poverty

Yesterday the Department for Work and Pensions released new statistics on poverty in the UK, Households Below Average Income (HBAI).

The HBAI provides annual estimates on income and living standards in the UK, and shows changes over time.  The latest numbers reveal that one in five UK households are still living in poverty.

 

How is Poverty Measured?

Poverty is a complex concept that is difficult to define and measure.

Most measures of poverty in a UK context are based on income. They count the number of people below a certain level of income – the poverty line.

Poverty lines can be relative, which are tied to the overall distribution of income or consumption. This is typically set at 60% of the median (average) income.

Absolute poverty lines are generally anchored to a standard of basic needs or a fixed point in time.

Poverty can also be measured Before Housing Costs (BHC) or After Housing Costs (AHC), which means that a household’s housing costs have been subtracted from their income.

Because housing costs in the UK are high, there is usually a substantial difference between BHC and AHC poverty figures.

 

How Many People In The UK Live In Poverty?

The statistics released in the HBAI yesterday are for the 2013/2014 financial year, which are the most recent figures available on poverty in the UK.

The statistics found that one in five people – a total of 13.2 million – are living in poverty in the UK, when measured as relative poverty after housing costs. Almost a third of children – a total of 3.7 million – live in poverty.

But as explained above, there are different ways to measure poverty. The tables below provides summaries of the number of people living in poverty in the UK, according to different measurements.

 

   

 

 ConservativesLib DemsLabour
Universal CreditComplete the roll-out of Universal Credit.• Complete the roll-out of Universal Credit.
• Review UC to address any issues regarding ‘cliff edges’, and ensure increased working hours are properly incentivised.
Pause and review the programme.
Spare Room Subsidy /
Bedroom tax
No change.• Existing social tenants will not be subject to any housing benefit reduction until they have been offered reasonable alternative accommodation.
• Ensure that those who need a bedroom for genuine medical reasons are entitled to one, and those whose homes are substantially adapted do not have their Housing Benefit reduced.
Abolish it.
Benefit capReduce the benefit cap to £23,000.Retain the benefit cap, which should continue to be set at around the average family income.Ask the Social Security Advisory Committee to examine if it should be lower in some areas.
Benefit upratingFreeze working age benefits for two years from April 2016, with some exemptions (e.g. disability benefits, statutory maternity pay etc.).Introduce a 1% cap on the uprating of working-age benefits until 2017/18.• Introduce a higher rate of Jobseekers’ Allowance for those who have contributed over years.
• Cap Child Benefit rises for two years.
Disability• Review whether benefits should be reduced for people suffering from long-term yet treatable conditions (e.g. addiction, obesity) who refuse a recommended treatment.
• Aim to halve the disability employment gap.
• Provide significant new support for mental health.
• Develop a package of specialist support for carers seeking work.
• Conduct a review of the Work Capability Assessment and Personal Independence Payment assessments.
• Simplify and streamline back-to-work support for people with disabilities, mental or physical health problems.
• Reform the Work Capability Assessment and focus it on the support disabled people need to get into work. It will be monitored by an independent scrutiny group of disabled people.
• Introduce a specialist support programme to ensure that disabled people who can work get more tailored help.
Young peopleReplace Jobseeker’s Allowance for 18-21 year olds with a Youth Allowance. After six months, young people will have to take an apprenticeship, a traineeship or do daily community work to receive benefits. They will not have an automatic entitlement to Housing Benefit.• Protect young people’s entitlements to the welfare safety net.
• Double the number of businesses that hire apprentices.
A guaranteed, paid job for all young people who have been out of work for one year, and for all those over 25 years old and out of work for two years. It will be a job that they have to take, or lose their benefits.
PensionersContinue to increase the State Pension through our triple lock, so it rises by at least 2.5%, inflation or earnings, whichever is highest.• Legislate to make the ‘triple lock’ permanent, guaranteeing decent pensions rises each year.
• Withdraw eligibility for the Winter Fuel Payment and free TV Licence from pensioners who pay tax at the higher rate (40%).
• Keep the triple-lock so that the state pension increases by inflation, earnings, or 2.5%, whichever is highest.
• Restrict Winter Fuel Payments for the richest 5% of pensioners.

 

In-Work Poverty Is On The Rise

The statistics released by the Department for Work and Pensions yesterday revealed that more than half of families in poverty have at least one partner in part-time work.

  • 39% of households in poverty have at least one partner in full-time work.
  • 13% of households in poverty have at least one partner in part-time work.
  • Only 10% of households in poverty are unemployed.
  • The remaining households are of pension age or economically inactive (due to disability or other circumstances).

In-work poverty has been rising in the past two decades. In 1996/97, the earliest statistics available in the HBAI, 26% of households in poverty had at least one partner in full-time work, compared with 39% in 2013/14.

 

In-work poverty

 

 

The Broken Link Between Benefits and Poverty

The purpose of means-tested benefits is to help people on low incomes. But the figures in the HBAI show that, of the working-age people in poverty:

  • 8% receive Income Support
  • 9% receive Employment and Support Allowance
  • 12% receive Jobseeker’s Allowance
  • 13% receive Working Tax Credit
  • 29% receive Child Tax Credit
  • 35% receive Housing Benefit
  • 43% do not receive any of these benefits

Our report on Universal Credit found that many people do not take up the benefits they are entitled to.  For example, only around 60-67% of people eligible for Jobseeker’s Allowance make a claim.

With a very large proportion of people in poverty not in receipt of benefits, it is important that people are aware what support they are eligible to claim.

If you want to help people increase their income, contact us for a free trial of our Universal Benefit Calculator. Our easy-to-use tool makes the benefit system simple to understand.

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