Preventing poverty in the labour market

Adrian Sinfield, University of Edinburgh

Preventing poverty more effectively requires lower unemployment and decent jobs, fair wages and greater security.  This means a ‘career first’ rather than a ‘work first’ approach, with jobs worth having and benefits to the individual, their family and the wider society.

Reducing poverty nowadays is discussed as if it were all a matter of getting ‘them the poor’ to behave better. But preventing poverty requires closer attention to its political economy and so the ways in which the workings of society, polity and economy allow and encourage the creation of poverty.  Tackling prevention in addition to lifting people out of poverty leads to greater and closer scrutiny of the processes that fail to protect people.

A crucial part of this requires a fairer and better working labour market. The objectives were clearly set out by William Beveridge 71 years ago in Full Employment in a Free Society. Full employment ‘means having always more vacant jobs than unemployed, not slightly fewer jobs. It means that the jobs are at fair wages, of such a kind, and so located that the unemployed can reasonably be expected to take them; it means, by consequence, that the normal lag between losing one job and finding another will be very short’ (Beveridge, 1944, p 18).  The aim, he stressed, should always be a seller’s market, not a buyer’s market. ‘A person who cannot sell his labour is in effect told that he is of no use.’ This is ‘a personal catastrophe’ rather than ‘the annoyance or loss’ suffered by the employer who cannot fill a job.

I have quoted Beveridge at such length to bring home the contrast with today’s policy assumptions for the labour market. Throughout his career Beveridge recognised the ways in which the balance of the power in the labour market shifted with changes in unemployment. The higher the unemployment, the more the balance tilts in favour of the employer. This was brought out by classic studies in the past. ‘Hiring requirements tend to rise – the definition of an “acceptable” worker is tightened up’, as Lloyd Reynolds, a pioneer of labour market analysis, pointed out (Reynolds, 1951, p.73). In consequence, those with least bargaining power in the labour market, whether suffering particular disabilities, lacking skills and/or belonging to ethnic, religious and other minorities, become even more vulnerable to exclusion and deprivation.  The risk of low pay and poor working conditions is increased.

By contrast, with lower unemployment employers have to recruit more widely, invest more in training and recruitment, make more adjustments to promote flexible working that allows a ‘family-friendly’ and better ‘work-life’ balance for their employees.

Many basic social policies are more likely to be successful when unemployment is kept low. ‘Maintenance of a high general level of economic activity has priority over improved labor market organisation … because it is a structural prerequisite to the latter’ (Reynolds, 1951, p 75). This was also stressed by Beatrice Reubens when she carried out a detailed, comparative review of European programmes to help the ‘hard-to-employ’, personally visiting and analysing experience in country after country. Low unemployment was a prerequisite for successful rehabilitation and re-employment (Reubens, 1970).

I am aware of no research since that challenges the need to keep overall unemployment low to tackle poverty in the labour market and to better support those caught on its margins. Reducing unemployment is a central part of what needs to be done to reduce inequality and poverty (Atkinson, 2015, ch. 5).

But stigmatizing and mythmaking about ‘shirkers, not workers’ weaken public support for tackling the labour market, rather than the ‘out of work’. Policies of ‘what works’ in keeping voters on side include the opportunistic exploitation of long-term prejudices of ‘we the people’, the taxpayers and contributors, and them, the takers who ‘rest on their benefits’.  But the changing trends in long-term unemployment, David Webster demonstrates, are to be explained by the overall state of the labour market, not by the behaviour or characteristics of those suffering long periods out of work (eg, Webster, 2005).

Politicians and others who should know better – and very often do – continue to nourish the myths despite their careful refutation (Shildrick et al., 2012b). They do not mention that over the last half century basic benefit rates for people unemployed or sick have fallen by one-half compared to average earnings (by the DWP’s own analyses until they were cut as an economy, Sinfield, 2013).  Inadequate ‘welfare to work’ and tougher sanctions policies are feeding the growth of poor jobs that diminishes people’s lives, not helping to preventing them.

