Tag Archives: Low Income

Food for thought: how the UK food strategy is trying to revolutionise the way we think about and access food

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Research has shown that healthy food choices are three times more expensive than unhealthy ones, food bank use is at it highest ever level and the NHS is anticipating significant struggles in long term treatment of people with conditions linked to obesity and unhealthy lifestyles, like cancer, diabetes and heart disease.

A forecast published in a report by the Food Foundation showed that if we continue at our current rate and type of food consumption 22% of children born in 2020 will be overweight or obese by age 5, rising to 46% by the time they reach age 21.

But the impact doesn’t stop there. The food system – agriculture, food production, distribution and retail combined – releases more greenhouse gases than any other sector apart from energy. In the UK, the food system accounts for a fifth of domestic emissions – but that figure rises to around 30% if we factor in the emissions produced by all the food we import.

The food we eat – and the way we produce it – is doing damage to both the environment and our health and the government is now trying to take steps to mitigate the damage, and improve our health and wellbeing in the process through the roll out of a national food strategy.

Fixing a broken system

Figures from the Trussell Trust show that between April 2020 and March 2021, a record 2.5 million emergency food parcels were given to people in crisis. The increasing use of foodbanks shows just how deeply entwined inequality, food and health are, and how important it is for a robust and equitable food strategy to be rolled out.

The Broken Plate 2021 report from the Food foundation provides an overview of the food system in the UK, looking across four main themes:

  • making healthier options more appealing;
  • making healthier options more affordable;
  • making healthier and more sustainable options more available; and
  • addressing inequalities in food so that everyone can have the chance to live longer, healthier lives.

In July 2021 the UK government published a review into how the food system in the UK works and the interventions that could be brought in to prevent the harms from what we eat and the way we eat. The plan sets out recommendations and a strategy for the future which focuses on food being equitable, accessible, healthier, and sustainable.

The recommendations cover a number of key themes:

  • escape the “junk food cycle”, including introducing a Salt and Sugar Reformulation Tax;
  • reduce diet-related inequality, including extending eligibility for free school meals;
  • make the best use of our land – including guaranteeing agricultural payments to help farmers transition to more sustainable land use; and
  • create a long term shift in food culture, including the development of a robust system of data collection and reporting to help monitor long term progress.

Inequality exacerbated by unequal access to food

One of the most pressing issues around food is its availability and its ability to exacerbate existing inequalities, particularly among disadvantaged groups. We have already seen that food bank use is high (disproportionately so among lower income groups) and that eating healthier food is more expensive than unhealthy food.

The shelf life of more unhealthy and highly processed food is also often longer, so it is easier to store, and food can be spread out and eaten across multiple days more easily. Processed foods, which are often higher in sugar, salt and trans fats (unhealthy fats) also often require less cooking (both in terms of heat energy required to cook them and knowledge of how to prepare them) which for people with reduced access to kitchens, experience of fuel poverty or limited knowledge of preparing food can be more convenient. Research consistently shows that people who fall into these groups are significantly more likely to come from lower socioeconomic backgrounds and have experience of poverty.

Steps are being taken to try and improve access to healthier food for people living on lower incomes, including free school meals and (with a bit of persuasion from Marcus Rashford) a wider roll out to also offer meals during school holidays. The government also runs a voucher system for new parents to help them get access to fresh food like fruit and vegetables.

More recently there has also been discussion about the roll out of “food on prescription” services, both for those people on lower incomes and for those people who are at risk of medical complications or disease as a result of being overweight or obese.

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Sustainable as well as healthy

As has been made clear in the reports, food systems don’t just impact on us as individuals, they also have a significant impact on the environment. The changing climate is at the forefront of everyone’s mind, including multiple extreme weather events, the publication of an IPCC report on climate change, and the run up to COP26, due to be held in Glasgow. So the way we grow and process our food, and how this negatively impacts our environment is coming under greater scrutiny.

Currently, many practices are having a negative and detrimental impact on our environment across a number of areas including carbon emissions, water pollution, reduction in soil health, loss of biodiversity, land use/deforestation.

And commentators are now emphasising that our food system as well as being healthy and accessible should also be sustainable, with programmes developed to reduce food waste, support community-based agriculture schemes, help farmers to transition to more sustainable ways to farm and use land and stimulate demand for in season, sustainably grown, locally sourced food.

Final Thoughts

Food, and our relationship with it is becoming increasingly important, not only for our own personal health and wellbeing, but also for the health of communities more generally, and the health of our planet.

Sustainable, healthy and equitable food systems help to promote healthier choices and reduce our impact on the planet. And food can also play its part in helping to relieve other pressures on society, like food poverty, inequality and the rising use of food banks. Food on prescription services can help support people to make better choices and reduce the risk of diseases like cancer, heart disease, stroke and obesity.

In short, food is not just vital for life, but also for living well.

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Fair and flexible labour market: building back better

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Much has been reported on the recovery from the pandemic and how things can be ‘built back better’ but what about those groups that have been disproportionately affected?

Recent research has highlighted the unequal impacts the pandemic has had on particular groups within the labour market.  From the lowest paid to part-time workers and women, research has considered how things could be moved forward so that those that have borne the brunt of the economic impact are not left behind. In this blog, we take a look at some of these publications, each of which highlights the need to create a fairer and more flexible labour market.

