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					Poverty and Place:
What have we learned from the last decade?
Summary document for the
Community Regeneration and Tackling Poverty Network

Jim McCormick

June 2009

It is ten years since the UK Government pledged to end child poverty. It set the goal
of doing so by 2020 and halving the rate by 2010. Devolved governments have
committed themselves to the same outcome. A year from the halfway mark, the UK
as a whole is set to fall significantly short. Yet, whether the target is reached remains
a matter of priority and commitment, not chance. It is estimated that an additional
£4.2 billion is required for the UK as a whole to hit the 2010 target, over and above
investment already planned1. Poverty does not only affect families with children,
although this has been the highest priority for policy-makers given all we know about
the links between deprivation in the early years and disadvantage in later life.

A tale of two halves: poverty and exclusion across a decade

The last decade2 reveals a tale of two halves in terms of poverty and exclusion
overall and among children. After a period of momentum in reducing poverty rates,
progress has slowed more recently. The latest figures3 show the rate of child poverty
in Scotland stuck at 21% before housing costs (and 24% after housing costs). The
rate has stalled for the last four years, while child poverty has started to rise again in
the UK as a whole. This does not mean the same group of children have experienced
poverty for that period. We need to distinguish between the smaller group of
households who experience persistent poverty and the much larger group who
experience short-term poverty. In addition, recurrent poverty affects households who
move in and out of poverty over time, but rarely move clear of the poverty trap. We
also need to distinguish between poor households in terms of the depth of poverty.
There is a big difference between families living just below the recognised poverty
threshold and those who find themselves well below this level.

What has changed for better or worse - or merely stayed the same - within the UK’s
picture of poverty in the last decade? The New Policy Institute (NPI) has analysed 56
indicators since 1998 in their Monitoring Poverty and Social Exclusion (MoPSE)
series for the Joseph Rowntree Foundation. NPI’s most recent report shows:

       From 1998-2002: 30 indicators improving, 19 steady and 7 worsening
        (net +23 improving)
       From 2003-2007: 14 indicators improving, 27 steady and 15 worsening
        (net – 1 worsening)



1
  D. Hirsch (2009) Ending Child Poverty in a Changing Economy, York: Joseph Rowntree
Foundation.
2
  In most cases, data refers to 1998-2007
3
  Published in May 2009: DWP (2009) Households Below Average Income 2007-08 Chapter 4
www.dwp.gov.uk/asd/hbai.asp


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Hills et al (2009)4 concur with the NPI findings, noting that trends in the UK as a
whole towards a more equal society improved on more fronts than they worsened –
especially in terms of reduced child and pensioner poverty and a narrowing of
economic divides between deprived and other areas. The authors concluded that the
last decade was more favourable to egalitarian objectives than either the period
before or ahead is likely to be:

       “This period may have been as good as it gets for egalitarian aims for some
       time to come.”

Focus: changing rates of poverty for different household types in Scotland

Child poverty in Scotland fell by around one-fifth over the last decade. While this is
among the best trends in the UK, it remains well short of being on track and contrasts
with Scottish pensioner poverty having fallen by more than 100,000 over the last
decade. This is the true success story, equating to a halving of the poverty rate from
31% to 16%. However, figures for 2007-08 show the poverty rate has stalled at this
level and at 20% before housing costs. Both figures are slightly better than the
overall UK rate5.

However, poverty among working-age adults has remained about the same as a
decade ago. In 2007-08, 15% of Scottish working-age adults were in poverty before
housing costs (19% after housing costs), similar to the UK rate overall 6. The key
distinction is whether they have children, not whether they are working. Poverty
among working-age people with children has fallen, for both workless and working
households. But poverty among working-age people without children has risen, both
for workless and those in-work. At 220,000 Scottish adults, this latter group now far
exceeds the number of poor older people, representing a complete reversal of the
position found a decade ago. A majority of workless, working-age adults remain in
poverty, and they are most heavily represented among the lowest-income 10%.
Those without children have seen the value of their benefits cut in real terms, being
20% lower than a decade ago.


Income inequality and social mobility

The Scottish Government Framework is concerned with tackling income inequality as
well as poverty – thus the focus within the Solidarity target on the lowest-income 30%
of Scots. What baseline does the Scottish Government’s Framework begin from?