By contrast treating people with dignity in the labour market means ensuring that they are offered a job worth having – the ‘career first’ rather than ‘work first’ thinking set out by Ron McQuaid and Vanesa Fuertes (2014). Making bad jobs better is a major theme of the concluding chapter to the 2012 award-winning study by Tracy Shildrick, Rob MacDonald and others, Poverty and Insecurity. The study is ‘about the lives of individuals and families living in or near poverty – despite (or, as this book will show, because of) their enduring commitment to work and repeated engagement with jobs’ (Shildrick et al, 2012a, p. 1).  It reveals the problems of the labour market experienced by the many people caught in the no-pay low-pay cycle.

‘Poor work is the big story’ in a world of greater inequality, insecurity and Social Exclusion (Byrne, 1999, p 69; Lansley & Mack, 2015). Policies to support the Living Wage are valuable, but they have to be accompanied by decent child benefit. The Chancellor of the Exchequer’s ‘misappropriated’ usage of a ‘national living wage’ (Veit-Wilson, 2015; Scottish Government, 2015) provides a fine example of ‘words that succeed and policies that fail’, the subtitle Murray Edelman chose for his book on Political Language (1977) – especially when it is combined with reduced tax credits.

Instead we need a broad policy approach that encourages and supports making bad work better, creating decent, good quality jobs for all (Findlay et al., 2013). As Michael Marmot argues, this will bring benefits that reduce the health gap (Marmot, 2015, ch. 6). This should also include more attention to the practices of poor employers and to the ways that employers providing the poorer jobs are themselves often caught in contracting arrangements with supermarkets or other larger employers.

One enterprising initiative is the Scottish Fair Work Convention tasked with developing the ‘fair employment and workplace framework for Scotland … that articulates a practical blueprint for implementing fair work’. ‘People must feel valued, rewarded, engaged in their work and be allowed to feel they have a stake in the success of their workplace, their community and their country’  (Roseanna Cunningham, Cabinet Secretary for Fair Work, Skills and Training, ‘Scotland: A Fair Work Nation’, 17 April 2015). Now this ambition has to be translated into strong policies in an area that has in the past been much neglected. It could make a valuable contribution to reducing poverty and inequality in the labour market.

Adrian Sinfield is Emeritus Professor of Social Policy and University Fellow at University of Edinburgh.

References:

Atkinson, A. B. (2015) Inequality: What Can Be Done?, Boston: Harvard University Press.

Beveridge, W. H. (1944) Full Employment in a Free Society, London: Allen and Unwin.

Byrne, D. (1999) Social Exclusion, Buckingham: Open University Press.

Cunningham, R. (2015) ‘Scotland: A Fair Work Nation’, http://news.scotland.gov.uk/News/Scotland-a-fair-work-nation-1851.aspx

Edelman, M. (1977)  Political Language: Words that Succeed and Policies that Fail, New York: Academic Press.

Findlay, P., Kalleberg, A. L. & Warhurst, C. (2013) ‘The challenge of job quality’, Human Relations, vol 66:4, pp 441-451.­

Lansley, S. & Mack, J. (2015) Breadline Britain: The Rise of Mass Poverty, London: One World.

Marmot, M. (2015) The Health Gap: the challenge of an unequal world, London: Bloomsbury.

McQuaid. R. & Fuertes, V. (2014) ‘Sustainable integration of the long term unemployed: From Work First to Career First’ in Larsen C., Rand, S., Schmid, J. & JR. Keil (eds), Sustainable Economy and Sustainable Employment, Muenchen: Rainer Hampp Verlag, pp 359-373.

Reubens, B. (1970) The Hard-to-Employ: European Programs, New York: Columbia University Press.

Reynolds, L. (1951) The Structure of Labor Markets: Wages and Labor Mobility in Theory and Practice, Westport, Conn.: Greenwood.

Scottish Government (2015) UK wage plan ‘not a Living Wage’ http://news.scotland.gov.uk/News/UK-wage-plan-not-a-Living-Wage-1dd6.aspx

Shildrick, T., MacDonald, R. , Webster, C. & Garthwaite, K. (2012a), Poverty and Insecurity: Life in Low-Pay, No-Pay Britain. Bristol: Policy Press.

Shildrick, T., MacDonald, R., Furlong, A., Roden, J. & Crow, R. (2012b), Are ‘Cultures ofWorklessness’ Passed Down the Generations? York: Joseph Rowntree.

Sinfield, A. (2013) ‘What unemployment means three decades and two recessions later’, Social Policy Review 25, pp 205-223.

TUC Commission on Vulnerable Employment (2008) Hard Work Hidden Lives, London: TUC.

