review drew on existing evidence about the links between gender and
poverty and the reasons underlying these, and analysed the impact of relevant
policies. It considered mainly research carried out in the last 10-15 years, with
a focus on the UK.
Read the full report.
The bigger picture
21
INTERNATIONAL
ANTI-POVERTY
STRATEGIES
This report sets out how poverty in the UK compares
with other countries, in Europe and elsewhere. It also
compares approaches to reducing poverty across
these countries, looking for evidence of strategies
that work.
Key points:
• Strategies are more likely to succeed if they have:
– political commitment;
– clear lines of accountability;
– links to economic policy;
– dedicated institutions or systems of governance;
– co-ordination across government;
– external stakeholder involvement;
– an effective system of monitoring and review.
• While the UK did not have a national strategy, it has seen a fall in poverty
while other countries have seen a rise. This is at least in part due to the
introduction of a range of other anti-poverty policies.
• The effectiveness of the EU Nation Action Plans was varied. While they did
not achieve their aim of reducing poverty, they did enable countries to
make strategic progress towards developing systems and structures for
tackling poverty.
• Anti-poverty strategies can be an effective way to assign responsibility for
poverty reduction, facilitate co-ordination and consensus building and build
support for the development of new measures or policies.
• Increasing the number of people in work does not necessarily decrease the
number in poverty.
• The timescale associated with anti-poverty strategies means they need to
be embedded in order to survive political change.
The research
By Tom MacInnes and Sabrina Bushe, New Policy Institute, and Peter Kelly and Fiona
McHardy, The Poverty Alliance
22
Reducing poverty in the UK
BACKGROUND
This report considers the many different strategies for
reducing poverty, across the UK, Europe, North America and
Brazil. No single strategy has been unambiguously successful,
though some have been associated with significant reductions
in poverty over a long period. There are many examples of
well-intentioned strategies that fail to achieve the political
purchase necessary for success.
What makes a strategy more likely to succeed?
There was no single example of a strategy that addressed all the problems of
poverty, but we found that several things can increase the chances of success.
• Political commitment: the most effective strategies all had commitment at
a high level, from both politicians and civil servants. This gave impetus and
leadership to the strategy.
• Responsibility and accountability: in some of the strategies we reviewed,
the lines of accountability for delivery were not clear. These were often the
less successful strategies.
• Links to economic policy: if anti-poverty strategies are to have real purchase
they must be developed alongside economic policy.
• Institutional arrangements: the creation of dedicated institutions or systems
of governance helps the development process. They also offer some
security against changes in political leadership.
• Co-ordination (the all-government approach): the multifaceted nature of
poverty means that tackling it requires high levels of co-ordination across
government.
• Implementation: the development of a strategy means very little if it is not
put into practice. There remains a gap between what is often committed to
in strategy documents and what is delivered. Often gaps emerged when
moving from the national picture to local delivery.
• The involvement of external stakeholders: these are a vital source of
information and should also be involved in implementing the strategy.
• An effective system of monitoring and review: measuring results is crucial
to maintain momentum and ensure various parts of governments are
meeting their objectives.
The bigger picture
23
Long-term view of poverty trends in the UK and
elsewhere
Most countries saw a rise in poverty between the 1980s and 1990s. While
some, such as Portugal and Ireland, then made substantial progress to redress
this, the UK stands out compared with many countries in the OECD. From
around 2008 the global recession and ensuing Eurozone crisis stopped any
further reduction in poverty in the EU except in the UK, where the rate has
continued to fall.
This may, though, be due to the way income poverty is measured, relative
to the national median income. This median has fallen substantially in real
terms in the UK, reducing relative poverty. It is worth noting, though, that
falling medians elsewhere in Europe have not always led to falling poverty.
It is useful, then to look at other measures of poverty, particularly the
material deprivation measure which looks at whether people can afford
everyday goods and services. In the UK, the proportion of people who are
materially deprived has risen sharply since 2009, from 3 to 8 per cent. Around
20 per cent of people in Greece and 15 per cent in Italy cannot afford everyday
items.
The UK experience
In 2012, the UK had a higher poverty rate on a range of poverty measures
than most old EU member states, ‘crisis’ countries aside. However, the UK
experience of poverty over the last 20 years could be seen as positive – a fall
when many comparable countries saw a rise and a fall when many similar
countries saw no such fall.
There was no strategy document for reducing poverty in the UK. There
were, however, a range of policies from the late 1990s onwards that were
intended to reduce poverty – e.g. the minimum wage and working tax credits.
There was also high profile commitment from the Prime Minister to ‘eradicate’
child poverty. So embedded was the idea of reducing child poverty, that even
following the economic crisis of 2008, the UK government protected payments
to low-income families with children via tax credits.
Overall, though, while the UK reduced child (and pensioner) poverty
considerably, child poverty was not eradicated. Working-age poverty,
particularly for those without children, did not fall at all. Across the countries
of the UK, progress was varied, with many strategies published but fewer signs
of success.
The EU National Action Plans
The EU National Action Plans (NAPs) were developed as part of the Lisbon
Strategy. The aim was to make ‘a decisive impact on the eradication of poverty
by 2010’. This was not achieved – poverty was higher, using the EU’s own
preferred measures, in the EU as a whole and in many member states at the
end of the process than at the beginning.
There is little doubt the initiative did provide new opportunities in most
member states to take a strategic approach to addressing poverty. Plans varied
in content and adequacy, but the fact that they existed at all was a sign of
success for many organisations.
24
Reducing poverty in the UK
The period from the start of the economic crisis casts some doubt on the
efficacy of relying on such formal external initiatives for the development of an
anti-poverty strategy. When the economic crisis began the strategies and
plans that had been put in place did little to prevent problems of poverty
increasing. The fact that in many cases these plans were externally driven
meant that there was little national commitment to them. However, it is clear
from many of those involved in the development of the NAPs that the process
gave many countries the opportunity to have a more focused discussion about
poverty and how it should be tackled.
What does a strategy add?
One criticism of the strategies voiced by several of our participants was that
they often comprised a collection of existing policies and did not add any new
policy developments or approaches.
A strategy can also facilitate co-ordination and consensus building among
a variety of stakeholders within and outside government. Linked to this,
strategies can be an effective way to assign responsibility for poverty reduction
policy. For example, before the first Belgian strategy there was widespread
reluctance to take responsibility for anti-poverty policy. Following the
strategies there is more clarity around where responsibility lies.
A strategy also offers the opportunity to link national targets to local
activity. In one local authority area there was clear evidence of the national
anti-poverty framework providing some of the impetus for the development
of approaches locally.
The need for political commitment
More successful examples of poverty reduction, such as Ireland or the UK, had
high level political commitment. In many countries the NAP process failed to
achieve real national political commitment, although there were some notable
exceptions such as Ireland and Belgium.
Often the process of developing an anti-poverty strategy remained a
largely bureaucratic exercise. As a result, the commitments to develop
strategies rarely manifested themselves in commitments to implement them.
The majority of NAPs were never subject to any kind of parliamentary scrutiny.
Institutional change – an example from Ireland
The strategy development process in Ireland was notable in that it was one of
few countries to have a government body dedicated to poverty reduction and
the ongoing development of anti-poverty strategies – The Combat Poverty
Agency (CPA).
It is clear that such institutions play a key role in the development of antipoverty strategies. It had strong links to the community and voluntary sector,
provided government with invaluable advice and expertise and ensured that
the experiences of people in poverty reached those developing the strategy.
The bigger picture
25
The wider economic context
Almost all of the strategies reviewed took the view that work is the best route
out of poverty. In doing so the assumption seemed to be that an increase in the
number of people in work would lead to a decrease in poverty. This is a valid
assumption and a necessary condition – we found no country that had reduced
poverty without increasing the number of people in work.
But across Europe, several countries increased the number of people in
work without significantly decreasing the number in poverty. For many people
at the lower end of the labour market, moving into employment (particularly
part-time, short-term and low-paid) does not necessarily mean moving out of
poverty. A key criticism of the strategies was that they failed to acknowledge
sufficiently the growth of in-work poverty, particularly following the onset of
the recession, and take the necessary action to address it. Moreover, often the
economic strategies for jobs growth took no account of how the type and
location of these jobs could best reduce poverty.
The impact of political change
Changing governments often means a shift in social policy. In Belgium, the
transition from a socialist government to a liberal one was accompanied by a
focus on fixing the economy as the solution to poverty rather than spending
on social assistance programmes.
Anti-poverty strategies take time to create and embed and in many cases
progress made in developing and implementing a strategy is lost in the
transition from one government to another. One of the biggest tests of
the success of a strategy is whether it can survive a change in government.
Drafting legislation to function alongside a strategy or developing a system of
governance that sits outside government are ways to ensure that a strategy
will survive.
About the project
This review consisted of data analysis, qualitative research, a grey literature
review, a review of European and international level documents and policies,
and structured interviews.
Read the full report.
26
Reducing poverty in the UK
REGENERATION AND
POVERTY
Regeneration describes a wide range of policy
interventions since the late 1960s that have sought
to improve economic, physical, social or environmental
conditions in disadvantaged areas. These often have a
high number of residents living in poverty. This study
looks at their impact on this.
Key points
• Poverty can be understood as having both a ‘material’ dimension (lack of
income) and a ‘non-material’ dimension (e.g. poor health, experience
of crime).
• Regeneration has been more effective in tackling non-material poverty
than material poverty. Place-based interventions around housing, the
environment and crime that address non-material poverty have been
particularly successful in improving quality of life for residents.
• Regeneration has created jobs but these are not always additional and are
often taken up by individuals living outside target areas.
• Area-based interventions to tackle worklessness increase the chances
of individuals finding employment but do not reduce overall levels of
worklessness within deprived areas.
• The capacity of regeneration to generate jobs that could benefit those
living in poverty could be enhanced through:
– ensuring jobs created match the skills and experience of people in
deprived places and are linked to local employment and training schemes;
– targeting sectors least likely to create jobs that just replace existing
employment;
– implementing large-scale Intermediate Labour Market (ILM) schemes
targeting those who find it hardest to get work, to create new jobs in
areas of high worklessness.
• Regeneration plays an important role in relieving non-material poverty.
Interventions to improve housing, the environment and community safety
in particular should remain priorities within regeneration strategies.
• The Coalition Government needs a more strategic approach to regeneration
which specifies core aims and how initiatives will be evaluated and clearly
aligns regeneration with anti-poverty strategies.
The research
By a team from the Centre for Regional Economic and Social Research (CRESR) at
Sheffield Hallam University, University of Cambridge, University of Reading, Queens
University Belfast and University of Stirling
The bigger picture
27
BACKGROUND
This study brings together evidence from past programmes
to assess the impact of regeneration on poverty and what
more could be done to ensure regeneration is effective in
tackling poverty. It also considers the likely impact of the
Coalition Government’s move away from funding large-scale
regeneration schemes in England towards a more ‘localist’
approach.
What is the link between regeneration and poverty?
Poverty has two dimensions in relation to regeneration:
• Material poverty - where income falls below a threshold or where individuals
or households are materially deprived because they cannot afford certain
goods and services. Research on regeneration rarely explores its direct
effect on income or deprivation but evidence on jobs and employment can
be used as an imperfect but reasonable proxy for poverty.
• Non-material poverty – aspects of living in poverty not directly related to
income. This includes individual experiences such as poor health or low
education attainment as well as outcomes related to living in ‘poor places’
such as higher experience of crime or environmental neglect.
Regeneration may impact upon these two dimensions of poverty in a number
of ways (see Table 1).
28
Reducing poverty in the UK
Table 1 – How regeneration activities impact on poverty
Type of
poverty
Broad regeneration
theme
Example of activity
within theme
How activities can
impact on poverty
Material
poverty
Business
development
Land and property
development
Business
support
Business planning
advice
Creates jobs which
raise household
income above
poverty thresholds
Physical
regeneration
Development or
refurbishment of
residential property
Tackling
worklessness
Jobsearch support
Supports individuals
to find work which
lifts household
income above
poverty thresholds
Health
Public health (e.g.
stopping smoking)
Reduces poor health.
May also lead to
longer-term material
benefits such as
access to (better)
employment
Education
Learning support
units in schools
Improves educational
attainment. May also
lead to longer-term
material benefits such
as access to (better)
employment
Housing
New housing
development
or housing
refurbishment
Enhances health
and well-being.
May also reduce
material poverty
if improvements
reduce heating and
maintenance costs
Crime and
the physical
environment
Environmental
improvements
(e.g. tackling
vandalism)
Improves satisfaction
with area and reduces
fear/experience of
crime
Non-material
poverty
The bigger picture
29
What is the impact of regeneration on material forms of
poverty?
Interventions to create jobs
Regeneration can generate jobs through a range of activities supporting the
creation, growth or (re)location of businesses (demand-side interventions).
Evidence shows that, typically, less than half the jobs created through
regeneration programmes are genuinely additional. This is because they would
have been created anyway (‘deadweight’) or lead to the loss of existing jobs
in the area where businesses are in direct competition (‘displacement’).
Nonetheless, most regeneration programmes exceed government guidance
on what constitutes a good number of jobs created.
A key issue is whether new jobs created are taken up by residents in target
areas or people from outside. Take-up of jobs by residents rarely exceeds
50 per cent although this could be improved through better targeting of
disadvantaged groups by interventions.
Construction and refurbishment can provide jobs if the use of local labour
is agreed with developers. There is, however, a risk that private sector partners
may withdraw if projects become financially unviable. Intermediate Labour
Market (ILM) schemes (which aim to get the long-term unemployed back to
work through training and temporary employment) can provide a less risky
mechanism for helping residents get regeneration jobs. These have been
shown to be effective in helping more marginalised groups into training and
employment.
However, there is little evidence that demand-side schemes to create jobs
have a significant impact on overall levels of worklessness or employment in
disadvantaged areas.
Interventions to help individuals find work
Some regeneration programmes seek to directly tackle worklessness among
residents in disadvantaged areas (supply-side interventions). These activities
can increase the chances of an individual finding work but this does not
translate into falls in overall levels of worklessness in the area. Limited impact
may be explained by insufficient spending, the challenges in establishing
partnerships with mainstream providers like Jobcentre Plus, a lack of jobs in
the local economy, and residents who find work then leaving the area (there is
little evidence, however, to support the assumption that regeneration directly
drives this).
Regeneration is not always effective in supporting individuals facing several
obstacles in getting work. There are also issues with job quality where
programmes support people to take up low-paid, low-skilled work associated
with in-work poverty.
30
Reducing poverty in the UK
What is the impact of regeneration on non-material
forms of poverty?
Regeneration programmes are more effective in tackling non-material than
material forms of poverty. Non-material poverty can be tackled through
people-based or place-based initiatives. People-based interventions around
health, education or community participation focus on improving outcomes
for individuals. Evidence shows they are better at improving the delivery
of services than bringing about positive change for individuals. The limited
impact of people-based interventions may be explained by short timescales,
the relatively small scale of spending and the difficulties of influencing
mainstream providers.
Place-based interventions focus on housing, crime and the physical
environment. Research indicates they deliver a broad range of benefits that
mitigate some of the negative experiences associated with living in poverty in
disadvantaged areas. These include improvements in health and well-being;
greater satisfaction with home and area; and reduced fear, or experiences,
of crime and anti-social behaviour.
What are the costs and benefits of regeneration?
Analysis of average annual government spending by regeneration theme in
2009–11 showed spending skewed towards interventions more likely to
reduce non-material than material poverty. Housing-related regeneration
accounted for 64 per cent of all spending, compared with 19 per cent on
worklessness, skills and business development activities.
Cost benefit analysis indicates that regeneration more than pays for itself.
Estimates show that, in combination, all regeneration activities produce
somewhere between £2.30 and £3.50 of value for every £1 invested.
What are the implications for the localist approach to
regeneration?
The Coalition Government’s localist approach to regeneration in England
(where decisions and actions are taken locally rather than directed nationally)
raises concerns about cuts in overall funding for regeneration, a lack of
strategic approach, the viability of community-led regeneration, the dominant
focus on economic growth, and the lack of institutional mechanisms to ensure
that local growth initiatives meet the needs of disadvantaged neighbourhoods.
This policy framework may prove regressive and intensify inequalities between
areas if there is not greater strategic focus and funding. Scotland, Wales and
Northern Ireland have all retained comprehensive national regeneration
strategies, providing an opportunity for comparison over time with the more
localist approach in England.
The bigger picture
31
What more could be done to ensure regeneration tackles
poverty?
• The Coalition Government needs to put in place a clear strategy for
regeneration that specifies core aims and how they will be evaluated, and
that clearly aligns regeneration with anti-poverty strategies. It should
combine activities to address both material and non-material forms of
poverty.
• A strategy need not be entirely centralised and prescriptive: exploration of
what makes good places to live (a Minimum Acceptable Place Standard –
MAPS) suggests ways of involving residents to establish priorities for their
area that builds on minimum standards.
• Housing, environment, neighbourhood management and community safety
initiatives should be key priorities for regeneration as they can relieve
non-material poverty. They can also be delivered at relatively low cost.
• The impact of regeneration on material poverty could be enhanced by:
– ensuring jobs created through regeneration activities are available to
local people and linked to local employment and training schemes;
– targeting job creating initiatives on sectors least likely to displace existing
jobs;
– linking ILM schemes that target those who find it hardest to get work
with regeneration activities in areas of high worklessness.
About the project
The evidence review analysed more than 400 evaluation reports and academic
articles that looked at the impact of regeneration on poverty. The evidence
was identified through searching electronic databases, inviting relevant
organisations to provide evidence, and through the personal knowledge of
research team members. The review covered both the UK and international
regeneration programmes but focuses on England for which the most robust
evaluation data exists.
The research was carried out by Richard Crisp, Tony Gore and Sarah
Pearson (CRESR, Sheffield Hallam University), Peter Tyler (University of
Cambridge), David Clapham (University of Reading), Jenny Muir (Queens
University Belfast) and Douglas Robertson (University of Stirling).
Read the full report.
32
Reducing poverty in the UK
RELIGION AND
POVERTY
This study documents poverty rates among the main
religious groups and denominations and explores the
likely causes and possible policy responses.
Key points
• Muslims are particularly likely to be at risk of poverty, while Sikhs and Hindus
are also more likely to experience poverty than are people affiliated with
Christian churches, Judaism, or people with no religion.
• In Northern Ireland, the rate of poverty is five points higher than the
national average for the UK as a whole. Within Northern Ireland the poverty
rate is over ten points higher among Catholics than among Protestants.
• The high rates of poverty among Muslims, Sikhs and Hindus are to some
extent due to the particular historical context of their migration to Britain.
For example, lack of fluency in English predicts poverty and is not uncommon
among recent Muslim or Sikh migrants. It is, however, no longer a barrier
among Muslims or Sikhs who were themselves born in Britain.
• The number of dependent children is one of the strongest drivers of
poverty in the UK and helps account for the increased risks faced by
Catholics and Muslims. This may reflect family values associated with
particular religious traditions, but there is also evidence that some Muslim
women would prefer to work if childcare was available.
• There is evidence from Northern Ireland of the success of the fair
employment programme in overcoming Catholic disadvantage, and the
adoption of similar programmes in the UK could well be effective in
mitigating disadvantages of Muslims and other faith groups who experience
inequality of opportunity in getting work.
• Outreach programmes by voluntary associations to increase membership
from non-traditional groups could also increase ‘social capital’ and thus
overcome poverty.
The research
By Anthony Heath and Yaojun Li, Centre on Dynamics of Ethnicity (CODE) and Institute
for Social Change, University of Manchester
The bigger picture
33
BACKGROUND
While there has been a great deal of work on poverty rates
among ethnic minorities, there has been very little focusing
specifically on religion and poverty. This project documents the
risks of poverty in different religious groups, and investigates
some of the main potential causes and barriers.
In comparison with the relationship between ethnicity and poverty, there has
been very little research focusing specifically on religion. However there have
been a number of studies which compare the effects of religion and ethnicity
on economic activity, unemployment and earnings, which are in turn major
factors in poverty. These studies have typically shown that Muslims have lower
rates of economic activity and higher rates of unemployment than do members
of other faiths, particularly Christians. There is also evidence that Catholics in
Northern Ireland continue to have higher rates of unemployment than
Protestants, although the gap has narrowed over time.
In line with this, we find major differences in the prevalence of poverty
between people of different religious affiliations. People of Jewish affiliation
are least likely to be found in poverty (13 per cent), in contrast to those from
the Muslim community (50 per cent). The second group most likely to be found
poor are Sikhs (27 per cent) followed by Hindus (22 per cent). Christians are
generally less likely than most other religious groups to suffer poverty, although
there are significant differences between Anglicans (14 per cent) and Catholics
(19 per cent). People with no religious affiliation, however, have a similar rate
of poverty (18 per cent) as the overall average.
Figure 1 – Prevalence of poverty by religious affiliation in the UK
60
50
% in poverty
40
30
20
10
All
None
Other
Buddhist
Jewish
Sikh
Hindu
Muslim
Other Christian
Catholic
Anglican
0
A major issue for interpreting religious differences is that religion is closely
entwined with ethnicity. Thus the great majority of members of the Pakistani
and Bangladeshi communities are Muslim, and it is therefore impossible to be
sure whether we are observing a religious or an ethnic difference. We are in
effect simply re-labelling the same people. However, some other ethnic
categories, such as the white, Black African and Indian groups, contain
substantial numbers of people belonging to different religions. This information
can be used to see if Muslims are more likely to be in poverty.
34
Reducing poverty in the UK
The research findings suggest that Muslims, after taking account of their
ethnic background, are indeed more likely to be in poverty than are members
of other religions or those with no religious affiliation. The authors estimate
that, after allowing for the effects of ethnicity and other factors such as age
profiles, the size of this increased risk of Muslims experiencing poverty is about
18 percentage points (compared with people with no religious affiliation). The
equivalent figures for Sikhs and Hindus are 8 and 5 points respectively.
In explaining these increased risks of poverty among Muslims, Sikhs and
Hindus it is useful to distinguish between:
• historically contingent factors such as low qualifications or lack of fluency
in the English language, which largely reflect the community’s migration
history and which are likely to be mitigated across time or across generations;
• factors which may be more intrinsic to particular religious traditions, such
as traditional family values which may encourage women to stay at home
and look after children or care for other family members;
• factors such as prejudice and discrimination reflecting how members of a
particular faith are treated by the wider society, potentially resulting in
increased risks of unemployment or low pay. Prejudice may, for example,
adversely affect the life chances of those wearing distinctive clothing
associated with their religion.
While it is not possible to assign definitive numbers to the size of these three
components, statistical analysis of the available data suggests that all three play
substantial roles. Important specific predictors of poverty which we are able to
measure include lack of fluency in English, number of dependent children,
economic inactivity, and low pay. However, these predictors do not fully
account for the higher risks of poverty among Muslims (although they do
largely explain the higher risks faced by Sikhs and Hindus). One potential
additional explanation for Muslims’ higher risk of poverty is their lack of
‘bridging social capital’, discussed below.
There is evidence that membership of some Christian churches may offer a
degree of protection against poverty, perhaps because church members are
more likely than non-members to belong to and participate in a range of
voluntary and civic organisations. Theory suggests that membership of
voluntary organisations and associated activities may foster the development
of social capital (especially bridging social ties with people outside their own
immediate social circle) which in turn may be associated with greater
information flows, personal support and professional development, leading to
greater success in the labour market. Data also shows that Muslims, Sikhs and
Hindus are less likely to belong to voluntary organisations or to take part in
civic activities than are Christians, and that this may contribute to their higher
risks of poverty, particularly among Muslims.
Policies could address all these contributing factors. They could specifically
consider:
•
•
•
•
difficulties with English;
availability of childcare for those who want to work;
discrimination and prejudice;
opportunities for civic engagement.
Even though lack of fluency in English will be mitigated in time, it is a major
barrier to securing well-paid work for many migrants and thus contributes to
heightened risks of poverty. Increased provision through adult education is
likely to be of considerable help.
The bigger picture
35
The number of dependent children is a particularly important driver of
poverty in general, and larger family size accounts in part for higher Muslim
and Catholic risks of being in poverty. While staying at home to look after
children may in part reflect preferences for traditional caring roles, there
is also evidence that some Muslim women would take up paid employment if
they knew of appropriate childcare provisions. Policy could usefully focus on
increasing information among relevant religious communities about the
availability of childcare and early education places. It is also important to ensure
that childcare facilities employ appropriate numbers of staff from relevant
religious communities, to make services more attractive to potential users and
to ensure the cultural sensitivity of the provision.
Evidence from Northern Ireland shows that the fair employment
programme, aimed at improving equality of opportunity for Catholics and
Protestants in their access to work, has been effective. This programme
requires firms to monitor their religious composition and, if a particular group
is under-represented, to establish action to remedy that. Such action plans
have typically involved a range of outreach activities encouraging applications
from the under-represented group. This programme represents a model which
could well be appropriate for tackling the under-representation of other
religious groups, such as Muslims or Sikhs, in the British labour market.
Outreach programmes could also be helpful for increasing participation in
voluntary organisations. Lack of knowledge about what voluntary associations
exist, or worries about the warmth of the welcome, may inhibit some from
joining. Bodies in receipt of public funding could be asked to prepare action
plans for facilitating participation from under-represented or non-traditional
groups.
About the project
The primary data source was the UK Longitudinal Household Panel Study, also
known as Understanding Society (USoc), which is also linked with the earlier
British Household Panel Study (BHPS). USoc started in 2009/2010 and, at the
time of analysis, three waves of data were available and were used. A total
60,925 respondents in the pooled BHPS/USoc files had valid responses to the
religion questions.
36
Reducing poverty in the UK
SEXUAL ORIENTATION
AND POVERTY
The economic impact of sexuality related stigma,
harassment and discrimination occurs when
institutions, such as employers, schools and local
authorities either deliberately or incidentally exclude
people based on their sexuality. Unequal treatment
can impact material living standards and the risk of
poverty throughout life.
Key points
• In 1987, 75 per cent of the British public thought homosexuality was always
or mostly wrong. By 2008 only 32 per cent thought this. This increase in
tolerance suggests strong generational differences in LGB people’s lived
experience.
• Data shows that 93.7 per cent of the population are heterosexual, 1.3 per
cent are gay or lesbian, 1 per cent are bisexual, 1.1 per cent are ‘other’.
Three per cent prefer not to disclose their sexuality.
• Among 16– 24-year-olds, 1.8 per cent self-identify as gay or lesbian with
a further 2.6 per cent self-identifying as bisexual. Only 0.4 per cent of
those aged 65+ self-identify as LGB.
• 12 per cent of heterosexual men, 13.4 per cent of gay men and 15.8 per
cent of bisexual men are in poverty; 13.4 per cent of heterosexual women,
13.7 per cent of lesbians and 16.3 per cent of bisexual women are in
poverty. These figures are surprising given that other characteristics of
LGB people, such as childlessness, suggest they might be much less likely to
experience poverty.
• Bisexual men are significantly more likely to be behind with household bills
compared with heterosexual men. Bisexual women are nearly twice as likely
as heterosexual women to be behind in Council Tax payments.
• Gay men are significantly more likely to receive income support
(4.7 per cent), housing benefit (11.3 per cent) and Council Tax benefit
(12.0 per cent) than heterosexual men. Lesbians are more likely to receive
Jobseeker’s Allowance (4.5 per cent) than heterosexual women.
The research
By SC Noah Uhrig, Institute for Social and Economic Research
The bigger picture
37
BACKGROUND
Although
much
research
documents
harassment,
discrimination, prejudice or stigma related to sexuality, the
specific issue of poverty is rarely addressed. This report draws
on links between poverty and inequality to examine how
sexual orientation impacts poverty.
LGB experience of poverty (using a threshold of equivalised household income
before housing costs below 60 per cent of median) can be affected by perceived
and real discrimination, harassment and stigma across a number of areas
including homelessness, ageing and retirement, mental and physical health,
education, employment, and wealth and savings.
Youth homelessness American research suggests 15–36 per cent of
homeless youths are LGB. The proportion of homeless people in the UK whom
are LGB has never been quantified.
Disclosure of sexuality is often cited as a precipitating factor to LGB youth
homelessness in the UK.
Experiences of homelessness among LGB youth are particularly severe.
The main issues are fear of harassment and violence in shelters from other
clients and inadequate information gathering by service providers.
Ageing and retirement Social isolation is a particular problem for LGB
elders, leading to problems of social participation and getting care. Social
isolation also indicates social exclusion and higher poverty incidence.
UKLHS data shows that, among the over 50s, gay men are 2.7 times more
likely to live alone compared with heterosexual men; bisexual men are 1.3
times more likely. Lesbians are less than half as likely as heterosexual women
to live alone, perhaps because heterosexual women are likely to survive a male
spouse.
Other UK research shows that approximately two-thirds of over 50s think
social services are not welcoming to LGB clients and most are unwilling to be
open about their sexuality with social service providers.
Mental and physical health Health is a resource that can be used to meet
material needs, but it can also signal greater material needs; poor health is
highly indicative of poverty.
Research shows that sexual minorities consistently experience worse
health compared with heterosexuals.
Using the UKHLS epidemiological health scale (SF-12) which has mental
and physical sub-components, gay men’s mental health score is about four
points lower than heterosexual men’s while bisexual men’s is more than five
points lower. The score for lesbians is less than two points lower than
heterosexual women’s but bisexual women’s score is nearly seven points lower.
Education Poor education and skills are linked to poverty incidence through
limited employment opportunities. UKHLS data shows that although about
76 per cent of heterosexual and 70 per cent of gay/lesbian teens expect
to complete A-levels, only about 55 per cent of bisexual teens aspire to
A Level qualifications.
Lesbians are three times more likely than heterosexual women to have
university degrees yet young lesbians are significantly less likely to expect to
go to university or finish their studies if they do go, compared with either
heterosexual or bisexual women. Highly educated women may not claim
lesbian identities until later in life, however further research is warranted to
unlock this paradox.
38
Reducing poverty in the UK
UKHLS data indicates about 38 per cent of lesbian and gay students and
41 per cent of bisexual students report being bullied at school but only
22 per cent of heterosexual students report being bullied.
UK research in the early 2000s suggests that suicidal ideation is significantly
higher for LGB youth victimised in schools, as are rates of self-harm, depression,
and tobacco, alcohol and drug use. School truancy is also likely for victimised
LGB young people in the UK.
Employment Gay men in couples are significantly less likely to be working
or looking for work compared with men in heterosexual couples, while lesbians
in couples are more likely to be working or looking for work compared with
women in heterosexual couples.
Research suggests a gay male pay disadvantage relative to heterosexual
men, while lesbians generally experience a pay premium compared with
heterosexual women. UKHLS data shows a slight continuing pay disadvantage
for gay men, but significant pay penalties for bisexual men and women. Lesbians
experience a pay premium relative to heterosexual women even controlling
for education, age and motherhood.
Research shows that hiring practices across Europe are strongly biased
against gay men with no effect on lesbians. Hiring preferences have never
been examined in the UK.
A review of UK employment tribunal cases suggests strong motivation to
conceal sexuality at work; key barriers to seeking legal redress are harassment
by superiors and the desire to maintain confidentiality. Those seeking
redress must disclose their sexuality and many report reduced employment
opportunities as a result.
American research shows that gay men accept lower pay for higher
tolerance of their sexuality. No UK research examines this, however qualitative
research finds that some gay men and lesbians report trading earnings for
amicable work environments. UK bisexual employment experiences have
never been examined.
Housing wealth Swedish data shows that gay men, but not lesbians, are
discriminated against in rental markets. American data suggest discrimination
in mortgage markets.
UKHLS data indicates that gay and bisexual men and bisexual women are
significantly less likely to live in owner-occupied dwellings; all sexual minority
groups are more likely than heterosexuals to live in rented accommodation.
Savings and household finances American data suggest that same sex
couples, particularly lesbians, are more likely to save compared with
heterosexual couples. Childlessness allows same sex couples to divert more
resources into savings, implying that they are better financially prepared for
retirement compared with heterosexual couples. However childlessness may
mean more financial resources are needed to buy social and health care
support for LGB people in old age.
No UK research exists on sexual orientation and financial preparation for
retirement. Also, all reviews of pension provisions pre-date anti-discrimination
and civil partnership legislation.
The bigger picture
39
Policy recommendations
Given the economic impact of unequal treatment in a number of areas,
anti-poverty policies relevant to sexuality might fruitfully address stigma in a
range of public service provisions as well as improve hostile environments such
as schools and workplaces. Moreover, policies addressing gender and poverty
will undoubtedly benefit both lesbians and bisexual women, particularly with
respect to workplace equality. Area specific recommendations include the
following.
Homophobic school bullying Reduce the incidence and effects of
homophobic school bullying. Incorporate formal anti-bullying or no tolerance
statements in school policy to alter school culture; improve teacher awareness;
improve counselling and support services for bullying victims; promote student
organisations through which sexual minorities can develop self-esteem,
resiliency, and make unconstrained choices about their lives.
Homelessness Alleviate the experience, and reduce the incidence, of LGBT
homelessness. Develop LGBT-only supported accommodation and specialist
support workers; improve the safety of existing housing and homelessness
services; increase awareness of sexual minority issues in local housing
authorities with respect to how or why a housing crisis might result from
sexuality; improve statistical monitoring of service use and provision.
Mental and physical health Reduce LGB experience of, and improved
resilience to, minority stress. Improve health service staff’s ability to identify
the health needs of sexual minorities and the health issues that they are likely
to present; raise LGB trust in health services by improving health service
sensitivity to sexuality; improve statistical monitoring so that poor service
provision can be quickly identified and remedied.
