Poverty - Conservative Impact

The widespread poverty created by the Tory government is either a blind and pointless ideology or even worse a purposeful choice of government. The evidence of the detructive nature of their policies has been placed before them many times. This decimation of society is either denied by the Tories or simply ignored. If it is accidental then it amounts to manslaughter. If it is intentional then it amounts to social murder. Whether they are blind or purposeful choices, they remain choices made by this government. Ignorance is not a defence in law.

This section covers the level of poverty created by this government (and by the Lib Dems) since 2010. It may be something of a cliche, but there is always enough money for war. There is always enough money for MPs, but we are told that there is not enough money to ensure our people have access to adequate services, food and housing. One of the things that defines this government as compared to previous post-war governments is the level of in-work poverty and the complete collapse of the safety net. Austerity is a political choice not a necessity.

Relative poverty
Relative poverty generally means that a person can't afford an "ordinary living pattern" — they're excluded from the activities and opportunities that the average person enjoys.

A household is in relative poverty (also called relative low income) if its income is below 60% of the median household income.

The median is the number 'in the middle' of a set—so half of all households earn more than the median income household, and half earn less.

The government wants to measure spending power, rather than earning power, so it counts incomes after taxes and benefits.

And households need different degrees of spending power to live comfortably, depending on their size and shape. A household with one person in it needs less money to live comfortably than a household consisting of a couple and two children.

So household incomes are “equivalised” in poverty statistics. They’re adjusted to take into account the number of adults and children who live there.

Some useful examples for this document could be:


 * Choices need to be made between food, clothes or heat and charitable support is needed to provide these neccisities
 * Housing is temporary and location is subject to external decisions / budgets. Housing is often substandard
 * School holiday periods present a serious financial challenge to families
 * Additional or unforeseen costs present a serious risk to welfare and are often met by expensive loans
 * Indiviudals are subject to the poverty premium
 * Lack of dignity and reduced life chances

Absolute poverty
Absolute poverty is slightly trickier. The definition used by a number of international organisations (such as the UN and the World Bank) is that you cannot afford the basic needs of life—food, clothing, shelter and so on.

This is absolute in the sense that it’s measured relative to a fixed standard of living, rather than the rest of the population.

This isn’t the definition used by the UK government. As we explained above, the government defines “relative poverty” in comparison to median incomes in the current year. It defines “absolute poverty” in comparison to the median in 2010/11.

Some useful examples for this document could be:


 * The individual or family must do without food and/or heat and cannot substain themselves without charitable input
 * Housing is temporary or non-existent and is often low standard / substandard
 * School holiday periods create financial distress to families often leading to severe suffering
 * Additional or unforeseen costs cannot me met leading to further sanctions on individuals and families
 * Indiviudals are subject to the poverty premium
 * Lack of dignity and reduced life chances

Insecure Work
In Figure 1 it shows the growth in zero hours contracts where the individual has identified that they have no guaranteed hours. Since 2012 there has been a 358% rise in zero hour contracts.

Looking at the ONS business survey in Figure 2, the number of people on zero hours contracts doubles. This is where business reports on the number of people it employs with no guarantee of hours. The number peaked in 2015 at 2.1 million and fell off. 2017 saw the number begin to rise again upto 1.8 million.

In theory an individual on a zero hour contract has similar rights as an employee with guaranteed hours, but this much depends on how they are classified. There are two categories; "worker" and "employee". A worker while entitled to paid holiday leave and other rights typical of a employee, will not have the same rights over notice period and length of service. An individual employed on zero-hours as an "employee" has the full rights of a guaranteed hours employee in terms of employment rights, such as redundancy pay and a notice period. Of course if an employee is on a no guaranteed hours basis, the rights mean very little because the company can simply not provide the hours and avoid redundancy, hoilday pay etc. In effect zero-hours contracts cannot offer the employment rights guarantees by the nature of the agreement.