Veit-Wilson, J. (2015) Stealing a good name: the national living wage http://www.cost-ofliving.net/stealing-a-good-name/

Webster, D. (2005) ‘Long-Term Unemployment, the Invention of “Hysteresis” and the Misdiagnosis of Structural Unemployment in the UK’, Cambridge Journal of Economics, vol 29: 6, November, pp 975-95.

 

‘Poverty Punishment’ Overkill: The deliberate creation of destitution through benefit sanctions

David Webster, University of Glasgow

Hayley Bennett has already written about the short-sightedness of ‘poverty punishment’ tools in Active Labour Market Policies designed to push people into work. The harshest of these is the withdrawal of benefits through ‘sanctions’. In the year to March 2015, 587,000 benefit sanctions were imposed in Great Britain on Jobseeker’s Allowance (JSA) claimants, 43,300 on Employment and Support Allowance (ESA) claimants, and 43,800 on lone parent claimants of Income Support. What is particularly striking about today’s British sanctions regime is the way it deliberately drives many claimants into complete destitution, thus damaging their health, in extreme cases causing death, and certainly contributing mightily to the growth of food banks though, rather obviously, not helping them to find a job since their energies are taken up by the struggle to survive.

It did not use to be this way. Up to the late 1980s, disentitled or sanctioned claimants could claim Supplementary Benefit as of right, if they passed the normal test of resources, at the usual rate minus 40%. But in 1988, for sanctioned unemployed claimants with no contributory entitlement, Michael Portillo withdrew the new Income Support and substituted a regime of discretionary ‘hardship payments’, which have to be separately applied for. This was extended to contribution-based Jobseeker’s Allowance claimants in 1996 by Portillo and Peter Lilley, and then to Employment and Support Allowance claimants in the ‘work related activity group’ by Iain Duncan Smith in 2012. In 1996, the rule was introduced that ‘non-vulnerable’ claimants (arbitrarily defined) could not even apply for hardship payments for the first two weeks of a sanction or disallowance. The official DWP Decision Makers’ Guide acknowledges that the two week wait will often damage the claimant’s health (para. 35099). The criteria for ‘hardship’ are specific to the sanctions regime and are particularly harsh – for instance, a person with cash in hand equal to their ‘applicable amount’ will be refused even if the money is owed to a payday lender (DMG para. 35198). And as with any discretionary benefit, the complicated application process, lack of information given to claimants, and scope for bullying by junior officials mean that many claimants never even apply for the ‘hardship payments’ they ought to receive. The opaqueness of the system has been increased by the absence since 2005 of published statistics on hardship payments, other than a Freedom of Information response in 2013, and a Parliamentary Answer of 21 January 2015. Nevertheless we know that in 2011/12, when there were 705,000 JSA sanctions, there were only 64,000 hardship payment awards, indicating that, allowing for repeated sanctions on some individuals, little over one in ten of sanctioned claimants got a hardship payment. A Parliamentary Answer on 6 March 2015 promised that more information would be published in May 2015, but to date nothing has appeared.

Universal Credit introduces further changes to ‘hardship payments’. In particular, it makes them repayable, which given the rule that repayments are made at the rate of 40% of benefits paid, means in effect that the duration of sanctions becomes three and a half times the stated length. And under UC, all claimants have to demonstrate seven days’ compliance with benefit conditions before they can apply for hardship payments.

The public have been brainwashed into intolerant attitudes to unemployed people. For instance, YouGov found in March 2011, at the height of the recent severe recession, that only 20% of the population thought the main reason why some people are unemployed for long periods was lack of jobs! Despite this, support for cutting off all the benefits of claimants not complying with conditions, regardless of what hardship it causes, was fairly limited, at 21% in the UK and 14% in Scotland. More people (26%) thought they should lose none or a small amount, with the largest group (49%) thinking they should lose a large amount, but keep enough to cover their basic needs.

In spite of this relative lack of public support for making people destitute, the Portillo/Lilley regime has remained in place for almost two decades without serious challenge. The only government review, by Professor Paul Gregg in 2008, commented that sanctions should not cause ‘excessive hardship’ (undefined) but did not actually consider any evidence on the question whether they do.