Employment Recognise that non-pecuniary damage as a consequence of
discrimination/harassment has poverty consequences as LGB people forgo
pay for tolerant work environments. Alter workplace culture so that LGB
employment choices are not constrained; encourage employers to adopt antidiscrimination policies; establish confidential discrimination/harassment
reporting structures; promote sensitive employer anti-discrimination
governance structures that address and remedy incidents.
Ageing and retirement Alleviate elder LGB isolation and problems of social
participation. Promote LGB trust in social services by improving awareness
among social service workers of LGB elder issues related to disclosure of
sexuality and confidentiality; increase sensitivity to the LGB needs as distinct
from non-LGB others, particularly around issues of social isolation; improve
statistical monitoring of the quality of social support service provision and to
better understand how much is provided to LGB elders. Considering recent
marriage and civil partnership legislation, policy relevant analyses of retirement
preparation including pension arrangements is needed.
About the project
This research synthesises material from North America, Europe and the UK,
and includes newly possible analyses of the UK Household Longitudinal Study
(UKHLS) which provides evidence about employment, education, housing, and
health, all of which are likely to affect lesbian, gay and bisexual (LGB) people’s
susceptibility to poverty and their overall material well-being.
Read the full report.
40
Reducing poverty in the UK
WELL-BEING
AND POVERTY
This review explores the relationships between
poverty and well-being and the effectiveness of
well-being interventions aimed at reducing poverty.
Key points
• Well-being can be subjective (such as whether an individual feels happy or
satisfied with life) or objective (involving issues such as health, education,
social relationships). Poverty can affect subjective well-being, but is
ultimately different from it. However it is often a synonym for a low level of
objective well-being.
• There is strong evidence that:
– people living in wealthier nations have, on average, higher subjective
well-being;
– within nations, low income is associated with low subjective well-being,
however, whilst life satisfaction raises steadily with higher incomes,
positive feelings (e.g. happiness) rise only up to a certain income threshold;
– within nations, economic growth, that is increases in the income of all,
do not bring lasting increases in subjective well-being.
• Household financial resources are important for children’s academic
outcomes and educational support can improve social and emotional
development.
• Conditional cash transfers can supplement poor families’ incomes and
promote their children’s well-being by valuing educational effort and
achievement, preventive health care, and training.
• There is little research on well-being interventions aimed at reducing adult
poverty. Qualitative evidence shows that taking part in cultural activities
can enhance self-esteem and facilitate inclusion in society and the labour
market.
• Anti-poverty strategies can be more effective by increasing the income of
those in poverty and by promoting individual and community programmes
aimed at improving people’s wider well-being, e.g. health and education,
which can improve life chances.
The research
By Gianfranco Giuntoli, Ben Mitchell, Gavin Sullivan, David Devins, Jane South
The bigger picture
41
BACKGROUND
Well-being and poverty are much-discussed but contested
concepts. This review explores their relationship and the
evidence of the effectiveness of well-being interventions in
reducing poverty.
The different types of well-being
Well-being can be seen as either subjective (such as whether an individual
feels happy, safe or satisfied with their life) or objective (involving issues such
as health, education, social relationships). The relationship of well-being to
poverty depends on the type of well-being under consideration.
Subjective approaches to well-being
Subjective approaches see well-being as consisting of people’s own experiences
of their life in terms of their feelings or mental states (such as pleasure,
happiness, or sadness) and satisfaction with life, desires or preferences. Poverty
is one of the factors that can affect people’s well-being, but it is different
from it.
Examples of subjective approaches to well-being are utilitarianism, which is
the main approach to well-being in economics, and psychological measures of
‘subjective well-being’ (SWB). Utilitarianism, developed in the nineteenth
century, enables economists to establish a direct link between people’s income
and the maximisation of happiness or desire fulfilment. This link is based on the
assumption that the more money people have, the more goods and services
they can have, and the better off they are. In economics, this link led to the
goal of maximising national per capita income as measured by Gross Domestic
Product (GDP). However composite indicators of poverty and well-being, such
as the Human Development Index and the Millennium Development Goals,
have challenged the dominance of income as the representative measure of
poverty and well-being. In contemporary economics, income per capita is seen
as necessary, but insufficient on its own, for well-being.
Psychologists study SWB through measures of people’s positive and
negative emotions and judgements of life satisfactions. The relationship
between SWB and income changes depending on the specific component of
SWB investigated, i.e emotions or life satisfaction, and on whether we compare
nations or individuals within the same country. There is a strong relationship
between the wealth of nations and their overall SWB, although a growing body
of research shows that there are other factors, such as social life, trust,
freedom and education that affect SWB more than income. Within nations,
the correlation between money and subjective well-being is small and stronger
for those in the lower income brackets than for those with higher incomes,
suggesting that added income beyond modest affluence does not increase
SWB. Recent studies show that higher incomes steadily raise people’s life
satisfaction, ‘dollar for dollar’, but they do not generate more positive feelings
(e.g. happiness) past a certain threshold ($75,000 in the United States).There
are different explanations for why there is a low correlation between SWB
and money at the individual level, for example: income does not have an affect
once basic needs are satisfied; people adapt to their circumstances; income
affects SWB only if it is higher than that of other ‘similar people’. However,
42
Reducing poverty in the UK
recent research shows that direct measures of people’s material situation,
such as expenditure and consumption, have a stronger relation with subjective
well-being than indirect measures such as income and wealth.
The strength of subjective approaches is that they reflect how positively or
negatively people are experiencing their lives or specific aspects of them; they
can be used to inform policy decisions on specific issues or society as a whole.
However, a recent German study suggests that unhappiness and dissatisfaction
relate strongly to social issues such as unemployment, poverty, social isolation,
and disability, whereas high levels of happiness and satisfaction are not predicted
by these basic socio-economic and demographic characteristics but seem
more related to private matters, e.g. individual choice and attitudes.
Overall, the main weakness of subjective approaches is that people very
often adapt to their circumstances and so individuals in very different situations
may report similarly high SWB.
Objective approaches to well-being
Objective approaches see well-being as the attainment of (or the freedom to
attain) specific needs, goals or values, for example health, nutrition, housing,
education and self-respect. Some include happiness and life satisfaction, others
do not.
Some objective frameworks, such as many child poverty studies, refer to
well-being as an inclusive, overarching concept that encompasses poverty,
while others consider poverty more specifically as low well-being (e.g. Amartya
Sen’s ‘capability framework’). Overall, objective approaches see poverty as
multi-dimensional and suggest that anti-poverty strategies should tackle
people’s financial situation as much as promote the components of well-being
such as education, physical and mental health, self-esteem and aspirations.
Their main weakness is that they raise important questions in relation to who
decides what dimensions of well-being are important and how the decision is
taken.
Children’s and families’ well-being
There is strong evidence that poverty can affect individuals’ and families’ health
through different mechanisms, for example by reducing access to goods and
services that are important to maintain and improve health, and by generating
chronic levels of stress that can cause ill-health. Research shows that poverty
directly diminishes the experience of childhood, especially for children whose
parents are unemployed. Qualitative research shows the importance of social
and self-exclusion in children’s experiences of poverty. These are pressing
policy problems, especially where they are associated with withdrawal from
participation in school, or reduced career and lifetime aspirations.
The bigger picture
43
Policies and interventions
Many interventions focus on children and a smaller number on adults of
working age or older.
Families and children
A recent systematic review of the literature found strong evidence that
households’ financial resources are important for children’s outcomes, in
particular cognitive development, school achievement, and social and
behavioural development. The review suggests that increasing household
income can substantially reduce differences in schooling outcomes, while also
improving wider aspects of children’s well-being, including maternal mental
health and children’s anxiety levels and behaviour.
An international comparison suggests that ‘dual earner’ regimes, which
tend to be social democratic, Nordic countries that offer low to medium levels
of cash and tax benefits for families with children, but high levels of support for
paid parental leave and childcare, have a far lower percentage of children living
in poverty and lower child mortality rates compared with ‘general support
regimes’ (high levels of cash and tax benefits, but low public support for
parental leave and childcare) and ‘low family support’ regimes (low levels both
of cash and tax benefits and of support for parental leave and childcare
services).
The UK has been classified among the ‘low family support’ regimes and
policy-making has been described as reactive (in contrast to the more proactive
Nordic countries). However, since 1997 the UK has seen investment in
programmes targeted at child well-being, of which Sure Start and children’s
centres were key frontline initiatives. The second phase of the evaluation of
the Sure Start local programmes identified 5 out of 14 outcomes with
significant positive effects: improved social development and social behaviour
of children, greater independence of children, less negative parenting, and a
better home and learning environment.
Conditional cash transfers (CCTs) are interventions explicitly aimed at
promoting the well-being of families and children living in poverty. They usually
consist of cash grants provided on condition that the recipients meet certain
requirements, for example sending their children to school and having regular
health checks. In developed countries CCTs are based on the concept of
incentivising – the money provided in return for certain activities and behaviours
is additional to any benefits received. In a time of limited resources, CCTs can
be viewed as a targeted means of supplementing poor families’ incomes and
promoting activities that can improve their health and well-being.
Adults and older people
There is little research on the effects of non-monetary well-being interventions
aimed at reducing adult poverty. There is qualitative evidence that taking part
in cultural programmes and activities can enhance self-esteem and promote
greater participation in society and the labour market. One large-scale
European study found that social isolation is lower among internet users aged
65 or over, particularly among the most disadvantaged groups.
44
Reducing poverty in the UK
Conclusion
Focusing anti-poverty strategies on well-being does not necessarily mean
aiming to maximise individuals’ or societal happiness; high levels of SWB seem
to be related to unobservable factors rather than factors that can be affected
by policy initiatives. There is strong evidence that increased income can
improve both the SWB and the wider well-being components of people living
in poverty, including their physical and mental health. However, anti-poverty
strategies could be strengthened by complementing interventions to increase
the income of people in poverty, such as conditional cash transfers,
with individual and community-level initiatives aimed at promoting the wider
components of people’s well-being, such as mental health, education,
self-esteem and social and family relations. These initiatives would allow
anti-poverty strategies to improve people’s chances of inclusion in society and
the labour market, reduce the experience of ‘misery’, and, ultimately, reduce
the occurrence of poverty.
About the project
The literature review covered the period from January 2000 to September
2013. Eight databases were searched using a combination of poverty, wellbeing and intervention keywords. A total of 4,449 potential studies were
retrieved and 129 selected for review.
For further information
For further information please contact Gianfranco Giuntoli, email:
g.giuntoli@unsw.edu.au. Gianfanco undertook this project as Research Fellow
at the Centre for Health Promotion Research, Leeds Metropolitan University.
He is now Research Associate at the Social Policy Research Centre, University
of New South Wales, Australia
The bigger picture
45
WELFARE
AND WORK
CONTENTS
Foreword
48
Benefits take-up and poverty
50
Employment, pay and poverty
55
Means-testing or universalism and poverty
59
The informal economy and poverty
63
Universal Credit and poverty
68
Welfare to work policies and poverty
72
Welfare and work
47
FOREWORD
It should not be a surprise to anyone that work and welfare are critical elements
of any attempt to devise an anti-poverty strategy. The reviews in this section
demonstrate that, across the UK and internationally, a vast array of programmes,
policies and reforms have been implemented to boost employment, increase
incomes and reduce poverty. However, the breadth and depth of the reviews
demonstrate both the complexity of the issues involved and the difficulty of
finding a combination of policy responses that works.
Despite this complexity, the reviews do provide a concrete overview of
some reforms that could relatively simply help to boost incomes and reduce
poverty. The review of benefit take-up shows that, alongside expected
increases in take-up under Universal Credit, we could expect a sizeable impact
on poverty from a combination of policies aimed at increasing claimants’
knowledge of entitlements and reducing stigma and by improving links across
the Department for Work and Pensions, local authorities and broader public
services such as the NHS. Boosting the Universal Credit ‘work allowance’ and
encouraging the formalisation of currently informal employment could also
make a distinct impact.
However it is clear that these policies on their own will not be enough to
deliver the step change in poverty rates that this strategy is hoping to deliver.
These reviews provide a much needed objective assessment both of the
challenges that policy-makers face and the approaches and frameworks that
they will need to consider. This point is well summarised in the review of
Universal Credit. While recognising the vital role that income transfers, or the
‘pockets’ approach, should continue to play, it highlights a longer-term
ambition of relying less permanently on means-tested benefits to tackle
poverty. This could be achieved by moving towards a more fundamental
‘prospects’ approach that would look beyond income redistribution and poverty
alleviation to ask how individuals and families can be helped to protect
themselves against poverty by earning more.
There are clear links here with the review of employment and pay, which
argues persuasively for a more broadly-based strategy for tackling low pay,
and with reviews in other sections that focus on education and adult skills.
Other reviews also highlight the importance of considering the role of
employers in this agenda.
However, in many of these areas we have relatively little evidence of policies
that might prove successful on a national scale. For example, it is clear from
the reviews that we know more about what does not work in helping individuals
and families to improve skills and increase their earnings, than what does. This
means that we must make the most of opportunities to test new approaches
and design better policy. The introduction of Universal Credit and potential
changes in Jobcentre Plus and in the employment programmes for harder-tohelp benefit claimants across the UK will provide a vital test bed.
48
Reducing poverty in the UK
Of course, such policies and programmes are only as good as their delivery
and must adapt to the local situation. In short, as a recent publication on child
poverty from the Scottish Government outlines, in addition to pockets and
prospects, place also matters. These issues are well covered in the review
of welfare to work programmes, which highlights the trade-offs between
UK-wide, devolved and local delivery models. The clearest theme here is that
outcome measures are important: no matter what the delivery model, if we
want employment services to deliver longer-lasting jobs and higher earnings,
then this is what we should be evaluating their performance on.
This should start by ensuring that Jobcentre Plus is measured on its success
in moving people into work, rather than simply off benefits.
Overall, these reviews present policy-makers with a clear challenge. The
policies and programmes implemented over the last 50 years have not delivered
the impact on poverty that we need. We need to learn from the past and build
on these lessons to develop and test a new strategy that incorporates
approaches based on pockets, prospects and places.
Matthew Oakley
Head of Economic Analysis at Which? and Member of the Social Security Advisory
Committee, but writing in a personal capacity
Welfare and work
49
BENEFITS TAKE-UP
AND POVERTY
In 2009–10 almost a third of eligible recipients in the
UK were not claiming the means-tested benefits to
which they were entitled and in 2011–12 15 per cent
of those eligible for Child Tax Credits and 35 per cent
of those eligible for Working Tax Credit had not
claimed. Take-up rates for most out-of-work incomerelated benefits declined in the decade to 2009–10.
Key points
• Improving take-up of means-tested benefits by those in and out of work
would make a major contribution to poverty reduction.
• Measures to improve the take-up of means-tested entitlements need to be
central to anti-poverty strategies.
• Take-up rates can be improved by increasing the level of knowledge about
entitlements and the eligibility rules and by reducing stigma and the
complexity of claiming. Local initiatives are most effective.
• Universal Credit is expected to increase benefit take-up, especially among
the poorest households, but it seems likely that continuing welfare reforms
will have negative effects.
• Local authorities and social landlords should sustain and, where possible,
increase their investment in specialist welfare rights services and in local
targeted take-up campaigns.
• Health service staff and GPs should extend the targeted provision of
welfare rights services within healthcare settings and make referrals to
more specialist welfare rights advice.
• Welfare-to-work providers and employers have an important role to play
in promoting in-work benefit take-up which could contribute to
employment retention and in-work poverty reduction.
• There is a need for continuing research and experimentation to stimulate
continuous improvement in service delivery and a better understanding of
‘what works’ in promoting take-up.
The research
By Dan Finn and Jo Goodship, University of Portsmouth and the Centre for Economic
and Social Inclusion
50
Reducing poverty in the UK
BACKGROUND
Almost a third of eligible people in the UK in 2009–10 were
not claiming the means-tested benefits they were entitled
to – an estimated £10 billion worth. Take-up rates for most
income-related benefits declined in the decade to 2009–10.
Take-up of tax credits increased after 2003–04 but in 2011–
12 HM Revenue & Customs estimated that 35 per cent of
those eligible for Working Tax Credit and 15 per cent of those
eligible for Child Tax Credit had not claimed their entitlements.
Reasons for non-take-up
Non-take-up is the result of the dynamic interaction between social and
economic circumstances, policy reforms, administration and complex eligibility
rules. The most significant factors appear to be level and accuracy of knowledge
about an entitlement and eligibility, linked with the perceived cash value of the
benefit compared with the effort involved in claiming it.
Take-up rates are highest where potential benefit payments are high and
lowest where people are eligible for relatively small amounts. The evidence
suggests that as means-tested support was extended to cover more pensioners
and working-age people many may not have claimed because they had higher
relative incomes and relatively small entitlements.
Nevertheless, a significant number of households had far higher unclaimed
entitlements with evidence suggesting that take-up was undermined by
problems with benefit design and service delivery and explicit discouragement
for some groups. In particular, increased conditionality and related sanctions
are designed to get people into work as quickly as possible and make their
claims relatively short-lived. A side effect, however, has been a ‘disconnection’
from the benefits and employment services system.
A further recent factor is likely to have been the public debate and media
coverage of welfare dependency which has increased the stigma attached to
those claiming benefits, especially people of working age. Research findings
suggest that this stigma is linked to reductions in take-up and a reluctance to
claim.
How to increase benefit take-up
Changes in benefit design, service delivery, and targeted campaigns have
helped increase take-up and led to financial gains and additional jobs for poor
households, with the income increasing spending and economic activity in
low-income communities.
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51
One significant finding is that central government was able to improve
take-up of Pension Credit and tax credits through simplifying benefits,
changing service delivery, and targeting advertising campaigns. The review also
found that initiatives taken at the local level, whether by local authorities or
voluntary agencies, are among the most effective ways of increasing benefit
take-up. Investment in take-up services and campaigns typically generates far
more in additional benefit income for poor households than they cost to
deliver.
The more effective approaches include:
• simplifying the language and content of benefit forms;
• easing the process of claiming through (carefully designed) telephone and
digital claims processes;
• making systematic use of feedback from users, advocacy organisations and
frontline staff, to highlight problem areas;
• ensuring people are informed of entitlements at key ‘trigger’ points, for
example when registering births;
• targeting take-up campaigns at those not claiming high-value entitlements,
especially among harder-to-reach groups;
• taking information into communities through outreach activities, often in
partnership with other intermediaries such as health workers and community
organisations.
The findings point to the value of welfare benefits advice being made available
through local, trusted, and more accessible settings, including children’s
centres, community and voluntary centres, health care locations and, to some
extent, through welfare to work providers.
Easy access to advice services with trained staff able to provide independent
and authoritative welfare rights information is important. Such services play a
key role in take-up initiatives, improving other staff attitudes towards claimants,
and knowledge of entitlements and the welfare system.
Benefit take-up in the new welfare landscape
Means testing will remain at the centre of the British welfare system and
take-up of benefits will be a significant factor shaping the impact of welfare
reforms on reducing poverty; measures to improve take-up need to be central
to anti-poverty strategies.
The introduction of the Single Tier Pension from 2016 may reduce means
testing for many pensioners but up to a third of pensioners will still rely on
means-tested Pension Credit and support with Council Tax and rent costs.
Universal Credit is expected to increase benefit take-up, especially among the
poorest households, but it seems likely that it will also have negative effects.
In particular:
• it will take time to develop awareness about the new rules, regulations and
systems – additional effort will be needed to inform potential claimants,
frontline delivery staff, and intermediary organisations that assist more
disadvantaged groups and communities;
• there is a risk that digital delivery may reduce and deter take-up among the
people who do not have access to computers and/or the necessary skills;
• there is much uncertainty about the impacts on take-up of tougher
conditions for out-of-work claimants and the extension of conditions to
cover over a million in-work eligible recipients.
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Reducing poverty in the UK
Monitoring the take-up impacts of welfare reform
The government has the primary responsibility to tell potential claimants about
their eligibility, facilitate the claims process and ensure that services are
targeted adequately at the disadvantaged groups who are less likely to claim.
It is important the government, and its delivery partners, monitor the impact
of welfare reform policies on take-up and make effective use of the insights
gained from the many pilots and initiatives being tested alongside
implementation of Universal Credit.
It is important to continue annual publication of take-up data, including in
future Universal Credit, and for the series to continue estimating take-up of
Council Tax support. If take-up rates do not improve under Universal Credit, as
the government has suggested, it should consider setting an independently
assessed indicator giving the level of take-up it wants to achieve. This would
help drive future improvements. The data series should continue to measure
the extent to which any increase or fall in take-up of means-tested entitlements
affects the number of people in low-income households.
The UK’s devolved administrations and local authorities will continue to
have an interest in promoting take-up of benefits. However, the devolution of
Council Tax support, and some elements of the Social Fund, have changed the
incentives of local government. It will be important to monitor how local
authorities respond to the devolution as some may seek to reduce the cost of
support by discouraging claims and doing less to encourage take-up.
Supporting and encouraging future benefit take-up
Most local authorities, and many social landlords, are preparing for increased
demand for advice and support as a result of welfare reform. Some are
developing new services to help disadvantaged people cope with changes both
in how benefits are paid and in their value. Given the scale of unclaimed benefits
investment in welfare rights services will have a positive impact on family
incomes. Such services can play an important role in providing the information
and training to frontline staff who interact with claimants. National charities
and voluntary organisations have been at the forefront of benefit take-up
campaigns and are well placed to monitor the impact of changes in benefits
and service delivery.
The development of local support services for the introduction of Universal
Credit could also play a role in trialling local ways of identifying non-recipients,
developing new advice channels, and evaluating their impact on increasing
take-up rates. Health services could also consider providing welfare rights
services within healthcare settings and signposting service users to more
specialist welfare rights advice. The evidence suggests increased benefit takeup has positive impacts on household income and on some health outcomes at
little cost to the NHS. There is a particular need for cultivating these partnerships
as health professionals are likely to be encountering more patients in financial
hardship and concerned about their benefit status, especially concerning
disability assessments.
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53
Welfare-to-work providers and employers may find themselves playing
a more direct role in providing advice and assistance on benefit take-up,
especially those delivering the Work Programme. The evidence from the USA
suggests that facilitating in-work benefit take-up can help with the transition
into employment and claiming means-tested financial supports may improve
employment sustainability. There may also be less stigma attached to welfare
advice and take-up assistance delivered in employment support settings.
Funders and research organisations should continue to draw attention to
the non-take-up of means-tested benefits and challenge myths that reinforce
stigma. Further policy-related research and public policy debate on the reasons
for and impact of low take-up is needed. More should be done to stimulate
a better understanding of ‘what works’ in promoting take-up and the
dissemination of examples of best practice. Finally, the government should
commit to ensure the level of take-up of Universal Credit and other meanstested benefits is considered as part of its strategy to reduce child poverty.
About the project
This research reviewed evidence on the take-up of means-tested benefits and
tax credits and the impact of strategies and interventions designed to improve
take-up rates.
Read the full report.
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Reducing poverty in the UK
EMPLOYMENT,
PAY AND POVERTY
Policy in the UK promotes employment to tackle
poverty. However, this is challenged by the increasing
prevalence of ‘in-work poverty’ and low earnings
growth as Britain emerges from recession. This review
examines the relationship between employment, pay
and poverty and assesses the evidence on the impact
of different employment interventions on poverty
reduction.
Key points:
• Workless households, low-work-intensity households (either in terms of
the number of earners or hours worked), and households with low-wage
earners have a relatively high poverty risk and are priorities for anti-poverty
initiatives.
• National employment growth has had a limited impact on relative poverty
rates, because the gains have often gone to households who are not in
poverty.
• Rises in the National Minimum Wage boost household incomes for some
low-earning families, but are relatively poorly targeted at households in
poverty.
• Wage supplements have a positive impact on poverty reduction since they
are family means-tested and thus well targeted on poor households.
However, their work incentive effect is stronger for lone parents than for
second earners in couples.
• Activation (imposing conditions on welfare receipt) generally increases
employment rates, but the impact on poverty depends on the types of jobs
taken and the effect on benefit take-up. Sanctions reduce welfare use, and
can increase work entry, but possibly at the cost of job quality.
• Active labour market programmes that include job search services and
sanctions or employer incentives (e.g. wage subsidies) have the best
employment outcomes, while training programmes vary in impact. Tailoring
to individual needs is more effective than standardised provision.
• A range of strategies can be effective in promoting earnings improvements,
including financial incentives to encourage retention, placing individuals
in better quality jobs, and improving skills. However, income increases
(and thus poverty impacts) have tended to be modest.
The research
By researchers at The Work Foundation, Coventry University and the Policy Studies
Institute
Welfare and work
55
BACKGROUND
Employment is fundamental to tackling poverty, since earnings
from paid work are generally the largest source of income for
households. However the relationship is not straightforward
because poverty is measured in relation to household incomes,
while employment affects individual earnings. Household
composition and other income sources therefore mediate the
relationship between employment and poverty.
Employment status and poverty
There is a strong relationship between worklessness and poverty both in the
UK and internationally. The poverty rate for working-age individuals in
unemployed families was 54 per cent in 2012, compared with an average of
15 per cent. If poverty is measured by material deprivation, rather than relative
low income, the disadvantage faced by workless families is even greater.
While the poverty risk is higher for workless households, working
households now constitute the largest share of overall poverty. A substantial
proportion of in-work poverty is made up of families with ‘low work intensity’
– including single-earner couples, families with only part-time earners and
those working intermittently.
Employment characteristics and poverty
Hours of employment, pay rates and job security all affect poverty risk. In the
UK, part-time workers are twice as likely, and the low paid three to four times
as likely, to be in poverty as all workers. Hospitality and catering, personal
services, retail and the residential care sectors are most closely associated with
both in-work poverty and (persistent) low pay.
Women are heavily over-represented in both low pay and part-time work
but this is not reflected in strong gender differences in poverty levels. This is
because poverty is measured at the household level, and low-earning women
are more likely than low-earning men to live with higher earners. However,
this means that low-paid women are especially reliant on a partner’s earnings
to lift them out of poverty, which makes them more vulnerable to poverty
from family breakdown.
The number and quality of jobs and poverty
Employment growth is not always associated with poverty reduction, because
the jobs created may not go to households in poverty. This can be seen in the
increasing polarisation between dual and no-earner households over the past
30 years. The evidence on the effectiveness of targeted job creation schemes
is somewhat inconclusive however. The evidence suggests that enterprise
zones have had relatively little impact on employment prospects for local
workers while wage subsidies, sometimes integrated with other interventions,
can be effective for some groups of workers.
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Reducing poverty in the UK
Statutory minimum wages can have a positive impact on poverty outcomes
and this has been the case in the UK, although the effect tends to be small,
because minimum wage increases are not well targeted on poor households.
A moderate rise in the National Minimum Wage (NMW) in the UK would boost
incomes for some poor families, but would have little impact on relative income
poverty overall. However, by creating a wage floor, the NMW limits the extent
to which very low pay by employers is subsidised through tax credits, and has
the potential to encourage a ‘virtuous circle’ of higher pay, greater investment
in skills and higher productivity, although the extent to which this has occurred
in the UK is limited. Wider payment of the living wage has the potential to raise
the earnings of many low-paid workers but could also reduce labour demand,
notably for low-skilled young workers.
Other institutional factors also influence the links between employment
and poverty, such as collective bargaining, associated with fewer low-paid jobs,
and union membership, linked to a modest wage premium. Family friendly
working practices can potentially play an important role in promoting
employment among people with caring responsibilities, although evidence
about their poverty impacts is limited.
The evidence on active labour market policies and poverty
Wage supplements aim to ‘pull’ more people into the labour market by ‘making
work pay’. In the UK, their impact on employment is broadly positive, albeit
more so for lone parents than for couples, because of the disincentive effect
for second earners (due to higher withdrawal rates as earnings rise). Wage
supplements also have a direct positive impact on poverty by topping up
household income, and are well targeted at households in poverty through
means testing. The introduction and extension of tax credits was a major
element in the reduction of child poverty between 1997 and 2010.
Activation strategies aim to ‘push’ people into employment by imposing
conditions on welfare receipt. In the United States, welfare reform increased
employment rates, reduced welfare use and had a small positive impact on
poverty among lone parents. However many of those who entered work
remained in low income, and the population ‘disconnected’ from both welfare
and work also grew. In the UK, recent changes to conditions attached to
benefits for lone parents have raised employment rates, though poverty
impacts have not been assessed. It is too early to properly assess other more
recent changes to conditionality, such as reforms to Incapacity Benefit and
changes to the JSA sanctions regime. International evidence suggests that
sanctions reduce the use of welfare, and can increase work entry, but possibly
at the expense of work stability and earnings.
There is an extensive evidence base on active labour market programmes,
but robust findings on which strategies and services are most effective in
promoting longer-term earnings and income outcomes is lacking. US evidence
strongly suggests that a ‘work first’ message conveyed by employment advisers
is important in realising positive employment and earnings outcomes. However
personalisation of services is also important and allocating people to services
according to need is more effective than a blanket regime of either job search
or training. The impact of training programmes varies widely, but they are
generally more effective if small scale, well targeted and delivered in conjunction
with employers. Longer-term outcomes may also be more positive for training
programmes. Those furthest from the labour market, such as the long-term
unemployed, require more intensive support and there is some evidence that
intermediate labour market programmes can have positive outcomes for
this group.
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Findings from the Employment Retention and Advancement (ERA)
evaluations (in the United States and the UK) examining longer-term earnings
outcomes suggest a range of effective strategies: providing financial incentives
to individuals for staying in work, placing individuals in better quality jobs, and
facilitating job mobility to better paid work. Increasing skills can also be
effective, but to improve earnings, training initiatives need to be closely linked
to progression pathways. However, even where such strategies have had a
positive impact on earnings, their effects tend to be modest rather than
transformational.
Implications for policy
• Poverty reduction needs to include some form of in-work income transfer
– in the short to medium term at least – since this has a direct and immediate
impact and is well targeted at families in poverty. It is also important to
reduce second earner disincentives through modifications to the design of
Universal Credit.
• Modest increases to the NMW can play some role in reducing poverty;
however the impact is limited because it is relatively poorly targeted at poor
families. Raising the NMW to the level of the living wage would invariably
cost jobs, however more can be done to encourage employers to pay the
living wage in sectors that can afford it.
• The move towards personalised and tailored support in UK active labour
market programmes is supported by a range of evidence, although Work
Programme results suggest this model is not currently working well for
people with health conditions. Changes to the contracting model are
probably needed to address this.
• With the introduction of Universal Credit and the availability of ‘real-time’
earnings data, there is potential to further develop and test approaches
to promoting earnings progression, including employer-based sectoral
initiatives. Clearer incentives for providers to promote earnings growth
could further this agenda.
• Over the longer term, policy should be focused on facilitating growth in
more highly paid jobs. This may be supported by institutional mechanisms,
such as union coverage and collective bargaining, as well as by wider
industrial strategy and skills policies. More evidence is needed on which
approaches could work best in the UK context.
About the project
The research consisted of a literature and policy review, drawing on published
literature from the UK, Europe and North America. It was undertaken by
researchers at The Work Foundation, Coventry University and the Policy
Studies Institute.
Read the full report.
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Reducing poverty in the UK
MEANS-TESTING
OR UNIVERSALISM
AND POVERTY
How closely should income transfers and state services
be targeted on the poorest groups? This review
looked at the effectiveness of different anti-poverty
strategies according to how closely they are targeted
on people with limited means.
Key points
• Both means-tested and universal approaches have advantages and
drawbacks. Means-testing can create stigma, complexity, work disincentives
and reduced support. Universal services and benefits can spread finite
resources too thinly.
• International evidence in the 1990s appeared to show more universal
systems benefiting low-income groups more. Recent studies challenge this
finding.
• The UK is relatively successful in focusing redistribution on less well-off
households. For example, the UK redistributes about 14 per cent of
household income in cash benefits compared with Germany’s 28 per cent,
but the redistributive impact is the same.
• An anti-poverty strategy requires a mix of means-tested and universal
approaches. Universalism works best in the context of redistribution
between earning and non-earning periods of life, because everybody needs
this to some degree. An adequate single-tier, non-means-tested pension
has been shown to work well, for example in New Zealand.
• Universal access to essential services is desirable, but not if it compromises
the quality of the service. It would be a mistake, for example, to lift meanstesting on social care if this narrowed the range of needs covered.
• In tackling child poverty, a large degree of means-tested support needs to
be accepted: this can potentially be four times as effective as a universal
payment. However, it will work best if combined, in the long term, with
universal access to free or low-cost childcare.
• The safety net for working-age adults without children is now perilously
low: only half the protection guaranteed to pensioners.
The research
By Dimitri Gugushvili and Donald Hirsch, Centre for Research in Social Policy,
Loughborough University
Welfare and work
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BACKGROUND
In providing services and cash to households to alleviate
poverty, the state has to decide the extent to which it restricts
access to services and cash to the most needy groups. Doing
so appears more cost-effective in anti-poverty terms, but can
create problems.
The problems of means-testing benefits include stigma and uneven take-up,
conflict with wider objectives of the welfare state and potential marginalisation
of programmes, reducing taxpayer support.
Universal and means-tested approaches are not opposing alternatives but
part of a continuum, and there are various definitions and categorisations that
could be used. For this analysis, the key variable is the extent to which access
is targeted to households with low means, or made available on criteria that do
not take household means into account.