Universal Credit
Universal Credit (UC) was first introduced in October 2013. The Tory / LibDem coalition planned to introduce Universal Credit in a managed way, progressively rolling it out nationally. The transition from the current system of benefits and tax credits to Universal Credit was expected to be complete by the end of 2017. It was presented as having the following advantages:

 

Encourage people on benefits to start paid work or increase their hours by making sure work pays It is a myth that as a whole people need encouraging into work when on benefits. Given the right conditions the majority of people want to work. UC acts in the opposite way to the intended outcome. It follows the logic of "treat them mean, keep them keen." The structure of UC means that if you work, then for every £1 you earn, 63% of that pound is taken off your UC payment. With busfares and other costs associated with work, this can leave the UC claimant worse off. Being worse off when you are already living on the breadline is not an option for many claimants and leaves people who wish to work in a situation where they cannot. Below is just one example of somebody working being penalised:

It is worth noting that somebody in the above scenario would be loath to take more hours as this would increase their risk of being without any money. If they reach the wage level where they come off UC and at a later date need to re-apply, they would be subject to a minimum wait of 5 weeks before receiving any help. If we consider the level of welfare payments on UC and how this leaves the individual often in debt, even the slightest interuption in their earning pattern could lead to complete destitution.

A single parent with two children, working full-time on or around the minimum wage, could be as much as £2,500 a year worse off under the new system according to the Save the Children charity   Make it easier for people to manage the move into work UC makes it more difficult for people to move into work. The risk created for the recipient of UC of moving into work is amplified by the nature of the welfare provided. Once somebody is on UC by its very nature and how it is implemented they will be in debt. Often moving into work has upfront costs such as clothes, travel costs, child care etc. It does not help people into work to place their accomodation at risk by stopping housing payments for a minimum of 5 weeks.   Simplify the system, making it easier for people to understand, and easier and cheaper for the government to administer It is not necessary to simplify the system. In fact it is counterproductive to simplify some systems. UC replaces all these different welfare elements, but by its very nature means each of the elements still need to be considered and judged upon:


 * Child Tax Credit
 * Housing Benefit
 * Income Support
 * income-based Jobseeker’s Allowance (JSA)
 * income-related Employment and Support Allowance (ESA)
 * Working Tax Credit

The above could quite easily been streamlined into a single process, while not changing the terms of payment and certainly not introducing a delay between introduction and first payment. UC has been more expensive to administer, while leaving people poorer.

The DWP had estimated administration costs for the roll-out of Universal Credit to be £2.2 billion. By August 2014 this estimate rose to £12.8 billion over its "lifetime" and was later increased again to £15.8 billion. Approximately 11% of intended recipients have been moved to Universal Credit by December 2017 (0.7 million out of 5.5 million) The National Audit Office maintains Universal Credit could incur higher administrative costs than the systems it replaces. A study by the Resolution Foundation published in November 2018 also predicted that Universal Credit will cost more than the older system of benefits it is replacing.   Reduce the number of people who are in work but still living in poverty UC has not reduced in work poverty. In-work poverty has increased and in particular in areas where UC has been introduced.   Reduce fraud and error Benefit fraud has increased since the introduction of UC according to the DWP. This is partially due to the method of recording benefit fraud where more errors are recorded as fraud. However overall fraud and error combined have increased. See the section Benefit fraud versus Tax fraud for a detailed breakdown. 

Child Poverty


Poverty is measured in two ways:


 * Relative poverty
 * Absolute poverty

See the definition of poverty for more details on how poverty is defined and measured.

Children in relative poverty
In 2018 30% of children are living in relative poverty. This amounts to 4.1 million children or in a class size of 30 it is equivalant to 9 of those children living in poverty.

3.1 million of the children living in poverty have working parents, an increase of over 50% since 2010 when the figure stood at 2.1 million. Child poverty in some inner-city areas is as high as 50%.

When Labour came to power in 1997 child poverty stood at 27% and was rising. In the period from 1979 - 1997 child poverty rose from 13% to the 27% figure. For the period 1997-2010 under a Labour government poverty started a downward track, standing at 20% in 2010 and still falling. This amounted to 900,000 children taken out of poverty over that period.

