The New Poverty

Stephen Armstrong

• Publisher: Verso
• Year: 2017
• Print ISBN: 9781786634658
• eBook ISBN: 9781786634665
• Topic: Social Sciences
• Subtopic: Economic Policy
• Index: Social Sciences

Today 13 million people are living in poverty in the UK. According to a 2017 report, 1 in 5 children live below the poverty line. The new poor, however, are an even larger group than these official figures suggest. They are more often than not in work, living precariously and betrayed by austerity policies that make affordable good quality housing, good health and secure employment increasingly unimaginable.

In The New Poverty investigative journalist Stephen Armstrong travels across Britain to tell the stories of those who are most vulnerable. It is the story of an unreported Britain, abandoned by politicians and betrayed by the retreat of the welfare state. As benefit cuts continue and in-work poverty soars, he asks what long-term impact this will have on post-Brexit Britain and - on the seventy-fifth anniversary of the 1942 Beveridge report - what we can do to stop the destruction of our welfare state.

1

Want

The aim of the Plan for Social Security is to abolish want by ensuring that every citizen willing to serve according to his powers has at all times an income sufficient to meet his responsibilities …

It cannot be got without thought and effort. It can be carried through only by a concentrated determination of the British democracy to free itself once for all of the scandal of physical want for which there is no economic or moral justification.

Sir William Beveridge, Social Insurance
and Allied Services Report

Last year, in Manchester, I met Aziz – a nineteen-year-old boy living in a homeless hostel, having been kicked out of his parent’s home after a family row. Aziz had slept rough and sofa-surfed until he found a temporary home in a dormitory at the men’s hostel in the centre of the city.

Because he’d moved around for a few weeks, he’d missed letters from the Jobcentre and – as a result – had been sanctioned for three months and was living on a £27 per week hardship loan, a sum that would be taken out of his benefit once it had been restored. The hostel took £10 per week, leaving him with £17 – or £2.40 per day. But he doesn’t think he’s living in poverty. ‘Poverty is kids in Africa.’ He shrugs. ‘I’m nothing like that.’

There is clearly huge disagreement about the definition and measurement of poverty in the UK – from politicians, academics and the public, when polled. To define subsistence in his report, Beveridge pooled a collection of estimates from his subsistence subcommittee – including Seebohm Rowntree and the economist Professor Arthur Lyon Bowley.

The committee set basic subsistence necessities before housing costs in London at £2 11s 0d per week. Converting this to the present day, the relative price would be approximately £148 using the retail price index. The Bank of England’s inflation calculator puts the number closer to £187.54 – or £9,752.08 a year. In comparison a single person over twenty-five on Jobseeker’s Allowance is entitled to £73.10 per week – or £3,801.20 per year.

Such calculations are not part of the official measurement of poverty in the UK. Instead, the UK government measures income-based absolute poverty and relative poverty. Absolute poverty as defined by the United Nations means severe deprivation of basic human needs, measured as an income of around $2 per day. Absolute poverty in the UK, conversely, measures income levels against a specific point in the past – most recently, the average earnings of the population in 2010–11, benchmarking the year the Child Poverty Act was passed. It’s a way of measuring progress – the poverty threshold is a household earning less than 60 per cent of the 2010–11 median income after taxes and transfers, adjusted for household size and composition.

Relative poverty, on the other hand, uses current income levels, setting the poverty threshold at below 60 per cent of today’s median income. Although this definition was accepted by all political parties when proposed by Prime Minister Tony Blair in 1999 – he suggested it as he announced he would halve child poverty within a decade and eradicate it within twenty years – it’s starting to fall out of favour.

In March 2010, for instance, then Work and Pension’s Secretary Iain Duncan Smith dismissed the measure because ‘you get this constant juddering adjustment with poverty figures going up when, for instance, upper incomes rise’. This made the measure eternally fluid and meant that as families were raised above the threshold, the media point itself would rise, meaning they would remain in relative poverty despite earning considerably more.

Over the next five years, Duncan Smith used this critique to redefine the way child poverty is measured – scrapping the legally binding target set in 2010 and replacing it with a duty to report on the number of children in households achieving GCSEs as well as the level of worklessness. In its Troubled Families report in 2011, and its Measuring Child Poverty report in 2012, the coalition government proposed measuring poverty by behaviour rather than circumstances. Measuring Child Poverty, for instance, focussed on drug and alcohol use, family stability and parenting skills instead of income.

