Archive for the 'Poverty and Inequality' Category

Austerity Christmas: Why are the most vulnerable footing the bill for the country’s debts?

In addition to the revelry and merry making, Christmas is a time for reflecting on the past year. Director Alison Shaw looks back on the political play of 2014 and throws out some tough questions well worth ruminating on over the turkey and the cake this holiday season.

Policy Press - 018 resizeWhilst we publish work at Policy Press that challenges social problems, our team, like most of our readers and community, will be spending time this Christmas in comfort with families and friends (for which I am extremely grateful). I am conscious however that there are an enormous number of people who face a Christmas of poverty, distress and loneliness.

I can’t help but think, at this time of giving gifts and consuming an abundance of food, what about those people who cannot do this for their children and family, who are suffering from yet more cuts to their income and the services that support them? How do you actually live when your benefits have been sanctioned and you have no money for a month or three – nothing – zero. How about this for Christmas cheer:

“It’s Christmas Day. You don’t do any jobsearch, because it’s Christmas Day. So you get sanctioned. For not looking to see if anyone has advertised a new job on Christmas Day.” (Source: Poverty Alliance)

It is positively Dickensian. And not in the warm, comforting glow of A Christmas Carol.

The surprised look on the childrens faces when Father Christmas tells them he has fogotton the presents Credit: TheirHistory

1930s: The surprised look on the childrens’ faces when Father Christmas tells them he has forgotten the presents. Photo credit: TheirHistory

Reflecting on 2014, we have seen tough public spending cuts in the UK with promises of substantially more taking us back to 1930s level of public spending. What pains me is the severe hardship some of our most vulnerable citizens are in. There is constant talk from all the main parties of reducing the deficit, a seeming consensus, but what surprises me is the lack of animated public debate about this assumption. Surely the political decisions as to where the cuts happen, how much money needs to be saved and over what period needs questioning when the poor and vulnerable are seemingly bearing the biggest burden.

historic picture

I briefly looked at the historic picture to gain a longer view. According to the ONS September 2014 data General Government net borrowing (‘deficit’) was 5.9% of GDP in 2013/14 and gross debt was 87.8% of GDP. I think our debt has ranged from over 200% of GDP during World War II to as low as 25% in 1992, with the period from the 1920s to the mid 60s seeing debts of at least 100%, and often much higher, which seems to suggest we can live for long periods with a debt that is higher than the current one.

“..it makes me question whether the mantra that we have to cut the deficit is in fact a political position…”

I guess the key issue is the cost of servicing the debt, and again a longer view helps put the current situation in context: post World War II we paid about 4% of GDP in interest and by the 2000s it had dropped to 2%. The cost is now expected to be around 3%. So it makes me question whether the mantra that we have to cut the deficit is in fact a political position being taken around the size of government and public spending and not based on a necessity, as we are led to believe.

So, the point of all this is to really question why we are pulling back from helping those most in need? I admit to being incredulous that when we are one of the wealthiest countries in the world over 900,000 UK citizens had to be fed by The Trussel Trust food banks in 2013-14 because they could not eat without it. How did we get here?

I’m grateful that there is a growing body of accessible data on the subject of government spending and that we’ve been able to contribute to this over the past couple of months, enabling people to take a closer look at the numbers through publishing books such as Good times, bad times and Why we can’t afford the rich. Getting that kind of research out into the public domain is to my mind essential and it is only by increasing awareness of the cold hard facts, of encouraging people to interrogate the numbers with ever greater attention to detail, that we’re really going to be able to call our politicians to account. This of course is going to be something that will become ever more important as we run into the General Election in the UK next year.

Robin in the snow, Martin Mere. Photo credit: Gidzy

Robin in the snow, Martin Mere. Photo credit: Gidzy

Thanks to the tremendous support we’ve received this year from our authors and editors, customers and readers, retailers and suppliers. Policy Press has had a fabulous year publishing some really ground-breaking and influential work. As we all step back and take a few days’ break I hope that there will be time for reflection, as well as time to recharge batteries, ready to fling ourselves back into the fray in the New Year and keep on keeping on to get us to a better, fairer and more just society.

And now, stepping down from the soap box for 2014, I’d just like to wish you all a truly wonderful Christmas and New Year from everyone at Policy Press.