The picture is, at first, confused. According to the ONS, the gap in incomes between
the poorest and richest 20% of UK households was the same in 2006 as in 1991, on
the eve of the last recession. This is in spite of a raft of measures to undertake
redistribution by stealth during successive budgets in the last decade. This suggests
that inequality rates would have grown significantly in their absence. This is likened


4
  Towards a more equal society? Poverty, inequality and policy since 1997 edited by John
Hills, Tom Sefton and Kitty Stewart (2009), The Policy Press and JRF
http://www.jrf.org.uk/publications/poverty-inequality-and-policy-1997
5
  DWP (2009) Households Below Average Income 2007-08 Chapter 6
www.dwp.gov.uk/asd/hbai.asp
6
  DWP (2009) Households Below Average Income 2007-08 Chapter 5
www.dwp.gov.uk/asd/hbai.asp



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to ‘running up a down-escalator’ where considerable effort is needed to stay in the
same position.

The OECD found that the gap between rich and poor in the UK fell significantly in the
first half of this decade after growing steadily between 1985 and 2000 (as in most
other OECD states). The main reasons for recent progress were found to be higher
employment rates, especially among mothers, lone parents and low skilled workers;
and redistributive measures such as tax credits and higher benefit for families with
children and pensioners. A steady rise in inequality over 15 years followed by a sharp
reduction over the next 5 years explains why the net impact over the full period was
close to zero – and underlines the importance of defining the period over which
assessments are made. Moreover, to underline how swiftly these gains may be
eroded, the most recent Households Below Average Income (HBAI) figures indicate
that inequality in the UK rose again in the two years to 2007-08 to reach the highest
recorded rate of inequality for almost 50 years.

Parental earnings remain a powerful predictor of children’s future incomes. Recent
panel study findings allow us to dig deeper into the story of social mobility in the UK.
These cover the fortunes of people born in the 1940s who had children in 1970.
Today, those adults are in their 60s and their children are approaching 40. Around
600 families from Scotland were included in the study. Looking back to 1980, when
the children were aged 10, around 45% of the Scottish sample were in so-called
routine jobs compared with 30% in professional jobs. By 2004, when the original
children were aged 34, just under half had moved into professional jobs while around
20% were in routine jobs. However, the trend in terms of relative social mobility is
more worrying.

The Table indicates that a higher proportion of Scottish professionals in their mid-30s
came from professional backgrounds in the first place than was true in England or
Wales. As professional jobs expanded, the children of professional parents in
Scotland were more likely to secure them than was true in the rest of Britain. Only
three in ten of those in professional jobs by their mid-30s came from non-professional
households, and just 6% grew up in ‘routine’ backgrounds – professional parents in
1980 were 12 times more likely to see their children grow up to gain professional jobs
than parents from routine backgrounds.

Social mobility across a generation - children aged 34 in 2004

Family origins of those aged 34 in         Scotland      England     Wales
professional jobs (2004)
Parent(s) were in professional jobs in     71%           62%         56%
1980
Parent(s) were in routine jobs in 1980     5.8%          10.5%       5.8%
Ratio                                      12.3          5.9         9.7


While these findings are based on data from a single study with relatively small
samples for Scotland and Wales, they challenge assumptions about Scotland’s more
egalitarian education traditions. The children in this study left school in 1986-88 when
unemployment rates were among their highest in the post-war period. It appears that
Scotland’s professional jobs for this cohort were largely out of reach for the majority
of those coming from non-professional families. The study cannot tell us whether
social mobility was particularly low at this point, or how far it has increased in the last
decade.




                                                                                         3
Future data may reveal a more positive picture due to the faster expansion of further
and higher education, the steady reduction in workless households from the late
1990s and a reduction of wage inequality among women in particular since 1997.
Short to medium-distance mobility may have improved – so, professional jobs may
have become accessible to more people from average backgrounds. However, given
what we know about the continuing low levels of attainment for about one in five
young people in the last decade, there is little reason to expect longer-distance
mobility among families with low educational attainment to have improved.

Poverty and place: what have we learned about changing disadvantaged
places?

There is a palpable sense that this agenda is too big and doubts are expressed about
whether local government can really make a dent in poverty levels. Yet, local
authorities are better placed than most to understand the intricate patterns of poverty
in different places over time – the circumstances, beliefs and behaviours associated
with disadvantage, as well as local capacity to take advantage of opportunities
available.