Children in absolute poverty
When Labout entered government in 1997 absolute poverty was at 26.1% and rising. By 2009/10 absolute poverty stood at 12.4% and was following a downward trend. This amounted to 1.8 million children lifted out of absolute poverty. The target set by Labour was to end child poverty by 2020. The Institute for Fiscal Studies (IFS) estimates that absolute child poverty will increase by a further 4% by 2022. The IFS identifies this as being a result “mainly to the effect of tax and benefit reforms introduced by the government.”

The Tories have scrapped the Labour targets and moved to a model of stigmatising poverty rather than ending it. This is particularly hard on childen who need to be given the best life chances and taken out of the cycle of growing up in poverty and so living in poverty. The Tory government has trashed the progress made by the previous Labour government to end child poverty.

Pensioner poverty
As shown in Pension Payment Comparisons UK pensioners have the lowest state pension of all the OECD countries (only a quarter of pensions enjoyed in Croatia for example). One third of pensioners survive on state pensions. Lack of job stability in the workplace is likely to see the number without any private pensions increase or at least the contribution made by private pensions decrease.

In the 1990s, pensioner poverty was much higher for single pensioners than pensioners in a couple, with the problem worse for women. In 1996/97, 42% of single female pensioners were in poverty while the high point for single male pensioner poverty was 34% in 1997/98.

The majority of the fall in the overall pensioner poverty rate over the following five years was due to improvements in the single pensioner poverty rates. By 2002/03 the single male poverty rate roughly matched that of pensioners in couples and the single female rate settled at about four or five percentage points higher.

However, since 2010/11, the gap between single and couple pensioners has started widening once again, with increases in poverty among single pensioners accounting for most of the growth in pensioner poverty in the three years to 2015/16. Since 2015 there a further 300,000 pensioners living in poverty and many thousands more living on the threshold.

Poverty rates for pensioners who rent their home were very high in the 1990s. For those in social housing, the poverty rate peaked at 54% in 1996/97, fell to 20% in 2012/13, and has risen back to 31% in 2016/17. For those renting from private landlords, the peak was 46% in 1997/98 and the low point was 27% in 2007/08, before rising back up to 36% in 2016/17. There are now 1.9 million pensioners living in poverty.

The Tories recently released the impact of cuts made to pension credit. Their figures indicate that 40,000 pensioners will lose an average of £5500 per year.

Future stress on pensioners will be the latest cuts of government funding to local authorities. This is equivalent to a major tax rise as council tax will increase way above inflation and correspondingly above increases in the state pension covered by triple-lock.

The poverty premium
Poverty comes at a cost. Society is full of those savings you can make if you buy in bulk, from bus tickets to food. On top of this, those in poverty often do not have the facilties at their disposal to pay for energy in advance. Buying your energy on a daily basis using payment cards is far more expensive.

Where low income families pay more



 * 1) Higher cost credit
 * 2) * Low income families are more likely to need short notice loans due to not having the income to deal with exceptional costs, unreliable work hours and sanctions applied by the DWP. These loans come at a high premium
 * 3) Using pre-payment meters
 * 4) * It is less likely that a low income family will have access to a bank account and so are more inclined to have more expensive pre-payment meters. Also due to the unreliability of income it serves them better to receive energy on a more managed basis
 * 5) Paying to access money
 * 6) * Lack of access to ATMs that provide free withdrawal of money will often mean that low income families need to use services that charge to access their money
 * 7) Paying to receive paper bills
 * 8) * Low income families are far less likely to have access to online services and so cannot take advantage of the savings offered by online bills
 * 9) Not switched to best fuel tariff
 * 10) * Identifying preferential fuel tariffs often requires access to online price compare sites which is not always available to low income families. Also the lack of a bank account, poor credit rating and worries over disturbance in supply act to discourage low income families from seeking out better fuel tariffs
 * 11) Not paying by cheapest billing method
 * 12) * This can apply across all family activities from transport to food shopping. Low income families don't always have access to low cost supermarkets or if they wish to travel to one they have a premium on their travel costs
 * 13) Insuring specific items
 * 14) * Often it is not possible for low income families to insure full contents. This leads to higher costs to insure particular items
 * 15) Premiums related to where people live
 * 16) * Areas with concentrations of low income families are subject to higher insurance premiums. This on top of not being able to seek out the cheapest payment method leads to increased costs

Purchasing power
The Poverty Premium: when households in poverty pay more for everyday goods and services. First coined in the 1960s it may be an old concept but it remains an important social issue today. And for the poorer households affected it is a real and pressing problem. The University of Bristol estimated that the average low-income household in 2016 paid a poverty premium of £490 for the year. There is no such thing as an average low-income household – depending on households’ needs, preferences and circumstances, some will have paid less while others will have paid more. Much more.