This year, at last, has seen some heavyweight criticism. The House of Commons Work and Pensions Committee report on Benefit Sanctions Policy beyond the Oakley Review in March 2015 recommended that the two-week wait should be abolished and that where a claimant is vulnerable or has children, the DWP itself should initiate the hardship payment process. It was also highly critical of the lack of published information about hardship payments and called for at least annual data on numbers of hardship payment applications, numbers of awards, and numbers of those awards made from day one of a sanction.

These are modest reforms but they would relieve a disproportionate amount of misery and damage for claimants, and stress on the public and voluntary services who have to cope with the consequences of the destitution so casually created by the sanctions regime. The government’s response to the Work and Pensions Committee report, long delayed, has been promised for this month (October 2015). Let us hope that when it comes it will face up to at least this intolerable aspect of the ‘poverty punishment’ machine.

Dr David Webster is an Honorary Senior Research Fellow in Urban Studies, University of Glasgow. His papers on benefit sanctions are available at www.cpag.org.uk/david-webster and http://www.gla.ac.uk/schools/socialpolitical/research/urbanstudies/projects/ukbenefitdisallowances/

Inequality and student finance

Lindsay Paterson, University of Edinburgh

One of the great political myths of our time is that the current system of student finance in Scotland is progressive and that the system in England is iniquitous. Free undergraduate higher education has become such a premise of debate in Scotland that almost no politician who wants to claim egalitarian credentials dare challenge it. That same view now seems to be percolating to the left in England, since Jeremy Corbyn became leader of the Labour party. His policy, too, is to abolish fees, rejecting what he claims is the errors of New Labour which introduced fees in the late-1990s.

All these people claim that free tuition favours the poor. Yet the evidence is consistently and strongly that it does not, or at least not in present circumstances. The background here is how to finance a massively expanded system of higher education, with participation rates having risen from under 20 in every 100 young people in the 1980s to about 50 in every 100 today. In theory, this could have been paid for by taxes. But no government in the democratic world has successfully pursued a programme of raising taxes in recent decades. That approach to funding the welfare state is too unpopular, even in the extreme circumstances which some countries (notably Greece) have faced since 2008.

So the question has become how to find other sources of finance. The rationale for charging fees for university is that the beneficiary – the graduate – should pay part of the cost. Of course, both society and the individual benefit, but no serious politician in the UK (or anywhere in Europe) has proposed that the whole cost should be borne by the individual. The sharing has also now come to be only when the graduate is indeed benefiting financially – after graduation. Young, full-time students do not pay anything upfront, anywhere in the UK. But in England, there is retrospective payment, in proportion to earnings. In Scotland, nothing is paid, ever.

Three main questions then arise about the policy of charging fees:

  1. Has it discouraged overall participation in higher education?
  2. Has it widened inequality of participation?
  3. Has it disproportionately disadvantaged poor students?

On the first question, the answer is unequivocally that it has not. We can look at this in two ways – over time, and across countries. Over time, the graph of participation just keeps on rising, with some very short-term blips.[1] In England, these blips were in the years of the two large fee increases – 2006 and 2012. In each case, the proportion of 18-year-olds who applied to university dropped temporarily by about 1 or 2 percentage points. But the rate recovered again the year after, and continued inexorably upwards thereafter.

Across countries, the main comparison of England is with Scotland, where the rate of increase – even with no upfront fees since 2000 – has been very similar. Indeed, even when fees were abolished completely for Scottish students in 2007, there was no discernible effect on the trajectory, and certainly no difference at all from what happened in England. Comparing countries more widely, there is simply no relationship between the rate of participation and whether fees are charged. For example, the participation rates in New Zealand (which charges fees financed through loans that are repayable after graduation, as in England) and Sweden (where higher education is free) are very similar.[2]

On the second question the answer is also unequivocally that there has been no harm. Poor students and rich students have been swept along in the wave of generally rising participation. There is inequality, but whether fees are charged has not made it worse.[3] England provides a key test. The ratio of university application rates from rich areas and poor areas has steadily declined over the past decade, through two large fee increases. It was about 4.4 to 1 in 2004, declining to 2.6 to 1 in 2014. In Scotland, the decline has been similar, but when fees were abolished the inequality actually grew temporarily, as well-off students took advantage of the state’s generosity. This resembled what happened in Scotland further back, in the early 1990s, during the first phase of expansion of higher education. Though it was all free then, the main initial beneficiaries were the children of the middle class.