The international evidence
Studies in the 1990s and early 2000s appeared to show that more universal
systems of social protection had tackled poverty the most effectively. A seminal
study by Korpi and Palme (published in the American Sociological Review in
1998) suggested that universal approaches were associated not only with
more public spending but a greater degree of redistribution. Across 11
countries, they found that those with high social spending based on universal
principles did not just recycle money within income groups but also
redistributed across them. More recent studies challenge this conclusion.
Looking at a wider range of countries, at more recent evidence and more
closely at poverty effects (not just overall levels of redistribution), these studies
found that smaller but more targeted programmes can have at least as much
redistributive effect and that greater selectivity based on income can ensure
that more of this redistribution is in favour of the poorest groups. Over time,
means-tested programmes have improved their reputation and funding, partly
by incorporating conditions relating to seeking work, and by being expanded to
include support for working people on low incomes.
The evidence also shows that effective redistribution can take place in very
different kinds of system. For example, Australia and Denmark both redistribute
successfully; Denmark as one of the most generous regimes overall and
Australia as one of the least. Both make extensive use of means-testing,
suggesting that the level of targeting is no less important than the size of the
redistributive budget. This also explains why the UK achieves almost the same
level of redistribution and is more effective in reducing poverty than Germany,
which has considerably larger spending.
Five specific challenges for the UK
The issue under review is bound to play out differently in each policy area. The
review identified five particular issues that a UK strategy will need to address.
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Reducing poverty in the UK
1. The balance between the state pension and Pension Credit in
providing for low-income pensioners
The means-tested credit has helped reduce pensioner poverty sharply in the
past 15 years. The weaknesses of this strategy are that a third of those eligible
do not claim Pension Credit, and it may discourage pension savings. However,
if as an alternative all money from the credit were put into increasing the basic
state pension, those who had received Pension Credit would on average lose
four times the amount gained from the pension increase. The government’s
alternative strategy of reducing means-testing by combining the basic and
second state pensions into an adequate basic pension is a better way of
reducing poverty while minimising means-testing. New Zealand has shown
that a simple single tier pension can reduce poverty without means-testing.
However, to make this affordable the UK government is increasing the pension
age, which could create additional poverty among those waiting for their
pension – about 40,000 people for each year the pension age rises.
2. The role of means-tested payments in tackling child poverty
Unlike with pensions, the potential role of non-means-tested cash payments
in tackling child poverty will be limited. Child Benefit was never intended to
provide fully for the cost of a child. From the late 1990s until 2011, Child Tax
Credit and its predecessor were indexed much more generously than
Child Benefit, which has helped lower child poverty. If Child Benefit were
redistributed into Child Tax Credit, child poverty would fall by over a quarter.
This is not a reason to abolish Child Benefit, but to recognise the crucial role
means-tested payments play in tackling child poverty. International experience
suggests, however, that dependence on such benefits could be reduced by
working to improve earnings among low-income families, and improving
subsidised services used by families and thus reducing family costs.
3. The best way to structure resources designed to help improve
children’s life chances
It is widely accepted that better life chances for people growing up in
disadvantaged families must be a key part of any anti-poverty strategy. Some
redirecting of resources to the early years can help, but this would harm
disadvantaged children if their needs were neglected at school age; early
intervention does not work if it is not followed through. Means-tested demandside subsidies, such as educational maintenance allowances and student grants,
can bring clear benefits by encouraging students to take up education
opportunities. Supply-side support, such as additional resources through the
pupil premium and area-based funding, has not been shown to have automatic,
clear-cut benefits. To prove its worth, it needs to be used in combination with
other measures to transform the experiences of disadvantaged children.
4. How far help with disability, health and care should be targeted
Our present system means-tests support for most social care but not for most
health needs or benefits to cover disability costs. Some countries now provide
non-means-tested care support; in the UK this would need substantial
increased spending to avoid the risk of targeting those with more severe
conditions at the cost of others having unmet needs. In the health service,
selective charges do not work well for people on low incomes: around 40 per
cent of those in poverty miss out on benefits such as free prescriptions, while
more than 40 per cent of people not in poverty receive them, and given the
complication of detailed means testing, more universal access to such benefits
may make sense.
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61
5. In what cases means-testing might be made more acceptable to
the public and recipients
Means-tested benefits suffer from a poor image, contributing in many cases to
low take-up and to reduced taxpayer support. However, this is not always the
case; for example in the past a student grant system graduated by families’
ability to contribute was widely seen as legitimate in helping ‘deserving’ children
go to university. Means-testing can be most effective where it is seen as an
essential and legitimate part of income maintenance and where it has a simple
delivery mechanism. Hence an anti-poverty strategy should not shy away from
means-testing when it is efficient and can be seen to be fair.
Conclusion
This study has not shown either means-testing or universalism to be superior
in an anti-poverty strategy; each has its role. In particular it shows that we can
no longer treat means-testing simply as a regrettable necessity at the margins
of the welfare state. Specific recommendations, set out in the full study,
include:
• Continue moving towards a single-tier pension with a higher pension age,
but initially provide extra protection to people approaching pension age to
avoid increased poverty risk.
• Improve means-tested provision for low-income families, but at the same
time reduce their costs, by moving towards free childcare and extending
the categories of low-income claimants who automatically get other
benefits (known as passported) such as free prescriptions.
• In strengthening support for social care and the costs of disability, ensure
that low-income households are able to meet additional everyday costs,
and ensure that reducing means-tested elements does not compromise
that goal.
• Extend ‘affluence testing’ selectively, initially as a way of legitimising winter
fuel payments. However, a generalised affluence testing policy could end up
complex and, through downward pressure on the eligibility threshold,
effectively amount to means-testing by another name.
• Improve out-of-work benefits for working-age people without children to
make them worthy of the name ‘safety net’.
About the project
This review examined evidence and arguments for universal and means-tested
approaches, both generally at the international level and specifically with
respect to selected areas of UK policy. It examined the relevant literature and
made additional calculations using the Family Resources Survey.
Read the full report.
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Reducing poverty in the UK
THE INFORMAL
ECONOMY AND
POVERTY
This research explores whether the informal economy
enables people to escape their poverty. It then looks
at policy interventions that might enable people to
move into formal work.
Key points
• One recent estimate suggests that the UK informal economy is equivalent
to 10 per cent of GDP, thus constituting an economy of £150 billion.
• Although people in poverty are more likely to work informally, they have
lower wage rates and total incomes from their informal work, reinforcing
their marginalised position.
• For people living in poverty, evidence supports the idea that informal work
is undertaken out of need, not greed, primarily in order to make ends meet.
• Reviewing other western economies, problems associated with the informal
economy can be tackled using a twin track policy approach which:
– develops policy measures to help those in poverty move their informal
work into the formal economy by enabling them to do odd jobs for
others legitimately (e.g. the mini-jobs scheme in Germany); helping
them make a smooth transition from unemployment to self-employment
(e.g. start-up premium in Germany, formalisation services); targeting
customers with incentives to use formal labour (e.g. tax deduction
schemes and service voucher initiatives);
– provides those living in poverty with alternative sources of livelihood
and support. Countries with higher social protection expenditure,
greater levels of intervention to help vulnerable groups enter the labour
market, more effective social transfer systems and greater equality are
significantly correlated with smaller informal economies.
The research
By Colin C Williams, Sheffield University Management School
Welfare and work
63
BACKGROUND
The informal economy (defined as paid activities that are
not declared to the authorities for tax, social security and/or
labour law purposes but which are legal in all other respects)
does not generally enable people to escape poverty in the
UK. Although people living in poverty are more likely to work
informally, research shows they receive lower pay rates and
incomes, reinforcing their marginalised position. This can
be tackled by introducing policy initiatives to help people in
poverty move from informal into formal work and developing
formal work and welfare systems that provide better sources
of livelihood and support.
Poverty and the informal economy: the evidence base
Given that the informal economy is by definition hidden from view, measuring
it is difficult. However, one recent estimate is that it is equivalent to 10 per
cent of GDP constituting an economy of £150 billion. Analysing the limited
and somewhat dated evidence on who undertakes informal work reveals that
although people in poorer populations are more likely to do informal work,
they benefit less, meaning that the informal economy reinforces their
marginalised position. For example, a JRF-sponsored survey of Southampton
and Sheffield in 1998 found that 40 per cent of households in lower-income
neighbourhoods undertook informal work in the previous 12 months but only
18 per cent of households in affluent neighbourhoods. However, the mean
annual household income for households working informally was £115
in lower-income neighbourhoods compared with £2,420 in affluent
neighbourhoods.
A more recent Eurobarometer 2007 survey of 1,313 UK respondents
similarly reveals that the registered unemployed only undertake a small
proportion (6 per cent) of all UK informal work (despite being more than 8 per
cent of the surveyed population), earn 28 per cent less per hour from informal
work (£11.84) than those in formal employment who also work informally
(£16.42) and earn just over 1 per cent of the gross informal income. Those in
formal employment, although 50 per cent of the surveyed population, receive
97 per cent of total informal income and have higher annual informal incomes.
Those living in poverty, furthermore, predominantly engage in informal
work out of need, not greed, to make ends meet in the absence of alternative
means of support and livelihood. Whatever the reasons, however, their informal
work results in unfair competition for legitimate businesses, does not allow
customers any legal recourse if a poor job is done and is fraudulent activity
involving tax evasion and/or benefit fraud (i.e. ‘working whilst claiming’) causing
a loss of revenue for the state, which has knock-on effects on attempts to
create social cohesion and leads to a loss of regulatory control over the quality
of jobs and services provided in the economy.
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Reducing poverty in the UK
What is to be done about the informal economy?
Four possible policy options exist for dealing with the informal economy: do
nothing; eradicate it; deregulate the formal economy; or facilitate the
formalisation of informal work. Reviewing the implications of each:
• solely doing nothing would leave those in poverty in their current
marginalised position and do nothing to deal with this;
• solely pursuing its eradication would take away from people in poverty even
those small opportunities they can seize to alleviate their plight;
• solely deregulating the formal economy would result in a levelling down of
work and welfare provision, casting even more into the same plight as those
currently living in poverty;
• solely facilitating formalisation, although enabling government to achieve
its wider objectives of employment creation, enterprise development and
social cohesion, would leave governments without any teeth to tackle those
refusing to formalise.
The result is that a mixture of these approaches is required. Conventionally,
the UK government has pursued an eradication approach. However, given that
many businesses start up in the informal economy and those living in poverty
commonly engage in paid favours to help each other out, an eradication
approach results in one hand of government eliminating precisely the
entrepreneurship and active citizenship that other hands of government are
seeking to foster. Recently, therefore, the UK government’s approach has
shifted towards a ‘facilitating formalisation’ approach. This report supports this
policy shift but also recognises that other approaches have an additional
supporting role to play such as doing nothing in relation to paid favours,
eradication when tackling those who refuse to formalise and deregulation
when seeking to make it easier to formalise.
How can people in poverty be helped to move from
informal into formal work?
To help people living in poverty move from informal work into the formal
economy, this report recommends looking at whether the UK could adopt
measures to:
• enable people to engage in odd jobs for others legitimately, such as the
mini-jobs scheme in Germany and the Simplified Employment Act 2010 in
Hungary;
• smooth the transition from unemployment to self-employment such as the
start-up premium (Gründungszuschuss, GZ) in Germany as well as
implementing a formalisation service for informal enterprises;
• enable those engaged in the provision of domestic services to move from
the informal to the formal economy by providing incentives to the
customers to use formal sector provision, such as the household work tax
deduction schemes used in Sweden and Denmark and the service voucher
schemes used in Belgium and France.
Welfare and work
65
Developing effective methods to facilitate formalisation, however, is not simply
about evaluating the effectiveness and transferability of individual policy
measures. It also requires policy measures to be put together in various
combinations and sequences that are effective. For example, governments
might simplify regulatory compliance as well as introduce incentives, such as
amnesties, to enable people to move into the formal realm; at the same time,
in relation to those who fail to comply, they may implement tougher sanctions
for those subsequently caught and improve detection methods to catch them,
while also introducing campaigns to gain greater commitment among the
public to ‘tax morality’. Furthermore, what represents an effective mix of
measures will be determined by the structure of the informal economy and
the key drivers of informal behaviour. Tackling an informal economy dominated
by smallscale paid favours between close social relations in the domestic
services realm will require different measures to tackling an informal
economy dominated by exploitative sweatshop-like work, such as unlicensed
gangmasters using illegal immigrant labour in the agricultural sector.
Evaluations will be needed of what combination of measures, applied in
what order, are most effective in what contexts. Before doing this, however,
evaluations should assess which individual policy measures work and which do
not, albeit perhaps in conjunction with other measures. These innovative
initiatives, however, are mere palliatives. They are necessary but insufficient for
tackling poverty and the reasons for people in poverty working in the informal
economy.
What is the relationship between the informal economy
and broader economic and social policies?
If people in poverty currently reliant for their livelihood on the informal
economy are to be helped to escape it, it is likely that mainstream labour
market opportunities and welfare support will also need to be enhanced.
Analysing the relationship between the size of the informal economy and
broader economic and social policies, using a comparison of the 27 member
states of the European Union (EU-27), the finding is that societies with larger
informal economies are characterised by lower levels of social protection, less
government expenditure on active labour market interventions, lower and less
effective social transfer mechanisms and greater inequality.
Although these findings are based on simple correlations of two variables
and the effect of other contextual factors have not been taken into account,
the tentative conclusion that can be drawn is that there is currently no evidence
that deregulation and cutting taxation reduce the size of the informal economy
(if anything they appear to increase its size) and that it is countries pursuing
greater levels of social protection, government expenditure on active labour
market interventions to help vulnerable groups, more effective social transfer
mechanisms and more equal societies that have smaller informal economies
and the poor therefore presumably less reliant on the informal economy as a
means of livelihood and support.
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Reducing poverty in the UK
Conclusion
This review reveals that the informal economy does not often enable people to
escape their poverty. Although people experiencing poverty are more likely to
work informally, both their wage rates as well as total income from informal
work is lower, meaning that the informal economy reinforces their marginalised
position. Reviewing other western economies, the finding is that the informal
economy is intrinsically linked to wider work and welfare arrangements that
need to be addressed as part of a comprehensive anti-poverty strategy. There
are specific policies which have been tried elsewhere in Europe that show
promise in encouraging formalisation and reduction in longer term poverty
risks.
About the project
The research was undertaken through a literature review of policy and
academic documentation. Evidence was gathered from the academic
and practice literature on the extent and nature of informal work in the
UK and policy measures were identified using the Eurofound ‘knowledge bank’
of good practice policy measures for tackling undeclared work.
Read the full report.
Welfare and work
67
UNIVERSAL CREDIT
AND POVERTY
The introduction of Universal Credit marks the biggest
change to the welfare system since the Second World
War. This study evaluates the impact that Universal
Credit will have on poverty and work incentives and
how the policy could fight poverty more effectively.
Key points
• Universal Credit is expected to have a broadly positive impact on poverty
through higher incomes (‘pockets’) and improved work incentives
(‘prospects’).
• ‘Pockets’ are expected to increase by £16 per month per household on
average through higher take-up of benefits and higher entitlements,
particularly for those in work, however the impact varies by income level
and household type.
• ‘Prospects’ improve overall through improved work incentives, simplicity
and conditionality, however 2.1 million people will see a small decrease in
incentives while 1.5 million people will see a large increase.
• Tackling poverty through Universal Credit involves trade-offs. For example,
whether to follow a pockets or prospects approach to poverty reduction,
and whether to help a few people a lot or many people a little. Policymakers need to take cost-effectiveness into account.
• Elements outside of Universal Credit risk undermining its poverty-fighting
potential. Structural issues such as high housing costs contribute to poverty,
while the positive impact of Universal Credit is undermined by other welfare
reforms. The withdrawal of free school meals may undermine work
incentives, and localised Council Tax Support undermines the simplicity that
Universal Credit was intended to achieve.
• Increasing spending on one policy parameter, while cutting spending
elsewhere within Universal Credit, may have a negative impact on poverty
overall.
• The report scores different options for reform of Universal Credit on their
impact on poverty and cost-effectiveness. This scorecard will assist policymakers in decisions about how best to tackle poverty. Many of the findings
apply equally to the current benefit system.
The research
By Deven Ghelani and Lisa Stidle, Policy in Practice
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Reducing poverty in the UK
BACKGROUND
Universal Credit is the biggest change to the welfare system
since the Second World War. It is replacing six of the main
means-tested benefits (Jobseeker’s Allowance, Income
Support, Employment and Support Allowance, Housing
Benefit, Child Tax Credit, and Working Tax Credit) and will affect
more than 8 million households. Its key aims are to reduce
poverty, simplify the benefit system and ‘make work pay’.
This review draws on official and independent sources to consider the expected
impact of Universal Credit (UC) on poverty and work incentives, and policy
issues that could restrict the ability of UC to tackle poverty.
It also illustrates the impact of UC on four household types and analyses
how changes to different policy parameters within UC and closely aligned to
UC could cost-effectively tackle poverty and improve work incentives.
Universal Credit will reduce poverty through ‘pockets’
and ‘prospects’
Universal Credit itself, set apart from other welfare reforms, will have a net
positive impact on relative income poverty through two strategies: increasing
household incomes (‘pockets’) and strengthening work incentives (‘prospects’).
Through pockets alone it is estimated that UC will lift 250,000 children and
350,000 working-age adults out of poverty, and incomes are expected to
increase by £16 per month per household on average. This is through a
combination of increased take-up of benefits, higher work allowances and
lower withdrawal rate under UC. However the impact varies by both household
type and income level. Poorer households see the largest income gains, while
all household types will include winners and losers.
Prospects will improve as a result of increased financial incentives, simplicity
and smoothing, and conditionality. The stronger, clearer work incentives of UC
are expected to get 100,000–300,000 workless households into work, and
households already in work are expected to increase their hours by an additional
1–2.5 million hours per week. Analysis for this report looked at four different
household types. Three were able to exit poverty by working fewer hours
under UC compared with the current system. However, owner-occupiers were
worse off when first entering work, and lone parents with high childcare costs
were not always better off working more hours.
Room for improvement: the policy scorecard
The following policy scorecard has evaluated options for tackling poverty
under UC and scored them, using a traffic light system, on four key indicators:
• pockets – the direct impact the policy has on household income;
• prospects – the impact on work incentives to either enter or progress in
work;
• targeting – the ability to target specific groups without complicating the
system;
• cost-effectiveness – an indication of cost and who would benefit by how
much. Where possible this indicator looks at what the impact of spending
£1 billion would be.
Welfare and work
69
Key
strong positive impact
neutral
limited/negative impact
Policy option
Pockets
Prospects
Targeting
Cost-effectiveness
Increase the base level of
support within UC whether
in or out of work.
Directly increases income
for all UC households.
May harm work
incentives.
Can be targeted to
different groups.
£1 billion would increase
incomes for all UC
households by
£129/year.
Create a second earner
work allowance to support
dual earning households.
Increases income for dual
earner couples.
Improves work incentives
for potential second
earners.
Targeted at a large
group in poverty that
is responsive to work
incentives.
£1 billion would increase
the incomes of dual
earner couples by
£3,292/year.
Increase the household
work allowance so more
can be earned before UC
is withdrawn.
Directly increases the
income of in-work
households.
Encourages out-of-work
households to move into
work.
Can be targeted to
particular groups.
£1 billion would increase
incomes for 3.3 million
in-work households by
£302/year.
Lowering the withdrawal
rate so UC is withdrawn
more slowly as earnings
increase.
Increases the incomes of
in-work households.
Improves incentives to
enter and progress in
work.
Targeted at all in-work
households.
£1 billion would lower
withdrawal rates by 3.3%,
to 61.7%. This would
increase incomes by
£230–£330/year for
£10,000 of earnings.
Raising tax thresholds or
lowering tax rates.
Small increase in income
for households earning
above the tax threshold.
Has a small positive
impact on incentives to
progress in work.
Targeted at in-work
£1 billion would raise the
households with relatively personal tax allowance
higher incomes.
by £560; affected
households would gain
£39/year.
Integrating council tax
support into UC.
No direct impact, but
would increase incomes
through increased
take-up.
Leads to consistent and
clear work incentives.
Targeted at all
households in receipt
of UC.
Increased take-up could
cost £717 million. This
would be partially offset
by administrative savings
of £74 million.
Giving free school meals to
all UC households.
Reduced costs for
Leads to consistent and
households, but no
clear work incentives.
impact on relative income
poverty measures.
Targeted at all
households with children
on UC.
Estimated to cost
£500–£750 million,
but could be reduced
by lowering the work
allowance.
Increasing the childcare
subsidy to 85% for all UC
households.
Increases income for
500,000 households that
claim childcare support.
Promotes entry and
progression in work for
parents that need formal
childcare support.
Targeted at UC
households that need
formal childcare in order
to work.
£400 million per year,
benefiting 20% of
in-work households with
children on UC.
Higher wages (through
increased productivity)
Improves incomes for
in-work households, but
they would only see 1/3
of the benefit due to UC
withdrawal.
Supports progression in
work.
Could be targeted at
specific sectors.
Costless to the
government and
would benefit both
the government and
households.
Lower living costs
(through more competitive
markets).
Improves disposable
incomes for all
households.
No direct impact on work
incentives, but may lower
the costs of work and
improve mobility.
Can be targeted to types
of expense, but not to
types of households.
A sustainable fall in living
costs would improve
cost-effectiveness.
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Reducing poverty in the UK
Conclusion
Universal Credit will reduce poverty, but there is room for improvement.
• Policy-makers should first focus on policy that sits outside of UC, but
impacts on its ability to reduce poverty. Streamlining Council Tax Support
and free school meals would help to reduce poverty and support the
principles of UC. This should be a priority for an anti-poverty strategy.
• Poverty measurement will favour a pockets approach to poverty reduction,
while a prospects approach may provide a more cost-effective and
sustainable strategy.
• Increasing the work allowance would improve both take home incomes
(pockets) and the returns upon entering work (prospects). It would also
support other policy proposals, such as the integration of Council Tax
Support and free school meals. This should also be a priority for an antipoverty strategy.
• Reducing the withdrawal rate of UC would be an expensive measure but it
would increase the incomes of a large number of working households in
poverty, help improve the prospects of households by letting them keep
more of their earnings, and help other policy measures (e.g. lower rates of
tax, higher wages) to filter down more to the pockets of low-income
households. This should be a longer term goal.
• Policy-makers should consider the impact that policy decisions have on
UC’s ability to reduce poverty. Recent reforms to the welfare system will
more than offset the positive impact that UC will have on poverty. Similarly,
increasing spending on one policy parameter while cutting spending
elsewhere may have a negative impact on poverty overall.
About the project
This study reviewed literature, with a focus on policy rather than implementation.
Original analysis was conducted to illustrate the impact of UC at a household
level, and to model how changes to a range of policy parameters within and
closely aligned to Universal Credit could cost-effectively tackle poverty.
Read the full report.
Welfare and work
71
WELFARE TO WORK
POLICIES AND
POVERTY
This review looks at international evidence on the
delivery of welfare to work services. It reviews
organisation, performance management frameworks,
frontline delivery and integration with other services.
Key points
• Evidence shows the organisation and delivery of welfare to work policies
play a central role in shaping the efficacy of poverty reduction and economic
growth strategies. Who delivers services and how, together with the
incentives of the system, should be designed to maximise the impact of
benefit reforms and employment programmes.
• The design of performance incentives impact on service outcomes.
Jobcentre Plus, local authorities and private sector providers should be
rewarded for earnings progression and job quality in addition to enhancing
job placement and employment sustainability.
• Well designed contracts can reduce costs, give access to skilled staff and
services not available in the public sector and bring innovation to the
service. The risks are that providers exploit weaknesses in contract design
and only help more immediately employable claimants.
• Decentralisation of welfare to work policy and delivery can result in
improvement, but also carries risks. Where local priorities diverge from
national goals there are particular risks; such devolution should be
underpinned by transparent national minimum standards, especially where
participation is mandatory for benefit claimants.
• More detailed data on earnings and benefits should be analysed to identify
the specific programmes and services that contribute to poverty reduction,
employment entry and earnings progression and deliver net benefit to
government finances in the medium to long term (not just the short term).
Universal Credit should make this possible at low cost.
• In-work support services and help with skill acquisition and earnings
progression should become an integral feature, not an add-on, to welfare
to work programme design.
The research
By Dan Finn, University of Portsmouth and the Centre for Economic and Social
Inclusion
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Reducing poverty in the UK
BACKGROUND
Delivery of welfare to work has changed significantly in recent
years and will continue to transform as Universal Credit is
rolled out. Welfare to work and activation policies are central
to the long-term poverty reduction and economic growth
strategies of the UK Government and governments within
other OECD countries.
Typically welfare to work policies combine changed employment-related
obligations and job search requirements, mandatory participation in active
labour market programmes, and the implementation of revised sanctions that
seek to influence claimant behaviour. The strategies also embrace tax and
benefit reforms aimed at improving work incentives and 'making work pay'.
Comparative evidence suggests that, when well designed, such strategies have
contributed to improved outcomes by ensuring that benefit claimants have a
better chance of getting employment and, in countries with high and/or long
lasting out-of-work benefits, offsetting the possible negative impact of such
entitlements on work incentives.
A range of factors contribute to the relative efficacy of welfare to work
policies including the organisation, management and frontline delivery of
employment services. Some of the public sector reforms that may contribute
to improved employment outcomes include decentralisation, inter-agency
collaboration, contracting out, performance management and the delivery of
frontline employment services within more integrated delivery systems.
This report considers the merits of these different reforms. While the
rationale for them and their design varies from country to country, studies
suggest they have had significant impacts.
Welfare to work reform, job retention and skills
Welfare to work reform in countries such as the USA, Australia, Germany and
the UK, has been comparatively successful in getting benefit leavers into jobs,
but many such jobs are low paid and short lived. This means employees continue
to rely on other income and often quickly return to unemployment. These
outcomes reflect a combination of factors, including the poor quality of
available employment as well as the individual circumstances of benefit leavers.
In the UK the evidence suggests that greater employment sustainability and
earnings progression would improve the cost-effectiveness of welfare to work
programmes and contribute more effectively to longer-term poverty
reduction. This has led to increased policy interest in how to better combine
job placement with retention and progression services, and the delivery
methods and organisations most likely to improve such outcomes.
There has been much debate about how to improve the effectiveness of
Jobcentre Plus (JCP) and the Work Programme (WP) in their capacity to
place, sustain and progress service users in better quality employment. There
has been significant criticism of the lack of integration of employment and
skills services and the role of separate national departments in the highly
centralised British system. Proponents of reform suggest that greater flexibility
and decentralisation would enable local government and/or other partnerships
to improve welfare to work policy effectiveness, value for money and better
adapt ‘mainstream’ employment and skills policies to local conditions.
Welfare and work
73
Decentralisation of welfare to work – advantages and risks
There has been a strong international trend towards decentralisation in welfare
to work policies and employment service delivery, with a view to joining up
services and adapting them to local needs. But the evidence suggests that
devolution carries risks as well as rewards, especially where local priorities
diverge from national goals. There is no automatic relationship between
decentralisation in employment and skills services and more coherent, effective
or integrated delivery and user experience. Such a correlation depends on
variable managerial, fiscal and delivery capacities of lower tiers of government
and/or local delivery partnerships. There is also the potential for poorly
designed incentives that may have unintended results, and, as in the USA, the
emergence of wide variations in the cash benefits and services available and in
user experience. This risk is heightened when some areas can draw on a strong
and diverse network of local agencies and provision, while others have few
such supplementary resources.
Any move towards devolved welfare to work budgets in the UK would need
to flexibly deliver localised strategies within a coherent and equitable national
policy framework with minimum standards. This is especially important where
programmes are mandatory. A fair balance would also need to be struck
between incentives that encourage employment outcomes and expenditure
savings and poverty reduction. Balancing national and local priorities requires
an agreed and transparent performance framework in which the central,
national body has the authority and responsibility to analyse performance,
assess and evaluate the effectiveness of local activation strategies and hold
delivery agencies to account.
Contracting out welfare to work services
Contracting out the delivery of employment services has been a complex
undertaking with purchasing authorities making frequent adjustments in
contract design and incentives in response to delivery problems and changing
external conditions. Evaluations report mixed results but the more positive
findings suggest that well designed contracts can reduce delivery costs, give
access to skilled staff and services not available in the public sector and bring
innovation to service delivery. The risks are that providers may help more job
ready claimants, ‘park’ those hardest to help and otherwise exploit weaknesses
in contract design.
Controversy over such issues has marked the implementation of the Work
Programme (and the outsourced programmes that preceded it). It is premature
to draw definitive conclusions, but some of the improvements necessary are
now clear.
The design of the WP has contributed to an anti-poverty strategy by
rewarding providers for long-term employment sustainability, with findings
suggesting that employment retention is higher than anticipated. However,
the programme has not worked effectively for those hardest to place, especially
those on disability benefits. Consideration should be given to an increase in
WP funding levels to improve the support for more disadvantaged groups.
Consideration should also be given to fostering greater competition and more
diversity of providers and choice for service users – both factors that have
been associated with improved outcomes and participant experience in
Australia. This would require a reduction in the size of contract areas and an
increase in the number of providers. By aligning new contract areas with subregional and local authority boundaries there could be greater ‘joining-up’.
Stronger incentives to reward providers for improving participant skills and
placing them in better paid jobs would also help poverty reduction.
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Reducing poverty in the UK
Performance management and targets
The design of performance and contract management frameworks, targets
and payments is critical for effective incentives to ensure the behaviour and
outcomes of public and private welfare to work delivery organisations supports
policy. The Coalition Government dropped most of the targets it inherited
replacing them with objectives to move people ‘off benefit, into employment,
as quickly as possible’ and to reduce the cost of fraud and error. The intention
is to drive cultural change and give JCP district managers and advisers greater
flexibility in the services they deliver and in how they work with claimants. Early
positive evaluation results, however, have been overshadowed by concerns
that the new regime may be causing perverse target-driven behaviour, and
contributing to the significant increase in sanctions.
This report endorses recommendations made by others for government to
refocus the DWP and JCP targets more directly on employment outcomes
and to develop and monitor measures of employment sustainability and
earnings progression. Such targets would bring JCP into line with the incentives
in Universal Credit and the WP, and facilitate the development of in-work
support as an integral feature, not an add-on, to welfare to work service design.
The development of real time information on earnings and benefit receipt
should make it feasible to measure and reward participant earnings gains; this
happens already in some US programmes.
Performance indicators that measure the duration and quality of
employment outcomes, including improvements in earnings and skills, would
contribute more to poverty reduction. Also, given the concentration of in-work
poverty in single-earner households, performance measures of household,
rather than only individual employment outcomes, should supplement the
extension of employment services and conditionality to the partners of the
unemployed and low-wage workers.
Using data to improve employment and poverty reduction
outcomes
The introduction of Universal Credit and related changes in income tax and
National Insurance data should, over time, make available low cost data through
which to track the longer term benefit, employment and earnings of welfare
leavers. This opens up the possibility of more accurate evaluation and much
greater insight into those employment services and programmes that generate
net benefits for government finances, as against possibly cheaper services that
simply result in immediate benefit savings. Such data could be used to shape
service delivery and test and validate future contract and performance targets,
and the results should give more information on which welfare to work
interventions better contribute to poverty reduction and higher quality
employment.
About the project
This research reviewed literature on the organisation and frontline delivery of
welfare to work programmes.
Welfare and work
75
MONEY AND
THE COST OF
LIVING
CONTENTS
Foreword
78
Debt, credit and poverty
80
Early childhood education and care and poverty
84
Fuel and poverty
89
Savings, assets, wealth and poverty
93
The cost of living and poverty
98
Transport and poverty
Money and the cost of living
103
77
FOREWORD
The reviews in this section cover topics intimately related to JRF’s definition of
poverty as when a person’s resources are not sufficient to meet their minimum
needs.
On the resources side, the reviews found that, although income is the main
material resource for those in poverty, assets, credit and debt must also be
considered in an anti-poverty strategy.
The credit and debt review found no robust evidence that problem debt
causes poverty, but did find that the consequences of problem debt worsen
poor households’ living standards and well-being. Although high-cost credit is
concentrated in low-income households, the review found both advantages
and risks in capping the cost of credit, and argued that any cap must go hand
in hand with work to ensure that low-income families are not pushed towards
informal, and riskier, forms of credit. What would help, the review concludes,
are measures to help low-income households manage drops in income and
peaks in expenditure. On the other side of the balance sheet, the savings and
assets review found no great support for the idea that promoting savings or
assets alone can lead to a major reduction in poverty, and so recommended
that any future asset-based welfare be considered only if overall income levels
were adequate. If savings are to be encouraged among low-income households,
then soft compulsion and matched funding seem to be much more effective
than tax breaks. A common recommendation is that an anti-poverty strategy
should encourage more low-income households to save small amounts, and
give low-income households more opportunity to borrow small amounts; the
challenge is that neither activity is very profitable for mainstream financial
service companies.
On the needs side, many examples are given of a ‘poverty premium’,
whereby the poor pay more for the same product than the rich. It is clear that
certain groups (e.g. disabled people, people living in rural areas) face enhanced
costs, and a lack of ‘enabling goods’ such as a bank account to pay for goods in
different ways, and internet access to help shop around more effectively,
meaning they end up paying more. We also know that prices of essential goods
have been rising faster than other goods and services in recent years, meaning
that low-income households are seeing higher inflation rates, on average, than
better off households.