The problem with Duncan Smith’s critique of relative poverty is something any GCSE maths student could point out – he clearly didn’t understand averages. The benchmark for relative poverty is a median measure rather than a mean. If you had one hundred people with one hundred different salaries, the mean average would involve totalling up their combined earnings and dividing by one hundred. The median, on the other hand, would be the mathematical equivalent of standing them in a line in order of income and picking out the person right in the middle of the line. You could easily raise the incomes of everybody below the threshold and, provided they remained below the median salary, they’d have no effect on the level of the median salary. Number fifty in the line is number fifty in the line, even if the forty-nine below them earn very similar wages.

Relative income poverty has critics on the left as well, who argue it fails to take into account the cost of living or the effects of debt. Their preferred measure is something closer to the principles established by the pioneer of poverty research – in the UK and ultimately the world – Seebohm Rowntree. Rowntree conducted three surveys of poverty in York – in 1899, 1936 and 1951 – using a list of essential needs and deciding someone was in poverty if they were unable to heat their home, feed themselves or their family properly and afford sufficient clothing, alongside other basic essential needs, thus measuring poverty by level of deprivation rather than level of income.

This is the method preferred by Stewart Lansley and Joanna Mack, who conducted the ESRC-funded poverty and social exclusion surveys in 1983, 1990, 1999 and 2012. In the case of Rowntree, he produced the list of needs from his own ideas about what was necessary. In 1899 that was fuel and light, rent, food, clothing and household and personal items. In 1936, he allowed that people had the right to live, not merely exist, and added newspapers, books, radios, beer, tobacco, holidays and presents.

Lansley and Mack, instead, conducted a survey of the British public to find a mutually agreed list. In both cases, the list of essentials changed over time. It obviously makes no sense to compare the living standards of 1899, 1936 and 1951 – or even 1983, 1990 and 1999 – with today. Take the telephone – a luxury in the 1950s, commonplace in the 1980s and 1990s, and essential today for those in casual, precarious jobs where being on the end of a phone is a precondition to securing work. Likewise the computer – even in 1999 few people considered having a computer at home to be essential. Since the introduction of Universal Credit, however, daily access to broadband is often mandated by Jobcentres – internet access is an enforced essential for those on low income or receiving benefits.

Interestingly, Lansley and Mack found that even in their most recent work, the British public has always considered a TV to be a luxury – and yet, when asked to imagine what it would take to live day after day, month after month, year after year with just a minimum acceptable standard of living, people are more generous. Since 2008, the Joseph Rowntree Foundation has published annual updates of the Minimum Income Standard (MIS) to reflect households’ essential requirements for survival and to allow participation in society.

To arrive at this minimum income each year, the Joseph Rowntree Foundation pulls together twenty-two detailed focus groups with people from a wide range of social backgrounds and asks them what items should be covered by a minimum household budget – including housing and domestic fuel, household goods and services, clothing, personal goods and services, food and drink, and social and cultural participation.

In household goods, for instance, the groups agreed that carpets or tiles for flooring, furniture (including sofas, dining table and chairs, beds, wardrobes and drawers), curtains, cushions, light shades, bedding, hairdryer, kettle, toaster, iron, cooker, fridge, washing machine, microwave, cooking and cleaning equipment, landline phone rental, mobile phones, postage, babysitting and childcare were all needed ‘to have the opportunities and choices necessary to participate in society’, as the Joseph Rowntree Foundation defines the MIS.

Having drawn up the list, it was checked to see whether it met basic nutritional requirements, then the full list was priced at a variety of stores and suppliers. In 2016, the total for single people was at least £17,100 per year before tax to achieve the MIS, and for couples with two children it was at least £18,900 each – a household income of roughly £38,000.

Beveridge was clear that any measure of subsistence would increase over time: ‘determination of what is required for reasonable human subsistence is to some extent a matter of judgment; estimates on this point change with time, and generally, in a progressive community, change upwards’. Beveridge also opposed means testing and believed in certain universal benefits. Instead, from the end of the 1970s successive governments have hacked away at the basic level of benefits – during the 1980s Conservative governments decoupled benefits from economic growth, reduced social housing support and cut unemployment benefit entitlements, and New Labour’s policies included the welfare-to-work New Deal and a harsh sanctions regime. Means testing has risen, marking out benefit recipients as separate from the rest of society.

Overall the 2010 coalition cut public spending by 8.3 per cent – over £10 billion of which came from the welfare state. A further £12 billion of welfare cuts loom between 2016 and 2020, including the remaining three years of a freeze in working-age benefits, reductions to allowances in Universal Credit that make it significantly less generous than current benefits, and cuts to child tax credits.