The important topic in connection with the third question is not the matter of fees but rather how students finance their living costs. Public finance for students is much more generous in England than in Scotland. There are better non-repayable bursaries for poor students, and also better loans. The effect is that the scheme of student finance which was put in place in England after 2012 is the most egalitarian of any scheme anywhere in the UK since fees started to be charged a decade and a half ago.[4] In contrast, the Scottish package disproportionately benefits students from middle-class backgrounds, who end up with less debt than any other group. The main reason for this – which at first sight might seem counter-intuitive – is because loans (including fee loans) are not repayable until after graduates start earning above a certain level, and because low-earning graduates have a large part of the debt eventually written off.[5]

It is not inevitable that free higher education would be fiscally regressive in these ways. Nor is it inevitable that charging fees should go along with progressively redistributive bursaries and loans. Free services tip over into being progressive when all or a large majority of a population uses them – such as primary or secondary school. Free services are also progressive when they are disproportionately used by poor people – such as the National Health Service. English financial support was made more progressive as a deliberate political bargain when fees rose.

But the point remains. For the time being, Scottish policy on student finance is socially regressive. So: will any political party take the risk of saying that publicly when campaigning for the Scottish parliamentary elections next May?

[1] Table 1 in Higher Education Statistics Agency (2014), UK Application Rates by Country, Region, Sex, Age and Background. https://www.ucas.com/sites/default/files/jan-14-application-rates.pdf

[2] Section B5 in OECD (2014), Education at a Glance. http://www.oecd.org/edu/Education-at-a-Glance-2014.pdf

[3] Tables 11-12 in Higher Education Statistics Agency (2014), UK Application Rates by Country, Region, Sex, Age and Background. https://www.ucas.com/sites/default/files/jan-14-application-rates.pdf

[4] Hunter Blackburn, L. (2014), The Fairest of Them All? The Support for Scottish Students in Full-Time Higher Education in 2014-15, Centre for Research in Education Inclusion and Diversity, University of Edinburgh. http://www.centreonconstitutionalchange.ac.uk/sites/default/files/papers/workingpaper3_fairestofthemall_creid.pdf

[5] Johnston, A. and Barr, N. (2013). ‘Student loan reform, interest subsidies and costly technicalities: lessons from the UK experience’. Journal of Higher Education Policy and Management, 35, 167-178. http://www.tandfonline.com/doi/full/10.1080/1360080X.2013.775925

 

Professor Lindsay Paterson is Professor of Education Policy, Social Policy, University of Edinburgh

 

Poverty in the archives: a tale of persistence

Jackie Gulland, University of Edinburgh

Today we hear a lot about people claiming benefits, people being refused benefits, people appealing against these refusals.  Many of them win their appeals but not all. What happens when people try to get benefits and lose their appeals?

In my research on the history of incapacity benefits, I’ve found many people failing to get the benefits they felt they were entitled to.  This blog post tells the story of one of those claimants.  Earlier this year I was in Belfast for the Social Policy Association annual conference.  The talk at the conference was all about austerity, poverty, stigma, the decline of the welfare state, the Budget.  There were excellent presentations from researchers at all stages of their academic careers.  There were discussions of ‘impact’, questions about whether or not social policy research makes a difference, how we can do it better.  But my trip to Belfast also had another purpose: to have a look at some benefits papers in the Public Record Office of Northern Ireland, conveniently located next door to the conference, in another magnificent purpose-built building.    My hunt was for benefit claimants.  Throughout my research on the history of incapacity benefits, I have often wondered what happened to the people who were refused benefits. Some of them appealed and some of them won their appeals but many didn’t.  In a collection of files in the Public Record Office of Northern Ireland I have found out about some of them.  The Public Record Office holds files of correspondence to the Northern Ireland Prime Minister’s office in the 1920s and 30s, and there are about a dozen files concerning people’s problems with sickness benefits.