FACT: We can’t afford the rich

Academic and Policy Press author Andrew Sayer latest book Why we can’t afford the rich publishes today. In today’s guest blog post Andrew provides some insights into what motivated him to write the book and why he believes we really can’t afford the rich…

Sayer0002Yes, I really do mean we can’t afford the rich. The richer they are, the more likely they are to be extracting more wealth than they create.

It’s not about rich individuals but about the mechanisms by which they accumulate excessive wealth – wealth that others, by and large, have created.

As I explain in the book, these mechanisms are both unjust and dysfunctional, and have a lot to do with the current economic crisis. They primarily involve controlling key assets – like land, property and money – that others lack but need, and using them to extract wealth via rent, interest payments, profit from production, dividends, capital gains, and speculative gains.

Here’s an example: you have, or buy, a house purely to rent out to others. The production costs of the house have already been paid for. Once you have deducted any maintenance costs, then that rent is unearned income, as are any capital gains resulting from rising house prices. The house already existed and was paid for, so the rent is something for nothing, because you haven’t provided anything that didn’t already exist.  Continue reading ‘FACT: We can’t afford the rich’

Inequality: The debate that won’t go away

Policy Press Director Alison Shaw has been passionately engaged with the subject of inequality for many years, trying to puzzle out the causes and what can be done to resolve the situation. This month she is pleased to be launching two books that she believes add to the debate in an engaging, accessible, rigorously researched way.

Policy Press - 018 resize“As a young person, a now distant memory, it seemed perplexing to me why some people had immense wealth and privilege and others had nothing, even within wealthy Western societies never mind globally.

This somewhat naive question has led to me to try to understand over the years why this is the case, and more importantly perhaps, what can be done. What happens when you have so little that you can’t feed your children? When you have to borrow money to get through a week but this means you get into further debt the next? When jobs are poorly paid and insecure (if you can find them at all) and when the much heralded welfare safety net has holes in it big enough to regularly fall through because the system can’t keep up with changes in work patterns and so you get no money? What then? Continue reading ‘Inequality: The debate that won’t go away’

Myth busting: How the Treasury really spends your money

In light of the Treasury’s example ‘annual tax summaries’ and the implications in terms of welfare spending, academic and Policy Press author John Hills has shared some infographics with us to help us understand the difference between what we’re told and what the numbers actually show.

According to Hills’ research, when the social security budget was described to members of the British public – covering state pensions, child benefits, tax credits for those in work, benefits for unemployed and disabled people – half of people said they thought that 40% or more of spending went on the unemployed. The actual figure is closer to 4%. Continue reading ‘Myth busting: How the Treasury really spends your money’

The welfare state’s surprising winners

Leading social policy expert, academic and Policy Press author John Hills’ new book Good Times, Bad Times: The welfare myth of them and us,  publishes today. In his blog, first published on the LSE British Politics and Policy blog explains how the idea of a welfare-dependent underclass is wrong.

John Hills (small)Twenty-five years ago Granada television and my colleague in LSE’s social policy department, Julian Le Grand, came up with a novel way of presenting the effects of social policy.

Instead of graphs, tables and talk, they used a TV game show between two families – the Ackroyds, from Salford in Greater Manchester, and the Osbornes, from Alderley Edge in Cheshire – to illustrate who got what out of the welfare state of the time. Which of these stereo-typical working-class and middle-class families were the true ‘Spongers’ of the show’s title, most ‘dependent on government’ in current formulations, if one could look over their whole lives?

As it happens, the longer-living, university-educated, opera-loving middle-class Osbornes turned out to be the winners, getting more than the working-class Ackroyds. A follow-up programme which I helped with, Beat the Taxman, two years later looked at which family had done best as a share of income out of the tax reforms of the Thatcher years. Perhaps less surprisingly, the Osbornes won that one too.

Invented

What was special about these families was that, in the words of the game show host Nicholas Parsons, “we’ve invented them”. A quarter of a century later I’ve gone back to those families and their (newly invented) children and grandchildren to explore key issues in the current debate about ‘welfare’ and the welfare state.

In my new book, Good Times, Bad Times: The welfare myth of them and us, I present the results of research over the last decade or more in LSE’s Centre for Analysis of Social Exclusion (CASE) and elsewhere using large datasets, the results of our own surveys, government statistics, and the results of computer simulations.

