Category: Poverty

Why work is not the best way out of poverty

At the hustings, there seemed to be a general agreement between the politicians that work is the best route out of poverty.  It’s a common misconception, reinforced yesterday by a further claim that it’s all about education and opportunity.  These are common muddles, but worse, they have been diverting us from focusing on policies that have a much better record.

The place to start is with poverty.  Poverty is complex, multi-dimensional and many headed.  It’s a wicked problem, where apparent solutions that help in one way can add to the problems in others.  Single solutions don’t work.

Let’s focus, however, on low income.  Large numbers of people suffer low incomes for extended periods – previous research suggests that in Britain, well over half of us will have had at least a year on low income in a ten-year period.  The reasons for low income include unemployment, but they also include low pay, having young children, divorce, disability, becoming a student, suffering discrimination or falling ill.  Being in secure, well-paid work helps people to be less vulnerable, but it’s not a sovereign cure.  If we look at the evidence on the dynamics of poverty, education helps, and work helps, but so do staying healthy and marrying someone with a stable income.  But surely, it’s said, people in work are less likely to be poor.  True – but it doesn’t follow that entering work will have that effect on the next person into it, any more than encouraging people to focus on their marriage prospects would.   It all depends on the job, as marriage depends on who you marry.  The economy matters in general terms, because that shapes the range, pattern and numbers of jobs that are available; but work is no guarantee of invulnerability.

If we look at what pushing people into work has done, it hasn’t led to a reduction in poverty.   It has led to an increase in the proportion or people who are working on low incomes.  It’s also given us, as a by-product, a staggering increase in penalties for non-compliance with benefit rules, and some catastrophically low incomes as a result. ‘Employability’ providers have been diverted from what they do best, which is to help people in need of support; benefits have been undermined by rules which have little or nothing to do with people’s financial circumstances.  Putting together work preparation and benefits has been bad for both.

If work isn’t the way, what is?   We might get a clue by looking at pensions, where there have been positive improvements over several years.  That’s not because pensioners are entering the workplace; it’s because pensions have improved.   Benefits matter;  and, for dealing with poverty in a broader sense, the basic structure of services is critical.    If we’re serious about tackling poverty, we need a much broader based, structural response to the problems.

 

 

Child poverty measures saved! A note from Kitty Stewart

Dr Kitty Stewart prepared a joint letter about Child Poverty Statistics which was signed by 170 academics, and published in The Times.  The Times keeps the details behind a paywall, so with Kitty’s permission I am posting the letter and list of signatories here.

This is the text of the letter:

This week the House of Commons will decide whether to persist in abolishing the UK’s child poverty indicators, replacing them with ‘life chances’ measures of worklessness and educational attainment. We urge the government to listen to the Lords and retain the existing indicators, keeping income and material deprivation at the heart of child poverty measurement.

Research shows conclusively that income has a causal effect on child development: children in poor households do less well in part because of low family income. Worklessness is an inadequate proxy for children’s circumstances: two-thirds of UK children in poverty live with a working adult.

A recent government consultation showed overwhelming support for the current measures from academics, local authorities, frontline services and others. Just 1% of respondents supported removing income from poverty measurement.
Wider indicators of children’s well-being are welcome and important, but should not come at the expense of the existing poverty measures, which are vital to our ability to track the impact of economic and policy change.

Kitty has subsequently written:

The government has backed down on the abolition of the child poverty measures. The Bishop of Durham’s amendment was defeated in the Commons last week, but the government subsequently put a revised amendment to the Lords which does pretty much the same thing. There will be no requirement to report to parliament, but the law will continue to require annual publication of all four of the existing measures.

Maybe our joint letter, which was published in the Times on the morning of the Commons debate, added a little bit of extra pressure at a key moment, on top of the strength of the vote in the Lords and the concerted opposition from children’s charities and others. Whether it did or not, it seems that making a lot of noise can still make a difference, which is very cheering!

 

A Scotland without poverty

I’ve just shared a brief interview on Good Morning Scotland with Jim McCormick, of the Joseph Rowntree Foundation.  Jim has prepared a report called A Scotland without poverty (not to be confused with a Poverty Alliance report of the same name) proposing a ‘leadership strategy’ to develop effective anti-poverty policies.  The main proposals include an extension of free child care to 15 hours a week, getting more people into work and building career ladders,  more intensive employability support, improving housing conditions, extending financial inclusion, improving takeup and taxing Winter Fuel Payment.

This is much too limited.  The first problem is that it doesn’t address the principal conditions shaping the lives of people who are poor, which are not about work – they mostly affect people who are not part of the labour market, including long-term sickness, disability, childhood  and old age.  There are very limited responses to two of those , and even less about the first two.     The second problem is that for those who are engaged with the labour market, work is too insecure and unpredictable to build resources.   Work is not the answer.  Even to reduce poverty, we need to ensure access to the conditions of civilisation – the phrase is Tawney’s – with a secure foundation of health, education,  housing and public services.  Even within the limited framework of devolution, those are indeed issues that a Scottish Government could address.