Here I found a man who claimed sickness benefit in July 1928 and was told he was fit for light work.  He appealed against that decision and the appeal confirmed the original decision.  He wrote to the Prime Minister asking for advice so that he could ‘procure justice’.  The Prime Minister’s Office confirmed that, since he had unsuccessfully used the appeal procedure, there was nothing more that could be done. So then he claimed unemployment benefit.  His unemployment benefit was refused.  He appealed against that decision and the decision was upheld. So he wrote again in March 1929 to the Prime Minister asking for advice.  He was told that all the appeal procedures had been followed correctly.  What to do next?  In November 1930 he wrote to the Prime Minister again about his unemployment benefit and asking whether, if he couldn’t get either sickness benefit or unemployment benefit, perhaps they could give him a job with the labour exchange.  The Prime Minister’s office replied saying that, since he had followed all the appeal procedures, there was nothing they could do about his benefit but that should a suitable vacancy arise, he would be considered for a job.  By August 1931, his persistence seemed to have paid off as his next letter concerned his dismissal from a two month temporary contract at the labour exchange.  Unsurprisingly there was nothing that could be done, since: ‘retrenchments are necessary and that those who can best be spared are the ones who are selected first of all for retrenchment’.

Fast forward to 1938 and we find the same man writing to the Prime Minster again asking for a job.  This time we are told that he worked for a temporary period for the employment exchange in 1934 but had been laid off again.  The file closes with a polite letter from the Prime Minister’s private secretary ‘regretting that there are no vacancies at present for which you could be considered’.  At that point he seems to have given up.

Learning from the letters

What did I learn from this file?  I learned a lot about this particular claimant. Over the course of the correspondence, which amounts to thirty-three letters altogether, I learned that he was married and had seven children, including three who were grown up and unemployed , that he had worked in the ‘shirt and collar trade’ and that he had a war injury of some kind from the First World War and that he was desperate to find work. One thing can be said for him and that is his tenacity.

Lessons for today

What can we learn from this story today?  The main lesson for me is that people do not claim benefits frivolously.  They claim them because they need them.  If they have the energy and persistence to appeal against refusals, they might succeed in getting desperately needed income.  But many people do not have this kind of persistence.  They give up and they plunge further into poverty.  They may, like this man, attempt to get work but, in hard times, work may be short term and underpaid and many will soon find themselves back trying to claim benefits again.  Few have the tenacity of the man in the archives.  Much needed welfare rights and advice services will help but what we really need is a fair and accessible benefits system, which recognises the reasons why people need to claim in the first place: poverty.

Dr Jackie Gulland is lecturer in social work at the University of Edinburgh

For further information about this project see http://www.blogs.hss.ed.ac.uk/constructingincapacity/

(where an earlier version of this post was published).

Recent Changes to Measuring Child Poverty

Morag Treanor, Lecturer in Social Policy, University of Edinburgh

The Conservative government is planning to change the current measure of child poverty, which combines income (60% median equivalised) and material deprivation (21 items commonly agreed as essential by members of the general public for adults and children separately, which are then combined to create an index of multiple deprivation).[1]

The proposed new child poverty measure would comprise commonplace family characteristics such as: family ‘breakdown’, ill-health, lack of skills, inadequate housing, ‘poor’ schools and ‘worklessness’. Let’s lay aside the fact that these characteristics do not distinguish between poor and non-poor people as they are experienced by many people at different points in the lives[2]. Let’s also lay aside the fact that these dimensions do not measure poverty itself, but rather are risks, consequences or causes of falling into poverty. Let’s instead focus on what analysing income and material deprivation can tell us in relation to child wellbeing.

It is worth briefly commenting on the background to the current child poverty measure. It was reached after a period of extensive consultation using research evidence. Not only has the 60% median equivalised income measure succeeded in capturing the effects of complex economic situations, it is also the official child poverty measure of the EU, OECD and UNICEF, and is now used by other governments[3].To change this measure now not only negates the considered and considerable efforts of many, it will separate UK child poverty from the rest of Europe and beyond. The government also risks being accused of changing the goalposts in recognition of its impending failure to reduce or eradicate child poverty.[4]

Let us turn our attention now to income, material deprivation and child wellbeing. The following chart is from my recent analysis of six waves of the birth cohort study Growing up in Scotland (See Figure 1 below) when the children are aged six years old. The red line with mean equal to 0 is the average of child wellbeing across all children in the study. Any positive numbers above this line shows higher than average levels of child wellbeing and any negative numbers below this line shows lower than average child wellbeing.