Low paid workers: new settlement needed

The Resolution Foundation’s latest annual Low pay Britain report has warned that the low paid are at greatest risk of becoming unemployed once the furlough scheme ends in September.

Despite the positive backdrop for low paid workers in the run up to the crisis with a fast rising minimum wage following the introduction of the National Living Wage (NLW) in 2016 – which has driven the first sustained fall in low pay for 40 years – the Covid-19 crisis has adversely affected the low paid to a much greater degree than the higher paid. The research showed that workers ranked in the bottom fifth for pay were three times more likely to have lost jobs, hours or have been furloughed than the top paid fifth. Low paid workers are also more likely to work in the sectors most impacted by the pandemic – hospitality, leisure and retail.

As the economy reopens, however, so too do the sectors most restricted over the past year which improves the prospects for low paid workers. Indeed, they are now returning to work fastest. In April alone, almost a million workers came off furlough – more than half of them employees in hospitality, leisure or retail.

But while the report highlights the positive prospects for the low paid, it also addresses several key issues that policy makers will need to consider if the low paid are to benefit from the recovery. Major risks for the low paid are identified:

  • higher unemployment
  • decreasing job security
  • infringements of labour market rights

It argues that low paid workers’ relative unemployment risk after the pandemic is likely to be particularly high given the possibility of structural change concentrated on low paying sectors. And if unemployment rises, it is noted that job quality and infringements of labour market rights are likely to deteriorate.

The Resolution Foundation calls for a new settlement for low paid workers, arguing that “policy makers must look beyond the minimum wage – to job security and labour market regulation – for ways to ensure it’s a recovery that benefits low paid workers”.

Part-time employees: must be included in the recovery

As we move towards the end of restrictions and of the furlough scheme, cracks have also started to emerge for part-time workers, who have been “clinging on in a volatile labour market” according to recent analysis by the Timewise Foundation.

This report notes that part-time employees are one demographic that hasn’t had the same level of scrutiny in the literature as other disproportionality affected groups.

The experience and outlook for part-time employees appears “particularly bleak” according to the report. Despite the furlough scheme being effective in protecting millions from unemployment, it is argued that it is actually masking significant challenges – most notably for part-time workers. The disproportionate impact on part-timers has seen them face higher levels of reduced hours and redundancy. They are also less likely than full-timers to return to normal hours and to hang on to roles during lockdowns.

Evidence shows 44% of part-time employees who were away from work during the first lockdown continued to be away from work between July and September 2020, when restrictions began to temporarily ease. This compares to 33.6% of full-time employees.

The majority (80%) of part-time workers also do not want to work more hours but as Timewise data shows, only 8% of jobs are advertised as part-time – “simply too big a problem to ignore”.

In response to the analysis, a vision for change is set out, focusing on creating a fair and flexible labour market that will:

  • support those in everyday jobs to access flexibility
  • help the millions of people who want or need to work flexibly to find flexible opportunities
  • remove some of the barriers to support those trapped in low-paid work and unable to progress

Women: promoting a gendered recovery

Women have also been disproportionately affected in the labour market, particularly as they are often employed in low-paid and part-time jobs within shutdown sectors such as hospitality and retail, which are notoriously characterised by job insecurity.

This was highlighted in a recent briefing paper by Close the Gap and Engender which looked at the impacts of Covid-19 on women’s wellbeing, mental health, and financial security in Scotland. The paper confirms pre-existing evidence that women have been particularly affected by rising financial precarity and anxiety as a result.

The closure of schools and nurseries and increased childcare disproportionately affected women’s employment and women’s propensity to work part-time places them at greater risk of job disruption. The data shows that young women and disabled women are being particularly impacted by the pandemic.

Key findings include that women are more likely than men to be receiving less support from their employer since the first lockdown, and were significantly more likely than men to report increased financial precarity as a result of the crisis – this was particularly the case for young women and disabled women. Timewise points to the potential for this to add to a growing child poverty crisis.

Similarly to the above reports, which call for the specific affected groups to be included in any future employment strategy, this report concludes by highlighting the importance of a gender-sensitive approach to rebuilding the labour market and economy.

Final thoughts

While furlough has undoubtedly protected many within those groups who have been disproportionately affected by the pandemic, this is only temporary and as all three reports above suggest, these groups are at greatest risk of unemployment and job insecurity when the scheme finally ends.

The research clearly calls for a fairer and more flexible labour market with stronger and better rights for all workers. Failure to address this in the attempt to build back better will only serve to increase the inequalities that already exist in the labour market.

The reports highlighted in this blog post have recently been added to The Knowledge Exchange (TKE) database. Subscribers to TKE information service have direct access to all of the abstracts on our database, with most also providing the full text of journal articles and reports. To find out more about our services, please visit our website: https://www.theknowledgeexchange.co.uk/

Further reading on employment issues from The Knowledge Exchange Blog:

The economic impacts of the coronavirus outbreak: what the experts are saying

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While the coronavirus outbreak is first and foremost a public health emergency, the economic damage caused by the pandemic is also a huge concern. In recent weeks, think tanks and economists have been offering their thoughts on just how badly they believe the economy will be affected by Covid-19, and how long it might take to recover.

