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Poverty and unemployment in Wales

Monitoring poverty and social exclusion in Wales 2009 (published 3 June by the Joseph Rowntree Foundation) examines trends in poverty statistics over the last ten years and the impact of the recession.  See the poverty publications page for a copy.

Of particular concern is the 16% unemployment rate (average for 2008) among 16- to 24-year-olds, compared with 6% for all working-age adults. As a result, almost half (45%) of all those unemployed in Wales are under the age of 25.

The recession and consequent unemployment have disproportionately affected some areas of Wales.  Although all of Wales has been hit, the six South Wales Valley local authorities, plus Newport and Bridgend, now have the highest proportions of the working-age population claiming JSA in Wales. In April 2009, Blaenau Gwent's rate was the highest for any local authority in the UK, while Merthyr Tydfil's rate placed it tenth in the list.

Looking at the longer trends, poverty was rising in Wales even before the recession began. By 2007/08, half the improvement in reducing child poverty since the late 1990s had been lost. The official figures for Wales show that the average proportion of children in poverty (on the after housing costs measure) in 1998/99 stood at 36%. This reduced to a low point of 28% in 2005/06 but has increased to 32% in the latest figures (2007/08).

The study also highlights in-work poverty: over the ten years to the mid-2000s, almost all the reduction in the number of children in low-income households in Wales occurred among those in workless families. This leaves as many children living in poverty in working families as in non-working ones.

But can in-work poverty get worse as unemployment rises? Certainly it can - among those two earner families who lose one partner to unemployment.  The family is still classed as 'working' - but their money is down and their poverty risk is right up.

London's Poverty Profile

Compiled by NPI with the support and involvement of the City Parochial Foundation, this report shows London to be the most unequal region in England with the highest proportion of households in the top tenth of incomes nationally, and the highest proportion in the bottom tenth too.

London has the highest rate of income poverty of any region in England (after housing cost). Inner London in particular has the highest rates for all age groups (children, working-age adults and pensioners).

But - although Inner London is worse than any English region on many indicators, it has seen improvements in recent years. Outer London on the other hand has experienced a significant deterioration across a number of indicators since the late 1990s, including child and working-age poverty. One consequence of this is that more of the capital’s low-income population now live in Outer London than Inner London.

Despite this, boroughs in the Inner East (north and south of the river) fare worse across a range of indicators compared with other parts of London. This is particularly noticeable for worklessness and ill health.

The report can be accessed from our poverty publications page.

The specially-created website is at www.londonspovertyprofile.org.uk

Should adult benefit for unemployment now be raised?

This report (April 2009) asks whether the value of the social security benefit for people who are unemployed, namely Job Seeker’s Allowance (JSA), should now be substantially increased. There are several parts to this question. By what criteria can the current value of JSA be deemed to be ‘low’? Has JSA always been low or was it once worth much more? Even if it is low, what are the arguments for and against raising it, and how strong are they? What difference does it make that ‘JSA’ is really two benefits distinguished by their grounds of entitlement, namely a record of National Insurance contributions as opposed to the level of family income?

Although the question is prompted by the recession that began in 2008, the report is guided by the view that answers are needed whose validity does not expire once the recession is over. If JSA is to change, an argument needs to be made for a permanent change. The aim of this report is to demonstrate that the question is a pertinent one which deserves serious attention and a serious answer.

The report can be accessed from our poverty publications page.

Monitoring Poverty and Social Exclusion 2008

The tenth anniversary edition of our annual assessment Monitoring poverty and social exclusion report,  published by the Joseph Rowntree Foundation on 8 December, presents a comprehensive analysis of trends across the past decade.

The key conclusion is the finding that, after an initial burst of success, improvement in many key areas has slowed down or remained unchanged. Up to about 2002 the picture was strongly positive with over half (30) of the 56 indicators showing an improvement and only a few worsening. Since then, by contrast, only 14 indicators improved while 15 worsened (leaving 27 steady). This is a fragile position to be in when entering a recession. 

The report can be accessed from our poverty publications page.

In-work poverty: a dagger at the heart of the anti-poverty strategy

In 2006/07, 'in-work child poverty' - that is, children in households with below poverty-line incomes and where at least one adult is working - reached an all-time high.  Quite apart from the blow this has dealt to the pursuit of the child poverty targets, for a strategy whose cornerstone is the  idea that work is the route out of poverty, this is a disaster.