Childcare can be a major cost for families who earn too much to benefit
from tax credits, but the review considers that the mix of demand- and supplyside subsidies used in the UK (something seen in very few other countries) can
lead to confusion for both providers and parents. The review recommends a
comprehensive reassessment of the way all UK governments support childcare.
Such a review should also consider the impact of childcare on the poorest.
The review on transport found the concept of transport poverty unhelpful:
affordability of transport is important, but the time and the physical and mental
capabilities required to make use of transport options also need to be
considered. Given low rates of car ownership among low-income households,
an anti-poverty strategy should begin by considering public transport,
principally buses. The review recommends a greater role for local authorities in
England, with travel needs in rural areas being considered more intelligently.
Targeted schemes offering free or reduced bus travel can help encourage
young people to stay in education and unemployed people find and stay in
work, but, in general, the review found that evaluations of transport schemes
often fail to sufficiently consider the impact of the location of schemes, and
the implications for those who lack access to any form of transport.
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Reducing poverty in the UK
Finally, while the cost of domestic energy is rarely off the political agenda,
the review reminds us that for some low-income households, the high cost of
energy can mean people live in homes that are too cold or damp, or cut back
on other essentials. Although some of the review’s recommended solutions –
more competition in the supply market and a more accessible market for
consumers – are being actively considered by governments and regulators,
others – such as a review of the more regressive green levies, area-based
initiatives to target poorly insulated homes, and allowing GPs to ‘prescribe’
improvements in home insulation – have not yet made it into party manifestos.
Arguably, they should.
Mike Brewer
Professor of Economics at the Institute for Social and Economic Research, University
of Essex
Money and the cost of living
79
DEBT, CREDIT AND
POVERTY
This review examined the evidence on the links
between problem debt, consumer credit and poverty.
Consumer credit is a part of everyday life for many
people, helping to smooth the ebbs and flows of
income and expenditure and manage financial
resources flexibly. There are concerns, however, that
use of consumer credit, particularly high-cost credit,
can lead to financial difficulties and over-indebtedness.
Key points
• Poor households are at greater risk of experiencing financial difficulties and
problem debt than those that are better off.
• There is no evidence to show that problem debt causes poverty, but the
consequences of problem debt can adversely affect poor households’ living
standards and well-being.
• Low-income households are less likely to use consumer credit than higherincome households. However, high-cost credit users, although representing
a minority of all credit use, are concentrated among the poorest households.
• Low-income households are vulnerable to drops in income and to peaks in
expenditure. Measures that could help poor households manage these and
that should be included in an anti-poverty strategy are:
– access to debt advice that is free and impartial;
– greater access to affordable small-sum loans, although there are
questions as to how this can best be delivered;
– better enforcement of credit regulation, especially tighter affordability
assessments so that people on low incomes only borrow what they can
afford to repay;
– appropriate debt solutions as a route into debt relief.
• The vulnerability of low-income households to income shocks suggests
that the promotion of savings and access to preventative money guidance
could also have a role to play in an anti-poverty strategy.
• At present there is insufficient evidence to recommend the inclusion of a
cap on the cost of credit in an anti-poverty strategy.
The research
By Yvette Hartfree and Sharon Collard, Personal Finance Research Centre, University
of Bristol
80
Reducing poverty in the UK
BACKGROUND
This review examined the evidence on the links between
debt, credit and poverty. ‘Debt’ was defined as problem debt,
where individuals are unable to make contractual payments
on consumer credit or household bills. ‘Credit’ was defined as
non-mortgage consumer credit.
The relationship between debt and poverty
Around 10 per cent of all British households have problem debt. Households
on the lowest incomes are at greater risk of experiencing financial difficulties
and problem debt. They are more likely than better-off households to have
high debt repayment-to-income ratios and to report arrears on bills and
payments.
Although problem debt is not solely a function of income, poor households
and those with problem debt share common characteristics, including being a
tenant and not being in work. Low-income households are more likely to be in
arrears on household bills than consumer credit (partly reflecting the fact that
not all low-income households use credit). Among the general population,
income drops (caused by job loss or relationship breakdown) are reported to
be the major cause of financial difficulty by around four in ten households. Low
income is an underlying cause of problem debt, whereby household finances
are very susceptible to income or expenditure shocks that, in the absence of
savings or other resources, can lead poor households to use credit and default
on payments.
There was no evidence to show that problem debt directly causes poverty.
Problem debt can deepen poverty, however, and increases the risk of remaining
in poverty because it adversely impacts poor households’ well-being and their
ability to address their financial circumstances.
The relationship between credit and poverty
Around half of all British households have unsecured consumer credit.
Borrowing and use of credit follows a lifecycle pattern, with higher use at
younger ages and among families with children. Low-income households are
less likely than those on higher incomes to use consumer credit, although low
income is not related to credit use independently of other factors (e.g. work
status and tenure). Those poor households that do not use credit report that
this is largely through choice.
Among low-income households who do use credit, it is used to cover
expenditure peaks such as Christmas and birthdays, to spread out the cost of
major purchases and cash emergencies. It is also used following a fall in income
to meet everyday expenses and to avert financial difficulties such as paying
bank charges for unauthorised overdrafts and falling into arrears with bills or
other loans.
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Credit cards, personal loans and overdrafts are the most common sources
of credit used by poor households, as they are among the general population.
Compared with higher-income households, poor households are more likely
to use the Social Fund and mail order catalogues, and to borrow from friends
and family. Use of credit unions is low among poor households, compared with
other types of credit.
High-cost credit (home credit, pawnbroker loans, payday loans) represents
a very small proportion of borrowing in the general population, used by just 2.5
per cent of all households. High-cost credit users are, however, concentrated
among households with the lowest incomes. Reasons for using high-cost
credit include exclusion from mainstream credit due to a poor credit history or
low income; having ‘maxed out’ mainstream credit options; and the fact that
high-cost credit has features (other than cost) that make it attractive to people
on low incomes.
In order to repay consumer credit, low-income households have to cut
back on expenditure and curtail living standards. For the majority of lowincome credit users, the overall benefits of using credit and the items or
services it enables them to have appears to outweigh the impact of making
repayments. For a significant minority of high-cost credit users, however,
credit use makes their financial situation worse so that they find it difficult to
meet everyday needs while also repaying what they owe. Making minimum
repayments on credit cards and overdrafts over a prolonged period of time can
also trap low-income households in a cycle of servicing debt that they cannot
reduce and/or pay off.
What measures should be included in a UK anti-poverty
strategy?
The evidence highlights two key issues for low-income households: their
vulnerability to drops in income and to peaks in expenditure, both of which put
them at greater risk of problem debt. Based on the available evidence we
suggest the following policy and practice interventions for inclusion in an
anti-poverty strategy:
• Debt advice that is impartial and free at the point of use. While there is no
evidence that debt advice helps lift people out of poverty (or prevents them
falling into poverty), the positive financial outcomes include increased
income through income maximisation and a reduction in the amount owed
to creditors.
• Greater access to affordable small-sum loans that could help low-income
households to cope with both peaks in expenditure and cover everyday
expenses following an unexpected fall in income. However, questions
remain as to how low-cost loans can best be delivered on a sufficiently
large scale.
• Credit regulation and, more importantly, better enforcement of credit
regulation to help prevent people getting into financial difficulty. This
applies particularly to tighter affordability assessments and the enforcement
of responsible lending so that people on low incomes only borrow what
they can afford to repay.
• Debt solutions should be assessed to ensure they provide a route into debt
relief for low-income households.
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The vulnerability of households to income shocks also suggests a role for
the promotion of savings (covered by another evidence review) to provide a
financial cushion for households while they adjust to their new circumstances.
It also suggests a need for preventative money guidance, information and
support at the point at which households experience (or anticipate) an income
drop that might help them to cope better and prevent arrears and unsustainable
credit use. However, preventative money advice and guidance was not an
intervention covered by this review and evidence on its effectiveness would
need to be assessed before recommending its inclusion.
The Financial Conduct Authority’s planned cap on the total cost of payday
loans is intended to prevent excessive charges and so should make payday
loans cheaper for those still able to borrow. However, as the impact of the cap
will not be known for some time and evidence from other countries that have
introduced a cap is equivocal, we do not recommend including price restrictions
in an anti-poverty strategy at the present time.
About the project
This review was an expert-led synthesis of evidence from academic bibliographic
databases; government, third sector and industry sources; research organisation
publication lists; and web searches. It focused on studies published in the last
15 years and on evidence from the UK along with evidence from other
countries where relevant.
Read the full report.
Money and the cost of living
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EARLY CHILDHOOD
EDUCATION AND CARE
AND POVERTY
This report reviews low-income children’s access to
affordable good-quality early childhood education
and care (ECEC), its developmental impacts and its
effect on parental, notably mothers’, employment
levels.
Key points
• The ECEC system in the UK consists of state provision and state-subsidised
private-for-profit and not-for-profit provision, e.g. day nurseries,
preschools and childminders.
• All three- and four-year-olds and some disadvantaged two-year-olds can
have some state funded early education. Take-up has been high, but less so
among poor children, notably from certain minority groups. Despite this
intervention, poor children remain less likely than their better off peers to
reach a good level of development at age five.
• Poor children experience lower quality ECEC than their better off peers,
especially in private provision in disadvantaged areas. The impact of poor
quality is also proportionally greater for poor children.
• Research strongly suggests that only good-quality ECEC has positive
short-term and, possibly, longer term, educational effects for poor children;
it is less clear what impact it has on their social and emotional development.
• Children’s centres, in close partnership with local authorities, can play a key
role in brokering access for poor children to quality ECEC, coupled with
other family support provision.
• The impact of the home learning environment on children’s development
is at least as strong as that of quality ECEC; public policy needs to consider
strategies to help parents maintain or achieve a positive environment.
• The amount of free early education may fail to meet parents’ childcare
needs; parents pay for additional childcare upfront, and may be partially
reimbursed through the tax and benefits system. This complex mix of
supply- and demand-side subsidies causes problems for parents and
providers.
• Research evidence on the role of publicly-funded ECEC in promoting
parental employment is limited, and sometimes contradictory.
The research
By Eva Lloyd and Sylvia Potter, University of East London
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Reducing poverty in the UK
BACKGROUND
The provision of good-quality, affordable and accessible
early childhood education and care (ECEC) promotes
young children’s intellectual development, leading to better
educational outcomes and life chances. It may also allow
parents to work. By reducing social and cultural inequalities
ECEC can also promote social justice.
The UK context
Early childhood education and care (ECEC) is delivered by private for-profit
and not-for-profit businesses, including childminders, alongside state provided
early education in nursery schools and classes attached to primary schools.
Children’s centres, offering a range of family support services primarily to poor
families, represent a third, social welfare, strand of provision, but only some
deliver ECEC. While all state provision is led by graduate staff – a key predictor
of service quality – this is not the case in other sectors. Moreover there are
quality variations within and between sectors.
This ECEC system is complex, combining free early education entitlement
(for three- and four-year-olds and some two-year-olds) with a parental
childcare subsidy through the tax and benefit system to cover the costs of
additional childcare. Childcare costs are reimbursed retrospectively, which may
create barriers to employment. About two-thirds of parents who pay for
formal childcare do not receive any government help with costs.
While the overall uptake of free early education has been high, it remains
lowest among the poorest children, notably those with special educational
needs and from certain minority ethnic communities. In disadvantaged areas
the quality of private ECEC attended by poor children is lower than that
provided in state schools. There are also problems with maintaining the supply
of ECEC in disadvantaged areas where fewer parents use additional childcare
to supplement their children’s free early education.
ECEC’s social mobility aim
Even before poor children enter primary school a significant developmental
gap has already opened up between them and their better off peers. Good
quality ECEC alone is unlikely to close this gap, let alone the lower quality
provision found in disadvantaged areas. International research demonstrates
positive short-term ECEC impact on cognitive development, provided it is of
good quality, though the picture is less clear for social and emotional
development. There is mixed evidence for longer-term impact, with some
studies finding the impact fades as children age. The UK Millennium Cohort
Study indicates limited longer-term educational impacts from ECEC provision
on the poorest children. Countries offering universal provision generally do
better for all young children. The UK strategy of subsidising parents through
the tax and benefits system to buy childcare within a childcare market is not
only rare within Europe but has also promoted an increasingly socially
segregated ECEC system. Yet evidence shows children from disadvantaged
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85
backgrounds benefit from settings which include children from a mixture of
social backgrounds.
The Effective pre-school, primary and secondary education (EPPSE 3–16)
study found home learning environment is as important – if not more
important – as quality ECEC. International research also suggests whole-family
approaches, which provide support for multiple issues alongside ECEC, are
effective. Children’s centres appear well placed to play this role in the UK,
as their targeted family support, delivered in close partnership with local
authorities, has already helped families access ECEC and other services.
ECEC’s economic rationale
International and UK research on the role of publicly-funded ECEC in
promoting parental employment is limited, and sometimes contradictory.
Parental employment opportunities and decisions are influenced by local
employment opportunities, which in turn interact with the tax and benefits
system, maternal educational levels and family and community attitudes.
Attitudes also vary depending on children’s age.
For low-earning families, the current free entitlement does not make a
sufficient difference to household income, although it does help reduce
childcare costs for three- and four-year-olds (and some two-year-olds).
Childcare costs go down further when children reach school age. Nevertheless
upfront childcare costs remain high in the UK, which can be a barrier to
employment. International evidence suggests a stable and sustainable ECEC
system should be available regardless of whether parents are employed.
Norway has adopted this approach, while also improving quality through
stringent regulation, including a cap on parental income-related fees and
payment of public subsidy to private providers dependent on quality. The result
has been almost universal uptake of ECEC, with a positive impact on children,
including those from low-income families. Norwegian local government also
retains a major role in financing, regulating and supporting the system.
The key role of ECEC quality
International evidence confirms that low ECEC quality disproportionally affects
poor children’s development. Quality is influenced by both structural factors,
such as adult–child ratios, group size, available space, and by process factors
related to the delivery of care, such as staff–child communication patterns and
planning for learning activities. The beneficial impact of a social mix in ECEC
settings on service quality is also demonstrable. This in turn predicts better
educational outcomes for poor children.
International evidence also highlights the key role of practitioner
qualifications and training. Upgrading UK childcare practitioner qualifications,
pay and conditions may lead to long-term pay-offs for government, though
initial investment may be high. Improving workforce qualifications would be
one positive step towards improving the quality of poor children’s ECEC and
improving their educational outlook.
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However, evidence on what is important for quality relates mostly to
services for children aged three and over, with less known about younger
children; an important gap in research. Another problem relates to the rather
poor quality of much ECEC research itself.
Nonetheless, by itself, even universal good quality ECEC does not ‘inoculate’
against the adverse effects of child poverty. Research confirms that multiple
approaches are needed for reducing poverty and addressing its consequences
for poor children’s (and their parents’) educational achievements, health and
safety, nutrition, housing and access to public services.
Conclusions
Currently the UK spends around £7 billion a year on a patchwork of free
entitlement, tax credits and childcare vouchers. It is estimated that an additional
0.5 per cent of UK Gross Domestic Product would need to be spent to deliver
high quality, accessible and affordable ECEC in the UK, making it an unlikely
option in the short to medium term. Nonetheless, changes in the UK’s ECEC
funding and support systems could still promote social justice for poor children
by improving their access to good quality provision, promoting short-term and
possibly longer-term positive outcomes both for their social mobility and for
their families’ economic well-being.
Evidence suggests that interrelated and interdependent policy changes
could help more poor children in the UK benefit from high quality ECEC.
Review the current structure of government intervention in ECEC
The UK early childhood education and care system is overly complex. It needs
to be simplified and made more transparent to deliver both social mobility and
economic well-being. Aspects that need to be reviewed include the promotion
of socially mixed provision, the role of local government, the qualifications, pay
and employment conditions of the ECEC workforce and levels of direct support
for providers, in order to ensure a high quality, flexible, accessible, affordable
and sustainable ECEC service.
Government support for parental childcare costs should be simplified
The level of upfront parental contributions to childcare costs needs to be
reviewed as well as the current multiple support strategies through the tax and
benefit systems. The availability of sufficient and affordable early childhood
provision interacts with local job opportunities and the tax and benefits system
in determining whether dual or single earner families with young children can
escape or avoid family poverty through paid work.
There should be no trade-off in quality between publicly supported
ECEC driven primarily by social mobility and that driven primarily by
economic well-being
Maintaining and improving quality in ECEC is especially vital if its dual purpose
is to be realised and harm avoided to the life chances of poor children, who
suffer more as a result of poor quality provision.
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Support for children’s centres should be increased
Children’s centres should be hubs of whole-family support, including more of
them offering ECEC alongside other services. In parallel, local government
should play a more prominent role in supporting service quality and access to
ECEC, especially for poor children.
Support for parents to maintain a good home learning environment
should be strengthened
A good home learning environment is more important for young children’s
development than parental education or socio-economic status. Reducing
the burden of family poverty helps parents create or maintain a good home
learning environment. This is another area in which children’s centres could
provide practical support to parents within their communities.
About the project
This review focused primarily on national empirical and survey research, official
statistics and policy documents published since 1997, coupled with international
empirical research and research reviews.
Read the full report.
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Reducing poverty in the UK
FUEL AND POVERTY
This evidence review focuses on understanding
factors associated with energy needs, fuel costs and
poverty.
Key points
• In England a new approach defines a household as fuel poor if it has both
a low income and above average fuel costs. The inclusion of an income
threshold in the measure of fuel poverty puts greater focus on the
experiences of low-income households.
• Scotland, Wales and Northern Ireland continue to define fuel poverty as
needing to spend more than 10 per cent of income on fuel to maintain
adequate warmth in the home.
• Households in fuel poverty risk not only having cold homes but cutting back
on other essentials to afford to keep warm. This can involve serious hardship
and poses risks to physical and mental health.
• An anti-poverty strategy should address:
– General retail price of fuel. Increases driven by higher wholesale prices
are hard to avoid. However, greater transparency and competition in the
market are needed, especially where energy companies are effectively
selling wholesale to themselves as retailers.
– Accessibility of the energy market. An inability or unwillingness to
engage with the energy market combined with preferences for certain
methods of payment result in some low-income households paying
higher than average fuel prices. Regulators and trusted intermediaries
must help create a fairer, more accessible energy market.
– The impact of public policies on fuel bills. Low-income consumers pay a
disproportionate share of the cost of some policies, such as the feed-in
tariff, but stand to benefit least. Public policy must ensure low-income
consumers are safeguarded.
– Energy efficiency of low-income homes. New approaches are needed
to bring homes up to a minimum standard, particularly in the private
rented sector. Referrals by health professionals and area-based
initiatives can help support those most in need.
The research
By Ian Preston and Vicki White, Centre for Sustainable Energy
Money and the cost of living
89
BACKGROUND
The rising cost of energy is a key factor putting pressure on
household budgets. The end of 2013 saw all of the largest
energy suppliers, the so-called Big 6, once again increase
their prices (by 4–11 per cent). The average household annual
energy bill was more than £1,350 in 2013.
Defining fuel poverty
The first ever UK government fuel poverty strategy in 2001 defined a
household as ‘fuel poor’ if it needed to spend more than 10 per cent of its
income on heating the home. Following an independent review of fuel poverty
in 2011–12 (the Hills Review), the Department for Energy and Climate Change
(DECC) has adopted a new definition for measuring fuel poverty in England.
This ‘low-income, high cost’ (LIHC) measure defines a household as fuel poor
if its income is below the poverty line (taking into account its required energy
costs) and its energy costs are higher than is typical for their household type.
The method of measuring fuel poverty has implications for both the number
and types of households defined as fuel poor. Under the 10 per cent definition,
around 3.2 million households were in fuel poverty in England in 2011, but
under the new LIHC definition the number is lower, at 2.4 million. While
reducing the number of households defined as fuel poor, the new definition
refocuses attention on those living in the least energy efficient or largest
homes. However, in an environment of high fuel prices, the level of fuel costs
can create issues for a wide range of low-income households. The new
definition has therefore faced criticism for excluding some low-income
households who live in smaller or more efficient homes.
The impact of fuel poverty
Research has shown that low-income households are often determined to
manage their fuel bills and expenditure on other essentials through very tight
budgeting and cost-cutting. However, this perceived ‘managing’ can give way
to an inability to cope. One outcome of unaffordable fuel bills is that households
restrict their heating and live miserably in a cold home, with consequences for
physical and mental health and social well-being. High fuel bills may also lead a
household to sacrifice spending on other essentials, including food, to a degree
that increases hardship and has further health implications. The sharp relative
increase in fuel prices in recent years has exacerbated this impact of fuel
poverty on the overall living standards of low-income households. The poorest
fifth of households spent 11 per cent of their income on household energy
in 2012, up from 8 per cent in 2002, while the richest fifth spent 3 per cent in
2012, up from 2 per cent in 2002.
Four underlying issues to address
The main components which determine whether a household is in fuel poverty
are: the cost of fuel; household income; and the energy efficiency of the
property (which affects how much energy is needed to maintain adequate
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warmth in the home). Policies to address fuel poverty have often focused on
energy efficiency, which continues to be important. However, low-income
households’ experience of fuel poverty is influenced by how much they pay for
their fuel, and not just how much they ‘need’ to use. In identifying policy options
for addressing the issues, it is useful to consider the many factors affecting
household vulnerability to fuel poverty. Solutions need to be sought in four
aspects of policy and practice to address:
1. The overall cost of fuel. World demand and other influences have
contributed to the rise in energy prices. However, many questions have
been raised about the basis of retail energy prices. The ‘vertical integration’
of the UK energy market (the fact that the same companies generate
energy, sell it on the wholesale market and buy it for retail distribution), and
the much higher profits made in generation compared to distribution, raise
questions about whether markets are sufficiently competitive. Greater
transparency is needed to instil confidence that households are not paying
too much for their energy.
2. The fairness and accessibility of retail markets. The energy market is failing
to provide for the needs of low-income consumers. This is partly because
some products disproportionately used by low-income households – such
as prepayment meters – cost more per unit. Low-income households may
also be excluded from taking advantage of the best deals due to the
complexity of the market (e.g. lack of understanding, wide range of different
tariffs and offers available); risk-aversion (e.g. fearing switching will result in
them ending up on a worse deal); less financial flexibility (e.g. a bank account
is required to take account of direct debit offers); reliance on more
expensive fuels, such as electricity for heating (more common among
low-income households) and therefore excluded from dual fuel offers; lack
of access to information to compare prices (e.g. the Internet). Reducing the
‘poverty premium’ of energy costs make a significant contribution to
tackling fuel poverty.
3. The impact of public subsidies and obligations. Government action on
energy efficiency and climate change has varying effects on the cost of fuel
for low-income households. Policies aimed at improving the energy
efficiency of the housing stock can help reduce energy demand and
therefore bills, while policy costs passed through to consumers will increase
their bills. The overall policy design – who it is targeted at, what it delivers
and how it is paid for – is critical. Some policies – such as the Warm Homes
Discount – are directed and (crucially) well-targeted at helping low-income
consumers. Others – such as the feed-in tariff – stand to benefit betteroff households to a greater extent (e.g. due to ability to take advantage of
the offer), but are paid for by all consumers through electricity bills,
disproportionately burdening low-income households. It is vital to recognise
these different impacts, and to take steps to compensate low-income
households where they face a disproportionate cost from policies aimed at
reducing carbon emissions.
4. Improved home energy efficiency. Despite initiatives seeking to reduce
heating bills, particularly for low-income households, poor energy efficiency
remains widespread, especially in the private rented sector where mandatory
minimum standards of efficiency should be used to force improvements.
In addition, restructuring the approach to targeting and delivering energy
efficiency schemes, for example through area-based approaches focused
on areas of high social deprivation, may help yield economies of scale and
ensure the success of such initiatives is less reliant on individual households.
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91
Recommendations
This study supports the recommendation of the Hills Review for a comprehensive
cross-departmental strategy to tackle fuel poverty. The strategy should at a
minimum involve: DECC (energy policy); Ofgem (consumer protection and
policy delivery); Department of Health (health and well-being); Department for
Work and Pensions (uptake of benefits, targeting and access to employment);
HMRC (targeting); Department for Communities and Local Government; and
Department for Education (improved school attainment).
The following measures and programme approaches are recommended to
address fuel poverty.
• Winter warmth – A fuel poverty alleviation programme, focused on
improving standards of energy efficiency in the homes of the fuel poor
(some 4.5 million under the 10 per cent definition in the UK) to a minimum
level (Energy Performance Certificate band B or C) by 2030. Initially the
policy would use the Index of Multiple Deprivation (IMD) Income Domain to
target the poorest areas through area-based schemes.
• Greener homes – A programme targeting the ‘able-to-pay’, by providing
access to a range of finance for the installation of energy efficiency and low
carbon measures (with Green Deal being one option). This programme
needs to support the remaining 20 million-plus households (those not
targeted/eligible for the Winter warmth programme) through a range of
fiscal measures to improve standards of energy efficiency and reduce
emissions across the housing stock.
• Healthy homes – Considering the needs of the energy vulnerable (those
who may not be fuel poor but are vulnerable to facing high energy bills and
cold homes) this programme would see health professionals prescribe a
basic level of insulation and heating control for those with cold-related
illnesses. This programme should reduce demand for the health service.
• Retail market transformation – Improving fairness in the energy market,
by implementing further market reform to increase transparency and
competition, especially for pre-payment meter customers who could
benefit significantly from smart meters. In particular focusing on improved
transparency on supplier profits and clearer presentation of components of
energy costs.
• Trusted intermediaries – Improving accessibility to the energy market
by developing new methods for delivering switching services, with new
models for collective switching programmes and approaches for managing
customer utility bills.
• Benefit maximisation – Ensuring income is maximised by providing
benefits checks for those helped through the Winter warmth or Healthy
homes programmes.
About the project
This study applied an ‘expert informed’ Rapid Evidence Assessment (REA)
approach to review research on a broad range of factors associated with
household energy needs, fuel costs and poverty. The expert-informed REA
approach combined expert knowledge of relevant information sources with a
focused search of peer-reviewed and grey literature.
Read the full report.
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Reducing poverty in the UK
SAVINGS, ASSETS,
WEALTH AND
POVERTY
This review examines international evidence to see
if savings, assets and wealth change people’s attitudes
and help lift people out of poverty.
Key points
• Approximately 20 per cent of households in the UK are both income and
asset poor.
• 1.6 per cent of households have zero or negative wealth.
• A quarter of low-income families do not save in any form. Soft compulsion
and match funding are better incentives to encourage saving among
low-income households than tax breaks, and automatic transfers of spare
funds into other savings schemes (e.g. from education to pension funds)
may help increase saving behaviour. But a lack of spare income among very
low-income families means that saving is relatively unlikely even with strong
incentives.
• British pensioners have one of the highest poverty rates in Europe, and
poverty in old age is related to working-age poverty. The most effective
schemes in reducing poverty in later life have a strong basic pension backed
by mandatory contributions into a public or private pension.
• Access to housing wealth may postpone financial difficulties, but owners
who withdraw equity are more likely to experience mortgage arrears or
repossession. Homes-owners have consistently accounted for around half
of households experiencing poverty.
• Intergenerational transfers tend to help low-income households in
transitory poverty rather than those in persistent poverty.
• There is a lack of evidence that initiatives encourage asset or wealth
accumulation beyond that which may otherwise occur, or that this is
sustained at a level that actually helps lift people out of poverty.
• There is a lack of evidence of an ‘asset effect’ whereby asset ownership
influences behaviour and attitudes. Asset-based schemes should build on a
robust safety net, not be a substitute for it.
The research
By Beverley A Searle and Stephan Köppe, University of Dundee
Money and the cost of living
93
BACKGROUND
In theory savings, assets and wealth can provide a safety net
against unexpected expenses or drops in income. It is also
argued that holding assets changes people’s thinking; they
become more responsible and forward-looking.
There is a lot of theory about how access to savings, assets and wealth can lift
people out of poverty. Assets can provide financial income, as well as income in
kind. Savings, assets and wealth can act as insurance, providing a cushion from
unforeseen expenses or declines in income in later life. Access to assets can
give people greater control and provide the infrastructure from which other
financial resources will flow. Ownership of assets, it is also argued, changes
individuals’ behaviour, and they will become more responsible citizens and
more forward-looking in their financial planning: this hypothesised benefit,
which is on top of their financial value, is referred to as an asset effect.
Wealth distribution in Great Britain
In Great Britain, the level at which most data is available, individuals who are
in the bottom two deciles in terms of their income, are also asset poor. The
proportion of households with little or no savings is highest among low-income
households and decreases as you move up the income scale. The British
population is more vulnerable to financial emergencies than people in other
countries, and about half the population would struggle to come up with
£1,500 in 30 days. In Great Britain 1.6 per cent of households have zero or
negative wealth.
Savings
Financial exclusion is an important issue for people living in poverty. A quarter
of lower-income households in the UK have no form of savings. Five per cent
do not have or use any financial products or services.
Tax incentives to encourage saving are ineffective in alleviating poverty.
Matched funding is more effective for low-income households than tax breaks.
Automatic transfers of funds between schemes may also increase saving.
Evaluation of the Savings Gateway initiative in the UK and other similar
schemes – which offered an initial endowment and means-tested match
funding to savings – suggests this sort of approach is promising, although even
with its deliberate attempt to target low-income families it was difficult to
reach those on the lowest incomes. While people on low incomes will accept
and invest the initial endowment offered through such schemes, they are
unlikely to add to it – people need to have spare income in order to save.
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Providing schemes with instant and easy access is important. People on low
incomes are cautious of using savings schemes that have restricted withdrawal,
and are reluctant to lock away money. Schemes also need to provide appropriate
and simple information and should not set deadlines for matching contributions
from those with very low savings; this is counter-productive to improving the
long-term well-being of people experiencing poverty. Evidence suggests
programmes that include provision of social support and financial education
are effective, although they can be costly. People on low incomes may borrow
money to protect their savings. Some credit union schemes have trialled soft
compulsion, whereby people are encouraged to include an additional amount
for saving when they repay a loan. This has not yet been fully evaluated but
could offer an effective way of breaking the cycle of debt among low-income
households.
Pensions
In 2012, 4 to 30 per cent of pensioners experienced poverty (60 per cent of
median income, before housing costs) in Europe. British pensioners have one
of the highest poverty rates (17 per cent in 2012, ninth out of 31 countries).
Severe poverty (40 per cent of median income) in old age is related to
working-age poverty. Reliance on private pension schemes risks income
inequality being replicated in later life. Evidence suggests the best povertyreducing schemes have a strong basic pension backed by mandatory
contributions to an earnings-related public or private pension. Automatic
enrolment, matching contributions and equal access to pension schemes are
positive steps towards poverty alleviation in later life. Take-up still remains
lower among low-income workers, and without compulsion they remain at risk
of receiving a pension which will keep them below the poverty line during
retirement.
Housing
The sale of social housing is a key international asset transfer initiative. In the
UK around 30 per cent of tenants have exercised their right to buy (RTB) with
2.8 million homes being sold. Evidence shows that the poorest households do
not exercise the RTB.
There is little evidence to support the existence of an asset effect arising
from home ownership. The evidence shows that a sense of control rises with
income levels, and precedes home-ownership rather than arising from it. Little
evidence exists on what happened to social tenants who bought their home
and the impact this has on their financial circumstances or attitude towards
financial management. Those who were better off and lived in areas of higher
house prices were more likely to benefit from selling their home having
exercised the RTB. Rising house prices provided a disincentive to buy where
tenants felt they were paying more for their house than their neighbours had.
Money and the cost of living
95
The asset value of housing may provide some support for incomes in later
life, but poor households have limited options for using their housing assets.
Higher income households and those living in regions with higher house prices
are more likely to release equity. Equity release is of limited use if there is not
much value in your house. Equity withdrawal can help people finding it difficult
to get by, but people who withdraw equity are more likely to have mortgage
arrears or be repossessed. Gaining an asset through home-ownership is no
guarantee of being lifted out of poverty; owners consistently account for over
half of those in persistent income poverty.
Intergenerational transfers
Asset wealth can be shared across generations. However, only those with asset
wealth can pass it on, and can afford to pass it to children when it is needed.
Parents in poor households are a third less likely to make regular financial
contributions to children than parents in non-poor households. However
low-income adults get more regular financial help from parents than non-poor
adults, although intergenerational transfers tend to help low-income
households in transitory poverty rather than those in persistent poverty.
Wealthier parents are more likely to leave an inheritance.
Risks of savings, assets and wealth as an anti-poverty
strategy
Financial exclusion is a key barrier to wealth accumulation for the poorest in
society. Encouraging asset ownership introduces people into mainstream
financial systems, but also exposes them to risks if housing assets lose value as
house prices fall, pensions lose value if there is a downturn in the stock market,
or people lose savings if high street banks go bust. These risks can be mitigated
through government supported protection, guaranteed returns, or insurance.
These guarantees come with a cost and reduce the potential benefits or gains
made through market systems, compared with public income replacement
schemes.
Conclusion
The extent to which assets, savings and wealth can alleviate poverty is not well
recorded. Overall, there is little evidence for an asset effect on reducing
poverty or decreasing income inequality. There is a lack of evidence that
initiatives encourage asset or wealth accumulation beyond that which may
otherwise occur, and a lack of evidence that this is sustained at a level that
actually helps lift people out of poverty. Overall, asset based interventions
favour higher-income households rather than low-income households, with
those on the very lowest incomes least likely to engage.