The result, according to the IFS, is that the period from 2015–16 to 2020–1 is set to be the worst on record for income growth in the bottom half of the working-age income distribution, while also seeing the biggest rise in inequality since the 1980s. As a result of these cuts the expected income for an out-of-work single parent is about £214 per week, or around £11,000 per year, and someone working thirty-five hours per week on the national living wage should earn £252 per week, or £13,000 per year. These figures are £6,000 per year and £4,000 per year lower, respectively, than the amount of money most Brits think is the minimum required for an acceptable standard of living. By 2020, the poorest 30 per cent of households will lose on average about 12 per cent of their disposable income compared to 0 per cent on average for the richest 30 per cent.

Recently there have been official and unofficial attempts to shift the blame for poverty to the poor themselves. In November 2012, Duncan Smith sought a new way to define child poverty that was not just based on income. A multidimensional measure, the DWP suggested, might include living in a workless household, living in an unstable family environment, having parents without the skills they need to get on or parents in poor health. The DWP backed this with the results of an online poll that said parental drug or alcohol addiction was the number-one measure of whether a child was growing up in poverty.

In this self-reliance school of thought, an enormous responsibility for someone’s poverty lies on their own shoulders. And yet the evidence suggests a more complex pattern, including the inarguable conclusion that poverty is systemic, and that while the chances of escaping it are falling away the chances of falling into it are rising.

‘I don’t think that you can deny that parental behaviour matters and that there are some families, both rich and poor families, who in some cases need to do a better job,’ argues Sam Royston, head of policy and public affairs at the Children’s Society. ‘But that capability problem is not more prevalent in low-income families than in high-income families. The outcomes of it can be worse for low-income families – because when you combine parenting difficulties with a low income, then the outcome’s clearly worse. But in many cases families that I see on a low income are the best parents – because they have to be. In a lot of cases they’re the best at managing their money simply because they have to. You need to have that support to enable people to bring up their children where they’re struggling – whether that’s with their parenting or with their income. They need enough to live on. It just seems obvious and it’s just not true that if parents managed better as parents they’d manage better on low income.’

The bad parenting doublethink works both to punish and demonise – if the individual is to blame, society doesn’t have to take responsibility and can turn away. This narrative is present in much of the British media’s coverage of domestic poverty.

In 2013, Christian Albrekt Larsen, a professor at Aalborg University’s Centre for Comparative Welfare Studies in Denmark, examined a sample of 1,750 British, 1,750 Danish and 1,750 Swedish newspaper articles between 2004 and 2009, looking at reporting on issues surrounding poverty, low pay and benefits. He found 59 per cent of UK stories depicted the poor in a negative light, as opposed to 38 per cent in Sweden and 45 per cent in Denmark – with child and pensioner poverty stories making up the vast majority of positive stories in the British press. A full 10 per cent of all UK stories had a benefit fraud theme, while the Swedish articles contained only one such story and the Danish equivalent carried none. Stories about single mums abusing benefits made up 19 per cent of the UK articles in the sample against 2 per cent of the Danish stories and 1 per cent of the Swedish stories.

In July 2016, I talked to Sebastian Siemiatkowski, the co-founder and CEO of Sweden’s fast-growing financial start-up Klarna – valued at over £2 billion – and asked him about the Swedish attitude to benefits. He thought that a strong welfare state encouraged entrepreneurs like himself. ‘If you look at social mobility as the number of people that go from low-income parents into creating a different type of environment for themselves, Sweden ranks among the highest in the world,’ he explained. ‘I think the rights that we think are basic – such as free healthcare, free education and the idea to try to give each individual the opportunities to do what they want and excel with their life – works very well. Most importantly, the welfare system is so strong that anyone can take a risk and know that – if the worst happens – they will be taken care of. For me, knowing that if Klarna didn’t work I wouldn’t struggle to feed my family made it easier to start the company. That’s how Sweden creates entrepreneurs – and why it’s kicking above its weight globally.’

The UK problem, perhaps, is in language. In 2016, the Beatrice Webb Society surveyed the language of poverty and found that certain words caused people to switch off when they heard them used: ‘benefits’, and even ‘poverty’ itself. Aziz would have agreed. Instead, the survey found, people in the UK responded far better to framing the issue ...

Table of contents

• Cover Page
• Halftitle Page
• Title Page
• Copyright Page
• Dedication
• Contents
• Acknowledgements
• Introduction: The Report
• Chapter 1: Want
• Chapter 2: The Problem of Age
• Chapter 3: Health: The Rise of DIY Dentistry
• Chapter 4: Idleness
• Chapter 5: The New Full Employment
• Chapter 6: Squalor
• Chapter 7: Unconnected
• Chapter 8: Ignorance – Unreported
• Chapter 9: Divided Kingdom
• Chapter 10: More than Half the Sky
• Chapter 11: Courage, Faith and Unity
• Afterword
• Index