This chart shows that material deprivation (solid line) and recurrent poverty (dotted line) are each associated with lower than average child wellbeing; increasing levels of either income poverty or material deprivation result in increasingly low levels of child wellbeing. However, when both recurrent poverty and material deprivation are measured together (combined multiplicatively in an interaction term to be technical – dashed line), this results in exceedingly low levels of wellbeing for children, greater than either material deprivation or income poverty added together. This indicates that income and material deprivation while related, for the definition of material deprivation is not being able to afford consensually agreed necessities, are picking up on different aspects of economic disadvantage, which when combined, equal to more than the sum of their parts in their association with low levels of child wellbeing. This suggests that using both income and material deprivation in a measure of poverty is valuable and necessary.

Figure 1 – Interaction term between recurrent poverty and material deprivation for child wellbeing

 

Another advantage to the current measure of income and material deprivation is that it is objectively measured and comparable across time and place. The proposed new components of child poverty, i.e. family ‘breakdown’, ill-health, lack of skills, inadequate housing, ‘poor’ schools and parental ‘worklessness’,  do not distinguish between poor and non-poor people but result in a highly stigmatised and distressed group of people.

[1] For more details on how this index is created, and what the implications are of how the index is created, please refer to Treanor (2014).

[2] I have written about this more fully in a consultation response.

[3] http://www.newstatesman.com/politics/2012/11/moving-goal-posts-wont-hide-coalitions-failure-child-poverty

[4] http://www.newstatesman.com/politics/2012/11/moving-goal-posts-wont-hide-coalitions-failure-child-poverty

Dr Morag Treanor is a Lecturer in Social Policy at University of Edinburgh

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/

The Production of Social Inequality and Social Insecurity: Uncovering the Class Politics of ‘Austerity’

Gerry Mooney, The Open University in Scotland

A year has elapsed since the September 2014 Scottish Independence Referendum, a referendum which many have claimed has led to far reaching change in Scotland, not least in the political landscape of contemporary Scotland. Alongside change, however is continuity and this is all so evident in that Scotland continues to be a society characterised by widespread and deepening problems of poverty, and the persistence of and indeed rising inequalities income and wealth. One important aspect of the 2014 Independence Referendum was that the voting outcomes reflected the uneven economic, social and political geography of Scotland, demolishing in an instance the idea that Scotland is some kind of homogenous or unified national community. There was a strong correlation between where people lived and their tendency to vote YES or NO to Independence. The evidence shows that the YES vote was highest in the most disadvantaged areas of Scotland. Further, across all local authorities there was also a marked relationship between areas of deprivation/affluence and the likelihood of voting YES or NO respectively.

Part of the explanation for this will surely lie in the fact that, contrary to claims that the campaign for Independence reflected a rise in Scottish nationalism, the entire ‘indy ref’ debate in no small part revolved around contrasting visions of social welfare and social justice and, in turn, around the issues of ‘austerity’ and welfare ‘reform’. It was clear that many of the 1.6m voting YES, as well as a sizeable number of NO voters, believed that change was necessary – that there were alternatives to austerity and to UK government approaches to welfare – either with independence or continuing membership of the UK union.

The notion of austerity has become one of the most used terms in recent times. It has been deployed in political and media narratives as a shorthand way of referring to the period of economic and financial crisis that engulfs much of the UK today. That ‘we’ live in an ‘age of austerity’ was the message of David Cameron, prior to becoming PM in May 2010. The term is increasingly used as a descriptor; almost as a technical, neutral and value-free way of describing UK Government policies. At a superficial level this may be helpful but it contributes little to our understanding of the drivers of austerity, its key outcomes and, importantly, the beneficiaries of austerity measures. In many respects it may actually detract from our understanding of the underlying political project that characterises austerity – and that there are winners – as well as millions of losers – as a result of the political choice that austerity programmes represent.

Readers of this short piece (as well as others in this collection) will surely be aware of the rising number of people in Scotland who are forced to rely on food banks, on support from charities, third sector and faith organisations, in order to survive. Across Scotland this daily struggle for survival is made all the more difficult by a range of welfare ‘reform’ measures that both reflect and reproduce a much harsher and more punitive approach to those experiencing poverty. Increasing numbers of people are being subject to various welfare ‘sanctions’ for seemingly breeching new benefit regulations. In turn this directly creates economic hardship. But more generally, Scottish society today is characterised by growing problems of food poverty and of fuel poverty. Yet even acknowledging this fails to really capture the enormity of the widespread problems of insecurity, risk and precariousness of different kinds which are impacting on many of the most disadvantaged sections of society.

