We need more resources than income alone

Paul Spicker, Professor of Public Policy, Robert Gordon University

We often identify material deprivation by looking at people’s incomes. The headline figures for Challenge Poverty Week refer to 900,000 people in low income households.   It’s not the only way to think about low resources.  For example, it’s becoming much more common in the developing world to work with a ‘proxy means test’, mainly a checklist of people’s possessions.  There are lots of practical problems with this – certainly more than enough to mean that it wouldn’t be a good way to do things here – but it also raises some important issues of principle.  We know, from the last report on Wealth and Assets in Scotland, that the bottom half of Scottish households own 6% of Scottish properties, less than 3% of pensions holdings, and less than 1% of the financial wealth.  No, that was not a misprint: these figures refer to the wealth of half the households in Scotland.

Because we focus so strongly on low income, the immediate connection that most people make from poverty is to income maintenance, and particularly to social security benefits.  Social security benefits are massively important, and much of my own work has been devoted to arguments to make benefits better.  Whenever we decide to focus on very low income, however, we are liable to make two critical leaps, and both of them have to be taken cautiously.  The first is to assume that people whose incomes are higher are less of concern.  We’re aware now that many people who are working are on low incomes, but the impact of causal, ‘flexible’ working, unpredictable incomes and debt stretches far beyond that.  The central issue is not risk, but vulnerability – the extent to which, if things go wrong, a household is liable to suffer.  The fewer assets and resources people have, the more vulnerable they become.  The opposite of vulnerability is ‘resilience’, and resilience depends on having command over resources.  The Scottish Government thinks of resilience as being about “the internal capacity of disadvantaged individuals to lift themselves and their families out of poverty”.   Resilience shouldn’t depend on pulling yourself up by your bootstraps.  It’s developed by having resources to hand, and systems that protect people from harm when things go wrong – systems like the health service, the education system and public housing.

That point leads to the second great leap.  Social security is about money; money assumes that people will be buying and selling goods; buying and selling goods assumes that the provision is in the private market.  Now, some things are provided in the private market, and we’ve largely been content to accept that:  we don’t expect government to provide people with shoes, and there’s not much call for a National Food Service.  We do need adequate benefits, because if we don’t have them people will go without essentials. We do, however, have some very important other needs provided through public provision, rather than through benefits.  We don’t pay for schooling by giving people the money to buy an education. Everyone in Britain  has the equivalent of insurance for medical care, whether they actually use it or not.

Currently we are using social security benefits to buy two other key items, and I’m not convinced that either is the right way to do things.  The first of those is child care, which we’re paying for rather haphazardly through Tax Credit.  Our child care is much more expensive and has a lower coverage than in countries where it’s subsidised or paid for more directly.  The second is housing, which we’ve been trying to provide through Housing Benefit.  We used to do it by providing public housing, supported by a general needs subsidy.  Housing Benefit is complex, expensive and far less effective in producing housing supply than council housing ever was.  (A third trend is noteworthy, but it hasn’t actually happened yet: there’s a big movement at present to marketise social care, and we should be looking at that with some suspicion.)  If we want to make a major impact on people’s lifestyles, giving people the money to spend is not necessarily the best way to go.

Professor Paul Spicker is based at Aberdeen Business School, Robert Gordon University. He blogs regularly at http://blog.spicker.uk/

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