With each passing week it’s emerging that the economic impact of the coronavirus could be more severe than first thought. The International Monetary Fund (IMF) has warned that the shutdown of economic activity in the world’s major economies is likely to trigger a far more painful recession than the one following the financial crisis of 2008. The IMF now believes that the world is facing the worst economic downturn since the Great Depression of the 1930s.

In the UK, an equally gloomy prognosis has come from the Office for Budget Responsibility (OBR), the government’s fiscal watchdog. Its stark assessment of the possible economic impact of Covid-19 indicates that the UK economy could shrink by 35% and unemployment could rise to more than two million.

The regional picture

The economic impact of coronavirus is varying significantly across the country. Research by the Centre for Progressive Policy (CPP) has revealed that the decline in economic output is estimated to reach almost 50% in parts of the Midlands and the North West in the second quarter of this year. In terms of decline in Gross Value Added (GVA), Pendle in the North West is estimated to be the hardest hit local authority in the UK, followed closely by South Derbyshire and Corby in the East Midlands.

In Scotland, since the coronavirus outbreak began, the University of Strathclyde’s Fraser of Allander Institute (FAI) has been publishing regular updates about how business is being affected.

The FAI’s most recent survey of Scottish businesses  finds that, while all sectors of the Scottish economy have been severely affected by the crisis in terms of staffing levels, the accommodation and food services sector (which includes hotels, bars and restaurants) has experienced the harshest impacts, with 77% of businesses reducing staff numbers. In addition, 85% of businesses expect growth in the Scottish economy to be weak or very weak over the next 12 months.

On a more positive note, the FAI survey found that more than 95% of businesses which are planning to use the UK government’s  Coronavirus Job Retention Scheme believe it will be ‘very effective/effective’ in supporting their survival during the pandemic.

Business and employment support

The Job Retention Scheme is one of a series of measures introduced by the UK government aiming to limit the impact of the coronavirus, and ensure much of the economy is able to recover when the health crisis is over. While these actions have been widely welcomed, there have been calls for the UK to learn from more innovative measures adopted by other governments.

A report by the Policy Exchange think tank has highlighted Denmark’s wage subsidy, which is differently calibrated to the Job Retention scheme in the UK. While the Danish government is covering 75% of the salaries of employees paid on a monthly basis who would otherwise have been fired, for hourly workers the government will cover 90% of their wages, up to £3,162 per month. The Policy Exchange report notes that this assumes that workers paid by the hour won’t have the savings and support networks that generally better off salaried workers are likely to have.

Household challenges

The bigger economic picture is bad enough. But the real pain of an economic recession will be felt much closer to home. For individual households, social distancing measures aiming to contain the spread of coronavirus are already having significant impacts on spending habits. Research by the Institute of Fiscal Studies (IFS) has highlighted how these changes may be affecting people on different incomes.

The IFS suggests that richer households will be more resilient to falls in income since a considerable proportion of their spending goes on things that are currently not possible, such as eating out and holidays. But because lower-income households spend a higher share of their income on necessities, such as rent and food, the IFS suggests that they will be less resilient to any fall in income.

Exiting lockdown

In recent days, governments in France and Germany have set out plans for easing their lockdown restrictions, while Austria and Italy have already allowed some shops to open.  But the UK government has extended its lockdown to the beginning of May, and has not announced a clear exit strategy.

The uncertainty surrounding the trajectory of the coronavirus makes it exceptionally difficult to see when things might return to normal. But some analysts are becoming concerned about the harm that a prolonged lockdown might do.  A discussion paper published at the beginning of April highlighted some of these dangers:

“A long lockdown will wipe out large swathes of the economy. There will be a negative impact both financially and mentally on too many people. Already the lockdown has seen a surge in domestic violence. How to end the lockdown is key to helping restart the economy.”

The authors of the paper have put forward a strategy for ending the lockdown, suggesting that a phased traffic light approach (red, amber, green) would give everyone a clear sense of direction and address the economic, social and quality of life challenges posed by the lockdown.

After the virus

There is no clear agreement among economists on how the economy might fare once the health emergency has passed. Some economists forecast a sharp recovery, others suggest it will take two or more quarters, while still others forecast an initial boost in activity followed by another dip when the effects of unemployment and corporate bankruptcies start to filter through.

But there is a growing sense that the pandemic will have a fundamental impact on the economic and financial order. And in the UK, Paul Johnson, director of the IFS,  has suggested there will be an economic reckoning:

 “We will need a complete reappraisal of economic policy once the current economic dislocation is behind us. Tough decisions will have to be made which are likely to involve tax rises and higher debt for some time to come. The only other alternative would be another period of austerity on the spending side. That looks unlikely.”

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Beneath the headlines: record high employment rate, but what’s more important – quantity or quality?

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Competition for new jobs

The UK employment rate has hit a joint record high of 76.1%, according to the latest official figures. The unemployment rate was estimated at 3.8%; it has not been lower since 1974. The economic inactivity rate was also close to a record low.

