From the TUC

Making work pay

25 Sep 2008, by in Labour market, Society & Welfare

There’s an interesting entry today on Stumbling and Mumbling, looking at the latest Tax Benefit Model Tables. It quite rightly highlights the fact that a single person who leaves Jobseeker’s Allowance for a 16 hours a week job at the minimum wage will be just £8.42 a week better off; if one member of a couple with no children gets the same job they will actually be £6.63 a week worse off.

These figures are one way to look at some of the weak points in the Government’s anti-poverty strategy. The same tables show that a couple with children will be up to £28.43 a week better off, and a lone parent up to £43.31. Although these figures aren’t fantastic, they are significantly better.

This is because the obverse of the Government’s commitment to ending child poverty has been the relative neglect of poverty in families with no children. If we look at the latest Households Below Average Income figures we can see that between 1997/8 and 2006/7 (table 5.8ts) the proportion of working age adults with children who were poor after taking housing costs into account fell slightly, from 26% to 25%, but the proportion of working age adults without children who are poor rose, from 16% to 18%.

I’m an enthusiastic supporter of the Government’s child poverty objectives, but families without children deserve help out of poverty too. Jobseeker’s Allowance is just £60.50 for a single person with no children, and £94.95 for a childless couple, these are pitifully small amounts, a national disgrace.

The other problem is the lack of attention that has been paid to in-work poverty. The Households Below Average Income figures also show (table 5.4) that a majority of adults in poverty live in a household where at least one of the adults has got a paid job. If you use the Government’s definition of poverty – living in a household with an income below 60% of the equivalised median before housing costs – then 55% of adults in poverty live in working families. If you use the anti-poverty movement’s definition – which calculates the figure after housing costs – then the proportion rises to 60%. (The figures are very similar for child poverty.)

Why should this be? Well, some workers are not claiming the tax credits they are entitled to, and some families can only escape poverty if at least one adult gets a full-time job. But a major cause is the persistence of low pay.

Of course, low pay is not identical with in-work poverty, but there is a very significant overlap. As IPPR’s excellent report, Working Out of Poverty pointed out, the risk of being poor is 18 times higher for low-paid than for non-low-paid working adults. (p 41)

The result of the concentration on children’s poverty is that the number of children in poverty has come down by more than half a million, but the number of households in poverty has stayed the same, about 4.3 million. The composition of that 4.3 million has changed over the past ten years:

  • In 1996/7, there were 2.2 million poor workless families and and 2.0 million poor working families.
  • By 2005/6 there were 1.8 million poor workless families and 2.5 million poor working families. (IPPR, p 43)

The lesson of all this isn’t that the Government should stop trying to end child poverty, but that it must pay more attention to in-work poverty and poverty in childless families.