For energy alone this additional cost typically amounts to £317 per year.

It can often be the case that the poorest families are hit hardest by the premium. This is because they are more likely to be in need of short term expensive loans. There are a number of cases where the premium can exceed over £2000 per year.

Higher rates of Tax for the poor
The poorest 10 per cent of households in the UK pay a greater proportion of their income in tax than the richest 10 per cent and the situation is getting worse as the Tories move more and more spending away from central government to local authorities. In 2019/20 the government will cut the government grant funding for local services by a further £1.3 billion (36 per cent). This being despite the government stating that austerity had ended. Local councils already being under severe spending pressure. The impact of reducing central government spending to councils is to push up the cost of council tax. When the Tories and Liberal Democrats entered government in 2010 one of the first things they did was to increase VAT by 5% to 20%. This had a dispropotionate impact on the poorest in society.


 * The lowest tenth of earners pay an average of 42 per cent of their income in the form of income tax, national insurance, VAT and council tax
 * The richest 10 per cent see around a third (34.4 per cent) of their earnings go to the taxman
 * Council tax and VAT were found to hit the poorest households particularly hard. Low earners pay an average of seven per cent of their income in council tax while the wealthiest households pay just 1.5 per cent
 * The poor pay 12.5 per cent of their income on VAT while the rich pay five per cent

Treat 'em mean
The Department for Work and Pensions (DWP) was created out of a number of government departments in 2001. It's original aim was to join up the different departments that ensured welfare erradicated poverty and provided the opportunities for people to gain work. It formed part of the Labour party plan to erradicate child poverty by 2020 and one of its stated aims was "to help its customers become financially independent and to help reduce child poverty". Its initial aims while not perfect leant towards facilitating a growth in the welfare of all in the country by creating a joined up system where opportunites were opened up for individuals while providing the necessary support on that path.

Under the Tories the culture of the DWP has changed radically, moving to a model of refusal and blockage with the obvious outcome of less successful results. The DWP is now a cost reduction and profit maximisation private enterprise. It has been particularly vicious where the sick and disabled are concerned.

“We simply have to get to grips with the sicknote culture that means a short spell of sickness absence can far too easily become a gradual slide to a life of long-term benefit dependency.

The new welfare bill – described as the biggest shake-up of the system since it was set up 60 years ago – is designed to say end the culture of the fit and healthy being able to refuse work being rewarded for staying at home.”

David Cameron, 17 February 2011.

The argument made by Cameron was full of ridiculous assumptions. It assumed that somebody who is sick could somehow wish to use it to enter long-term sickness. It contains a cynicism about the hard fact that we the taxpayer contribute our taxes and NI into a system to ensure we have support when we are ill. The government are not awarding slackers free money when they provide cover during times of hardship, they are meeting their obligation under a social agreement. We vote fo them, we hand them trust, pay their wages, meet their expenses and in return we expect them to fulfill their side of the deal. It is worth noting at the time of introducing new policies on welfare, the Tories had just gifted millionaires massive tax cuts, while increasing VAT which ensured the larger tax bill for the poorest.

"This callous and unjustified approach to social administration is destroying people’s lives."

Sue Jones, 16 February 2019

120,000 deaths and growing
See the table here that describes some of the 120,000 deaths caused by DWP actions.

https://www.theguardian.com/society/2019/feb/12/man-wins-fit-for-work-appeal-seven-months-after-his-death?fbclid=IwAR06eIEtw4pcXf79GwnrkIZcCTSoACDxvbR3M0twRwpCKF2riH5vUUA7qMo

DWP Jody Whiting https://wiki.campaign-labour.org/wiki/Form:Disability_News_Service_Article