It’s not surprising that such record figures are often highlighted as ‘good news’ headlines. However, there has also been an increasing focus on quality of work over the past decade and the impact this has on people’s lives – reflecting concerns regarding developments in working practices, as highlighted by a recent City-REDI briefing paper. It has therefore been argued that the record employment rates are not necessarily representative of a ‘good news’ story.

Concerns

Concerns over working practices include the rise of the gig economy, unequal gains from flexible working, job insecurity and wage stagnation, to name but a few. The City-REDI paper outlines a number of ongoing concerns related to:

  • weak productivity growth;
  • employment insecurity and precarity;
  • in-work poverty;
  • skills shortages and skills polarisation; and
  • the impact of automation, technological change and the gig economy on the nature and experience of work.

Indeed, analysis has shown that much of the recent rise in employment is due to a ‘surge in low-value work’, which is holding back productivity growth. Many people are stuck in low paid insecure work, all of whom are contributing to the high employment rate.

Recent research from the Joseph Rowntree Foundation has reported that four million workers live in poverty, a rise of over half a million over five years – meaning in-work poverty has been rising even faster than employment. The causes of this increase include poorly paid jobs – particularly under temporary and part-time contracts – and a lack of progression routes for people in low-skilled work.

In addition, the rising gig economy shows no signs of slowing down, more than doubling in size over the past three years and now accounting for 4.7 million workers, according to a new report. An interesting finding of the report is that the majority of gig economy workers use this platform to supplement other forms of income, suggesting that workers are not getting enough of an income from their primary employment.

It has also been shown that advances in technology have pushed some workers into poorer quality jobs than those lost, something which cannot be addressed without some kind of policy intervention.

Health impact

Not only is poor quality work bad for the economy, it is also bad for people’s health.

A recent report which examined the impact on social inequalities of policy initiatives and reforms to extend working lives in five European countries, highlighted that working conditions are also known to influence post-retirement health, and for those with lower socioeconomic status, workplace arrangements may be causing or contributing to poor health.

A number of studies have highlighted the link between good work and health and wellbeing. As stated by a What Works for Wellbeing briefing paper, “Being in a job is good for wellbeing. Being in a ‘high quality’ job is even better for us.” It has also even been suggested that being in a poor quality job is actually worse for health and wellbeing than remaining unemployed.

Moves towards improving quality

Recent developments in the UK to address such challenges for the future and quality of work include:

  • the establishment of The Work Foundation’s Commission on Good Work in 2016, which aims to better understand the factors shaping change, and the nature and scale of opportunities and risks, so as to promote policies to achieve ‘good work’;
  • The commissioning and publication of the independent Taylor Review of Modern Working Practices in 2017 which called for policy to address the wider issue of creating quality jobs for all; and
  • the Government’s Good Work Plan, published in December 2018, which sets out the reforms planned to help improve quality of work – the first time the UK Government placed equal emphasis on the quality and quantity of work.

In addition, the Chartered Institute of Personnel and Development (CIPD) launched the UK Working Lives survey, the first robust measurement of job quality in the UK. This has since contributed to government thinking and recommendations around ‘good work’ in response to the Taylor Review.

Despite the widespread agreement over the need to adopt ‘good work’ principles, however, there remains no agreed set of indicators of exactly what it encompasses nor metrics for measuring progress towards it.

What is good work?

As the City-REDI briefing paper and other studies indicate, defining good quality work is complex as quality means different things to different people.

A range of factors contribute to different people’s perception of quality and fulfilling work, including pay, flexibility, security, health and wellbeing, nature of work and job design. The CIPD survey highlights seven dimensions of job quality:

  • pay and benefits
  • employment contacts
  • job design and nature of work
  • work-life balance
  • work relationships
  • voice and representation
  • health and wellbeing

Of course, there is no one size fits all solution.

Final thoughts

While productivity and employment rates undoubtedly remain important, they alone are clearly not enough to understand the health of the labour market; the quality of work also needs to be considered.

As shown by the visible shift from quantity to quality of work in recent years and the recent developments from the government and others, ‘good work’ is undeniably on the policy agenda. However, as the City-REDI paper suggests, there should be a focus on promoting ‘good work’ amongst the most disadvantaged groups such as the young, people with disabilities and those working in hotels and restaurants. It is also suggested that there is scope for further research on good practice in promoting ‘good work’ in establishments of different sizes and in different sectors.

As highlighted in the Taylor Review, “All work should be fair and decent with realistic scope for development and fulfilment.”

You may also be interested in some of our previous employment-related posts:

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Universal basic income: too good to be true?

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“I am now convinced that the simplest approach will prove to be the most effective – the solution to poverty is to abolish it directly by a now widely discussed measure: the guaranteed income.” Martin Luther King, 1967

It may come as a surprise to learn that the current ‘hot topic’ of universal basic income (UBI) – also known as basic income or income guarantee – is actually over 500 years old.

It was first developed by radicals such as philosopher Sir Thomas More in the 16th century, drawing upon humanist philosophy.  It was mooted by Thomas Paine in the 18th century, and then again in the mid-20th century, by economists such as James Tobin and Milton Friedman.  In 1967, Martin Luther King called for a ‘guaranteed income’ to abolish poverty, and in the 1970s, a basic income experiment ‘Mincome’ was conducted in Canada.