But the continuing lives of the Osbornes and the Ackroyds may bring home some of its key points. There are Gary and Denise Ackroyd, whose incomes vary widely from month to month as his hours as a van driver change and her work in a school only brings in pay only in term-time – contrasting with the stable and predictable incomes of people like young civil servant Charlotte Osborne (and of many academics).

Over the 2000s, the circumstances of the Osborne parents, Stephen and Henrietta changed a lot, particularly after Stephen’s heart attacks and decision to down-shift his accountancy work, but they still remained in the top 2 per cent of the income distribution. By contrast, the changes in the size of their family and the effects of Jim Ackroyd losing his job in 2006 meant that he and his wife Tracy bounced around the income distribution – close to being in the poorest tenth in two years, but just above the middle by the time they were empty nesters in 2010.

“But we don’t need made-up examples to know that arid picture of unchanging lives is wrong”

The book also looks at the life chances of the newest grandchildren, George Ackroyd and Edward Osborne, born at the same time in July last year. If we knew nothing about them apart from where they were born, we would already expect Edward to live nearly four years longer. And although some of the educational gaps have closed in the last decade, the chances are that Edward will be doing better at school from the very start, leave with better qualifications, go to a better university, earn much more and build up a far higher level of wealth. There’s nothing predetermined about that, and George Ackroyd might buck the trend – it’s just that he starts with the odds against him.

And looking at the recent past, the poorest of the families, lone mother Michelle Ackroyd, working 16 hours a week on a low wage, turns out to have lost 6 per cent of her income from tax credit and benefit cuts and austerity tax rises since May 2010. By contrast the most affluent of the families – Stephen Osborne with £97,000 per year earnings and his wife with £9,000 from her part-time teaching, plus significant investment income – have lost slightly less in weekly cash than Michelle, and only 0.7 per cent of their income.

Twenty-five years on, more than ever, the debate around ‘welfare’ contrasts a stagnant group of people benefiting from it all, while the rest pay in and get nothing back – skivers against strivers; dishonest scroungers against honest taxpayers; families where three generations have never worked against hard-working families; people with their curtains still drawn mid-morning against alarm-clock Britain; ‘Benefits Street’ against the rest of the country; undeserving and deserving; them against us. We are always in work, pay our taxes and get nothing from the state. They are a welfare-dependent underclass, pay nothing to the taxman, and get everything from the state.

But we don’t need made-up examples to know that arid picture of unchanging lives is wrong. We know from our own experiences, those of our families – and from TV soap operas and nearly every novel – that people’s lives and circumstances change, and what we get out and put in changes over our lives.

It remains true that people starting advantaged remain much more likely than others to end up advantaged, and those who start poorer are more likely to end up poorer. But there is considerable variation and uncertainty around such average differences in life trajectories. This does not just include the long-term changes over the life cycle that we all go through, but also other variations and changes, from at one end the rapid variations many people experience in circumstances and need for support from week to week to, at the other end, the factors that affect the life chances of our children and our grandchildren.

As a result of all this variation in circumstances over our lives, most of us get back something at least close to what we pay in over our lives towards the welfare state. When we pay in more than we get out, we are helping our parents, our children, ourselves at another time – and ourselves as we might have been, if life had not turned out quite so well for us. In that sense, we are all – or nearly all – in it together.

Good times bad times [FC]Good Times, Bad Times: The welfare myth of them and us is published by Policy Press.  For further information, follow this link: Good times, bad times

John Hills is Professor of Social Policy and Director of the Centre for Analysis of Social Exclusion (CASE) at the London School of Economics.

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

The coming apocalypse in UK social policy

Academic and Policy Press author Tony Fitzpatrick has been musing on the state of UK social policy and the effectiveness of welfare reforms since 1945.


tonyfitzpatrick[1]Many expect that in the next few years we will experience an Armageddon in UK social policy, with the effective privatisation of the NHS, the proliferation of profit-making schools, the increased outsourcing and marketisation of public services more generally, and increased levels of poverty and inequality as a result of government austerity.

But these pessimists and naysayers are overlooking something important about the near future. Here’s why.

How often have you heard something like the following? ‘The problem with the welfare state is that it pays people to do nothing. All of those entitlements and unconditional rights encourage them to become dependent. Benefit levels are too high. The result is an erosion of the work ethic, a culture of poverty, lack of family values, increased crime and general loutishness. What we should do is crack down, force the shirkers and the scroungers to do their bit. Let’s end the passive, something-for-nothing system.’