The weakness of that comment is one it shares with the Rowntree report.  Jim refers to a  ‘leadership strategy’ – a strategy issued from on high – and I have just done the same thing.  Poverty is a difficult, complex, multifaceted set of issues.  In that situation, it’s not possible to insist on priorities in one field without sacrificing others – so how should those priorities be decided?  We need to look at what matters to the people who are experiencing poverty, and build from there.    ‘Leadership’ is not the way forward: try listening instead.

 

The Welfare Reform and Work Bill

The Welfare Reform and Work Bill being presented to Parliament offers us a sticky confection of  policies related to poverty and benefits.  Most have been announced before, including the freeze in the level of most benefits, the denial of benefits to families with more than two children, the  reduction in the benefit cap and the rather more important removal of distinct rates of benefit for people who are too sick to work.  The removal of most measures relating to child poverty is particularly worth noting.  The Explanatory Notes are helpfully explicit:

The specific parts of the Child Poverty Act 2010 that this Bill removes are:

a. The four UK wide targets along with the definitions of the related measures:

  1. Relative low income;
  2. Combined low income and material deprivation;
  3. Absolute low income; and
  4. Persistent poverty.

b. The duty upon the Secretary of State to meet these targets.

c. The continuing effects of the targets after the target year.

d. The provisions in sections 8-8C relating to the Social Mobility and Child Poverty Commission.

e. The duty on the Secretary of State to lay before Parliament a UK wide strategy.

f. The duty on Scottish Ministers to lay before the Scottish Parliament a Scottish strategy

g. The duty on the relevant Northern Ireland department to describe in its strategy the progress it intends to make to contribute to the meeting of the targets in para (a).

h. The duty on the Secretary of State to lay before Parliament a statement in relation to the targets described in para (a).

i. The duty placed on local authorities to co-operate to reduce child poverty in their local area including the preparation of a joint child poverty strategy.

j. The duty placed on local authorities to prepare and publish an assessment of the needs of children living in poverty in their area.

It does at least, have the virtue of consistency.  If there was any continuing responsibility to do anything at all to reduce child poverty, it would be rather difficult to justify most of the other measures in the Bill.

More confusion about median income

The government is proposing, not for the first time, to change the signposts that are used to warn us if child poverty is getting worse.  The most commonly used indicator in Europe, the “risk of poverty”, is based on “economic distance”, judged as 60% of the median income.  The median income splits the top half of incomes from the bottom half.  One of the objections, made by a spokeswoman for the PM, is right:  if the median income falls during a recession, the poverty threshold might also fall.  The other statement, made by David Cameron, shows he doesn’t quite get it:

“Today, because of the way it is measured, we are in the absurd situation where if we increase the state pension, child poverty actually goes up.”

That could only be true if lots of pensioners were sitting on something just below  the median income, enough to change the figure, and the government was offering a big enough increase in the pension to leap-frog them over the median.  Not that  many are.   I suspect this is probably another example of confusing the median with the average.  The mean average is sensitive to changes in income anywhere in the income distribution, top or bottom; the median, or the half-way point, isn’t.

Additional note, 2nd July:  An editorial in the Scotsman this morning writes that

“there is an element of truth in the belief that poverty cannot be wiped out. This becomes an inescapable fact if poverty is measured in relative terms: for people to be rich, someone has to be poor. … Using relative terms, poverty could be reduced if an economic crash hit the wealthiest hard and closed the gap between rich and poor by simply drawing back the rich while the poor standing still.” 

No, that wouldn’t alter the median; that’s completely wrong.  What is it about simple sums that defeat grown-ups so completely?

I wrote an article about this four years ago:  Why refer to poverty as a proportion of median income?, Journal of Poverty and Social Justice, 2012 20(2) 163-176 (sadly, behind a pay-wall).  There are problems using the median income: the biggest is that we’re comparing people on very low incomes to other people on fairly low wages, which are often unstable and insecure.    I suggested there that we could go for a comparison with median wages instead.  That doesn’t, however, address the other problem, which is that lots of our politicians and journalists can’t quite grasp what the figures are about.