However, only in recent years has debate on universal basic income (UBI) moved into the mainstream.

From the threat of job losses from automation and artificial intelligence, an overly complex and bureaucratic welfare system that has been branded ‘unfit for purpose’, to the failure of conventional means to successfully tackle unemployment over the last decade – basic income has been hailed as a key way to reduce inequality and provide a basic level of financial security upon which individuals can build their lives.

It has many current supporters – including billionaires Elon Musk, Mark Zuckerberg, and Richard Branson.  There is support among the general public too, with a recent poll reporting that nearly half of all adults aged 18-75 in the UK (49%) would support the UK Government introducing UBI at the level to cover basic needs in principle.

 

How does it work? 

In essence, UBI offers every citizen a regular payment without means testing or requirement for work.

Trials of different models of basic income have been conducted around the globe, including Kenya, Finland, and Canada.  There are also UBI trials planned in the district of Besós in Barcelona, Utrecht in the Netherlands and the Finnish city of Helsinki.  Closer to home, four areas in Scotland are also currently designing basic income pilots – Glasgow, Edinburgh, Fife and North Ayrshire.

While there have been many different models of basic income trialled and assessed over the years, in general, basic income schemes share five key characteristics:

  • Periodic: it is paid at regular intervals, not as a one-off grant.
  • Cash payment: it is paid in an appropriate medium of exchange, allowing those who receive it to decide what they spend it on. It is not paid in kind (such as food or services) or in vouchers with a specific use
  • Individual: it is paid on an individual basis—and not, for instance, to households.
  • Universal: it is paid to all, without means test
  • Unconditional: it is paid without a requirement to work or to demonstrate willingness-to-work

 

Anticipated benefits

The key anticipated benefits of the introduction of UBI is a reduction in inequality and poverty. However, advocates claim that it would also have many other benefits.  These include:

  • simplifying the existing welfare system (including efficiency gains)
  • reducing the psychological burden and stigma associated with welfare benefits
  • achieving more comprehensive coverage – no one ‘slipping through the net’
  • fixing the threshold and ‘poverty trap’ effects induced by means-tested schemes
  • enabling individuals to continue education and training, or retrain, without financial constraint dictating choices
  • making childcare arrangements easier
  • rewarding unpaid contributions such as caring and volunteer work
  • improving gender equality and help women in abusive situations
  • improving working conditions
  • addressing predicted future mass unemployment as a result of automation

 

Criticism

The key argument against the introduction of UBI is its cost – essentially that “an affordable UBI would be inadequate, and an adequate UBI would be unaffordable”.

Critics argue that if UBI were set at a level that enabled a modest, but decent standard of living on its own, then it would be unaffordable – either requiring much higher taxes, and/or the redistribution of funds from other areas, such as education or health.

However, if UBI was set too low, it would not provide an adequate income to live on, and it may be exploited as a subsidy for low wages by unscrupulous employers.

Others, such as economist John Kay, have argued that UBI simply would not have the redistributive effects intended.  Rather than improving the lives of those most in need, who would receive more or less the same as they do under existing welfare systems, it would instead provide more for the middle classes.

There is also some concern that UBI may undermine the incentive to work, and lead to the large-scale withdrawal of women from the labour market.

 

What does the evidence say?

Certainly, there is a beauty in the simplicity of UBI – and no one can argue against the goals of reducing inequality and poverty.  However, in truth, there just isn’t enough evidence available yet to judge whether or not the full-scale introduction of UBI would be successful.

While many pilots have demonstrated positive results, most have been of limited size and scope, and it is difficult to extrapolate these findings to the wider population.

Analyses by a wide range of organisations – including the RSA, the Joseph Rowntree Foundation, the OECD, and the International Monetary Fund, have drawn mixed results.

For example, a review conducted by Bath University in 2017 concluded that:

“The unavoidable reality is that such schemes either have unacceptable distributional consequences or they simply cost too much. The alternative – to retain the existing structure of means-tested benefits – ensures a more favourable compromise between the goals of meeting need and controlling cost, but does so at the cost of administrative complexity and adverse work incentive effects.”

Similarly, the IMF conclude that in the UK and France, UBI would be inferior to existing systems in targeting poverty and inequality. However, there are some aspects of UBI that are difficult to model, such as the behavioural impacts of having economic security.  Trials and experimentation are important sources of such information.

Thus, the planned trials of UBI in Scotland and elsewhere may well help to provide further answers.  And we – along with others around the world – will be watching with interest.

As First Minister, Nicola Sturgeon aptly puts it:

“It might turn out not to be the answer, it might turn out not to be feasible. But as work and employment changes as rapidly as it is doing, I think it’s really important that we are prepared to be open-minded about the different ways that we can support individuals to participate fully in the new economy.”

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Is the record high employment rate masking the reality of in-work poverty?

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wage-packetBy Heather Cameron

The employment rate may have hit a record high of 74.6%, with unemployment continuing to run at an 11-year low, but in-work poverty has also reached unprecedented levels.

More than half (55%) of people in poverty are living in working households, including millions of children, according to the latest Monitoring poverty and social exclusion (MPSE) report.