The growing number of people who are in paid work but classed as poor or are in need of welfare support, the so-called ‘working poor’, reflects the increasing economic precariousness and insecurity that shape the daily lives of a growing proportion of the population. While this is rarely made explicit, the widening and deepening of social insecurities and precarity is exactly related to the impact of austerity in the workplace – as much as in relation to so-called welfare ‘reforms’.

Cutting wages, in work and out of work benefits, pensions and the social wage more generally, that is in the provision of public services, is also about restoring conditions for profit and wealth accumulation. This amounts to little more than the transfer of wealth and power into ever fewer hands – the consolidation and advancement of the economic and political interests of the already rich and affluent. In this way ‘austerity’ is understood as a class-based strategy that works to consolidate and promote the interests of the already affluent and wealthy, against those of workers and the most disadvantaged sections of society.

This signals a more critical understanding of ‘austerity’ which interprets it as a deliberate programme of regressive redistribution: the large-scale redistribution of income from the bottom to the top of society, while making the most disadvantaged carry the brunt of the costs of the ongoing economic and fiscal crisis. Austerity programmes are dismantling not only welfare benefits and services, but also the mechanisms and structures which work to reduce inequality and enhance equity. In this respect it represents little more than an assault, a class-based and political assault, on the foundations of the post-1945 welfare state and the idea, enshrined in the post-1945 social contract, that the state has a vital role to play in reducing inequalities and supporting the most vulnerable by providing benefits and services.

How we approach the issue of austerity, as with poverty, is absolutely central to how it is understood and these shape any policies that follow. Poverty is no accident and neither is austerity: they are not inevitable but represent clear political choices to increase the accumulation of wealth and capital by the rich at the expense of those in the most precarious and disadvantaged social positions. Scotland is a wealthy country. A report published by Oxfam Scotland[i] in October 2015 highlights that the four richest families in the country are worth £1b more than the poorest 20% of the population, accounting for some £6.1b. Other recent research[ii] demonstrates that the ratio between the highest paid ten percent and the lowest paid ten percent of the population is now at its highest level since the mid-1970s, and the difference between the incomes of the top and bottom one percent is now over twenty times – and is increasing.

As the gap between rich and poor reaches unparalleled levels, it is incumbent on all of us who are concerned to tackle poverty to push for an anti-poverty strategy that empowers the poorest to gain greater income and provides greater bargaining power for workers in the labour market. Only through such measures can poverty be effectively addressed. This means increasing the ability of trade unions and workers to force employers to divert higher shares of profits to wages against the share going to dividends and ever higher managerial salaries. Work can only be a route out of poverty if workers have the power to bargain for decent wages and better conditions of employment. Past and current assaults on trade unionism and collective bargaining mark the political determination of successive UK Governments to increase the share that goes to profit and dividends, that is to the already wealthy and privileged. Such an approach lays bare the class politics and the class interests that underpin ‘austerity’ today.

[i] CPAG Scotland, Scottish Parliament must do more to ‘Even it up’. October 8 2015

http://www.oxfam.org.uk/scotland/blog/2015/10/scottish-parliament-must-do-more-to-even-it-up

[ii] Bell D and Eiser D., (2015), ‘Inequality in Scotland: trends, drivers and implications for the independence debate’, Stirling University Management School Working Paper, p.8 and figure 9.

http://www.centreonconstitutionalchange.ac.uk/sites/default/files/papers/inequality-paper-15-nov-final.pdf

Dr Gerry Mooney is Senior Lecturer in Social Policy and Criminology, Faculty of Social Sciences, The Open University in Scotland. He is co-editor of Poverty in Scotland 2014: The Independence Referendum and Beyond (Child Poverty Action Group, 2014). This is available on OpenLearn @

http://www.open.edu/openlearn/people-politics-law/poverty-scotland-2014-the-independence-referendum-and-beyond

Among other projects, he is currently working on Poverty in Scotland 2016: Principles and Tools and Targets Towards Transformation, to be published by CPAG in February 2016)

Gerry @ Web: http://www.open.ac.uk/socialsciences/main/staff/people-profile.php?name=Gerry_Mooney

Gerry @ OpenLearn: http://www.open.edu/openlearn/profiles/gcm8

Gerry @ The Conversation: https://theconversation.com/profiles/gerry-mooney-123416