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Reducing poverty in the UK
A more effective system would be one that gives people the basic support
they need on which they can build their assets and wealth. A poverty alleviation
programme, that would be truly transformative rather than just providing life
support, would only arise from an asset-building welfare system. Such schemes
would support asset accumulation that builds on top of a robust safety net. The
evidence suggests that it should:
• be inclusive so that low-income earners and not just high-income earners
benefit from schemes;
• include soft compulsion or matched funding, to encourage low-income
households to open and use savings accounts;
• include automatic transfers and link contributions to earnings to encourage
low-income earners to join pension schemes;
• include products that are easy to understand and flexible across the life
course;
• ensure asset and other social policies are integrated in a comprehensive
framework of mutual supporting incentives;
• ensure that basic minimum standards are met through universal welfare
schemes and services so that assets build on top of these, not provide a
substitute for them.
About the project
The review identified key theoretical and empirical literature. This was
supported by searches of bibliographic databases and government sources for
studies on poverty and asset schemes. It focuses on evidence from the UK,
Europe and America.
Read the full report.
Money and the cost of living
97
THE COST OF LIVING
AND POVERTY
This report looks at how the relationship between
poverty and the cost of living differs between types of
goods, markets and population groups, and considers
the policy options.
Key points
• Essential goods and services to meet basic needs and participate in society
take up a relatively larger share of low-income budgets.
• The price of essential goods and services has risen relatively quickly in
recent years, meaning the cost of living has risen faster for those on low
incomes. Some groups – such as disabled people and those living in rural
areas – have specific or enhanced costs of living as a result of additional
costs, higher prices, or higher quantities.
• Low-income individuals are less likely to be ‘active consumers’ switching
suppliers and shopping around, partly due to a lack of access to ‘enabling
goods’ that give consumers advantages, e.g. a bank account or internet
access.
• Public policy has a direct influence on the cost of living, for example through
the level of indirect taxes such as VAT, direct price regulation and through
stewardship of competition in the market. Essential costs may be reduced
or compensated for by, for example, discounts for targeted energy
customers, the universal service obligation in the telecoms sector or money
to offset some costs (such as housing and childcare).
• Regulators are increasingly using the concept of ‘consumer vulnerability’
– a more dynamic and flexible concept than that of ‘disadvantaged groups’.
However there are concerns over how it can be used in practice, and how
poverty and low income fit into this framework.
• Policy options can target the cost of living and its link to poverty – focusing
on low-income households, high-cost households or the whole population
but with particular benefits to either low-income or high-cost groups.
The research
By Adam Tinson, Peter Kenway, Sabrina Bushe and Tom MacInnes, npi
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Reducing poverty in the UK
BACKGROUND
Most discussion of poverty centres on incomes and the policy
solutions are assumed to lie with individuals and government.
The cost of living is an important extension to this discussion,
bringing in different markets and widening the group of actors
to include companies and regulators.
How do low-income budgets differ?
The concept of essential goods and services, such as those set out in JRF’s
Minimum Income Standard (MIS), is common across developed countries.
In the UK, a higher proportion of expenditure by low-income households is on
essential goods and services compared with better-off households. This results
in a differing inflation rate. In recent years, those with low incomes have tended
to experience a higher rate of inflation, although this was not the case in
general between the 1970s and the 2000s.
There may also be a different relationship between costs and poverty
among low-income households. For example, some groups face ‘special’ and
enhanced costs. Special costs are those that other groups do not face;
enhanced costs are costs that other people have, but not to such a large
degree. For example, a disabled person with restricted mobility faces special
costs of home adaptations, and enhanced costs of heating a home they spend
more time in. Those in rural areas have special costs to some extent in the
form of higher transport needs and may have enhanced costs, for example
through higher heating bills.
The poverty premium
The poverty premium is the idea that ‘the poor pay more’. This may include, for
example, paying for energy through more expensive prepayment meters,
which are used mainly by low-income households; paying more due to a lack
of banking facilities for direct debit payments; paying more in fixed costs due
to low consumption.
This poverty premium does not only affect those in poverty, nor is its effect
consistent. For example, people in poverty are more likely to live in deprived
areas, where home contents insurance premiums are higher, but most people
in poverty do not live in such areas, and most people living in those areas are
not in poverty. The poverty premium often relates to a higher chance of paying
a higher price, often associated with something related to poverty but not
necessarily poverty itself. Being in poverty may also mean lacking the resources
to get around the problem – for example the ability to afford transport to
a supermarket rather than relying on higher cost local shops.
Despite numerous examples of a poverty premium, it is difficult to quantify.
There have been no estimates of an ‘average’ effect or the numbers of
households that might be affected.
Money and the cost of living
99
Public policy and the cost of living
Almost all economic decisions made by government and business have the
potential to affect people’s cost of living. For example, trade policies can raise
or lower the price of imported goods. Planning policies can raise or lower the
cost of land, and so the cost of housing.
This research identifies the policy decisions made by government or public
bodies that have a direct and immediate influence on the cost of some essential
items. This takes various forms including: housing benefits; restrictions on the
uprating of water and rail charges; and stewardship of the market to ensure
competition (see Table 1).
Government intervention can increase as well as reduce the cost of
essentials. There is some debate in the literature over whether indirect taxes,
such as VAT and excise duties, weigh more heavily on low-income households.
These policies do not apply exclusively to people in poverty, and indirect
taxation represents a smaller share of the minimum socially acceptable budget
than of average expenditure – partly because some key goods like food and
energy are subject to either no, or reduced, VAT. Moreover, the costs of some
key essentials, such as food and energy, are influenced by global market factors
as well as domestic policy.
Table 1 – Classifying cost of living policies relevant to people in poverty
Category of
intervention
Redistribution
and compensation
Reduction
and control
Market
functioning
Category
description
Compensation for
costs incurred;
includes parts of the
social security or tax
systems
Reduced or controlled
costs (through prices
or quantities that
need to be consumed)
Measures which
ensure the
competitiveness and
smooth operation
of various markets
Examples
Housing
(e.g. housing benefit)
Water
(e.g. voluntary tariffs)
Childcare
(e.g. childcare
element of tax
credits)
Council Tax
(e.g. setting and
reduction schemes)
Heating and electricity
(e.g. tariff
Heating and electricity simplification)
(e.g. price regulation
Food and drink
for distribution
(e.g. investigation
and transmission;
into price collusion)
Warm Homes
Communications
Discount; the Energy (e.g. Universal Service
Companies Obligation) Obligation, monitoring
Transport
(e.g. price controls
on regulated fares)
of competition)
Transport
(e.g. competitive
tendering for bus
services)
Financial services
(e.g. investigation into
high interest credit)
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Reducing poverty in the UK
The role of companies and regulators
Regulators are increasingly using the concept of ‘consumer vulnerability’,
meaning individuals in vulnerable situations that may affect their ability to
engage in markets. It is a more dynamic and flexible concept than that of
‘disadvantaged groups’ which it replaces. There are concerns over how it can
be used in practice, and how poverty and low income fit into this framework.
However, it is clearly a concept with which an anti-poverty strategy could
engage since it raises the question of whether regulators should intervene
in the market only for the general consumer, or whether they should also
intervene for particular types of consumer.
Regulators like Ofcom, Ofgem and the FCA are leading the field, seeking to
move companies from a reactive to a strategic approach to dealing with issues
of consumer vulnerability. This involves working closely with individual
companies, consumer groups and other bodies to empower those tasked with
addressing consumer vulnerability issues and facilitating co-ordination across
regulators and companies.
Regulators monitoring how markets are working for different groups can
also help to reveal which parts of the market are not well served, helping
companies to identify commercial opportunities for addressing cost and access
issues. Further promotion of good practice among companies could also help.
As a possible type of policy, consideration could be given to the development
of modern Universal Service Obligations (USOs). While there is a USO for
phone lines, there is no equivalent for the Internet, although the Internet is an
MIS necessity and MIS could be used as a benchmark.
The role of individuals and the third sector
People with low incomes are less likely to have access to so-called ‘enabling
goods’ which help people get better and cheaper deals, e.g. bank accounts
which allow customers to pay bills by direct debit (often a cheaper method) or
a broadband connection that allows online shopping and price comparisons.
Measures to increase access can be effective, but they are unlikely to
be sufficient as there is a need for products that better suit the needs of
low-income households.
The third sector has a role to play here, and organisations have responded
to markets that do not work well for low-income households, for example
through the establishment of food and community energy projects. In some
cases new products have been developed to better serve the needs of certain
groups, including low-income families.
Money and the cost of living
101
Recommendations for an anti-poverty strategy
To address the cost of living as part of an anti-poverty strategy requires
engagement with a range of players including companies, regulators and third
sector organisations. Public policy alone cannot address the issue.
There are also tactical decisions to be made about how an anti-poverty
strategy should approach cost of living issues. Table 2 presents two types of
household – low-income and high-cost – and whether the policies that could
be applied are specific to the households in the group or whether they apply
generally but with a greater impact on those in low income.
Table 2 – Policy interventions for different types of household
Low-income households
Households with specific
higher costs
Examples of costs specific
to the group
A – Cuts in public subsidies B – Costs associated with
and discounts targeted at
disability or living in rural
low-income families
areas
Examples of costs
affecting whole population
which affect the group
disproportionately
C – Uprating of transport
and water costs,
consumption taxes
D – Costs associated with
consumer vulnerability or
lacking enabling goods
Much activity and campaigning against poverty focuses on Group A, but there
is a need for greater focus on special and/or enhanced costs too (group B),
among whom low-income households may be over-represented. There is
also a case for thinking about costs that affect the whole population but have
a greater impact on those with low incomes or higher costs (groups C and D).
This may be a way of building a broader coalition for action.
About the project
This project consisted of a literature review covering both the UK and
international evidence.
Read the full report.
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Reducing poverty in the UK
TRANSPORT AND
POVERTY
This study explores how transport affects poverty and
considers ways of alleviating it.
Key points
• The cost of travel can be a barrier to employment and training. Schemes
such as discounted bus travel for unemployed people and free bus travel to
college may help. Offering mopeds and scooters may help young people in
rural areas to reach jobs, employment and training. It should be noted,
however, that there has been limited robust evaluation of such schemes.
• Affordability of transport is important but other aspects such as time and
the physical and mental capabilities needed to use different transport
options also need to be considered.
• People on higher incomes with no access to a car may be transport poor
due to the poor quality of public transport. For example, the limited
frequency and timetable constraints of public transport can make it difficult
for people without access to a car to co-ordinate work, childcare and other
activities.
• Local travel provision in rural areas needs to be more flexible, using taxis,
private hire vehicles and volunteer drivers to fill the gaps where bus services
are not viable.
• Older people with low incomes have a higher take-up of concessionary bus
passes than wealthier people.
• There is evidence that those on low incomes or living in deprived
neighbourhoods are more adversely affected by the impacts of transport
than those living in more affluent neighbourhoods. These differences
include an increased risk of road traffic injury and higher exposure rates to
pollutants.
• The evaluation of transport schemes does not sufficiently consider the
distributional impacts of the schemes and their impacts on those suffering
from lack of adequate access.
The research
By Helena Titheridge, Roger Mackett, Nicola Christie, Daniel Hernandez Oviedo and
Runing Ye, UCL Centre for Transport Studies
Money and the cost of living
103
BACKGROUND
Transport offers the means to reach essential opportunities
such as jobs, education, shops and friends which affect the
quality of life. Thus it can play an important role in alleviating
poverty.
How are transport and poverty linked?
Reduced access to services and facilities such as health, work and education,
may be related to a lack of mobility. Poorer people can face geographic barriers
to accessing opportunities, worsened by lack of resources and skills to
overcome them. Lack of transport creates disadvantages when jobs, services
and facilities are separated from residential areas, and where there are physical
limitations, time constraints and lack of resources including financial constraints.
Lack of suitable transport can lead to social exclusion.
Poverty and mobility
People living in households in the lowest income quintile travel less than half
the distance of those in the highest income quintile and make fewer trips per
week. People on low incomes on average make more trips on foot and by bus
than other people.
Just over half of households in the lowest income quintile have a car
compared with over 90 per cent of households in the highest two income
quintiles (although inability to afford a car is not the only reason for lack of car
ownership). However, car ownership among households within the lowest
income quintile has grown steadily over the last 15 years while for the highest
two income quintiles, car ownership has been relatively stable. Public transport
fares (bus and rail) have risen faster than the cost of living, while the cost of
owning and running a motor vehicle has risen in line with the cost of living.
Considerations such as the need to carry heavy bags, personal safety, time
constraints and physical capabilities mean walking or public transport are not
always suitable options. For low-income students full participation in education
activities is often difficult because journeys are unaffordable and the expense
of ‘one off’ payments for travelcards deters uptake.
The impact of transport distribution
The concentration of bus operating companies on high-demand corridors,
which usually serve large numbers of commuters, means peripheral and rural
routes have been neglected. Carless people in rural areas have poor access to
key services, poor bus frequencies and spend more on travel compared with
car owners or carless urban residents. Public transport does not meet the
needs of many carless pensioners, leading to exclusion. Many rely on support
networks revealing the importance of lift-giving.
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Reducing poverty in the UK
The poor quality of the urban environment in deprived areas affects people’s
quality of life, especially for parents with young children, who have long walking
journeys. It also limits children’s recreation.
Road users, especially child pedestrians and cyclists, from the most deprived
neighbourhoods are much more likely to be killed or injured than those from
the most affluent neighbourhoods. This risk relates to reliance on walking and
cycling, living in old urban areas with high traffic volumes and vehicle speeds,
anti-social behaviour by drivers and lack of access to good quality public
transport and open spaces.
Low-income people’s concerns about crime and anti-social behaviour
affect their use of public transport and how safe they feel walking after dark.
Parents in deprived areas restrict their children’s travel because of the real and
perceived fear of being involved in a collision.
Transport poverty
The term transport poverty is generally used to describe the situation where
people are struggling to afford the costs of running a car or to pay for the
travel needed to maintain an acceptable standard of living.
Assuming that a definition of transport poverty is desirable and can be
agreed, the complexity of the transport needs of individuals and the suitability
of different options make it difficult to create a sensible measure of transport
poverty.
Simple measures of transport poverty that focus solely on transport
expenditure relative to income are not appropriate because those on low
incomes spend a smaller proportion of their income on transport compared
with those on higher incomes. This is in part because there is a luxury element
to transport. Those on higher incomes may choose to buy more expensive
cars, or travel first class.
However, there is general agreement that it is desirable to identify people
experiencing difficulties accessing key activities and to evaluate the impact
of transport actions on vulnerable groups.
Governance, regulation and financing of the transport
system
In the UK, transport is supplied by both public and private sectors. Bus operators
provide services in two ways: either commercially or under contract to local
government. In London, bus services are operated under franchise agreements
which gives Transport for London control over service routes, frequency,
quality and fares which means that bus services can be provided to address
social issues. Rail services are generally provided under franchises let by the
Department for Transport in England and Wales or by the Scottish Parliament
in Scotland. This means that social issues can only be addressed if they are
incorporated into the franchise agreements by the state. In Northern Ireland
a state-owned operation is responsible for all rail services in the province and
almost all bus services.
Money and the cost of living
105
Financing for local government initiatives must be raised locally or through
application to specific schemes such as the Local Sustainable Transport Fund.
This makes financing new schemes difficult and makes existing schemes
vulnerable to cuts.
Major transport decisions are made by government on the basis of the ratio
of benefits to costs. Economic benefits appraised include aggregate travel time
savings, reductions in travel costs and accessibility improvements. Social and
distributional impacts are considered as part of a subsidiary appraisal process
and are not incorporated into the benefit-cost ratio calculations.
Transport initiatives to reduce poverty
While the focus of this report is transport, it should not be forgotten that,
in some cases, it may be better to take services to people, particularly in rural
areas, rather than people to services. Examples include travelling pharmacists,
mobile libraries and GP surgeries held in village halls.
One way to address poverty is to reduce travel costs so unemployed people
can find jobs and travel to work. In London the Jobcentre Plus Travel Discount
Card provides half fares to people who have been unemployed for over three
months. West Yorkshire Public Transport Executive’s Travel to Work project
offered jobseekers free travel for the first month of employment plus
personalised travel information.
Wheels 2 Work schemes provide mopeds or scooters to individuals,
particularly young people in rural areas, who are unable to access training,
employment or education due to a lack of suitable public or private transport,
at a cost of about £20 per week.
All children up to the age of 16 are entitled to free travel to school under
certain conditions. Greater provision is made for children from low-income
households. Some local authorities extend financial help to children above the
age of 16 to travel to school and college.
Concessionary travel passes offer free local bus travel to all older people
and those with disabilities. There is a higher take-up rate of the passes by those
with low incomes, mainly because they tend to have lower car ownership.
Cutbacks in public expenditure and falling revenues are causing reductions
in bus services, particularly in rural areas and more flexible ways of providing
local public transport are required. The owners of private hire vehicles can use
their vehicles to provide local bus services, providing more flexible services
than the conventional ‘exclusive hiring’ by a single passenger. Taxi vouchers
can be offered to people eligible for concessionary travel passes but who have
no means of making local trips. Taxis could be better integrated into local
transport provision if taxi licensing powers were based with local transport
authorities. Another way of extending local transport provision is through
volunteer drivers. The Retired and Senior Volunteer Programme provides
schemes where volunteers aged 50+ provide transport for people to attend
appointments and collect repeat prescriptions. The scheme could be extended,
with suitable funding, to provide a range of transport services, particularly
in rural areas.
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Reducing poverty in the UK
Conclusions
The transport and poverty problem is more complex than just being about
having a low income and being carless. Affordability of transport is important
but other aspects, such as time and the physical and mental capabilities needed
to make use of different transport options, also need to be considered. The
limited frequency of public transport can make it difficult for people without
access to a car to co-ordinate work, childcare and other activities. Those living
in deprived areas are more adversely affected by the impacts of transport than
those living in more affluent neighbourhoods. Cutbacks in public expenditure
and falling revenues which are causing reductions in bus services are likely to
have an impact on people with low incomes and those without access to a car,
particularly in rural areas. More flexible ways of providing local public transport
are required. These could be combinations of buses, community transport,
taxis and volunteer drivers.
About the project
This research reviewed evidence on the links between transport and poverty
in the UK and was carried out by Helena Titheridge, Roger Mackett, Nicola
Christie, Daniel Hernandez Oviedo and Runing Ye from the Centre for
Transport Studies at UCL between November 2013 and March 2014. The
research also reviewed the evidence pertaining to a number of transport
schemes that could improve access to opportunities for people on low incomes.
Read the full report.
Money and the cost of living
107
EDUCATION,
PERSONAL
RELATIONSHIPS
AND
COMMUNITY
CONTENTS
Foreword
110
Adult and tertiary education and poverty
112
Advice, support and poverty
117
Family structure and poverty
122
Personal relationships and poverty
126
Primary and secondary education and poverty
130
Social networks and poverty
135
The NHS and poverty
140
Education, personal relationships and community
109
FOREWORD
When we think about policies that might best tackle poverty, we tend to focus
on institutions – the health service, the welfare state, schools. But personal
and family relationships, and the nature of the wider community in which we
live, also affect our lives, although it is harder to respond effectively through
policy to the drivers or consequences of poverty in these domains.
The seven reviews in this section appear to divide straightforwardly into
those that deal with institutions – primary education, adult and tertiary
education, and health – and those that deal with less ‘institutional’ personal
relationships – family structure, personal relationships and social networks.
The review left out of this otherwise tidy distinction – advice and support
– indicates both why it is not always straightforward to separate institutional
and personal or community factors, and also the policy challenges in responding
directly and effectively to the latter. As the advice review makes clear, key life
events such as the birth of a child, the loss of a job or a relationship breakdown
have a significant effect on the advice needs of people in poverty. Advice is
provided within ‘institutions’ and a major recommendation of the review is that
commissioning strategies need to do more to ensure that these institutions
and their practices respond to these underlying causes.
Take for example the social networks review. Policy-makers cannot force
people to interact in particular ways, but policy can change the nature of
institutions, particularly in deprived areas where institutional investment is
often weaker. Hence the recommendation to maintain and further support
internet access, schools, libraries, parks and community centres. As this
recommendation indicates, the more institutional factors affecting people in
poverty also have a role to play in responding to the personal and community
factors that can affect, or be affected by, poverty.
These reviews indicate a more challenging policy proposition: we need a
more expansive notion of what counts as ‘policy’ and more radical schemes
that allow community organisations to respond in a targeted way to local needs
(as in the higher education recommendation for a more localised approach
that better responds to where learners ‘are’, including how they think and feel
about themselves). Rather than being the solution, sometimes institutions are
the problem, and so we may need to seek solutions outside the obvious policy
routes to make any anti-poverty strategy a reality.
These reviews also indicate how institutions themselves can play a major
role in creating needs. The advice review notes the case of welfare policy
changes while the family structure and personal relationships reviews both
highlight childcare and family-related benefits. This common theme suggests
that recommendations on, for example, universal credit and childcare, need to
consider how institutions interact with the various experiences, relationships
and communities where people more at risk of poverty are likely to live.
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Reducing poverty in the UK
This may sound woolly, but the reviews have some clear recommendations
for Britain’s key institutions: that the NHS becomes a living wage employer,
that governments stop focusing on school differentiation and develop a
universal curriculum, that employers offer equal and non-transferable parental
leave, and that government should maintain the relative value of child benefit
and pensions.
Three final points emerge across the reviews. First, in many areas we need
better evidence of what works in addressing poverty, particularly in the case of
personal relationships and family structure, but even in the case of education
and advice. Second, there is tension between targeted and universal policies,
which sometimes also emerges in terms of the value of ‘mixing’. While the
evidence on mixing is weak in terms of directly lifting people out of poverty,
the social networks and health reviews both suggest that where people mix
they are more likely to develop sympathy for people unlike themselves, and so
arguably to support anti-poverty policies. Third, responding only to the
particular drivers or consequences in one of these reviews is unlikely to be
effective without a wider anti-poverty strategy. This, of course, is what the
other reviews in JRF’s programme can provide, and is the wider ambition of
the anti-poverty strategy to be published in 2015.
Omar Khan
Director at the Runnymede Trust
Education, personal relationships and community
111
ADULT AND TERTIARY
EDUCATION AND
POVERTY
This report explores how economically poor young
people and adults can access and use post-compulsory
education as a route to good quality employment.
Key points
• Problem: a lack of meaningful, recognised opportunities for those wishing
to pursue adult and tertiary educational routes out of poverty.
Solution: investment in paid, work-based initiatives and educational
partnerships similar to those available in so-called ‘apprenticeship countries’.
• Problem: mismatch between skills and qualifications of young people and
those rewarded in the wider job market.
Solution: flexible training pathways that provide high-quality academic and
vocational training that is more sensitive to local economic needs.
• Problem: social disadvantages, such a negative prior educational experience,
low confidence, poor health, and limited information, advice and guidance
which lock negative attitudes and practices in place from an early age.
Solution: targeted, brokered outreach work and a provision that begins
where learners ‘are’, not only in terms of their knowledge, skills and
qualifications but also in terms of how they think and feel about themselves.
• Problem: national policy that disregards local, life-shaping interactions
between individual young people and the local context.
Solution: a more localised or ‘ecological’ approach, particular for young
people not in employment, education or training (NEETs), and adult learners.
• Problem: gaps in higher education participation rates between young
people from different socio-economic backgrounds.
Solution: more ambitious widening participation targets, accompanied by
rigorously evaluated, long-term outreach initiatives that target children
from the most economically disadvantaged backgrounds from earlier ages.
• Problem: universities working individually and in competition to widen
participation rather than collectively and in collaboration.
Solution: long-term funding for new combined outreach initiatives, and
the introduction of measures that reflect the ‘greater good’ of widening
participation rather than placing universities in opposition with one another.
The research
By a team at the Manchester Institute of Education, University of Manchester
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Reducing poverty in the UK
BACKGROUND
There are two broad problems with post-compulsory education
as a route to good quality employment: the rapidly changing
labour market (behind which adult and tertiary provision often
lags) and an education system that is often insensitive to
young people’s and adults’ individual capacity and willingness
to engage in further learning and/or training.
This research focuses on the two intersecting aspects of adult and tertiary
education which affect engagement with the labour market:
• the changing structures of the labour market and of the nature, form and
structure of adult and tertiary education;
• the extent to which post-compulsory education responds to young people’s
and adults’ capacity and willingness to engage with education and training,
and the extent to which it also helps to create appropriate routes into the
labour market.
What do we know about educational qualifications and
wider benefits of learning which appear to help people
out of poverty?
In general terms, improved qualifications lead to better wages, and this can lift
people out of poverty. However there are clear differences in the ways in
which qualifications of different kinds and levels are likely to have an effect on
employment prospects in particular places. In addition, the desire to get poor
young people and adults into some sort of education/training has led to a focus
on low-level, narrowly conceptualised programmes which do not produce
tradable qualifications or lead directly to further education or high-quality
employment. The involvement of employers in designing qualifications has,
at times, led to narrower provision.
What do we know about the practices of employers and
the labour market and the implications for adult and
tertiary education and poverty?
Different kinds of labour market can dominate different areas, but young
people and adults experiencing the greatest levels of concentrated poverty are
often found in areas with a predominance of low skills and low pay. While there
may be well-paid, high-status jobs, there tends to be relatively few, and the
nature and type of qualifications and skills needed to get them are beyond the
expectations of many poor young people and adults. The much larger
percentage of jobs are poorly paid, insecure, repetitive and lacking autonomy.
Qualifications are often not required and there is little prospect of such jobs
offering the training and progression that may help to raise people out of
poverty. The incentive to get involved in learning and get qualifications is likely
to be highly reduced given the high-risk nature of such investments for
potentially poor returns. In such contexts, employers have a key role in
supporting the development of better jobs and progression routes.
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What are the barriers experienced by poor young people
and adults in engaging with adult and tertiary education?
There are many barriers facing economically poor young people and adults in
relation to post-compulsory learning. These include:
• poor earlier experiences of education – e.g. a lack of success, bullying,
negative views about school, lack of relevance of the curriculum;
• personal difficulties – e.g. time constraints, low income, poor health, low
confidence;
• the perceived cost of education and cultural disinclination toward debt
accumulation;
• life circumstances and events – e.g. family conflict and divorce;
• accessibility and availability of provision – e.g. neighbourhoods with limited
lifelong learning opportunities, a lack of educational success creating
barriers to entry, a lack of appropriate provision, a lack of suitable
information, advice and guidance;
• challenging policy frameworks – e.g. funding arrangements for adults
over 24;
• labour market disincentives – a lack of well-paid local jobs with
commensurate credentials, skills or training requirements.
How are poor young people and adults drawn into tertiary
and adult education and then into sustained employment?
Adult and tertiary education can engage disadvantaged young people and
adults and enable them to progress. Promising strategies include:
• developing appropriate outreach work to engage young people and adults,
for example through community-based organisations;
• the development of relationships of trust between young people and adults
on the one hand and teachers, other educators and advisers on the other;
• targeted, supported and individualised learning programmes, facilitated by a
high ratio of staff to learners;
• realistic, measurable and motivating learning targets, monitored
appropriately;
• well-targeted information, advice and guidance for planning individuals’
learning and identifying smaller steps which learners can take to gain
confidence and achieve measurable progress;
• well-developed pathways that link to high quality academic and/or
vocational training commensurate with the needs of both young people
and adults and local economies.
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Recommendations for an anti-poverty strategy
Qualifications and work experiences that count – use the recommendations of
the Wolf report on vocational education to develop broad-based educational
paths for young people which have clear links to progression, high-quality
academic and work experience content, and funding to incentivise employers
and education providers to deliver this. Improve the quality and quantity of
careers advice guidance and support to be more accurate and honest about
what types of programmes lead to what types of work.
A coherent response to connected challenges – create a more coherent and
less fragmented approach with clear lines of public policy responsibility,
accountability and delivery by appointing a ‘Tsar’ responsible across government
policy-making for the needs of adult and part-time learners.
Macro skills policy and the rebalancing of labour markets – economic policy
should rebalance the labour market to create a virtuous cycle through goodquality employment generating incentives for learning and training, which in
turn generates better employment. Shift responsibility for adult and tertiary
provision of skills from further education providers to developing the capacity
of workplaces to be sites of learning.
Local transition pathways – local adult and tertiary education systems have
to offer multiple pathways to link the sometimes low starting points of learners
with the demands of the local labour market. Enhance the UK apprenticeship
system by making the local routes into apprenticeships clearer, increasing the
educational content of the programmes and improving local employer
involvement. This includes expanding advanced and higher level apprenticeships,
making traineeships available for those not yet ready for a full apprenticeship,
maximising the impact of larger employer involvement and increasing support
for small businesses.
Governance structures and systems – creating appropriate local pathways
into employment requires governance structures and systems, particularly in
the most disadvantaged areas, that are capable of linking employers and
education providers and targeting resources to sustain those pathways.
Flexible and customised support systems – flexible, customised and financial
support systems are necessary to engage learners, build their confidence, and
support them in making appropriate and ambitious decisions about their future.
Personal relationships, experiences of success, and multiple ‘second chances’
are also all important. Funding for equivalent or lower qualifications should be
relaxed to support adult learners wanting to transfer into better-paid
occupations; funding for part-time learning in higher education should be
increased.
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Widening participation in higher education – the planned funding by the
Higher Education Funding Council for England (HEFCE) of new collaborative
outreach should be sustained for the long term so that new partnerships can
develop. The Higher Education Access Tracker (HEAT) service which allows
universities and colleges to measure the progress of individual participants in
activities designed to raise aspirations and attainment needs continued support.
The Universities and Colleges Admissions Service (UCAS) continues to invest
in and promote the use of contextual data (which puts student attainment in
the context of the circumstances in which it has been obtained) and encourage
its integration into the admissions process. Information about the use of
contextual data needs to be disseminated more widely to teachers, advisors
and young people. A longer term, sustainable solution to student funding
should be adopted, including proper consideration of a graduate taxation
system. This should include an investigation into current Treasury rules for the
way government loans and taxes are accounted for.
The wider benefits of learning – although pathways to good quality
employment are central to the role of education in overcoming poverty, the
evidence suggests that it is important not to forget the wider benefits of
learning, in terms of health, self-esteem, quality of life and democratic
participation.
About the project
The research was a policy- and practice-oriented literature review, carried out
by Carlo Raffo, Diane Harris, Alan Dyson, Cate Goodlad, Steven Jones and
Julian Skyrme. The authors supplemented traditional bibliographic search
procedures with an ‘expert witness’ approach. A simple data-extraction
analytical framework was applied to literature across all areas.
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ADVICE, SUPPORT
AND POVERTY
This review considered the needs of people in poverty
for information, advice and support, and how services
can help to prevent, mitigate, and reduce poverty.
Key points
• Households in poverty often need help to cope with changes in their
circumstances and need advice and support across a number of social
welfare issues. The most common advice needs arising for people in poverty
relate to issues of welfare benefits, debt, housing, childcare and employment.
• They are also more likely than others to need advice and support because
of their reliance on public services and the difficulties they experience in
navigating through the ‘system’.
• Effective advice can resolve problems and help improve the material
position of households, for example through benefits checks and debt
advice. Good quality careers advice can help provide people with a route
out of poverty.
• The soft and secondary outcomes from advice, including increased
motivation, skills and self-confidence, can be just as important as hard or
immediate outcomes such as formal qualifications or the amount of
additional benefits claimed. More research is needed to understand the
impacts of advice on poverty over time, especially the soft and secondary
outcomes. The quality of advice and delivery mechanisms is key, and
providing services in group settings, peer to peer provision, and through
mentoring projects all warrant further testing.
• Advice services should be embedded into core service settings such as GP
surgeries and community centres and pro-active efforts made by
mainstream services like the health service and job centres to identify
people in poverty and refer them to relevant advice services. National and
local policy-makers should consider the likely increase in demand for advice
when changing welfare entitlements and service provision.
The research
By Damon Gibbons and Sarah Foster, Centre for Economic and Social Inclusion
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117
BACKGROUND
The impact of advice services on the different experiences of
poverty has not been specifically researched. However it is
clear that the need for advice and support among households
in poverty that arises in response to life events is greater than
for wealthier households.
Why advice services are important to people in poverty
The need for information, advice and support (ranging from simple information
materials through the provision of specific advice tailored to the individual’s
situation, to support which may, for example, involve the service provider
engaging in advocacy on the user’s behalf) among people in poverty is driven
by a combination of three factors:
• Life events such as changes in household composition and/or the material
circumstances of households. Key trigger events leading to persistent
poverty include the loss of employment; reduction in earnings and benefits;
increase in the number of children, and becoming a lone-parent household;
• The changing nature of state support; economic and social policy decisions,
and the operation of key markets including housing, energy, and financial
services;
• The levels of human and social capital available to people in poverty, which
affects their ability to cope with challenges and use key services, and the
level of support they require.
While these three causes are individually important, they can also occur
collectively. The combination of needs that arises is then likely to give rise to
a need for considerable support.
It is important to recognise that households experience poverty in different
ways and to different degrees over their lifecycle. Some experience it only
temporarily. For others it is recurrent. It can also be persistent, in which case
the reliance on state support and any changes in entitlement and/or its
administration becomes extremely significant.
Research has not specifically considered the impact of advice services in
respect of these different experiences of poverty – it has tended to look at
broad groups of people who are at greater risk of poverty generally or at the
type of advice issues (and clusters of problems) that they are most likely to
experience.