And new research for the Joseph Rowntree Foundation (JRF) published last week says four million more people are living below an adequate standard of living and ‘just managing’ at best.

Statistics

The findings of MPSE paint a bleak picture for a substantial share of the UK population. It notes that the proportion of the UK population living in poverty has barely changed since 2002/03, remaining at around 21%. And at 55%, those in poverty in working households has reached its highest level since the data set began in 1994/95.

Of this 55%, four fifths of the adults in these families are themselves working – a total of 3.8 million workers were living in poverty in 2014/15, an increase of around a million since 2004/05.

Female employees make up the single largest group within this group at 1.5 million, followed by male employees at 1.4 million. However, the majority of workers in in-work poverty are male (53%) as there were 620,000 male self-employed workers in poverty in 2014/15, while there were 250,000 female self-employed workers.

The story is different for workless households, however, as the proportion of people in poverty in these households has decreased, with the number in workless or retired families having fallen by half a million. Despite the significant increase in the number of people aged 65 and over, the figures show there are 400,000 fewer pensioners in poverty. There have also been reductions in the number of children in workless households.

While this is clearly encouraging, as the MPSE report suggests, it is difficult to categorise this as progress since there has been little change in the relative poverty measure overall.

Moreover, the new research from JRF warns that millions of just managing families are on the tipping point of falling into poverty as 30% of the population are living below the minimum income standard (MIS). In addition, 11 million people were found to be living far short of MIS, up from 9.1 million, who have incomes below 75% of the standard.

So what is causing these worrying statistics?

Contributory factors

The labour market has undoubtedly had some influence on these figures, with low wages and insecurity. Although average incomes have begun to rise, they are still below their peak. Male weekly earnings are still lower than 2005 levels and female weekly earnings, although now equal to 2005 levels, are still below what they were in 2010.  And with inflation expected to return, it has been suggested that hourly pay is unlikely to reach its pre-recession peak before 2020.

However, this is only part of the issue. There are also a number of other contributory factors, including:

  • increasing cost of living;
  • housing market failures; and
  • cuts in welfare benefits.

The increase in numbers living below an adequate standard of living has been driven by rising living costs while incomes stagnate. The price of a minimum ‘basket of goods’ has risen 27-30% since 2008, and average earnings by only half of this. The JRF analysis suggests the cost of living could be 10% higher by 2020, a period when much state support has been frozen.

Housing is also an important factor. It is often too expensive and of poor quality, particularly in the private rented sector. The MPSE findings show that the number of private renters in poverty has doubled over the last decade, with rent accounting for at least a third of income for more than 70% of private renters in poverty.

Households accepted as homeless and those in temporary accommodation have also increased and landlord evictions are close to a ten-year high.

Added to this, is the four-year freeze on benefits, tax credits and Universal Credit (UC), along with a reduction in the overall benefit cap. The benefit cap mainly affects households with children and will increase the number of families affected, from 20,000 to 112,000.

All this puts those on the lowest incomes at risk.

Way forward

Clearly, strong growth in the number of people in employment does not mean an end to employment-related disadvantage.

To help end poverty, the JRF has called on the government to make a number of changes, including:

  • reversing cuts to the amount people can earn before their benefits are reduced;
  • ending the freeze on working age benefits;
  • extending support to low wage sectors to reduce the productivity gap; and
  • investing in a living rents scheme to provide more affordable housing.

As the MPSE report concludes, “solutions for in-work poverty require more than just more work.”

If you enjoyed reading this, you may also like our previous articles on poverty.

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Basic Income – a simple solution to a complex problem?

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By Heather Cameron

“If you want to incentivise work at every level of income then Basic Income is simply the best system.” (RSA, 2015)

Last month MPs in the UK Parliament were asked to consider the question of introducing a universal basic income to be payable unconditionally to all citizens without means-testing or work requirement.

The motion, which was tabled by Green Party MP Caroline Lucas, says the policy “has the potential to offer genuine social security to all while boosting entrepreneurialism”.

While no vote was taken on the policy, and it is unlikely to be made law any time soon, the motion raised the profile of the issue by enabling MPs to add their name in support.

And with ever increasing global interest in the idea, and basic income pilots set to spring into action all over Europe this year, perhaps it’s not as far away from becoming a reality in the UK as we may think.

Pilots

A number of cities and countries across Europe have committed to trialling a basic income.

Last year Finland announced a national basic income experiment, scheduled to start in 2017, which will be the EU’s first nation-wide project. It will see up to 100,000 Finnish citizens paid an unconditional income for a period of two years, after which the results will be analysed to see whether it should be rolled out nationally.

Trials have also begun in the Netherlands. The Dutch city of Utrecht will pay a small group of benefits claimants, whether they work or not, a basic income of £660 a month to provide a basic standard of living and help them avoid the ‘poverty trap’.

In Switzerland, a national referendum on a basic income is planned for this year, and support for the idea has also been reported in France and Canada.

While it is too early to tell whether these pilots will have the desired positive effect, the concept of a basic income is far from new and there have been signs of success from past experiments.

Positive outcomes

In the 1970s, a basic income social experiment, ‘Mincome’, was carried out in the Canadian town of Dauphin, which involved making payments to the entire population, relative to income to cover basic living costs. The programme succeeded in reducing poverty, improving health and alleviating other urban problems.