This refrain has been heard repeatedly since 1979. In fact, it began the day after the Elizabethan Poor Law was enacted in 1601, but leave that point to one side. 1979 was the year a government was elected which was dedicated to ending benefit and welfare dependency. Ever since then successive governments have more or less sung the same song.

Milk-and-honey

Of course, quite soon a difficulty builds up. If the welfare state’s unconditional, milk-and-honey culture has produced endless social problems, how to account for the effects of economic and social reforms since 1979? As the welfare state becomes more and more conditional, and as markets and consumerism play a greater and greater role, then it becomes harder to maintain that social problems are due to a post-WW2 system that encourages people to take, take, take.

It’s at this point that politicians turn into vampires. Just as vampires don’t see their own reflection in a mirror, so politicians are often adept at ignoring their own role in creating existing social and economic conditions.

Take the strategy of most Secretaries of State in the last government. Every few months some new shake-up was announced in which unemployed claimants/scroungers/beggars/single mums/teenagers/asylum-seekers/deadbeat-dads would no longer be allowed to sit at home all day having children and watching Countdown. This would be announced on BBC news as ‘the greatest reform to the welfare state since Beveridge’, etc etc. Time would pass. Then a few months later, basically the same initiative would be re-announced as if nothing had happened beforehand.

“By 1979 a grateful nation had awoken to its moral decline, vowed to pull its socks up and give a good kicking to those indigents who insisted on not getting the message”

This is one reason social policy debates often resemble some malicious echo chamber in which the same ideas bounce around for decades by being refurbished as radical and innovative. Overall, governments have swept the negative effects of their own policies and interventions to one side in the search for headlines and votes.

The narrative of the last 3 decades has been this, then. The years after 1945 after filled with social policies that distributed all sorts of goodies and presents to people and asked nothing in return.

This was the era of ‘passive welfare’. Only a few brave, lone voices in the wilderness warned us where it was all going: laziness, dependency, economic catastrophe, and so on.

‘Active welfare’

By 1979 a grateful nation had awoken to its moral decline, vowed to pull its socks up and give a good kicking to those indigents who insisted on not getting the message. After 34 years the party was over; time for responsible adults to clean the house. This is now the era of ‘active welfare’.

Is this idyll the society in which we now live? Can you think of anyone who imagines this is the case? Why isn’t middle England content, for instance? Let’s think of the possibilities.

One is that we were simply too optimistic about the task to be done. Turns out that the 1945-79 period was one of such decline that it may take generations, of instilling discipline and respect for authority in the rabble, to rectify.

Another possibility is that too many politicians of all parties have been living in a fantasy of their own making and have been trying to conjure that fantasy into reality by ignoring their own previous and ongoing role in creating a highly unequal, anxious, scapegoat-seeking and often punitive country.

For instance, New Labour’s defence of its record was simple.

In unfavourable circumstances – global hypercapitalism, corporate governance, post-national sovereignty, knowledge economies, and a culture of political apathy – it did all a modern social democratic party can do. Poverty was reduced. And following 4 years of Coalition government, its record doesn’t seem that bad now, does it?

Yet its modest progress on poverty stalled around 2003; ‘the excluded’ were Othered in a way that has increased middle England paranoia about destitute spaces, feral youth, social-moral meltdown and anti-social whatever; and it did little to reduce the levels of inequality it inherited in 1997.

So, according to the prevailing narrative, in the 34 years from 1945-79 we had a hedonistic, unconditional welfare state which failed. Well, by 2013 we had had 34 years since 1979. Will this lead to a sober, objective appraisal of where those 3 decades have left us and why? Will we conclude that if 34 years was long enough for one type of system to fail, it is also long enough for another to fail too?

Will we turn ourselves away from a political and economic system that tolerates massive inequalities, the intrusion of free markets into practically everything, an assumption that private is always best because the public sector is inefficient, underemployment and overwork (including some of the longest working hours in Europe), high levels of child poverty, insecurities, personal acquisitiveness and selfish individualism, and all the regulations designed to control personal behaviour?