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Despite these shortcomings in the evidence, it is clear that the need for
advice and support among households in poverty that arises in response to life
events is greater than for wealthier households. This is because they have
fewer financial and other resources (including skills and social networks) to
draw on. This is likely to both constrain the options that are available to them
and exacerbate the impact of changes when these occur. There is therefore a
need for ‘core provision’ focused on life events (e.g. health and welfare to work
services) to pro-actively identify people in poverty and refer these to advice
services capable of addressing problems holistically.
Changes in the relationship between the household and the state also give
rise to advice needs. For example, Citizens Advice reports that 50 per cent of
its clients will be affected by the introduction of Universal Credit and that nine
out of ten of these will need some form of support to manage the transition by
raising their capacity to cope with monthly payments, budget effectively,
manage their bank account, stay informed about the changes, or to get online.
However, equality impact assessments of policy changes such as these
(at both the national and local levels) do not currently consider the likely
increase in demand for advice.
Finally, levels of human and social capital are critical in determining the
extent of help needed. The health, knowledge and skills of individuals affects
their ability to identify and take up opportunities and use services independently,
as well as their level of personal resilience to cope with challenges. In addition,
positive relationships with family and friends and other social networks can
provide support and access to knowledge, including about the services that are
available.
What advice is needed and how does it help people in
poverty?
The most common advice needs arising for people in poverty relate to issues
of welfare benefits, debt, housing, childcare, and employment. Careers advice
has also been found to be particularly helpful in providing people with a
route out of poverty by helping them to access quality employment with
opportunities for advancement within the labour market. Regardless of the
particular advice issue, the soft outcomes, which include increased motivation,
skills and self-confidence, can be just as important as hard outcomes such as
formal qualifications or the amount of benefit gained, especially in the
longer term.
However, the complex interaction between the different reasons that
advice is needed, as well as the type and the number of problems experienced,
poses a considerable problem when it comes to assessing the impact of advice
services on individuals. In particular, the short-term benefits from provision
(such as the financial benefits accruing from a successful welfare benefit claim)
are likely to form only one aspect of any overall positive effect. Indeed, the
extent to which the provision of advice is of benefit is not apparent unless
assessed over time, and the quality of advice provided, including the methods
used in its delivery, are likely to be key variables.
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As well as providing short-term benefits, advice services contribute to a
broad range of secondary impacts which support improvements in the overall
quality of life of households. These are capable of either preventing poverty
from occurring; mitigating the impacts of this where it does occur, or providing
people with the opportunity to progress out of poverty. A summary of these is
provided in the table below.
Table 1 – Summary of primary, secondary and long-term outcomes of
advice for individuals
Primary impacts
Secondary impacts
Longer-term outcomes
Financial gains
Welfare benefit take-up
Improved diets
Improvements in physical
and mental health
Debt restructuring and
write-off
Warmer homes
Recovery of unpaid
wages/ minimum wage
enforcement
Compensation
payments (employment
discrimination/ housing)
Financial capability
Avoidance of debt
Increased social
interaction
Entry to and retention
of employment
(in-work benefits)
Greater social mobility
and ‘pathway out of
poverty’
Improved self-esteem
and confidence
Increased savings
Non-financial
In-kind benefits
More time for/fewer
constraints on, job search
Housing options,
preventing and addressing
homelessness
Successful transition to
adulthood
Improvements in
employment conditions,
retention of employment
Appropriate, affordable
childcare
Making good education
and careers choices
Increased human/social
capital
Suitable, affordable housing
Access to education,
training and employment
Access to health and
social care
Improvements in
relationships, and access
to leisure, networking,
and participation in society
Lessons for future provision
While advice services have sought to ensure that they are accessible to people
with complex needs, there remain a number of barriers. These stem from a
combination of individual, structural and cultural factors.
• Individual barriers include health conditions and/or disabilities, lack of
English, and caring commitments.
• Structural barriers include bureaucratic referral processes, limited opening
hours, or inability to access certain channels of delivery (e.g. online).
• Cultural barriers include lack of familiarity with service providers and in
some cases a lack of trust or fear of authority.
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Embedding advice services in core settings (for example, health and welfare to
work) and pro-actively identifying users with advice needs is therefore needed
to ensure that the most disadvantaged are provided with help.
There are benefits for statutory agencies in working with advice providers
to embed provision, as early advice can significantly reduce the demand for
high-cost interventions. In addition, advice agencies can also contribute to the
improvement of core services through their social policy work.
However, national and local anti-poverty strategies need to focus on how
advice provision can be delivered in ways that build the human and social capital
of service users and contribute to clearer routes out of poverty. Further
research into the effectiveness of, for example, peer to peer mentoring and
group-work approaches, is needed in this respect.
Finally, policy-makers at both the national and local levels should take
account of the likely demand for advice services arising from changes to
welfare provision and should include an assessment of this in future equality
impact assessments.
About the project
The research took the form of a literature review. This used both academic
databases and general online engines, limited to literature published in the
last six years. This time limit was extended in some respects in areas where
evidence was later considered weak, or where the authors had prior knowledge
of seminal publications.
Read the full report.
Education, personal relationships and community
121
FAMILY STRUCTURE
AND POVERTY
Put simply, families with more children and fewer
adults (and especially fewer adults in paid work), tend
to be poorer. However there are other structural
features of families that affect levels of poverty.
Key points
• The poverty rates of families with children have fallen over the past 15
years, particularly for lone parent families and those with three or more
children.
• The poverty rates of different family types have converged over time; larger
families and lone parents still have among the highest risks of poverty.
• Policies directly aimed at affecting family formation or size, such as tax
allowances for married couples, Child Benefit caps and benefits for larger
families, have not been shown to be effective in changing family structures.
• Child maintenance has the potential to lift lone parents (and some stepfamilies) out of poverty, yet receipt of child maintenance in the UK is low by
international standards, limiting any potential anti-poverty effects.
• After 2010, benefits were no longer reduced by any maintenance income,
improving the circumstances of child support recipients. A recent reform
aims to encourage greater co-operation between parents in reaching
agreements on child maintenance and arranging payments; it is important
to monitor how this affects the number and value of maintenance
agreements, and their effects on family and child poverty.
• The Lone Parent Obligation (LPO) reform appears successful in increasing
the employment rate of lone parents. It is less clear whether those further
away from the labour market will be able to make the transition into work.
It is also likely that the issues of job retention and earnings progression will
continue to be important for lone parents.
The research
By Martin Cullliney, Tina Haux and Steve McKay, University of Lincoln
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BACKGROUND
There are a number of well-established links between family
structures and poverty. This review considers what they are
and how the relationship could be eased.
The construction of UK poverty rates embodies a particular set of assumptions
about the needs of adults relative to children (the process of ‘equivalisation’),
and hence there are direct links between equivalisation and which families are
regarded as poor. The situation of lone parents, in particular, is affected by the
choice of equivalence scale.
Those who cohabit rather than being married have higher rates of poverty,
which is likely to reflect the different characteristics of those who marry (they
tend to be older, for instance). There is also an association between marital
status and paid work, with those in formal unions more likely to be in
employment than those cohabiting. This is found for both same sex and
opposite sex couples. Step-families seem to be only a little poorer than other
couples, though the evidence base is relatively old. There is limited evidence on
other family types, including extended families and children being raised by
grandparents, but on balance such families seem to have higher levels of
disadvantage. Some of the associations between family structure and poverty
are mediated by other factors such as gender, with a longstanding body of
research on differences such as in employment.
Much of the research on family structure concerns making comparisons
between lone parents and couples with children. It is difficult to conclusively
demonstrate a causal link between family structures and poverty, given the
wide range of differences in the socio-economic characteristics of different
family members. For example, lone parents tend to come from poorer
backgrounds; families with more children are more commonly found among
particular minority ethnic groups; cohabiting families tend to be younger than
married couples. Differences in family structure may be a consequence of
poverty, as well as one of its causes.
Defining family structure
There are many issues and considerations in arriving at definitions of family
and family structure. Family is defined here as consisting of a household
containing at least two people who are either related by blood, marriage or civil
partnership, or in a cohabiting relationship (and children may also be included
through adoption and step-relationships). This follows US Census Bureau and
some Office for National Statistics (ONS) usage. Single people living alone are
not treated as families, although they are included in some of the data discussed
to enable comparisons with other key groups.
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Who is poor?
In 2011/12 the following family structures were particularly at risk of poverty:
• lone parent families;
• large families, i.e. those with three or more children;
• cohabiting families (compared with married or those in civil partnerships).
Three main trends can be identified when looking at poverty levels of families
over time. Firstly, the poverty rates of families with children have decreased
over the past 15 years generally and, in particular, for lone parent families
between 1994/95 and 2011/12. There has also been considerable convergence
of risks of poverty by family type. Even so, rates of poverty remain high for
lone parents, much higher than for couples with children, and childless couples.
The poverty rates of families with three or more children have also fallen over
this time.
As is increasingly well known, recent data shows that most children in poor
families live in working rather than non-working families. Our discussions with
those with experience of poverty highlights problems of insecure and low-paid
employment, with strong perceptions that such work may mean a lower living
standard than being unemployed and on benefits. There is also an association
between low incomes and having only one adult in paid work.
Policy review
Child maintenance in the UK has a troubled history, and rates of collection are
below those in other countries. However, child maintenance has untapped
potential to play a significant positive role in reducing poverty, reinforced by
the 2010 reform to allow recipients to keep all their child maintenance. Recent
reforms (from 2012) are encouraging agreement between the two parents,
and it is important to monitor how – if at all – this affects levels of agreement
in money terms and rates of compliance. The new Child Maintenance Service
has considerable powers to collect money owed, including a 20 per cent
collection charge to the paying parent, and a 4 per cent charge for recipients.
It also expects a £20 fee from lone parents needing to make an application.
The potential to affect family formation through financial incentives is
limited; relevant evidence on links between welfare benefits and family
formation is inconclusive. In the UK, two policy proposals are of interest: the
re-introduction of a married couple tax allowance, and discussions about the
idea of a ‘family cap’, limiting the number of children for whom Child Benefit
would be paid. The evidence to date suggests that the effects of these
interventions are hard to predict, although the low level and limited coverage
of the Married Couple’s Allowance suggests a policy that aims to value marriage
rather than to increase its uptake.
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Reducing poverty in the UK
The final area considered is that of lone parents and employment (with
wider concerns about employment the subject of a different review). Increased
conditionality for lone parents with older children (the LPO requires lone
parents with older children to actively seek paid employment) seems to have
had a positive effect on employment in difficult economic circumstances.
However, lone parents who have entered work were already closest to the
labour market. Policies such as the Work Programme, aimed at finding
employment for others, have been less effective. Furthermore the impact of
LPO on employment retention and progression is less clear. Providing a
financial incentive to employment by topping up low wages and making
childcare both more available and more affordable could be successful in
further increasing the employment rate of lone parents in the UK.
Other countries often achieve higher rates of lone parent employment
than the UK, and overall lower rates of child poverty. However, non-working
lone parents tend to face above average poverty risks in most countries.
Conclusion
The following policy areas are critical factors in the relationship between family
structure and poverty:
•
•
•
•
relative value of child-related benefits;
Child Maintenance receipt;
pay progression for (lone) parents in work, and security of earnings;
cost and availability of childcare.
Policies aiming at changing the composition of families though financial
incentives are less likely to be effective. Current government policies on three
of the areas identified above may perpetuate the relationship between family
structure and poverty, by reducing the relative value of child-related benefits,
making child maintenance arrangements voluntary and by failing to more
actively support (lone) parents in entering full-time work. However, extending
access to free childcare, and Universal Credit, should help to address issues of
increasing income insecurity.
About the project
The research comprised a review of the national and international literature. It
also drew on the findings of other reviews in this series, avoiding duplication
through being selective in the policy areas investigated. The policy areas
included in this review were chosen on the basis that they directly affect family
structure and poverty, such as child maintenance, and not policy areas that are
clearly covered elsewhere such as childcare, and other issues pertaining to paid
work.
Read the full report.
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125
PERSONAL
RELATIONSHIPS AND
POVERTY
Policies and family relationships which help reconcile
the tension between participation in the labour market
and caring responsibilities can reduce the chances of
individual and family poverty.
Key points
• The chances of family poverty are lessened when policies enable fathers’
involvement in childcare and mothers’ involvement in the labour market.
• The stress of living in poverty brings added risk of relationship problems and
breakdown. Policies underpinning relationship support services are a more
effective way to tackle family poverty than marriage subsidies. Relationship
support services need to reach families in poverty or on low incomes,
especially those with multiple problems.
• Separation can lead to poverty for both parents but the risk of persistent
poverty is greater for resident parents. Regular child support payments
reduce that risk. Step-families can provide a route out of poverty but are
vulnerable to breakdown, leading to further spell(s) of poverty. Anti-poverty
policies for separated families need to be holistic, address the needs of all
family members and promote more involvement of non-resident parents.
• Paid employment can increase single mothers’ income but risks being
counterproductive without affordable childcare or childcare from other
family members.
• Grandparents play a vital role in providing free and flexible childcare,
frequently enabling low-income mothers to re-enter employment.
However, caring responsibilities can increase poverty risks for grandmothers
who disrupt their own employment. Also, many care for both grandchildren
and older parents, at financial cost to themselves. Raising the state
retirement pension age risks reducing the supply of grandparents able to
provide childcare and in turn increases the poverty risks of low-income
mothers without access to affordable alternatives.
• Intergenerational support most frequently goes downwards from parents
to adult children and grandchildren and occurs more often in families which
rely on welfare support for essential services.
The research
By Judy Corlyon, Laura Stock, Cristina Castellanos Serrano and Matt Gieve, Tavistock
Institute of Human Relations
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BACKGROUND
Personal relationships may cause or contribute to poverty –
through divorce/separation or unequal and gendered division
of unpaid care responsibilities and household income/earning
ability, or may alleviate it – through intergenerational support
or re-partnering and shared income.
The evidence on relationships and poverty
Working-age adults with children have higher poverty levels than those
in similar households without children. Parental childcare may reduce the
working time of one or both parents, thereby depressing household income,
while paying for private childcare increases family costs and requires longer
working hours. How parents share childcare and labour market participation
can affect their present and future chances of being poor.
Rates of cohabitation are increasing while those of marriage are decreasing.
Cohabitation itself is no more susceptible to breakdown than marriage, but
cohabiting couples tend to be less well-off than those who marry. Being poor
puts increased pressure on relationships and can contribute to their breakdown.
Relationship breakdown can also give rise to, or increase, poverty for both
parents. For non-resident parents (typically fathers) the risk is greater for
those in low-paid or no employment. But, overall, economic recovery can be
faster than for resident parents (typically mothers) who have a greater risk of
extreme and longer lasting poverty. Children whose parents separate are
affected by this socio-economic disadvantage and for a minority, where
poverty is compounded by maternal ill-health or parental conflict, there can be
long-term negative outcomes which can impact on their education, future
employment and likelihood of low income in adulthood.
Parents in the older generation typically receive support from adult children
but only when they reach an advanced age. Before that, income transfers and
practical help are usually downwards and commensurate with the needs of
adult children and grandchildren. Free and flexible childcare from grandparents
is a feature of all socio-economic groups but most frequently used by parents
with low incomes and usually provided by grandmothers who themselves are
more likely to be in the lower socio-economic groups. Many give up employment
or reduce their working hours to combine work and childcare. Thus, poorer
parents’ ability to take up paid employment often comes at the expense of
grandparents, effectively distributing part of the disadvantage of low income
across the generations.
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127
The influence of policy on family relationships and
poverty
The evidence points towards three crucial areas where policy impacts on the
link between family relationships and poverty: reducing the division of paid and
unpaid work between men and women; intergenerational help; and relationship
support before, during and after marriage/cohabitation. Current UK policies
designed to prevent poverty emphasise the importance of strong and stable
relationships which give children a good start in life and of paid employment
which not only improves the financial status of families but also prevents
intergenerational transmission of worklessness.
Fathers´ involvement in care and mothers’ labour market involvement:
reducing gender differences: international comparisons show that policies
which reduce the gap between a couple’s respective labour market participation
after the birth of a child are instrumental in reducing family poverty in the
short and longer term. One of the key elements in supporting mothers’
employment and encouraging fathers’ caring is parental leave which is nontransferable and paid at a high proportion of previous earnings: fathers are
disinclined to take leave which is low-paid and are open to pressure from
employers not to do so where it is transferable to the mother.
Current UK policy stresses employment as the route out of poverty but
women’s participation in the labour force is frequently hampered by the
discrepancy between lengthy maternity and brief paternity leave entitlement.
Leave which is specific to and equal for both parents in terms of length and
payment would serve to weaken the traditional emphasis on mother as carer
and father as earner, and reinforce mothers’ independence and career
prospects and fathers’ involvement in childcare in the short and longer term.
The chances of family poverty would further be decreased by the presence of
two earners and two carers.
Family help: beyond the leave period, a second element which allows
mothers (as current main carers) to be in the labour market is good quality,
affordable and available childcare. In the UK, state provision remains limited
and private provision is of variable quality, expensive and typically available at
fixed times not necessarily coinciding with mothers’ working hours. Across the
EU just over half of mothers with children below mandatory school age do not
work or work part-time because of inadequate childcare services: in the UK
this is the case for nearly three-quarters of mothers. Families, and especially
those on low incomes and headed by a lone parent, are often dependent on
informal (free) childcare and in particular that provided by relatively young and
healthy grandmothers. Often these grandmothers are also providing care for
their own parents or other relatives.
The current rise in the age at which women can retire with a state pension
could result in many families rethinking their priorities. Further financial
hardship will arise for poorer grandmothers who choose to leave employment
before receiving the state pension. Alternatively, their care for older relatives
will diminish and mothers’ access to the labour market will be restricted,
because of limitations of formal childcare. Grandparental childcare is
appreciated by mothers for reasons beyond the purely financial, and policy
which would enable this to continue as a personal choice without cost to
grandparents should be given due consideration. However, direct remuneration
of grandparents is difficult given the potential for fraudulent claims, and would
be unlikely to reduce poverty risks since cash transfers for such care do not
usually equate to labour market incomes. Recent years have seen a shift in the
distribution of money between generations with the result that many adult
children (and their children) receive financial support from parents. Maintaining
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the income level of this generation serves to promote a redistribution of
resources, however low, within the family. Evidence from Europe suggests
even more income transfers and practical support in both directions would
occur if the state provided essential services.
Relationship support: separation and divorce bring a substantially increased
risk of poverty to mothers, especially where caring is seen as a ‘woman’s role’,
and their career prospects have suffered through policies which obstructed
their continuing involvement in the labour force. Under current UK welfare
policy mothers, other than those of very young children, must be available for
employment, notwithstanding their often limited employment history and the
shortage of suitable childcare. Low-quality childcare risks further damage to
children already disadvantaged and/or adversely affected by the breakdown of
the parental relationship.
Policy also ignores the economic vulnerability of non-resident fathers,
concentrating instead on their potential, though frequently unrealised, ability
to raise the income level of their children and former partner by regular and
adequate child support payments. Formal arrangements made through the
Child Support Agency are more likely to endure than informal ones, but
imposing a cost for this service precludes its use by low-income families.
‘Strong and stable’ families are a touchstone of current family policy
initiatives. However the promotion of marriage, as opposed to cohabitation or
a co-operative relationship post-separation, is not an anti-poverty strategy.
Supporting couple relationships of all types is much more likely to lead to
beneficial outcomes – financial and emotional – for all family members. The
recent evaluation of relationship support showed that interventions for couples
at various stages in their relationship can improve emotional well-being and
relationship quality. It also demonstrated how government investment in such
interventions can be rewarded by substantial savings if subsequent public costs
of relationship breakdown are avoided
When relationships do end, holistic practical and emotional support,
especially when targeted at low-income families, can help alleviate adverse
outcomes. These include financial hardship, couple conflict, mental ill-health
and housing problems, as well as the negative consequences suffered by some
children. Savings to the public purse could be made through the provision of
interventions, such as the government-funded child poverty pilots, which help
mitigate these problems for couples or individuals and thus avoid the costs
associated with addressing them when they become entrenched.
The review found evidence lacking on: individual rather than household
income; paternity and maternity leave take-up rates; lone fathers’ caring
responsibilities and labour market involvement; the financial impact of older
couples’ relationship breakdown; intra-generational financial exchanges,
especially between adult siblings.
About the project
The review examined literature and policies, drawing predominantly on the UK
situation but also on evidence from other countries where this was useful for
comparative purposes. It was undertaken by a multidisciplinary team specialising
in conducting studies on family relationships, particularly bringing perspectives
from economics, sociology and feminist research.
Read the full report.
Education, personal relationships and community
129
PRIMARY AND
SECONDARY
EDUCATION AND
POVERTY
Department for Education figures show that
35 per cent of children in receipt of free school meals
gained five A*–C grades including English and maths,
compared with 62 per cent of other children. Why is
poverty linked to educational chances, and what can
be done about it?
Key points
• Parental choice and increasing school autonomy have been the dominant
themes of British education policy since the 1980s, but there is no evidence
to show that these are effective ways of improving the educational
attainment of children from poor backgrounds.
• The role of teachers is vital. Substantial variability in pupils’ outcomes is due
to the individual teacher they have for a particular subject, and this variability
is more powerful than inter-school variability.
• The subjects taken, rather than just the grades achieved, are important for
access to university. Poor children are less likely to study prestigious
subjects and are therefore disadvantaged.
• The specific content of the curriculum is a topic of longstanding ideological
debate, with little or no evidence on what works best to promote learning,
especially for disadvantaged children.
• While there have been evaluations to assess the quality of education
interventions, the quality of the evidence is often poor.
• Education reform alone will never be sufficient to address educational
inequalities. Poor and overcrowded housing, frequent moves, parental
stress, depression and poor health have all been shown to have a detrimental
effect on children’s learning, thus social policies on the economy, work,
housing and health can all affect educational outcomes.
• Educational inequalities are driven by families’ cultural resources as well as
economic resources, and books and reading are central to this. More
research is needed on how schools, parents and library services can promote
reading, particularly among children whose parents have lower levels of
education.
The research
By Roxanne Connelly, Alice Sullivan and John Jerrim, Department for Quantitative
Social Science, Institute of Education, University of London
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BACKGROUND
Socio-economic inequalities in educational attainment and
in related life-chances have been documented over many
years. Particular concerns have related to the long tail of low
attainment at the lower end of the spectrum, and the fact
that this low attainment is disproportionately experienced by
children from poor families. This has implications for later life
chances and social mobility.
This review is focused on educational attainment rather than other outcomes.
There is a whole range of other potential benefits of schooling, such as wellbeing and civic participation, which are beyond the scope of this review; neither
does this review consider the link between educational attainment and labour
market outcomes. It should not be assumed that increasing the educational
attainment of poor children is the only or best way to reduce adult poverty –
there is a difference between aiming to promote social mobility and aiming to
reduce poverty. The social mobility chances of individual children may well be
best increased via educational attainment. However, the overall level of poverty
in society is driven by structural inequalities in our economy and society that
clearly cannot be addressed simply by reforming schools. Policies intended to
promote social mobility will not necessarily reduce poverty, and it is important
not to allow the two goals to be confused.
The nature and causes of disadvantage
Socio-economic differences in educational attainment are far greater than
those due to race and gender, and should be given the highest priority. There
is a danger that the needs of poor girls are neglected because of the strong
focus on poor boys.
Differences in educational attainment according to the social origins of
children are due partly to income poverty. However, a full understanding of the
issue must also take into account the educational level of parents and the
family’s cultural and social capital.
Socio-economic differentials in education emerge before children start
at school, and the children of highly educated parents typically start school
with a particular head-start in their learning. The recent focus on the early
years is therefore vital, but should not lead to a neglect of the issues affecting
older children.
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131
School systems
Although the UK education system has changed dramatically since the 1960s,
and educational participation has increased enormously, the relative attainment
levels of the different social classes have been fairly stable, suggesting that
changes such as comprehensive education made less difference to inequalities
than had been hoped. There is some evidence, though, of narrowing inequalities
in school attainment during the period of the last government, 1997–2010.
It is too early to assess whether this trend will be maintained.
Research indicates that there is a stronger relationship between parental
social background and children’s test scores in England than in many other rich
countries. However, it is not possible to identify the extent to which specific
features of the education system, as opposed to wider social policies, structural
inequalities or cultural factors, may lie at the root of this difference. Thus it is
important that policy-makers don’t draw simplistic conclusions such as ‘they
do x in Singapore/Finland, therefore x will work for us’.
There is no robust evidence that any particular school structure or type
(such as academies, free schools, faith schools) is beneficial for improving the
performance of poor pupils. Selective schools show greater pupil performance
and progress, but are least likely to serve poor pupils. Therefore the existence
of such schools is likely to exacerbate inequalities.
It is often argued that the existence of competition between schools drives
up standards overall. However evidence suggests that competition from selfgoverning and faith schools has not driven up standards in neighbouring
schools. It may be that the focus on school structures has been misplaced, with
a greater emphasis needed on school and classroom processes.
School differences and interventions
It is important to recognise that much of the variability in school performance
is due to pupil intake, and attempts to measure the real ‘value added’ of a
school are problematic. Schools serving poor communities also often face
additional challenges, including dealing with children’s emotional and behavioural
problems.
The effect of school composition is well established in the literature.
Children who attend schools with a higher proportion of high-attaining pupils
or pupils of high socio-economic status perform better than similar children in
schools with a high proportion of poor and low-attaining pupils. This suggests
that one way of helping poor pupils would be to decrease school segregation.
Banding and school lotteries are both promising avenues for achieving this.
However, there are likely to be limits to the scope for school desegregation,
given the constraints of residential segregation.
School resources have been shown to have a positive effect on attainment.
This suggests that the pupil premium may be an effective mechanism to
improve the attainment of poor pupils, though this has not been shown directly,
and will inevitably depend on what is done with the money; it is vital that this
should be evidence-based.
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There is far more variability in performance between individual teachers
than between schools. Therefore, attracting effective teachers to schools
serving poor children is likely to be vital to closing attainment gaps. Evaluations
of the Teach First programme show positive results, but it remains to be seen
whether Teach First can be expanded to further increase the pool of effective
teachers in schools serving poor children. There may be limits on this unless
the status and quality of the teaching profession overall can be raised.
Classroom teaching methods matter, and there is evidence to support both
the literacy hour initiative and synthetic phonics teaching. These benefit
children across the social spectrum, but may be most important for those who
are at risk of falling behind in reading, who are disproportionately from poor
backgrounds. Other teaching methods that are fairly well supported include
effective use of new technology, mastery/individualised learning, metacognitive and self-regulation strategies.
Children from disadvantaged backgrounds are more likely to have
behavioural problems that can damage their attainment. The evidence suggests
that authoritative approaches to school discipline (high standards with warmth,
communication and understanding), and an emphasis on positive reinforcement
of good behaviour, can lead to improved behavioural outcomes.
There is evidence that poor children have less access to a demanding
curriculum and high-value subjects. Early curriculum choice is a longstanding
feature of the British school system, and this has the potential to exacerbate
both gender and socio-economic differentials, as young adolescents are
making decisions when they are ill-equipped to see the long-term
consequences. Policy innovations such as compulsory maths and English up to
18 have the potential to make a difference here. The related question of the
content of specific curricula has been debated in highly ideological terms. We
need to develop a body of empirical evidence on the type of curriculum that
most effectively promotes learning, especially for the most disadvantaged.
Many specific education interventions have been evaluated, but the
evidence is often of poor quality. The literacy hour and Education Maintenance
Allowance stand out as interventions with robust evaluations showing positive
effects. The Excellence in Cities and London/City Challenge initiatives also
showed positive results, but with weaker evidence as to how this was achieved.
The wider social context
This review focuses on issues directly affecting schools. However, wider social
policies are also likely to be relevant; educational inequalities are also the result
of family economic, social and cultural resources. Poor housing and frequent
moves, parental stress and depression, and poor health, are all factors that
have an impact on children’s educational attainment. Therefore policies
regarding health, welfare and housing are all likely to be important. Learning
does not only take place in school. Evidence consistently shows that parents’
educational level and related measures of ‘cultural capital’ such as the number
of books in the home, reading to children and children’s own reading for
pleasure outside school are powerful predictors of children’s educational
attainment. The promotion of reading and learning outside the school gates,
including via public and school libraries, therefore needs to be considered. In
addition, adult education may have an important role to play, given the impact
of low parental education on children’s attainment.
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133
About the project
This review is limited to the school years, and does not cover issues such as
pre-school provision or access to higher education. This is not a systematic
review, and it has relied heavily on other reviews of the evidence, bringing
them up to date with new evidence where necessary.
Read the full report.
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SOCIAL NETWORKS
AND POVERTY
There has long been an interest in the links between
poverty and social networks, particularly whether
there are causal links between the two.
Key points
• Poverty is a key barrier to being part of wider social networks. It reduces
access to transport and affects the ‘give and take’ of resources in networks.
The stigma of poverty can also lead to self-exclusion.
• The social networks of people experiencing poverty do offer some financial,
material and emotional support but this does not overcome socio-economic
inequalities.
• Evidence regarding whether social networks in deprived neighbourhoods
reduce the chances of leaving poverty through negative role models and
social norms is mixed: quantitative evidence tends not to find an effect
while qualitative evidence sometimes does.
• Attempts to diversify networks by increasing social mix in deprived
neighbourhoods are often unsuccessful. New higher income residents
have networks outside the neighbourhood, enabled by education and
employment and greater access to transport. Stigma and prejudice reduces
social mixing.
• Ethnic diversity may reduce trust in neighbourhoods making collective
action more difficult, reducing reciprocal trust and ultimately reducing
support for tackling poverty.
• Informal interaction, at schools, libraries, community centres and parks is an
effective way of developing social networks among diverse people, including
different ethnic groups. This informal interaction allows trust and
understanding to be developed. It may also help combat stigma.
• Large investments to create social networks through community
engagement have little impact on increasing social networks or tackling
poverty. However, active volunteers in organisations can act as bridges to
wider social networks, helping alleviate poverty.
• Social media can stimulate social networks but doesn’t generally increase
their extent; social networks in cyberspace tend to replicate those offline.
They can help people experiencing poverty organise collectively, rather
than extend or diversify social networks.
The research
By Peter Matthews and Kirsten Besemer, School of the Built Environment, Heriot-Watt
University
Education, personal relationships and community
135
BACKGROUND
Research on social networks and poverty has focused on
whether diverse social networks with people who are not
experiencing poverty improves the chances of escaping
poverty and, conversely, whether social networks dominated
by people experiencing poverty reduce the chances of leaving
poverty. Social networks have traditionally been focused on
geographic, area-based communities and neighbourhoods.
New information communication technologies (ICT) have
broken down these links to place and may offer new
opportunities.
Social networks and poverty
The social networks of people experiencing poverty do offer some financial,
material and emotional support (see Table 1). Evidence suggests this support
helps people to get by, providing information about services and support or
direct help.
However, the evidence also suggests the expectations of network
membership can place a burden on individuals and strain relationships. Indeed,
experiencing poverty is a key barrier to being involved in social networks. For
social networks to be effective, they need to have high levels of trust and high
levels of reciprocal exchange of resources – give and take. The experience of
poverty can mean people self-exclude from networks because they cannot
reciprocate, are ashamed of the stigma of their poverty, or be excluded by
others.
Table 1: Engagement in social activities and social support
Indicators of social networks
Non-poor
Poor
Speaks to relatives more than once a week
67%
67%
Speaks to friends more than once a week
68%
66%
Member of an organisation
63%
41%
… ill in bed
92%
83%
… needed practical help around the home
e.g. moving heavy furniture, DIY jobs
93%
82%
… needed advice about an important change in life,
e.g. changing jobs, moving house
93%
82%
… were upset because of relationship problems/feeling a
bit depressed and needed someone to talk to
92%
81%
… needed someone to look after home when away
93%
82%
… had a serious personal crisis and needed someone to
turn to for comfort and support
96%
88%
… needed a lift somewhere in an emergency
95%
84%
Would get ‘some’ or ‘a lot of’ support if…
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People experiencing poverty are much less able to get support in a range of
circumstances compared with people not experiencing poverty, and more than
20 per cent less likely to be a member of an organisation. However, the
difference in levels of informal sociability (speaking to family and friends)
between poor and non-poor people is negligible.
There is historic evidence that more affluent people maintain social
networks with other affluent people and maintain these networks even if they
experience downward social mobility. Evidence also suggests these networks
are important for ‘getting-on’ – accessing good quality jobs and influencing
services. The review found evidence that the reliance on strong social networks
by people in low-skilled work, declining industries and young people could
keep them in these industries and acted as a barrier to accessing better paid,
higher skilled employment.
Social networks and equalities and diversity
People tend to live near and socialise with people like themselves. This is
particularly the case with ethnic groups. There is evidence that neighbourhood
ethnic diversity leads to reduced trust and less of the collective action which
may help alleviate poverty. However, evidence also shows that where ethnic
groups mix in places like schools it can reduce distrust and overcome prejudice.
There is also evidence that people living in neighbourhoods with others from
the same minority ethnic group gain benefits in terms of employment outcomes
and increase their income in the longer term.
The generally disabling environment of poor housing, inaccessible or costly
transport, and harassment and intolerance prevent disabled people maintaining
strong social networks. Disabled people are less likely to be able to visit friends
and family or to be able to rely on people for support in-kind. This could make
their experience of poverty worse or last longer.