More recent basic income projects in developing countries have also helped alleviate poverty. In Namibia, a coalition of aid organisations trialled a basic income, funded through tax revenues, of 100 Namibian dollars to each citizen. The result: crime was reduced, children attended school and many villagers used the money to fund micro-enterprises. Meanwhile, in Uganda, a similar programme increased business assets by 57%, work hours by 17% and earnings by 38%.

Critics of such a system say that it would cost the state too much money, and would lead to welfare dependency and a reluctance to work, ultimately resulting in higher unemployment.

A recent survey undertaken in Switzerland would seem to refute this. It indicates that only a very small proportion of the population would stop working if they had a basic income and a majority believe that it would “relieve people from existential fears.”

Similarly, the Canadian experiment found no substantial difference in either female or male unemployment. There were changes in the labour market, as would be expected, with a reduction in working hours within families as a whole. Female spouses reduced their working hours to spend more time with children; and hours were reduced for adolescents within the family who entered the workforce later, suggesting that they were able to stay in education longer.

Way forward for the UK?

The Royal Society for the encouragement of Arts, Manufactures and Commerce (RSA) has recently concluded that there is a strong practical case for basic income in the UK to replace the current tax and benefits system – “it underpins security, replaces the complexity of the current system, and provides a platform for freedom and creativity.”

The RSA report sets out a potential basic income model for the UK. It would provide a universal payment to every citizen, (with restrictions for migrants and those serving custodial sentences). A ‘basic’ amount paid to everyone of working age would provide incentives to work, therefore mitigating against low pay traps of the current system. It would also, the RSA report claims, mitigate against some of the negative distributive effects of basic income schemes by redistributing from higher earners to families with children.

The report calculates household income, comparing the proposed model with the current system of likely Universal Credit/National Living Wage income for 2020/21. In all instances, ranging from single parent families with children under or over five to couples with children under or over five, there was a gain for household income under the basic income model.

With the current welfare system and all its complexity, the new Universal Credit apparently not doing what it’s supposed to and the continued increase in job automation, is this really just a simple solution to a complex problem?

Perhaps by the end of 2016, there will be more evidence for the UK to seriously consider.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

Further reading: if you liked this blog post, you might also like:

Goodbye Green Deal: the government’s decision to axe its energy efficiency scheme leaves a gap that will be hard to fill

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By James Carson

The Green Deal is dead. Last month, the energy and climate change secretary, Amber Rudd, announced that no further applications for finance from the project would be accepted.

The Green Deal was launched by the coalition government in 2013 with the aim of improving energy efficiency in homes across England, Scotland and Wales. Under the programme, households could borrow up to £10,000 for household improvements such as double glazing or home insulation, and make repayments through their energy bills.

As well as addressing fuel poverty, the energy efficiency scheme was also regarded as having a crucial role in meeting the UK’s emission reduction targets.

But, almost from day one, the programme was criticised as too complicated for the energy efficiency sector to administer and too hard for householders to understand. The first round of Green Deal funding attracted fewer than 2000 applications.

Although take-up improved in subsequent years, the scheme was still poorly regarded, not helped by reports of botched installations. Last year the House of Commons Energy and Climate Change Committee concluded that the Green Deal had failed to live up to expectations, arguing that its planning was flawed, its funding inefficiently delivered, and its implementation poor, all made worse by inadequate communication.

What’s the alternative?

But although few will mourn its passing, the sudden death of the Green Deal, with no replacement, has generated angry responses.

Julie Hirigoyen, chief executive of the UK Green Building Council, said:

“While the Green Deal was by no means perfect, the principle of enabling households to install energy-saving measures without paying upfront costs was sound.”

Greenpeace UK chief scientist Dr Doug Parr commented:

“Ditching measures to improve energy-wasting homes will simply leave people to pay more for their bills, with low-income families bearing the brunt of it.”

There’s little doubt that many of Britain’s homes need to improve their energy efficiency. In 2012, 357,000 homes in England had the worst energy ratings of F and G, and more than four in 10 of those were classed as “fuel poor”.

Badly insulated housing has significant impacts on health. Earlier this year, an analysis by Friends of the Earth suggested that cold homes lead to many more people in England than Sweden ending up in hospital with breathing problems, despite England’s much milder weather.

Announcing the Green Deal’s demise, Amber Rudd promised to work with the building industry and consumer groups to create a new system. The government has also commissioned an independent review to look at standards, consumer protection and the enforcement of energy efficiency schemes, to ensure that any future arrangements provide better value-for-money for taxpayers and consumers.

At the moment, another government energy efficiency scheme – the Energy Company Obligation (ECO) remains in operation. Under the ECO the big six energy suppliers are required to help vulnerable householders save on their energy bills and carbon emissions. However this scheme is due to be wound up in 2017.

With no replacement for the Green Deal on the horizon, the energy efficiency sector has been suggesting alternatives, including:

  • stamp duty and council tax rebates for homebuyers installing energy efficiency measures
  • setting aside some of the government’s projected £100bn infrastructure spending for insulating homes
  • A new ‘pay as you save’ scheme similar to the Green Deal, but one which offers more measures and is easier to administer.