Climate Change & Poverty [FC]Tony Fitzpatrick’s latest book Climate change and poverty: A new agenda for developed nations is available at the discounted price of £19.99 (RRP £24.99) from Policy Press website here.

Also available by the same author:

Applied ethics and social problems: Moral questions of birth, society and death

Voyage to Utopias: A fictional guide through social philosophy

Understanding the environment and social policy

The views and opinions expressed on this blog site are solely those of the original blogpost authors and other contributors. These views and opinions do not necessarily represent those of the Policy Press and/or any/all contributors to this site.

Universal Credit developments since publication of “Understanding Universal Credit”

blog_sam-royston_200x200pxSam Royston is Head of Policy and Public Affairs at the Children’s Society, and author of “Understanding Universal Credit”, published in the Journal of Poverty and Social Justice in February 2012. Since the original publication of this article there have been a number of policy updates affecting the delivery of the new system.  In this blog Sam summarises those change that particularly relate to the content of his article published in 2012.  The original article is free to access until 31st October 2014.

Childcare

At the time of publication, the Government intended to introduce childcare support under Universal Credit at a rate covering 70% of childcare costs. “Understanding Universal Credit” showed that this would be a much lower rate of support than some families can receive through the current system as a result of a combination of childcare support through Tax Credits, Housing Benefit, and (what was at the time of writing) Council Tax Benefit.

Since publication, the Government have sought to address this problem by providing an 85% rate of childcare support for families in receipt of Universal Credit. As a result, although some families would continue to receive less support than under the current system, any difference will be considerably less.

Since 2012, the government has also introduced plans for a new “Tax Free Childcare” scheme. Although families in receipt of Universal Credit will not be entitled to receive Tax Free Childcare, differences in the way the two systems will be administered and paid may create some complexities for those caught between the two systems. These issues are expected to be debated during the course of the “childcare payments bill” in Autumn 2014.

Free School Meals (and other passported benefits)

The successful implementation of Universal Credit continues to be threatened by the potential introduction of a benefits “cliff edge” as a result of the interaction between Universal Credit and various passported benefits – including, most significantly, Free School Meals.

Notably, the Government have still not yet made a final decision about eligibility for Free School Meals under Universal Credit, however, an “interim” solution of providing Free School Meals to all families in receipt of Universal Credit has been implemented.* In order to avoid undermining the progressive work incentive intentions of Universal Credit, it is critical that these rules remain in place following the roll out of Universal Credit.

Payment of Universal Credit

“Understanding Universal Credit” raises concerns that Universal Credit will typically be paid monthly and payments will not normally be able to be “split” between joint claimants. Increasingly concerns have also been raised about plans to pay “direct housing payments” (payments of the housing component to the tenant – rather than to the housing provider) through Universal Credit for tenants in the social rental sector – an arrangement which already exists for most tenants in the private rental sector. Concerns have been raised that these arrangements may lead to many social housing tenants to get into rental arrears.

The government has since released guidance on the circumstances under which “alternative payment arrangements” (APAs) will be considered. APAs would enable claimants to have their Universal Credit payment split, paid more frequently than monthly, or have the housing component paid to their landlord. Concerns remain that claimants will not be able to “opt in” to these arrangements for themselves, without this provision it remains a real concern that claimants unable to manage their money effectively, may not be able to get the support they need in order to do so.

Changes to the timeline for the introduction of Universal Credit

The government has significantly slowed the introduction of Universal Credit since original plans were laid out (for example, as late as the start of 2013, the DWP website stated that all new claims would be for Universal Credit from April 2014). During the initial period of the pathfinder, claims have only been able to be made by people with very specific circumstances, and in a very limited number of areas of the country. As of May 2014 only 6570 people were in receipt of Universal Credit .

Since this point, the government has begun to extend the pathfinder to additional jobcentres, and the service has opened to its first new claims from couples. From towards the end of this year, Universal Credit is expected to begin to take new claims from families with children for the first time.

*http://www.legislation.gov.uk/uksi/2013/650/made
It should also be noted that the Government’s decision to provide Free School Meals for all children in reception, year 1 and year 2, solves the difficulties arising from the interaction of Free School Meals and Universal Credit for this group of children.

The Journal of Poverty and Social Justice provides a unique blend of high-quality research, policy and practice from leading authors in the field related to all aspects of poverty and social exclusion.  For more information or to request a free trial please see our website here.


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