Social networks, place and poverty
There is limited and inconclusive evidence that the type of people in the social
networks of those experiencing poverty in deprived neighbourhoods has an
effect on their outcomes, and there are significant methodological challenges
to research in this area. Nonetheless, this review concludes there is not a
proven ‘contagion’ effect of living with other people experiencing poverty or
demonstrable evidence of a culture of worklessness, or the existence of an
underclass of people in poverty with different social norms. Much of the
evidence that does exist comes from the USA where income inequality is
higher, the marginalisation of social housing more visibly stark and the welfare
system less supportive.
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137
However, there are differences in the networks of high- and low-income
households. The social networks of lower income households in deprived and
mixed neighbourhoods tend to be in the neighbourhood, whereas higher
income people can maintain more networks further afield, and develop these
through educational and employment opportunities.
There is no conclusive quantitative evidence that living in a deprived
neighbourhood affects employment outcomes – either where you work or
your income. There is, however, qualitative evidence that for young jobseekers
living in a deprived neighbourhood isolated from strong labour markets can
limit their job search horizons. Their ‘mental maps’ are focused on the
immediate local area and they display an inward looking mentality, focusing
more on the short-term and areas closer to home. This is shaped by the
weakness of the local labour market, which results in reduced expectations.
There is strong evidence that people living in deprived neighbourhoods will
form strong social networks to campaign for improvements and this leads to
broader benefits. These are strongest with a stable population and strong place
attachment. Policies to mix communities through regeneration or housing
voucher schemes to encourage mobility can disrupt these networks. Indeed,
the evidence from mixed communities is that different lifestyles and stigma
and prejudice among more affluent households reduce social mixing and
networking.
Social networks, information communication technologies
and poverty
The digital divide remains a key barrier to using information communication
technology (ICT) to develop social networks. For lower income households the
cost of equipment and internet access is a barrier. There is evidence that
internet availability in public libraries is important for lower income people.
Furthermore the costs of communication are falling, which is likely to increase
the amount of communication. While the fast development of technologies
and websites means there is limited evidence, it appears that online social
networks mirror offline social networks. This means ICT is more useful for
catalysing collective action among those in poverty, rather than seeking to
extend or diversify social networks. Interventions such as cheap, flexible
broadband and free ICT equipment are likely to support and encourage existing
social networks and community action to alleviate deprivation and poverty.
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Reducing poverty in the UK
Policy implications
Developing social networks can only be part of a long-term strategy to tackle
poverty; it is unlikely to make an immediate impact or change socio-economic
inequalities. Efforts to increase social networks through mixed communities
and investment in community empowerment and development have had mixed
or minimal impact on the immediate outcomes for households experiencing
poverty. To maximise the benefits of social networks on tackling poverty in the
short-term, policy should:
• build on successful examples of increasing employment based on community
development and extending labour market horizons;
• support community development activities in deprived neighbourhoods to
create strong bonding networks that are bridged to networks of political
influence;
• support affordable internet access through cheap, flexible broadband,
subsidised devices, and internet access in public libraries;
• maintain facilities such as schools, libraries, parks and community centres
that encourage social mixing and social networks.
In the longer term, these policy interventions will help alleviate and tackle
poverty and, more importantly, develop understanding and trust between
different groups increasing public support for broader measures to tackle
poverty.
Conclusion
The clearest evidence is that poverty leads to isolation from social networks.
While social networks can help mitigate the impact of poverty through informal
support, the immediate policy focus of an anti-poverty strategy must be on
income maximisation and alleviating aspects of material poverty. In the
medium- to long-term social networks may help reduce poverty. Awareness of
difference and poverty will develop trust and make people more understanding
and more supportive of policy to tackle poverty. Informal interaction in places
like schools, libraries, parks and community centres are the best way to foster
these sorts of networks.
About the project
The study reviewed recent literature (2008–2013) on poverty and social
networks supplemented with analysis of data from the Economic and Social
Research Council-funded project the Poverty and Social Exclusion Survey.
Read the full report.
Education, personal relationships and community
139
THE NHS AND
POVERTY
This study considers how the NHS can make a better
contribution to tackling poverty. It focuses on the
NHS in England, and how, without further structural
reform, the NHS can do more to adapt, mitigate,
reduce and prevent poverty. The financial constraints
on the NHS are recognised but not focused on.
Key points
• The NHS’s contribution to tackling poverty is startling, yet mostly unknown
and unreported. It is one of the most equitable health care systems in the
world; far fewer people report cost as a barrier to accessing care here than
in other countries. Inequalities in income would be 13 per cent worse if
NHS services had to be paid for out-of-pocket.
• However, there remain many inequalities in access for some services that
are associated with poverty, for example mental health care, long-term
conditions and services for children with disabilities.
• The NHS has some institutional characteristics that get in the way of
tackling poverty at a system level. It needs to focus more on social models
of health and payment systems that focus on health outcomes not processes
of care.
• The NHS accounts for over 8 per cent of gross domestic product (GDP)
and 1.4 million jobs; it affects poverty far more deeply and significantly than
through the direct impact of its services. It constitutes a significant
proportion of the economy of regions like the North East of England.
• Half of NHS trusts report requiring payment of the living wage when
contracting services.
• A more poverty-aware and focused NHS requires stronger leadership,
better aligned system design, and stronger engagement with other public
services and civic society.
The research
By David Buck, The King’s Fund
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Reducing poverty in the UK
BACKGROUND
The NHS is a universal, tax-funded, free at the point of use
healthcare system. In theory, poverty is no barrier to care,
and charges for health care do not push people into poverty.
The NHS also has immense economic power with a budget
of more than £100bn in England. But it is not clear that the
most is being made of the NHS’s enduring principles, or its
economic might, in the battle against poverty.
The NHS can adapt to poverty (ensuring there are few, or no, financial or other
barriers to care and service delivery). But beyond this, the NHS can also
mitigate, reduce and prevent poverty, through its actions as a major employer,
commissioner and local economic entity.
Service delivery
The public report very low rates of being unable to access needed health care
due to financial barriers, contrasting sharply with many other developed
countries.
However, within England the picture is much more mixed. Many people
struggle to pay existing charges (for example, for prescriptions) despite
exemptions, and grants and travel and other costs can be prohibitive for some,
such as those with severe disabilities and their family members.
For some core conditions the NHS needs to do better, particularly in terms
of its support of families at risk of or experiencing child poverty, those with
mental health problems and those with long-term conditions (LTCs) – often
the same people.
For example, more than half of those with an LTC consider their health is a
barrier to the type or amount of work they can do, rising to more than 80 per
cent when someone has three or more conditions. Furthermore, research with
nearly 500 general practices shows 33 per cent of patients from the most
deprived postcodes have three or more LTCs, compared with only 7 per cent
in the least deprived. This systematic social patterning means that the NHS
needs to be alive to the social status and context of its 15 million patients with
LTCs. This also means LTCs are likely to be a core factor keeping people on
lower incomes and in poverty, and in making someone unemployed,
compromising individual and family income levels and increasing poverty risk.
How the NHS adapts to the increasing number of people with LTCs and
co-morbid mental health problems is clearly very important for the knock-on
implications for reducing the risk of poverty.
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141
Economic and social value
The NHS has a significant impact on income redistribution through the
production and delivery of in-kind healthcare services. In a world without the
NHS income inequalities would be 13 per cent wider between the top and
bottom income quintile.
The NHS accounts for more than 8 per cent of GDP at a national level.
However, it is much more important in relative economic terms in some areas
than others. Human, healthcare and social work services – dominated by NHS
activity – account for a significant proportion of every region’s gross value
added, from a low of 5.3 per cent to 8.4 per cent in London to a high of 10.7
per cent to 15.7 per cent in the North East. Areas with higher poverty have
economies more dependent on the NHS. The exception to this is London
which combines a vibrant economy, lower dependence on the NHS and high
poverty rates.
The NHS also keeps people out of poverty through its direct employment
(accounting for up to 15.7 per cent of employee income in the North East).
How and who it employs, and on what wages, also impacts on poverty; the NHS
employs more than 1 million non-clinical staff.
The NHS also contracts and buys through its commissioning. There is less
information on how these practices impact on poverty, although around half of
NHS trusts report specifying the living wage when contracting services.
The reforms
Health reforms have introduced a number of changes that could, in theory,
lead to a more strongly poverty aware and focused NHS. However, in practice,
there is little sign that the NHS is a more poverty focused system now than
when the government was elected in 2010. The system is still settling down
after significant upheaval, and it is undoubtedly more fragmented, which makes
it harder for organisations to focus on complex issues such as poverty.
There is a tangible lack of coherent policy from the system’s new leader –
NHS England – on poverty – to explain how the system’s powerful levers can
be used more proactively.
Case studies in the full report outline where the NHS is already working
well to tackle poverty. But to move beyond these islands of excellence – and
to make more of the NHS – it is recommended that NHS England should:
• lead on the development of a coherent policy for the NHS’ role in tackling
poverty, and create and disseminate a catalogue of good practice on the
NHS’ role in tackling poverty – this should set out the NHS’ role in
mitigating, reducing and preventing poverty;
• produce guidance for the NHS on what the Social Value Act implies for
commissioning and audit the wider economic impact of the NHS in local
areas, and its redistributive effects;
• ensure that resource allocation accurately reflects the circumstances and
needs of those in poverty and hold the NHS to account for the use of these
resources;
• ensure that the policy and practice guidance and future pilots on LTCs and
integration include how services need to adapt to take into account the
socio-economic circumstances of patients.
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Local health partners (particularly the NHS and local authorities) should be
further challenged to:
• pay the living wage as a default and stipulate this in commissioning;
• work more creatively and closely with other local public bodies to ensure
the NHS contributes to wider poverty and well-being objectives;
• understand and act on the implications of the Social Value Act, and include
assessments of the local NHS’s impact on poverty in joint strategic needs
assessments and joint health and well-being strategies.
Clinicians and their leadership bodies should:
• commit to Working for Health’s Working for Health Equity: The role of health
professionals recommendations and audit achievements;
• ensure that the social model of health is given as much status as the medical
model in training, and in continuing professional development.
The Department of Health should:
• consider how the NHS can do more for poverty through the NHS Mandate,
and the NHS, public health, social care and associated outcomes frameworks.
• work more closely with other departments (particularly DWP) to ensure
that people at risk of – or with – LTCs and mental health problems are
supported to remain in the workforce;
• carry out specific work with NHS England and Public Health England to
understand more deeply the impact of the NHS on poverty – and include
this as a benchmarked indicator through the NHS and public health
outcomes frameworks.
Conclusion
The NHS already makes an under-recognised and under-valued contribution
to tackling poverty. It needs to be more aware of this, so it can make an even
stronger contribution through maximising its economic and social value in
every community.
About the project
This is a policy analysis, rather than an academic analysis or systematic review.
However, the findings are drawn and triangulated from a wide range of national
and international literature, case studies and data.
Education, personal relationships and community
143
COMPLEX
NEEDS
CONTENTS
Foreword
146
Crime and poverty
148
Disability and long-term conditions and poverty
153
Economic migrants and poverty
157
Homelessness and poverty
162
Institutional care and poverty
166
Poverty among asylum seekers and refugees
171
Complex needs
145
FOREWORD
‘Complex needs’ in this context indicates that the poverty people face is
complicated by their additional requirements for support with, for example,
mental or physical health problems, or various forms of social marginalisation.
Disability is undoubtedly a huge part of the poverty picture in the UK.
However, poverty amongst disabled people is said to be consistently
underestimated because official measurements do not take into account the
extra costs they face as a result of their disabilities. Disability-related poverty
can be reduced by both minimising these extra costs – via interventions in
housing, transport, consumer markets and so on – and by boosting disabled
people’s incomes from paid work. This dual strategy makes a great deal of
sense, but it may be costly to implement because of the sheer numbers
involved, which seem certain to rise in an ageing society.
A different sort of challenge is posed by poverty amongst asylum seekers
and refugees, which is argued to be ‘institutionalised’ in current welfare and
immigration policy. Review recommendations – such as reinstating asylum
seekers’ right to work, and bringing asylum support rates closer to mainstream
benefit levels – would not be particularly costly to the public purse, but
political palatability presents a formidable barrier to implementation. Likewise,
addressing poverty amongst low-paid economic migrants, particularly acute
amongst those from outside the European Economic Area, requires more by
way of political will than public expenditure. Here the main recommendations
focus on extending employment rights, and tighter regulation of those sectors
where exploitation risks are greatest.
We were cautioned by Ipsos MORI’s research on attitudes to poverty (to be
published by JRF in 2014) that simply telling the public they are ‘wrong’ on
issues of poverty won’t change minds. Far more effective is to try to explain
the underlying causes of, and context for, the apparently ‘bad choices’ made by
some people living in poverty. This issue was addressed head on in the crime
review, which persuasively argues that long-term poverty adversely influences
family functioning. It engenders parental stress and conflicts that significantly
increase the risks of children and young people offending. The same could be
said about the more extreme forms of drug misuse and single and street
homelessness.
Stigma was a key thread running through this particular intersection of
complex needs, leading to a call in the crime review for preventative
interventions to be focused on ‘places, not cases’. But place-based strategies
can raise their own concerns about (further) stigmatising entire communities.
Working out how we can target help where it’s most needed, without
inadvertently reinforcing the problems we are trying to tackle, is a core
dilemma for this Anti-poverty Strategy.
Looking at ‘place’ from another angle, the fact that those in contact with
the criminal justice system routinely come from the poorest neighbourhoods,
and emerging evidence of similar geographical concentrations amongst those
using drugs and single homelessness services, underline the fundamentally
structural nature of these complex social problems. Reducing poverty itself is
therefore likely to be the most effective ‘primary’ prevention measure,
especially amongst unemployed young men living in disadvantaged areas,
whose needs, we are reminded in the crime review, have been neglected in
anti-poverty policies so far.
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Reducing poverty in the UK
A number of recent policy developments do give grounds for optimism. The
increasing influence of the ‘desistance’ model within criminal justice, which
owes much to the ‘recovery’ approaches now prominent in both mental health
and substance misuse policy, is very encouraging. So too are the positive
evaluation results emerging from ‘Housing First’ projects, which promote rapid
rehousing for homeless people with complex needs.
However, as was stressed in the homelessness review in particular, the most
intractable problems faced by those with complex needs tend to be their
poverty and worklessness. Resolving these poses even greater challenges than
addressing their housing, healthcare, or social integration needs. This takes us
back to fundamental macro-structural issues about the labour market, tax
and benefits dealt with elsewhere in this set of reviews – and reinforces the
importance of the comprehensive nature of the Anti-poverty Strategy that we
are developing.
Suzanne Fitzpatrick
Professor of Housing & Social Policy in the School of the Built Environment,
Heriot-Watt University
Complex needs
147
CRIME AND POVERTY
Poverty influences who offends and who is a victim of
crime. This study examines the impact of poverty on
crime and the benefits of tackling crime through
reducing poverty.
Key points
• Although the relationship between poverty and crime is not always direct,
living in poverty makes offending and being the victim of crime much more
likely.
• Trends in post-war economic inequality and poverty correspond to longterm patterns of change in the UK rate of property crime. The steepest
rises in the rate of property crime occurred during the 1980s and early
1990s, coinciding with dramatic increases in the level of unemployment
and inequality.
• The unemployment rate is positively and strongly associated with the
rate of acquisitive crime in Britain, but it is the severity and duration of
unemployment (and underemployment) that is important. Unemployment
also increases the likelihood of detection and severity of punishment, and
greatly constrains an individual’s freedom to make positive choices to desist
from crime.
• There is a strong relationship between dramatic increases in poverty and
violent crime. Increases in murder over recent decades are predominantly
murders of younger, poorer men, while richer areas have experienced
opposite trends of low and declining murder rates.
• Big changes in the housing market have radically altered the area distribution
of crime in Britain from southern to northern regions, and to areas of
‘residual’ public housing.
• Long-term poverty adversely influences family functioning, engenders
emotional stress and undermines emotional security, significantly increasing
the risks of children beginning offending and continuing into teenage.
• The speed and depth to which people sink into poverty and unemployment
is important in influencing the crime rate. The recent recession’s relatively
muted growth in poverty and unemployment may explain why crime has
continued to decline.
The research
By Colin Webster and Sarah Kingston, Leeds Metropolitan University
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Reducing poverty in the UK
BACKGROUND
Although a profile of known offenders and victims shows
that the majority have often experienced unemployment and
poverty, any relationship between poverty and crime must
be treated with caution. Most people who are poor have no
involvement in crime.
Poverty on its own does not cause criminal behaviour or victimisation. The
relationship between poverty and crime is not straightforward. Certain other
adverse individual, family, school and neighbourhood conditions, events and
experiences are involved. Poverty, nevertheless, generates material, personal
and social conditions that mean people are more likely to be victims of, or carry
out, crime. Although not all studies agree (opposing views are considered in the
main report) our findings include that susceptibility to, and the likelihood of,
teenage and young adult offending are substantially increased among children
who grow up poor. Another, and strikingly consistent finding, are the strong
links found between poverty and violent crimes such as homicide, assault and
domestic violence.
The different dimensions of the relationship between poverty and crime
are dynamic and complex. They relate to: age, life span and life transitions;
gender and poverty seen in the strong link between women’s poverty and their
offending and victimisation; the relationship between income poverty, parental
stress and onset of childhood and teenage offending; the neighbourhood
effects of area poverty and crime; the importance of feelings and perceptions
of relative poverty in engendering discord and violence; the different
relationships of poverty to violent and property crime; the significance of
macro-economic trends such as recession and crime; poor and insecure work
having an adverse influence on criminal proclivities; and the adverse influence
of changes in public, welfare and criminal justice policy on the rehabilitation of
offenders.
How poverty affects crime
Family
Families living in poverty are more likely to function poorly and conflicts and
emotional stress are more likely. Economic disadvantage and family dissolution
together can reduce the opportunities available to children, and their emotional
security. Parental stress and family disruption and break-up resulting from
unemployment and income poverty can thwart childhood development and
encourage early onset of offending. At teenage and young adulthood the
availability of secure, stable employment in preventing persistent offending
becomes more important than parental relationships.
Complex needs
149
Unemployment
The relationship between unemployment and crime is the most established
when unemployment increases rapidly and is long term. Total unemployment
and the rate of increase of unemployment strongly influence property crimes.
There is a strong causal relationship between unemployment and crime, and
both wages and unemployment are significantly related to crime, but wages
play a larger role over periods of economic downturn. The quality and stability
of employment has a stronger influence on deterring individuals’ involvement
in crime than the mere fact of having a job.
Women
Worsening women’s poverty due to increased divorce rates, more women in
low-waged jobs, unemployment, lone parenthood and wage inequality lead to
increased female crime. Sudden, unexpected events that impoverish women
–including having children – can send them into a spiral of decline, from which
crime becomes more of a desperate measure of ‘survival’ than it does for men.
Age
Adverse early childhood experiences caused by childhood poverty can predict
later offending behaviour in teenage years, which can persist into young
adulthood and beyond. However different triggers and causes may also
precipitate offending at different ages. For example, there are early teenage
experiences such as frequent truanting which are age specific that could not
have been predicted from childhood experiences.
Neighbourhood
People living in poor neighbourhoods are generally more likely to be the
victims and/or commit crime. Neighbourhoods with high levels of poverty can
concentrate the risks of people becoming victims of crime and lessen the
ability of people to protect themselves. There are high levels of inequality in
the distribution of crime risks between neighbourhoods.
Economic change
A weaker economy usually quickly leads to more unemployed and
underemployed people who may commit crime as alternatives to poor or
non-existent work. Increased motivation to commit crime as an alternative to
unemployment and underemployment tends to lag behind an economic
downturn as structures, routines, expectations and support deteriorate.
Changes in the economy, education and welfare have made the legitimate
routes out of crime more difficult.
Costs and benefits
The reduction of crime and poverty through suitable investment in policies
such as well targeted and well designed employment programmes offers
financial benefits. It has been estimated that in Scotland alone, violence costs
the Scottish economy £3 billion each year in healthcare, law enforcement and
lost productivity.
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Reducing poverty in the UK
Policy implications and recommendations
Some policies can directly influence and counter the impact of poverty on
crime. Others are more concerned with the bigger picture of overall reduction
and eradication of poverty, and the resulting significant effect this can have on
reducing crime. For example, it has been shown that relatively small reductions
in income inequality produce large reductions in homicides.
Successive governments have devised anti-poverty policies that neglect
the poverty of unemployed, effectively childless, young men into young
adulthood. Their unfavourable treatment compared with poor children and
pensioners, lone parents and working families with children (through the Tax
Credit system) has impoverished a group renowned for being prone to crime.
Before the 2008 recession and financial crisis, poor children and pensioners
had benefited substantially from targeted anti-poverty drives. Since 2008,
childless working-age adults and childless young men living in poor areas have
been hit the hardest.
To prevent them forming the bulk of any future increase of the offender
population the prospects and prosperity of poor young men of this and the
next generation need attention. The group’s propensity to ‘connect and thrive’
will depend on their access to decent work and security, and the avoidance of
poverty.
As well as policies for early teenagers and those leaving school, policies to
tackle the relationship of poverty and crime will need to continue to focus on
early intervention in children’s lives through bolstering and securing longterm, consistent and professionally staffed children’s services. The most
effective approaches combine improvements in unemployment, family income
and housing with targeted interventions designed to meet the needs of
children and their families who are disproportionately represented in poorer
groups.
Early intervention has long-term benefits for child development and
support for parents, helping to prevent later youth offending. Linking early
intervention with children to later interventions in teenage and young
adulthood is key, as long as interventions are well-targeted and well-funded,
and inclusive and seamless, ensuring children and young people are nourished
and flourish. A universal service should recognise the possible adverse, longer
term impacts of poverty on crime, combining children’s services, childcare,
family intervention and parenting programmes (such as that begun in children’s
centres and Sure Start) with youth inclusion programmes, financial assistance
to stay at school, and New Deal.
Policy to tackle the link between poverty and crime must be about ‘places,
not cases’. There needs to be a simple recognition that the children, young
people and families most likely to have contact with the police and criminal
justice system are routinely drawn from the poorest neighbourhoods.
The focus needs to be on neighbourhoods experiencing concentrated
disadvantage, not identifying and labelling childhood behaviour.
The bigger picture of reform requires tackling education and training and
the increasing polarisation between the unskilled and unqualified and the rest,
through earlier vocational schooling, good quality training and proper
apprenticeships. Alongside this, the quality, progression and remuneration of
insecure, low waged and unskilled work must be improved and the growth of
poor work reversed. Inequalities and poverty are best reduced through
knowledge and skill, which is also key to overall productivity growth. Thus
investment in education and training means excluded social groups can also
share the benefits of economic growth.
Complex needs
151
It is becoming possible, once again, in the context of unprecedented
extremes of wealth, to envisage redistributive measures of income and wealth
through taxation. For such measures to contribute to investment in education
and training, and a commensurate reduction in poverty, certain conditions
must apply. These include the reduction of both tax avoidance and the influence
on government of corporations and rich individuals to relax tax rates and law.
Gradually and through various steps towards more equality and the eradication
of poverty, greater transparency about asset ownership, and the adoption of a
wealth tax and higher top tax rates, the impact of poverty creating myriad
social problems, including crime, reduces.
About the project
The study reviewed the evidence from the academic and policy literature
published between 1980 and 2013 that directly or indirectly explored the
impact of poverty on crime.
Read the full report.
152
Reducing poverty in the UK
DISABILITY
AND LONG-TERM
CONDITIONS
AND POVERTY
This study considers how poverty among disabled
people is underestimated and explores the difficulty
in escaping poverty through paid work. It presents
recommendations for reducing poverty among
disabled people.
Key points
• Poverty among disabled people is consistently underestimated. This study
uses two different adjustments, each finding at least a ‘missing million’
people in poverty in households with a disabled person.
• Making society less disabling will reduce poverty among disabled people.
Possible ways of doing this include improving affordability and accessibility
of transport and housing, developing standards for consumer devices,
better use of technology, and making markets for assistive technologies
work more effectively.
• Disabled people are less likely to be working and more likely to be low-paid.
There are four main ways that this could be tackled:
– the benefits system: changes are needed so that the system doesn’t
stop people from being able to work;
– specialist programmes can help people return to work when they
include personalisation rather than sharp targets;
– early intervention, including better workplace practices and responsive
health systems, as well as a healthy psychosocial work environment;
– employers – many disabled people simply face limited opportunities.
There is a common perception that employing disabled people involves
extra costs, and there are limits to ‘reasonable’ adjustments. Stronger
actions may therefore be necessary, including regulation and incentives.
• Disabled people stress that work is not always the solution; policies should
resist the temptation to simplify the diversity of disability. It may be
necessary to change the current public debate; the idea that ‘work is the
best route out of poverty’ clearly cannot apply to all disabled people, and
reducing the aim of poverty reduction to simply improved access to
employment would be counterproductive.
The research
By Tom MacInnes and Adam Tinson, New Policy Institute; Declan Gaffney, independent
policy consultant; Goretti Horgan, University of Ulster; Ben Baumberg, University of Kent
Complex needs
153
BACKGROUND
Most studies underestimate the levels of poverty among
people with disabilities. This study shows the likely size of
these underestimates, and explores the difficulty in escaping
poverty through paid work.
Disability is a huge part of the poverty picture in the UK. Using the standard
measure, one in three people in poverty live in a household with a disabled
person. The headline poverty rate for disabled individuals is 23 per cent –
slightly higher than the rate of non-disabled individuals of 21 per cent.
However, poverty is about whether someone’s material resources are
sufficient to meet their needs. Disabled people’s needs are often greater – some
estimates put this at £1,500 a week. This is due to both ‘enhanced costs’
(things everyone needs but which are more expensive for disabled people) and
‘special costs’ (things that only disabled people need).
Unfortunately it is impossible to precisely adjust for these extra costs – they
differ too much between different disabled people. However, this review
provides two estimates that adjust for this in different ways.
• Excluding certain disability benefits from income: nearly 7 million people
live in a household where someone receives a benefit (Disability Living
Allowance or Attendance Allowance) to meet some of the extra costs of
disability. This is conventionally treated as ‘income’, even though a disabled
person with £100 extra income and £100 extra needs is as poor as someone
without a disability. When these benefits are excluded from income an
extra 1 million people are found to be in poverty.
• Estimating extra costs as a percentage of income: one study found that
the average disabled person had extra costs amounting to 24–35 per cent
of their income (depending on household composition). Using these figures,
the poverty rate among households with a disabled member rises from
25 per cent to 30–32 per cent, amounting to an extra 1.3 –1.8 million
people in poverty.
While these estimates are imprecise, we can reasonably say that the official
poverty statistics cover up a ‘missing million’ people in poverty, in households
with a disabled person; possibly the figure is even higher.
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Reducing poverty in the UK
Reducing disability poverty by reducing the extra costs of
disability
It is self-evident that making society less disabling will reduce poverty among
disabled people. While there is little direct evidence on how to go about this,
the literature and the author’s policy workshop with disabled people suggested
the following:
• greater levels of suitable housing could be provided, whether by changing
policies in social housing, improving the standards of new-build homes, or
helping disabled people own (and adapt) their own home;
• there could be greater enforcement of the ‘reasonable adjustment’
obligation in public transport, and the private transport Motability scheme
could be made more widely available;
• disabled people are legally discriminated against in certain markets, such as
insurance and other financial products. Government could legislate to make
this discrimination illegal;
• standards for consumer devices (and government standards in contracts)
could build in accessibility, without the need for separate markets specifically
for disabled people;
• technology could be used to reduce costs. Prizes could encourage
entrepreneurs to think of innovative ways of reducing costs, and government
investment could be increased;
• the markets for assistive technologies could be made to work more efficiently
through e.g. bulk buying and an online portal. There is also an argument for
extending government support from ‘Access to Work’ to a new ‘Access to
Life’ scheme.
Reducing disability poverty through paid work
Disabled people are less likely to be working and more likely to be low paid than
those without disabilities (even those with the same level of qualifications). The
evidence review suggested four main areas for policy: benefits, return to work,
prevention, and focusing on employers.
Despite an intense policy focus on reforming disability benefit systems over
recent decades, improvements in employment for disabled people have often
failed to materialise. There is no evidence at the national level that disability
employment rates are improved by either reducing benefit generosity, tighter
eligibility or stepping up activation policies (although these policies might
reduce disability benefit caseloads). Disabled people themselves highlighted
that the benefits system needs to allow people to move to areas where there
are more jobs, and to create a system with fair criteria and processes.
Specialist programmes can also help people return to work – although the
evidence mainly covers common physical health problems. Effective
programmes include longer-term engagement and personalisation, and
avoiding sharp work-focused targets that lead to ‘cream-skimming’ and
‘parking’. Some specialist programmes seem more effective but only work with
limited numbers of people. Supported employment that combines intensive
long-term in-work support and employer subsidies –in particular, the Individual
Placement and Support model – is one of the best ways of helping people with
severe mental health conditions into sustained employment. However, this
type of intervention needs to be properly resourced. Disabled people also
highlighted that people may need help to reskill, where there is a mismatch
between the jobs they are qualified or experienced and the jobs that their
health or disability allows them to do.
Complex needs
155
Early intervention can stop people leaving work to begin with. Long-term
worklessness due to mental health conditions and musculoskeletal disorders
can be reduced through better workplace practices, while responsive health
systems can reduce the risk of developing severe mental ill-health. Once sick
leave starts to be taken, early healthcare and workplace interventions can help
people with common health conditions to retain their jobs. Maintaining a
healthy working environment is also crucial.
However, disabled people stressed that they often face limited opportunities
in the labour market: it is crucial to ask ‘what should employers do differently?’
Individual managers can make a difference, and a radical improvement in advice
and training to employers could help. Yet there is a common perception that
employing disabled people involves greater cost (which can be true in some
circumstances). Employers are also often reluctant to make adjustments as this
can induce resentment among colleagues, or involve additional costs, even if
these are lower than anticipated. Workplace adjustments could help more
people to work, and it is a legal obligation for employers to make ‘reasonable’
adjustments. However the overwhelming majority of disabled people in work
have jobs for which they do not need a particular adjustment – they just
happen to be in a suitable job.
Disabled people suggested some stronger actions, including regulation
(supporting disabled people to assert their existing employment rights) and
incentives (targeted help to small companies, expanded access to work,
personal budgets for employment support). A number of countries impose
stricter job protection for sick or disabled workers. This reduces the risk of loss
of employment for workers, but it may also mean employers avoid hiring
disabled workers in order to maintain staffing flexibility.
Further recommendations from disabled people
The disabled people at our policy workshop stressed three further points:
• There is a need to challenge the assumption that paid work is the solution
to poverty among disabled people. Some disabled people cannot work, nor
is work what everybody wants when they have just found out about a
serious health condition.
• ‘Disability’ and ‘sickness’ are diverse and complex. We should resist the
temptation to make policies that falsely simplify the issues. Nor should
policies be seen as a series of disconnected levers to be pulled – it is about
creating a system that works as a whole.
• The current policy debate often seems to deny the legitimacy of social
security benefits, and to deny that some people are simply not able to work.
It will be hard to tackle poverty among sick and disabled people without
fundamentally changing the debate.
About the project
This study drew on new data analyses using the Households Below Average
Income (HBAI) data, supplemented by other surveys such as the Health Survey
for England and international data from the OECD and Eurostat; reviews of
published literature on ‘what works’; a policy workshop in October 2013
organised by Disability Rights UK.
Read the full report.
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Reducing poverty in the UK
ECONOMIC MIGRANTS
AND POVERTY
This review of economic migrants and poverty in the
UK considers the connections between economic
migration and poverty, the drivers and experiences of
poverty for different groups of migrant workers, and
strategies and interventions which can ameliorate
poverty among economic migrants.
Key points
• Low-paid migrant workers are more likely to experience poverty than UK
nationals in low-paid work; migrants from outside the European Economic
Area (EEA) are most likely to experience poverty.
• Tighter restrictions on welfare entitlements and access to the labour
market may exacerbate poverty for all migrant workers.
• Poverty is largely determined by the position of migrants in the labour
market and the precariousness of their employment.
• Extending employment rights to all workers, including agency staff, and
ensuring economic migrants are told about their rights is crucial to
mitigating the risk of poverty.
• Tighter regulation of employment sectors and businesses where exploitation
risks are greatest is needed.
• Improved advice and assistance for migrant workers might be funded by
the introduction of a ‘tax’ on businesses gaining most from cheap migrant
labour or by investing a portion of the fees paid by migrant workers for
visas.
• Architects and developers might be challenged to develop flexible, shortterm, yet good-quality accommodation to alleviate both exploitation and
overcrowding in migrant housing and improve local environments.
• Current discussions around ‘managing migration’ need to more fully
consider the potential of poverty to impact on the lives of migrant workers
and UK nationals in terms of levels and costs of service provision and
accessibility, employer competitiveness and community relations.
The research
By Simon Pemberton, Keele University, Jenny Phillimore, University of Birmingham, and
David Robinson, Sheffield Hallam University
Complex needs
157
BACKGROUND
Poverty is an important driver of migration – many people
migrate to escape poverty. Far less is known about the
incidence and experiences of poverty once economic
migrants arrive in the UK. This review explored these issues,
developing a series of assertions and recommendations.
The explicit focus of the review was on workers most likely
to encounter poverty: migrants in low-skilled, low-paid
employment.