Evidence on work requirements and sanctions from the USA

A comment on a US press website led me to a report produced in Chicago by the Heartland Institute.   They are apparently convinced that what poor people in the USA really need is a boot up the backside.  “Successful welfare reform can save lives and produce positive effects on multiple generations. It can save taxpayers billions of dollars and help address such serious social maladies as crime, alcoholism, and teenage pregnancy.”  So, they have produced a state-by-state report card for the administrations that do the things they approve of, including sanctions, time limits, strict work requirements, “service integration” based on support programmes for deviant behaviour and trading off entitlement to benefit for a lump sum.  They then compare that to what’s been achieved in work participation, poverty reduction, numbers of claimants and so forth.  What their figures show, despite their initial assumptions, is that there is no visible relationship between the strictness of the regime that’s being operated and the outcomes.  If anything, from page 7, two of the top five states for implementing the policies they approve of are in the bottom five states for outcomes.

This isn’t what I’m currently working on.  I’ve been reading up about benefits in developing countries, and that literature gives me a very different view of conditionality.  “You cannot pull yourself up by your bootstraps if you have no boots …  Cash transfers work.  … All the evidence is that people spend grant money wisely and that grants do not encourage people to be lazy or workshy.  … Giving people money is proving to be the best way to stimulate local economic developments in low income countries.”  By contrast, “there is almost no evidence that conditions make any difference.”  That’s from J Hanlon et al, Just give money to the poor, Kumarian Press 2010, pp 4,  173-4. and p 131.

The most direct way to improve health: more money

A new study by the Scottish Public Health Observatory has reviewed the potential effects on health of a series of interventions.  The effects on health are considered mainly in terms of mortality and the need for hospital care.  The measures in relation to incomes, cutting alcohol, tobacco or obesity, and encouraging cycling and walking to work.

Health interventions

The biggest benefits, by far, would be gained by the introduction of a living wage; the next biggest, though it is even more important for the poor, would be an increase in minimum income benefits.  Some of the measures they are being compared to seem restrained – a weight-management service rather than measures to reduce sugar, short-term interventions on alcohol rather than taxation by unit – but the size of the difference is so big that it’s unlikely to  tilt the table.

Feeding Britain

Feeding Britain is the report of an All-Party Parliamentary Inquiry into hunger in Britain.  It’s depressing that a report like this should have to appear at all.   There’s no shortage of food in Britain, as the government has been quick to point out.   That comment misses the point, however;  we know from Amartya Sen’s work on famines that there is almost always enough food.  What matters is whether people are entitled to eat the food that is there.

There are two processes that stand out in the new report.  One is the problems caused by the punitive, insensitive regime that has been imposed on benefits, particularly the problems caused by delays in benefit and sanctions.  The other is the growth of problems for people on very low wages.  We certainly need an increase in the minimum wage, and an extension of the same protection to people who are supposedly ‘self-employed’.

Beyond that, we should be thinking of introducing something like the ‘solidarity wage’ formerly developed in Sweden.  Following the same line of reasoning as Sweden used to, we could argue that don’t have any shortage of bankers, high paid executives; they are in a world-wide labour market and the posts are easy to fill.  By contrast, carers, cleaners, child care assistants, roadmenders and labourers are hard to replace.  If their wages go up,  that will become the going rate, but the activity will still need to be done.  The interesting thing about that argument, right or wrong, is not just that it runs counter to the received wisdom in the UK.  It’s that, when it was put into practice in the 1970s, it didn’t seem to make much difference, positively or negatively, to overall economic performance.  What it did  affect was the distribution of income.  We can, if we choose, simply decide to put a greater priority on improving low pay.

The JRF programme to eliminate poverty in the UK

The Joseph Rowntree Foundation has published a pamphlet called A UK without poverty , proposing a programme of action to mitigate or reduce poverty.  Poverty is “when a person’s resources are not enough to meet their (sic) basic needs.”  They argue for a “comprehensive approach” focusing on “pockets” (boosting resources directly), “prospects”, “prevention” and “places”.

The view they’re putting of poverty is limited – there is much more to it than low resources – but that doesn’t diminish from the importance of improving people’s resources.  However,the approach that’s generally being taken – including the emphasis on prevention and places – is heavily geared towards correcting individual and familial deficiencies,  rather than addressing structural issues.  In the treatment of benefits, there are three key flaws: the exploded belief that work is the answer, the attempt to swim around the need to put adequate funding into basic transfer payments, and an acceptance of personalised targeting that is doomed to failure.  Those are, of course, the same flaws that have run most recent attempts to reduce poverty into the buffers.

There’s a gap between the heading I gave this entry – eliminating poverty  – and mitigating or reducing it.  Most of the measures that JRF consider are timid.  Increasing resources is supposed to be done by improving incentives, encouraging people into work and reviewing the decisions to cut benefit upratings.  That is nothing like enough, and the pamphlet’s own assessment of the likely impact doesn’t suppose that it will be.   If we’re serious about eliminating poverty, we need major steps towards inclusive economic development, a wide ranging reconsideration of household incomes, benefits that offer households a stable and secure income, and much more extensive redistribution.  Of course, that’s not going to happen.