This report (accessed from the poverty publications page) for the Joseph Rowntree Foundation, reviews the evidence (over 30 years) and considers what must be done.  Two key findings are these:

  • Tax credits now lift around 1 million children in working families out of poverty. But this has been cancelled out by steadily rising number of children who need tax credits to avoid in-work poverty, up from around 2m in the mid- 1990s to around 3m on the latest figures. It is not, therefore, that tax credits have ‘failed’ but rather that the underlying problem, of work providing insufficient income, has got worse.
  • Most children in in-work poverty belonging to families who are only ‘part-working’ (that is, where the jobs done are part time only, or where one adult is not working at all, or where at least one adult is self-employed). Although this would seem to imply that poverty in these families could be avoided if the adults worked more, part-working families are not unusual, fully half of all children in working families belonging to this group.

As for what to do about it, building on what has gone is no longer enough. While myriad individual policies, including on pay and skills, all have their part to play, what is needed are some new, big ideas that can change the framework within which individual policies play out. In particular:

  • The creation of a system of free, universal childcare. The argument here is that while the poverty risk for part-working families is big, ‘part-working’ is still a normal family status in our society. So if it is not to be divisive, reducing the extent of part-working in the interests of cutting in-work poverty require changing a society-wide norm. Universal childcare provision could be the spur to that change, and to be universal it would need to be free. But while this can be seen as the logical endpoint of a number of government objectives, it is a far from foregone conclusion that the public would agree. A proper public debate is required.
  • A comprehensive review of the tax, tax credit and benefit systems with the twin objectives of cutting the tax paid by low-income working households and reducing the extraordinarily high marginal effective tax rates many of them face (70%+). By so doing, low-income working families would be better able to improve their financial position through their own efforts (e.g. by working a little longer, or getting slightly better paid) than they are now. ‘Allowing’ families to escape poverty in this way, by lowering their marginal tax rates, entails the recognition that the state may be a part of the problem as well as part of the solution.
     

Cold and poor: the overlap between fuel poverty and low income

The report of our study on the links between fuel poverty and low income was published on 10 July. Getting the fuel poverty programme back on course will require a focus on single people living alone as well as lower fuel costs.

Among the key points are that:

  • Levels of fuel poverty doubled between 2005 and 2007.
  • Many of those moving into fuel poverty were not in low income.
  • Levels of fuel poverty will remain high until and unless fuel costs are substantially reduced.
  • Single adults living alone are at the highest risk of fuel poverty.
  • Future fuel poverty initiatives must take full account of the burden of fuel costs on single adults living alone, particularly those of working age.

Both the full report, and a summary, are available for download.

We would like to thank the Eaga Partnership Charitable Trust for their support which made this project possible.

Introduce  a local income tax?  But we've already got one

Commentator Simon Jenkins, long an expert on all things to do with local democracy and local government, recently signalled his support for the introduction of a local income tax.  In a longer version of a Guardian Comment is Free piece, Peter Kenway explains why such a position is wrong.

Why Council Tax Benefit matters - and what could be done about it

Council Tax Benefit – which corresponds to the part of council tax that households do not have to pay if their income is low enough – is the only part of the whole council tax system where there is still a chance of reform in the foreseeable future.

With five million recipients and an estimated further two and half million ‘entitled non-recipients’, CTB determines the council tax liability of around a third of all households in England. More important still, CTB has the effect of transforming the council tax system into a hybrid property and local income tax.

This report has been written for the Local Government Association to help it and its members form a view about what could be done about CTB – and why it matters so much to the acceptability of council tax overall.

Means testing for legal aid in the Magistrates' Court

With effect from October 2006, a defendant’s right to receive legal aid for cases before a Magistrates’ Court became subject once again to means-testing, this requirement having been abolished in 1999.

In justifying this re-introduction, ministers stressed that it was designed to ensure that those able to afford the cost of their own representation should not benefit from legal aid.  The spectral figures of a convicted murderer and a professional footballer accused of spitting, both of whom had received legal aid, hovered over the debate.  Yet our analysis of the new rules paints a very different picture of who, from now on, will have to pay for their own defence: far from being just the rich, the list now stretches all the way to lone parents working full time on the minimum wage.  The question we ask is whether this is what parliament really intended.

 

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