The experience of poverty was found to vary according to the position of
migrants in the labour market, coupled with their legal status and material and
financial assets. A distinction exists between low-skilled and low-paid migrants
who are often more vulnerable to poverty and dependent on in-work benefits,
and those who are more highly skilled and relatively well paid. Although the
highly skilled/paid migrant workers can sometimes fall into poverty, this review
focused on economic migrants at greatest risk of poverty; those in low-skilled,
low-paid employment, where the growth in the proportion of foreign-born
workers has been greatest in recent years.
Economic migration and experiences of poverty
Much of the literature on economic migration and poverty focuses on the role
of migration in alleviating poverty, rather than the poverty experiences of
migrant workers. In addition, many studies focus on particular aspects of
migrants’ experience in isolation. However drawing this information together
we can consider the interdependent and frequently reinforcing influences on
the poverty experiences of migrant workers.
The deregulated nature of the UK’s labour market provides the context for
the recruitment of cheap, flexible migrant labour. A range of studies indicate
that the overall well-being of economic migrants is largely determined by
where they end up in the labour market, irrespective of the routes that have
been used to access the UK economy.
The precariousness of migrant employment is important. The evidence
highlights how some migrants may have patchy access to the labour market or
have lost their jobs and have been forced to look for lower skilled/lower paid
employment out of necessity. Research has shown how migrants may be
underemployed due to the lack of recognition of overseas qualifications, or
experience irregular employment. There is also an acknowledgement that
those who enter the labour market may be subject to discrimination or even
abuse by employers regardless of their job.
In turn, such instability can mean that many enter or remain in what is
frequently a cycle of low-paid, low-skilled work. This, it is reported, can force
migrants to maximise their income by various means, such as working long
hours and reducing costs, especially given the need for many to send money
home.
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Reducing poverty in the UK
The impact of poor working conditions and a lack of security and low pay
have impacts beyond the workplace. To minimise outgoings, many migrants
share housing with others. A number of studies have highlighted how this leads
to overcrowding and poor conditions, which combined with low incomes has
undermined migrants’ health and well-being.
The poor state of migrant accommodation and overcrowding is recognised
as an important factor in tensions with long-term residents who blame
migrants, rather than landlords, for deteriorating housing stock. Migrants can
also become dependent on debt and some migrants have become reliant from
support ‘back home’ to survive. All of these pressures and strains can damage
family relationships and impinge on overall well-being.
Working long hours, it has been noted how migrant workers often have
little time for socialising or education, including learning English. The lack of
opportunities to mix with local residents and pressure on services – as well as
the displacement of locals from employment in some areas – can exacerbate
tensions and fuel anti-migrant sentiment and calls for further restrictions on
migrants’ access to employment and welfare.
Differential experiences of poverty
European Union Labour Force Survey (EU-LFS) data, focusing on the
economically active 25–54 age group, highlights that levels of poverty are
particularly high among migrants in the UK from outside Europe (29 per cent).
This is compared with 16 per cent for EEA migrants and 18 per cent for UK
citizens although those from the EU8 are more likely to experience in-work
poverty than UK citizens. EU-LFS findings reflect lower levels of economic
activity and employment among migrants from beyond Europe, although some
arrive as students or spouses.
That non-EEA migrants are more susceptible to poverty than EEA migrants
and UK citizens can be illustrated through a range of ‘proxy’ indicators from
the Understanding Society dataset. While the data includes those who moved
for non-economic reasons and includes refugees and people arriving on
spousal visas, it highlights that non-EEA migrants perform less well. For
example, over half (57 per cent) of those that were born outside Europe were
‘struggling financially’, compared with 39 per cent for those born in the UK and
EEA. A similar pattern exists in respect of ‘housing in a non-decent state of
repair’, with 37 per cent of non-EEA born migrants stating this was a problem
compared with 19 per cent (UK born) and 28 per cent (EEA born). The capacity
to ‘save regularly’ and ‘being up-to-date with all bills’ were also more of a
problem for non-EEA migrants.
Non-EEA migrants may have further difficulties with the ability to access
employment opportunities and other services. More than 30 per cent indicated
that they did not have access to a car whereas this figure dropped to around
15 per cent for those UK born and around 20 per cent for those born in the
EEA.
Analysis over time reveals little change on many indicators. However, there
has been a slight improvement for non-EEA migrants in some areas, although
any progress may be curtailed by new restrictions on access to welfare and
employment.
Complex needs
159
Policy recommendations
Insights from the evidence suggest that an anti-poverty strategy tackling many
of the issues to which economic migrants are exposed will need to address:
• Employment rights – these should be extended to all workers. Improved
protection should be given to agency workers (including migrant workers)
in a bid to address discrimination, increase job security and enhance
employment rights.
• Resourcing regulation – there is a need for better resourcing and more
proactive inspection, offering protection to those who report exploitation.
• Outreach – trade unions should ensure there are no unreasonable
obstacles to migrant workers taking up membership and perform a ‘policing
role’ to non-members. They might also develop their outreach work – for
example with local authority housing teams – to share information on
housing tied to employment.
• Taxing employers of migrant workers – many employers profit from
employing low-paid migrants who frequently earn so little they qualify for
in-work benefits. The possibility of taxing such employers to develop a fund
that supports vulnerable/exploited workers should be explored (i.e. free
language support or a ‘living wage’).
• Investing visa fees – an element of increased visa fees charged to non-EEA
migrants should be invested in providing advice and support to people at
the greatest risk of exploitation.
• Credit union – a National Credit Union for Migrant Workers could provide
protection from destitution for migrant workers where their circumstances
have deteriorated.
• Language support – English language skills are key to progression in the
workplace. Additional language support could be provided through
‘buddying’, voluntary organisations and ‘English language cafes’.
• Information on entry – economic migrants could be provided with better
information on arrival in the UK (i.e. fact sheets and regular updates in
relation to employment and housing rights).
• Greater regulation and flexible accommodation – greater regulation is
needed in the private rented sector where many migrants live and where
poor housing conditions are found. Architects/developers could be
challenged to develop flexible, short-term, good-quality accommodation
to alleviate exploitation and overcrowding and improve local environments
– e.g. ‘brownfield bedsits’, ‘migrant pods’ and loan deposit schemes.
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Conclusion
As long as key sectors of the UK economy rely on a low-paid, insecure,
casualised workforce, economic migrants will encounter poverty. More
investment in education and training, better wages and conditions in some
low-waged jobs, improved job status and career tracks, and a decline in
exploitative low-waged agency work is necessary to improve employment
quality, making jobs more attractive to people born in the UK and better for
everyone. Current discussions around ‘managing migration’ need to consider
more fully the effects on poverty of both migrant workers and UK nationals,
particularly in terms of levels and costs of service provision and accessibility,
employer competitiveness and community relations.
About the project
This study is based on a review of more than 200 pieces of written evidence
and data analysis of the Labour Force Survey (LFS) and Understanding Society
(Waves 1–3, 2009–13). It focused on economic migrants rather than forced
or undocumented migrants.
Read the full report.
Complex needs
161
HOMELESSNESS AND
POVERTY
This study reviewed evidence regarding the extent
and nature of links between poverty and homelessness.
It examined the effectiveness of interventions that
attempt to break these by protecting low-income
households from homelessness and/or reducing
the likelihood that people with experience of
homelessness are impoverished in the long term.
Key points
• Research has consistently demonstrated that poverty is a precursor to
homelessness for most (but not all) people who experience it. The effects
of poverty can, however, be mediated by protective factors such as welfare
interventions and social support networks which reduce the risk of ‘poor’
households becoming homeless.
• Existing evidence also indicates that most homeless and formerly homeless
people experience poverty in the long term. The majority remain workless
even after securing settled accommodation and those that obtain paid
employment typically continue to struggle financially.
• Welfare reform threatens to strengthen rather than weaken the links
between poverty and homelessness. Particular concerns have been
expressed about the disproportionately severe impacts on homeless people
with complex needs and young homeless people.
• Evidence from the UK and elsewhere suggests that the link between
poverty and homelessness can be at least partially broken with effective
prevention measures (e.g. financial advice, rent deposit schemes) targeting
at-risk groups. These have capacity to reduce the scale and severity of
homelessness.
• Poverty is, however, more intractable and difficult to resolve than
homelessness. Existing homelessness interventions typically report positive
psycho-social, health and housing outcomes, but less success in terms of
improving homeless and formerly homeless people’s financial well-being.
• For the links between poverty and homelessness to be broken more
effectively, greater effort needs to be directed at tackling the structural
factors that contribute to economic disadvantage and inequality.
The research
By Sarah Johnsen and Beth Watts, Heriot-Watt University
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BACKGROUND
This review assessed the extent and ways in which
poverty causes homelessness, and homelessness causes
(or exacerbates) poverty. It also sought to evaluate the
effectiveness and costs of policy and practice interventions
that aim to break the links between homelessness and poverty.
Poverty as a cause of homelessness
The prominence of poverty in accounts of homelessness causation has
varied over time, but it is now agreed almost universally that poverty is a key
contributory factor. There are some (rare) cases wherein individuals with
substantial incomes experience homelessness after a personal crisis, but
empirical evidence indicates consistently and compellingly that experience
of poverty is shared by the vast majority of homeless people in the UK and
elsewhere.
That said, while there is a significant degree of consensus that most people
are ‘poor’ at the point they become homeless and therefore lack the financial
and other resources to ride out crises without becoming homeless, there is
less evidence and agreement regarding whether the greater majority grew
up in poverty, that is, have experienced lifelong poverty. There are some
indications that this may be true, but the evidence to support (or refute) this
contention is at present weak.
The influence of poverty in causing homelessness is determined in part by
macro-level structural conditions such as welfare regimes, housing and labour
markets, but also complex interactions between these and micro-level factors
such as individual vulnerabilities (e.g. ill-health and/or substance misuse).
Notably, the effects of poverty as a causal influence can be mediated (arrested
or exacerbated) by a number of factors such as the degree of protection
provided by welfare regimes, support programmes, and individuals’ access to
social, economic and/or human capital.
Concerns have been expressed about a possible increase in the incidence
of ‘middle-class homelessness’ in light of the recent economic recession and
current welfare reform in the UK. Recent evidence, however, suggests that the
strong causal link between poverty and homelessness appears to have been
maintained in the current economic climate, with homelessness continuing to
disproportionately affect the most economically disadvantaged members of
society.
Homelessness as a cause of poverty
Existing evidence also makes it clear that the vast majority of homeless
individuals in the UK, be they single homeless people or the heads of statutory
homeless families, suffer from persistently low incomes, are workless, and
reliant on welfare benefits. Evidence on the long-term economic status of
homeless and formerly homeless people is limited, but that which does exist
indicates that the vast majority remain in poverty even after they have been
rehoused: only a small minority participate in the paid workforce and those
that do typically continue to struggle financially.
Complex needs
163
Particular concerns have been expressed about the prevalence of debt
among formerly homeless households, especially those accommodated in the
private rented sector. Anxieties are also widely expressed regarding the
disproportionate (negative) impact of welfare benefit sanctions on homeless
people, especially those with complex needs and young people.
Homeless and formerly homeless people face many barriers to accessing
and retaining paid employment in the mainstream workforce, including: a lack
of stable housing, work disincentives associated with the welfare benefit
system, vulnerabilities and support needs, low educational attainment, limited
(or no) work experience, poor self-esteem and employer discrimination. These
issues are particularly acute for individuals with complex needs such as cooccurring substance misuse issues, mental health problems and/or experience
of institutional care.
Evidence suggests that those homeless and formerly homeless people who
do succeed in gaining paid work typically experience in-work poverty, in large
part because their work tends to be poorly paid and may involve insecure
short-term contracts. It remains unclear whether, and if so for how long, this
situation is sustained, but significant improvements in income seem unlikely
given the limited wage promotion prospects associated with unskilled work.
Thus, existing evidence suggests that neither the provision of stable
accommodation nor the facilitation of homeless people’s access to paid work
will in and of themselves (or in combination) be sufficient to lift the vast majority
of homeless people out of poverty. In short, poverty is much more intractable
and difficult to resolve than homelessness; the former tends to be chronic and
cumulative, the latter episodic.
The effectiveness and cost of interventions
A number of interventions have attempted to break the links between poverty
and homelessness. Research has shown that homelessness prevention
measures which target at risk households (known as ‘secondary’ or ‘tertiary’
homelessness prevention) can operate as a buffer protecting them from
homelessness even in the context of difficult conditions such as rising
unemployment or worsening housing affordability. Examples of such initiatives
include rent deposit schemes, family mediation, tenancy sustainment support,
and financial advice.
A number of other programmes have, in addition to other aims, attempted
to ensure that people who do become homeless are not impoverished in the
long term. Prominent examples include: employment, training and education
programmes; Foyers; social enterprises; Emmaus communities; money
management and financial inclusion initiatives; and individualised budgets.
Most of these have promoted paid employment and/or workforce preparation
as offering a route out of poverty.
All these initiatives, which intervene after people experience homelessness,
report many positive psycho-social and other outcomes, such as improvements
in self-esteem and the acquisition of skills, qualifications and/or work
experience. A number are also said to generate substantial cost savings to the
state and/or offer broader social returns on investment via welfare benefit
savings, tax gains and/or savings in health and criminal justice provision,
for example.
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That said, none has a particularly successful track record in terms of lifting
homeless and formerly homeless people out of poverty. Outcomes regarding
getting and staying in employment are generally moderate at best, and in some
cases poor. Furthermore, as noted above, service users who do get paid work
are rarely much better off financially. In sum, it is incredibly difficult for such
initiatives to make substantial inroads into poverty alleviation within the current
structural context.
Conclusions and implications
On the basis of available evidence, it seems that ‘primary’ homelessness
prevention – which combats the structural factors that contribute to economic
disadvantage and inequality in the first place – offers the most effective means
by which to counter both homelessness and poverty, and break the links
between them. Primary prevention measures seek to reduce the risk of
homelessness among the general population by improving housing supply,
access and affordability, and/or by reforming aspects of the ‘welfare settlement’
(e.g. the level of income benefits, housing allowances and employment
protection).
The review showcases a need for the homelessness sector to redirect its
focus from income maximisation, often reflected in a preoccupation with
ensuring that individuals receive all the benefits they are entitled to, to a
more ambitious emphasis on poverty alleviation. This would direct attention to
improving the accessibility of sufficiently well-paid work or out-of-work
benefits and/or strengthening of the wider welfare safety net (via provision of
social housing and housing benefit, for example). Longstanding calls for
improving the supply of affordable housing and the widespread application of
a living wage thus remain highly relevant; so too do efforts to combat the
‘poverty premium’, that is, the comparatively higher prices that ‘poor’ people
pay for things like household utilities and consumer credit.
The review also highlighted a need to re-examine the interaction between
the benefits system and paid work; if paid employment is to play a role in
poverty alleviation for homeless and formerly homeless people, the benefits
system needs to be able to respond more flexibly to casual and part-time work.
Moreover, there is a clear call for greater use of discretion in the deployment
of welfare benefit sanctions with vulnerable homeless people, as well as more
robust longitudinal research monitoring the long-term experiences of
homeless people and the effectiveness of interventions.
About the project
This research involved a ‘rapid evidence assessment’ of the existing evidence
based on the links between poverty and homelessness, including appraisal of
relevant academic and grey literature from the UK and other developed
nations. This was complemented by telephone interviews with eight key
informants, including representatives of central government, campaigning
agencies, umbrella bodies and service providers across England, Scotland,
Wales and Northern Ireland.
Read the full report.
Complex needs
165
INSTITUTIONAL CARE
AND POVERTY
This review examines international evidence about
the links between institutional care and poverty and
recommends strategies for the UK.
Key points
• Both children looked after by local authorities and prisoners are likely to
have previously been in poverty and to face an enhanced future risk of
poverty.
• They also share characteristics which hinder access to employment. Most
looked-after children in the UK have special educational needs. Almost half
have diagnosable mental health needs. Prisoners experience higher rates of
mental health problems than the general public.
• Up to one in four of the general population has a disability, but as many as
55 per cent of prisoners have a disability if those with anxiety or depression
are included. Up to 60 per cent have literacy and numeracy levels below
those normal among 11-year-olds. Strikingly, a quarter of adult prisoners
have themselves been looked after.
• Preventative support for children and families is key to reducing admission
to institutional care and could help reduce hardship and costs in the long
run.
• Wasteful costs could be avoided with new policies to prevent young people
looked after by local authorities and at risk of poverty from entering the
prison system.
• The problems faced by prisoners could be better addressed in communitybased settings where they can better access a wider range of support and
services.
• Social Justice Premiums, designed to compensate for inequality and social
injustice, should be introduced to ensure sufficient anti-poverty assistance
for those in need and failed by society.
The research
By a team from the Centre for Crime and Justice Studies, The Open University and
University College London
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Reducing poverty in the UK
BACKGROUND
Clear evidence about successful interventions for people in
institutional care is lacking, largely because reducing poverty
in relation to institutional care has not been consistently
targeted.
For this research people in institutional care were defined as those living in a
setting designated for the purpose of care and relying on public funding rather
than purchasing care for themselves.
While the review gathered evidence about institutions for people with
mental health needs and with disabilities, as well as immigration detention, the
analysis here focuses on the more prolifically studied groups – looked-after
children and prisoners.
Reducing the gap between institutions and the rest of
society
In recent decades an international movement towards community placements
has sought to counter the disadvantages of institutional living – isolation from
society, inflexible regimes and distance from family and friends. Community
placements mean that services can be provided from mainstream sources and
people live in their own accommodation. Anti-poverty interventions, such as
education, training and social security payments can be accessed more directly.
There is also a better prospect of service continuity so that users do not ‘drop
off a cliff’ when they leave an institution.
However, imprisonment – like immigration detention – has expanded its
reach: by restricting earning opportunities and paying for work at very low
rates, prisons penalise the already poor and efforts to educate prisoners and
give them skills have failed to significantly reduce the risk of poverty after
release.
According to a report by the National Audit Office there is no evidence that
on average imprisonment is more cost-effective than community sentences in
preventing reconviction. Individuals would benefit from a greater number of
supportive open settings instead of conventional prison. Closures of prisons
should be matched by at least equal provision in community settings.
Towards new mechanisms for delivery
Social Justice Premiums would represent individual entitlements to services
and payments based on lifetime disadvantages, including disability, disrupted
upbringing and placement instability, and years of having been looked after by
local authorities.
Public Service Agreements (PSAs) have provided a framework for publicly
accountable initiatives to increase the proportion of socially excluded adults in
accommodation, education, employment or training. Future agreements to
reduce poverty over significant target periods should learn lessons from the
mixed performance of PSAs.
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167
Looked-after children
International evidence shows that poverty is significantly found among the
families of young people who become looked after, and when leaving care they
face risks of unemployment and hardship. In England in 2012, 36 per cent
of care leavers aged 19 were not in education, training or employment;
although national comparisons are not straightforward, 60 per cent of
19–21-year-olds in Scotland receiving aftercare services whose economic
activity was known were not in education, training or employment.
Too often young people fail to progress educationally and lack the equivalent
material and personal support that they might receive from parents able to
focus significant resources on their development.
Well funded preventive services, such as Intensive Family Support Services
in the UK, or Supportive Housing in the US, can help families and avoid the
need for children to be looked after. Welfare benefits should not be disrupted,
so that families, including kinship carers, are better able to sustain care for
their children. Two-thirds of children looked after continuously for a year or
more have special educational needs, so educational assessment and services
will be key pathways to properly paid employment. Schools should be held
strongly to account for pupil premium spending on looked-after children and
for preventing their exclusion from school; fully adequate educational bursaries
should be provided equally to all careleavers, regardless of the type or duration
of post-school education.
Local authorities should be pro-active in preventing deeper engagement
with criminal justice by providing multi-disciplinary assessment and stable
family placements, promoting family contact, meeting financial needs, and by
specialist foster care and therapy.
Looked-after young people need improved financial resources to set up
home, to develop personal and vocational skills and to build savings for
lifetime goals. Government top-ups for savings accounts should ensure that
looked-after young people accumulate assets of at least the median rate for
non-looked-after children of the same age.
Working in partnership with colleges and employers, social workers and
carers should be enabled to help careleavers prepare for work, and get financial
education and access to sources of material support.
The Children Leaving Care Act (CLCA) led to improved employment
outcomes by delaying a young person leaving care until they are ready,
providing personal support and increasing financial help for caregivers.
Extending the upper age limit for support further into adulthood would ease
transitions.
Just as almost 50 per cent of 20–24-year-olds live with their parents,
careleavers up to 25 years of age should be able to live with carers. Building on
schemes like Going the Extra Mile in Northern Ireland, this extension should be
suitably funded and available to all young people being looked after.
Young people can be encouraged to lead service design and delivery
through initiatives like Leading Improvements for Looked After Children (LILAC).
Because local authorities run local services, effective leadership and
co-ordination from the responsible government can prevent damaging
variations in local performance and improve provision.
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Reducing poverty in the UK
Prisoners
In England and Wales, surveys have shown the prevalence of poverty and
extent of disabilities among prisoners. 64 per cent of prisoners claimed benefits
at some point during the 12 months before entering prison, which compares
with 14 per cent in the working-age population. Two years after being released
from prison in 2008, 47 per cent were receiving out-of work benefits.
Prisoners experience higher rates of mental health problems than the
general public for conditions ranging from schizophrenia, personality disorder,
drug and alcohol dependency to neurotic conditions. Whereas up to one in
four of the general population has a disability, as many as 55 per cent of
prisoners have a disability if those with anxiety or depression are included
(a quarter of prisoners suffer from anxiety and depression). Strikingly, a quarter
of adult prisoners have themselves been looked after.
Up to 60 per cent have literacy and numeracy levels below those normal
among 11-year-olds; 47 per cent have no qualifications compared with
15 per cent of the working population. Research has found a very precise
correlation between level of local deprivation and local imprisonment rates
across Scotland.
The stigma of imprisonment is an additional risk to prisoners, especially
minorities who also face prejudice and discrimination in respect of gender, race
and disability.
The evidence about effective interventions for people with mental health
problems and for young people leaving care suggests that providing support
services is crucial. Because so many prisoners experience the same problems,
schemes that provide them with similar support are vital.
The international evidence about the anti-poverty impact of prison-based
educational and training interventions shows they have unconfirmed or little
effect. Research suggests a much more intensive community-based strategy is
required to meet the needs.
Policies which raise employment and pay among the least qualified and in
impoverished areas will benefit both people at risk of entering prison and
former prisoners. If imprisonment was reduced to the levels in Germany
or Sweden, much expanded forms of transitional support and care under
probation supervision could be developed. Probation and prison partnerships
which work alongside other services to meet needs for accommodation, drug
treatment and employment, training and education play key parts in supporting
transitions. Across the UK former prisoners should be consistently given full
access to appropriate support and accommodation on the basis of their
vulnerabilities and multiple needs. Local authorities and primary health care
agencies should be held accountable for fairly assessing and meeting these
needs.
If long-term strategies for all excluded groups systematically include these
transitional schemes in their planning and targets, it will be not only a vindication
of social justice but also an opportunity to target effects with truly significant
scale and momentum. Moreover the pool of people at risk of entering or
returning to prison will be reduced.
Complex needs
169
To challenge the specific stigma of conviction and imprisonment
international evidence suggests it is important to bring in anti-discrimination
policies which protect the employment and remuneration rights of the
convicted, while taking account of relevant risks to the public. Current positive
policies among employers should be adopted as models for general use and
written into employment law and regulation.
About the project
The findings emerge from a problem analysis in a social justice policy framework,
informed by existing evidence and examples of positive practice. Wherever
possible the review sought evidence of programme implementation and
outcomes. Academic databases and online sources were searched for English
language materials published since 2000, from the UK, North America, Europe
and Australasia.
Read the full report.
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Reducing poverty in the UK
POVERTY AMONG
ASYLUM SEEKERS
AND REFUGEES
This review examined evidence on poverty and asylum
in the UK with the aim of identifying strategies for
reducing poverty among forced migrants.
Key points
• Poverty among asylum seekers and refused asylum seekers has been a
feature since the end of the 1990s but has deepened following cuts to
welfare entitlements and restrictions on access to the labour market.
• Pre- and post-flight experiences, language ability, social capital and social
networks impact on forced migrants’ vulnerability to poverty.
• Asylum seekers and refugees are heavily reliant on institutional support yet
frequently experience problems in accessing services. They are especially at
risk of poverty during transitions in institutional support.
• Asylum support rates are lower than mainstream benefits, which themselves
are judged to be below the poverty line. Increasing asylum support rates to
mainstream level and tying them to annual increments in the cost of living
would improve the situation.
• The current asylum system is failing to protect asylum seekers and refugees
from short-term and long-term homelessness while dispersal impacts on
refugees’ long-term access to employment and well-being.
• Some refugees encounter enduring problems entering the labour market,
achieving well-being and accessing welfare services. Forced migrants rely
heavily on non-governmental and refugee community organisations for
emergency support in a competitive and shrinking funding environment.
• Public opinion shows little understanding of the extent of hardship and
poverty among asylum seekers. Initiatives targeted to address widespread
misconceptions on asylum seekers and the causes of their dependency on
the welfare system would create a more conducive policy environment for
an anti-poverty strategy for asylum seekers and refugees.
The research
By Nando Sigona, University of Birmingham, Jenny Allsopp, University of Oxford, and
Jenny Phillimore, University of Birmingham
Complex needs
171
BACKGROUND
The introduction of dispersal policy in 1999 weakened the
social networks of forced migrants housed by the state,
reducing access to community-based support mechanisms
and increasing dependency on institutional support. Since the
early 2000s, asylum seekers have been denied the right to
work, and cumulative cuts have redrawn welfare services and
entitlements.
The review focused on:
• experiences of poverty among refugees, asylum seekers and refused asylum
seekers, including women, children, unaccompanied asylum-seeking
minors, families, elderly, lesbian gay bisexual transgender (LGBT) people,
disabled people, and members of cultural and religious minorities;
• how experiences of poverty changed over time and differed across the UK;
• strategies to prevent and reduce poverty among forced migrants.
Learning to survive in a ‘hostile environment’
The measures applied to asylum seekers since the early 2000s have
encountered strong opposition from advocacy and support groups, while
public opinion has become more hostile to the provision of sanctuary.
• Policy-makers should be accountable for guiding a reasoned public
discussion on asylum seekers and refugees.
Asylum support rates are insufficient to meet essential living needs, and well
below the European average. Germany recently increased asylum support
rates substantially after they were deemed unconstitutional. In the UK asylum
support rates have fallen beneath 70 per cent of Income Support, the level at
which they were set in 1999 on the grounds that the support is for a short
duration and housing and utility costs are covered separately. Unlike other
benefits, asylum support rates have not been increased incrementally in line
with the cost of living. In 2014 Refugee Action initiated a successful judicial
review against the government.
• Increasing support rates to 70 per cent of Income Support and linking
them to incremental rises in the cost of living would reduce asylum seeker
poverty.
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Reducing poverty in the UK
Asylum seekers can wait years for a decision on their case. Institutional
dependency during this period is experienced as disempowering, leading to
loss of confidence, mental health issues and deskilling which reverberate
across families. Poverty undermines participation in the asylum process itself
(e.g. applicants are unable to travel to appointments) and is associated with
high levels of stigma and social exclusion.
• Support should span each stage of the forced migrant’s time in the UK and
be less dependent on decision-making in the asylum system. Enforced
destitution is neither an effective nor humane means to ‘encourage’
individuals refused asylum to leave the UK.
• All asylum support should be in cash and not pre-paid card or vouchers.
Destitution and deskilling associated with the asylum process, coupled with
reduced access to further and higher education, in particular English for
speakers of other languages (ESOL) classes, affects refugees’ integration into
the labour market and society. Employers frequently express uncertainty
regarding refugees’ right to work. Refugee women face particular challenges
accessing employment, for example because of limited work experience or
formal education in their country of origin.
• Greater access to ESOL classes and collaboration between local and
regional service providers would facilitate improved access to services
and work.
• Reinstating asylum seekers’ right to work would reduce vulnerability to
poverty among asylum seekers, dispel myths about benefit tourism, and
facilitate labour market integration.
• The simultaneous granting of National Insurance numbers and legal status
would reduce harmful delays during a ‘high-risk’ period in terms of poverty,
supporting refugees’ transition into the labour market.
• Support to unaccompanied asylum seekers and refugees as they transition
to adulthood should be extended, e.g. the Scottish Guardianship model
reduces transitions into illegality and poverty among the young.
• The government should audit the provision of, and co-operation between,
support services to ensure that administrative delays and errors do not lead
to destitution, debts, arrears or hardships at points of transition.
• Universal Credit should be accessible for refugee families with limited IT
competence.
• Social services should adhere to their obligations under the Section 17 of
Children Act 1989 and protect refugee children from harm caused by
severe poverty and malnutrition.
Non-governmental organisations (NGOs) and refugees’ community
organisations (RCOs) commit extensive resources to responding to poverty
through emergency support such as food banks, emergency accommodation,
travel costs and legal assistance. These organisations need greater statutory
financial support.
• Interventions are most effective when a regional cluster approach is taken
involving statutory and non-statutory actors, although the independence
of NGOs and RCOs is key to effective services.
Complex needs
173
Housing and homelessness
Many become homeless as a result of poorly managed transitions in support,
e.g. when an individual undergoes a change in legal status, moves region, or
passes a significant age threshold for support purposes. Most at risk are the
young and those evicted from Home Office provided accommodation after
gaining refugee status.
• Asylum seekers should be given a choice of where they move to so they can
elect to live close to friends and family and gain the support they need.
• The Home Office should consider introducing a scheme whereby friends
and family are paid to house asylum seekers. This would mean impoverished
peers could afford to offer accommodation and associated support.
• Greater flexibility should be shown with transitions with refugees being
able to stay on in Home Office provided housing for longer periods with
providers’ costs covered retrospectively by Housing Benefit.
• Provision of support to refugees leaving Home Office housing should
include access to housing advice, rapid access to Housing Benefit and a
deposit loan scheme so they can access private sector housing.
• The Home Office should acknowledge and respond to the financial strain
placed on NGOs as they work to prevent street homelessness by making
more resources for emergency support available.
Some asylum seekers and refugees experience social exclusion and ill-health
because of poor housing conditions. Overcrowding is common among ‘hidden
homeless’ households. Home Office provided housing is often poor quality and
in deprived areas. Location within areas with little experience of diversity has
led to stigma and racist harassment.
• Giving service users greater voice in the management of housing contracts,
e.g. in Nottingham, has had some success in improving conditions and
delivering greater accountability among private contractors. Housing
associations and local authorities, where possible, may be best placed to
respond to the housing needs of asylum seekers.
• The Home Office should establish clarity about the contractual role and
responsibilities of private contractors and ensure accountability.
Dispersal is frequently carried out with little sensitivity to the needs of
vulnerable individuals who depend upon access to specialist services and
support groups.
• Vulnerable individuals should be dispersed only to areas that can meet
their needs. Pregnant women should not be detained or dispersed beyond
32 weeks of pregnancy.
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Reducing poverty in the UK
Health
Some asylum seekers arrive in the UK with health problems stemming from
experiences of persecution. These conditions, particularly for torture survivors,
are exacerbated by experiences of the asylum system and poverty. Mental
health provision for asylum seekers and refugees is insufficient.
• For rehabilitation to be effective, comprehensive long-term support is
required. Legal status should not be an obstacle.
• Efforts should be made to ensure that individuals are able to build
relationships with care workers, and that these are not jeopardised by
housing transitions or legal status.
The link between poverty and ill-health is especially acute for asylum seekers
and refused asylum seekers where they have limited access to healthcare.
Poor awareness of rights and entitlements is coupled with ignorance of rights
among medical professionals.
• Clarification is needed on healthcare entitlements.
• Improved access to ESOL and collaboration between local and regional
service providers, including RCOs, could help improve access to healthcare
services.
Restrictions on secondary healthcare for refused asylum seekers motivated by
claims of ‘health tourism’ are not supported by the evidence. Rather, forced
migrants struggle to access care, and pregnant women have very poor access
to antenatal and postnatal care, with well-evidenced and costly consequences
for the long-term health of mothers and babies.
• Asylum seekers and failed asylum seekers should be supported to access
antenatal appointments, develop relationships with midwives and claim the
maternity grant.
• Asylum support should reflect fully the cost of raising a child and maintaining
maternal health before and after pregnancy.
Conclusion
Evidence suggests that reducing the incidence of poverty would improve the
quality and fairness of participation in the asylum process and lead to improved
refugee integration.
Little attention has been paid to the long-term impacts of these measures
on refugees’ experiences of poverty. There are many causes of poverty among
forced migrants, including the asylum regime and lack of statutory support
with refugee integration.
About the project
The review included a range of academic and policy literature exploring the link
between poverty and forced migration in the UK from 1997. Sources included
over 30 independent submissions, literature located in key social science
databases and drawn from the research team’s existing knowledge and
expertise of the area.
Read the full report.
Complex needs
175
Image credits:
Liz Hingley – pages 4, 76, 108 and front cover, bottom right and
middle right.
Eloise Ross – page 144 and front cover, top right.
John Birdsall photography – pages 6, 46 and front cover, top left
and bottom left.
First published 2014 by the Joseph Rowntree Foundation
ISBN 978 1 90958 630 7
Ref 3015
www.jrf.org.uk
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Tel: 01904 615905
Email: publications@jrf.org.uk
The summaries in this publication are part of JRF’s research and development
programme. The views are those of the authors and not necessarily those
of JRF.
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Reducing poverty in the UK