In the meantime, industry, householders and environmental campaigners must wait for the government’s next move on energy efficiency.

Follow us on Twitter to see what developments in public and social policy are interesting our research team.

We’ve made some of our member briefings freely available. View a selection of our environment publications on our website.

The Carnegie Trust and the Wheatley Group: showing us how we can tackle digital exclusion

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By Steven McGinty

As the government pushes towards ‘digital by default’, a policy which envisions most public services being delivered online, it’s worth remembering that 20% of the UK population still lack basic internet skills. Groups such as Citizens Advice Scotland (CAS) have raised concerns that ‘digital by default’ could significantly impact on vulnerable and marginalised communities, particularly those claiming welfare benefits. However, if every citizen had basic digital skills and could use online government services, it could save the public purse between £1.7 and £1.8 billion annually.

So, which groups are the most digitally excluded?

According to the UK Government’s digital inclusion strategy, digital exclusion occurs among the most disadvantaged and vulnerable groups in society. These include:

  • those living in social housing (approximately 37% of those digitally-excluded live in social housing);
  • those on low incomes (44% of people without basic digital skills are either on low wages or are unemployed);
  • those with disabilities (54% of people who have never been online have disabilities);
  • older people (69% of over 55’s are without basic digital skills);
  • young people (only 27% of young people who don’t have access to the internet are in full-time employment).

What are the main barriers to using online services?

In 2013, the Carnegie Trust carried out research into internet access in Glasgow. The findings suggest that there are three common reasons why people never go online:

  • the comfort of doing things offline (34% of people cited their preference for speaking to people on the telephone, or in person, as the reason they don’t go online);
  • a fear of digital technology and the internet ( 28% were worried about issues such as using technology and staying safe online);
  • the costs involved (20% of people highlighted pressures on incomes and the cost of internet connections).

What are the main drivers for people going online?

More recently, the Carnegie Trust carried out a new piece of research, replicating their Glasgow study in two new locations: Dumfries and Kirkcaldy. The study investigated the main reasons people choose to go online. The findings show that:

  • 56% of people went online to find information of interest to them;
  • 48% went online to keep in touch with friends and family;
  • 44% thought it would be an interesting thing to do;
  • 44% had to go online as part of their work.

 How can we encourage people to go online?

Both Carnegie Trust studies show that each individual’s journey to digital inclusion is different and that a ‘personal hook’ or motivation, such as the opportunity to communicate with family members abroad, is an important tool for encouraging digital participation.

Additionally, they also show that friends and family are an important source of help when people are taking their first steps online. For instance, the case studies in Dumfries and Kirkcaldy highlight that people would appreciate help from ‘trusted intermediaries’ or local groups.  Therefore, it’s important that digital participation initiatives make use of existing communities’ networks and tap into the support available from friends and families.

Wheatley Group

The Wheatley Group, which includes Scotland’s largest social landlord, the Glasgow Housing Association (GHA), has been heavily involved in addressing digital exclusion. They have developed a digital strategy to help social tenants access the internet and are committed to proving free or low cost internet access (maximum of £5 per month).

The Group has also been involved in two pilot projects: one which provides technology to 12 low-rise homes, and the Digital Demonstrator project, which tests the feasibility of low-cost broadband in multi-storey blocks. The pilot projects highlighted two important lessons:

  1. the role of the local Housing Officer was key for engaging with tenants
  2. it was important that communities and neighbours learned together.

In an ideal world, every citizen would be digitally literate, and be able to interact with government online. However, this is not the reality. The work carried out by the Carnegie Trust and the Wheatley Group provides a solid basis for developing digital initiatives and ensuring that citizens and communities are not left out.

Further reading:

Sharing the caring – tackling the cultural and financial barriers to Shared Parental Leave

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Baby hand in father's palmBy Donna Gardiner

New Shared Parental Leave legislation came into force in England, Scotland and Wales on the 1st December 2014.

The legislation provides much greater flexibility in regards to how parents care for their child over the first year of his or her life. Specifically, a new mother can opt to curtail her maternity leave (subject to a minimum of two weeks), and have the child’s father or her partner take any of the remaining weeks as Shared Parental Leave.

Anticipated uptake and impact

The aim of the legislation is to encourage more men to share childcare, drive greater gender equality in the workplace, and eliminate discrimination around maternity leave. The government estimates that around 285,000 couples will be eligible to share leave from April 2015, and that take up will be around 8%.  However, it is not clear whether significant numbers of fathers will take up Shared Parental Leave in practice.

On one hand, there does appear to be evidence that fathers will welcome the new proposals. Research conducted by Working Families found that many fathers wanted to increase the amount of time they spent at home with their children. Indeed, many fathers, particularly those in the 26-35 age group, felt resentful towards their employers because of their poor work-life balance.

These findings are echoed by the IPPR, which found that one in five fathers wanted to change their working patterns, and another one in five wanted to spend more time with their baby, but couldn’t because of financial or workplace reasons. Another report found that over half (57%) of fathers working full time wanted to reduce their hours to spend more time with their children.

Cultural and financial barriers

However, despite the apparent desire among fathers to spend more time with their children, considerable barriers remain. Continue reading →