Poverty and social exclusion in 2009
New Policy Institute produced its first Monitoring Poverty and Social Exclusion report for the Joseph Rowntree Foundation in 1998. Entitled “Labour’s Inheritance”, it was the first independent attempt to bring together indicators on low income, unemployment and low pay as well other aspects of social exclusion, such as low educational attainment and poor health. This year we published our twelfth annual report – the first to be written during an economic downturn.
And whilst the recession forms a large part of the discussion in the report, the key findings focus on what was happening before the recession began. What is clear is that problems of rising poverty, debt and unemployment did not begin with the sub prime crisis, and had certainly began before the economy started to shrink. In fact, 2004 looks like the turning point, where trends that were previously positive either stagnated or turned for the worse.
In 2004, unemployment reached its lowest level under New Labour at around 4%, and was already rising again by 2006. Child poverty, that key government target, reached its lowest point under New Labour in 2004/05, and rose every year since. Housing repossessions were already three times higher at the end of 2007 than they were in the first part of 2004.
How can we explain these trends? On the headline child poverty figures, the rising trend in the number of children living in low income working households (“in-work poverty”) stands out. Firstly, following rises in the last three years, the number of children in low income working families is now over 2 million, the highest figure in the 30 year series.
But more importantly, the period from 1997 to 2004 represents the only period, give or take the odd year, in the last 30 years where in work poverty actually reduced. So this rising trend is a long term, chronic problem which New Labour successfully tackled for a few short years.
The peak of 2 million children living in working, low income households comes before the start of the recession. One may expect the recession itself to reverse the trend, as low income working families become low income workless families. That may well be the case. But rising unemployment will turn two earner households into single earner households, and households where parents work full time into ones where only part time work is available. So rising unemployment could also contribute to in work poverty, though where the balance lies remains to be seen.
While the recession has been a key theme of this year’s report, the coverage is much wider. Notably, in the areas we analysed that were not directly related to jobs and incomes but more concerned with social exclusion, the government’s record is more positive.
For instance, the number of 11 year olds not achieving basic standards of literacy and numeracy is far lower now than a decade ago, even among children in the most deprived schools. Both fear of crime and the risk of being a victim have fallen substantially in the last ten years. On many health indicators, the picture remains one of steady improvement.
It is, though, difficult not to be pessimistic. The UK is still in recession and indicators on unemployment and debt in particular can be expected to worsen even once the recession officially ends. But even once the recession and its effects have been dealt with, whichever government we have in the next few years will be left to deal with a range of long term, chronic problems.