What have we learned from the past decade about approaches which focus on
people (client groups) and on places as a whole? These questions were explored in
a recent review by a team at Oxford University.7The researchers considered a range
of UK Government policies to improve educational outcomes, tackle worklessness,
and promote sustainable employment in order to raise incomes. Their assessment
indicated that most of these policies had small, positive impacts. In the few cases
where detailed spending data were available, costs were generally offset by savings
to the Exchequer. The reviewers concluded that policies had the greatest impact
when they:

       delivered tailored support to the most disadvantaged people with minimal
        complexity;
       reflected local needs and priorities; and
       were shaped through active engagement with stakeholders including service
        users.

Overall, the reviewers found evidence that both types of approach had positive
effects and could not conclude that one was superior to the other. Both are needed if
the marked drop in worklessness achieved in the last decade is to be repeated when
the economic recovery comes.

Transforming Disadvantaged Places

In summer 2008, the Joseph Rowntree Foundation published a ‘round-up’ drawing
together research evidence from across the UK on the theme of transforming
disadvantaged places8. Some of the key messages - and some issues for the
Network to consider - are shown:


7
  Julia Griggs, Adam Whitworth, Robert Walker, David McLennan and Michael Noble (2008)
Person or place-based policies to tackle disadvantage? Not knowing what works:
http://www.jrf.org.uk/publications/person-or-place-based-policies-tackle-disadvantage-not-
knowing-what-works
8
  Marilyn Taylor (2008) Transforming disadvantaged places: effective strategies for places
and people, JRF Round-up, http://www.jrf.org.uk/publications/transforming-disadvantaged-
places-effective-strategies-places-and-people


                                                                                             4
The clear view emerging from evaluation of community regeneration programmes
across Britain is that not enough has been done to impact upon the disadvantages
experienced by deprived areas in terms of weak economies, worklessness, low skill
levels and the relative lack of (formal) enterprise. Geographical variations in
economic demand remain critical to the prospects of areas which have experienced
industrial decline, as is the degree of connectivity between disadvantaged places and
wider labour markets.

It is important to challenge the ‘nothing works’ fatalism sometimes found among
those who doubt government action can succeed. Regeneration has improved the
standard of housing and quality of local services in many communities, but achieving
lasting improvements to quality of life in the most disadvantaged places has proved
tougher. Fragmentation across organisations and sectors has blunted the effect of
efforts to boost economic inclusion – and it is not clear that the expertise of
community-based housing associations and Development Trusts is being drawn
upon consistently.

While tackling worklessness is one key strand of activity, „work first‟ approaches often
play down the fact that entry-level jobs may offer few prospects for developing skills,
achieving sustainable work and moving free of poverty. Concerns about in-work
poverty and low pay remain highly relevant. In addition, raising educational
attainment among young people is key to the long-term agenda of reducing and
preventing poverty.

More of the same for young people will not be good enough. Although average
attainment levels among young people have risen steadily, progress more or less
stalled among the lowest-attaining 20% of young people in the last decade in
Scotland. A radically different experience of school-age learning appears to be
needed for many of them to ensure current policies make more of an impact against
poverty in future.

Strong family and community networks in disadvantaged neighbourhoods can act as
a source of resilience as well as putting limits on people‟s horizons and their
willingness to consider opportunities elsewhere.

The causes and consequences of social dysfunction expressed in violence, family
neglect and chaotic parenting associated with addictions need to be managed pro-
actively. For those who experience and/or contribute to this burden of harm, the
challenges are clearly not only about raising incomes or getting work. A cautious
estimate suggests that 30,000 children in Scotland are living in the care of a parent
with a serious drug addiction. Any strategy to improve income and employment
prospects must first take account of the balance of care and risk for children in those
families, as well as drug stabilisation efforts. It is one stark example of the need to
take a holistic approach to the barriers that block pathways out of poverty.




                                                                                      5
National Framework, local action: what can be done?

The Scottish Government’s anti-poverty Framework9 was planned before the scale of
economic downturn was known. Job conditions alone make it immensely tougher to
carry on reducing poverty. However, the principles of the Framework remain largely
sound and, in setting 2017 as the date for assessing whether Scotland has truly
tackled poverty, it cannot be accused of chasing a quick fix. The Scottish
Government’s approach is grouped under three main headings:

Reducing income inequalities

The primary focus for reducing income inequalities in the Framework is employment.
Removing barriers to work through more accessible and affordable childcare is also
included here. The UK Government’s policy to extend job search conditions to lone
parents of school-age children is regarded by some as a step backwards, due to the
risk of penalties being imposed if job offers are not accepted, and by many others as
a policy that should be postponed until the economy recovers. Either way, the
Australian model in the mid-1990s of extending conditions upon lone parents only
once adequate childcare guarantees are in place seems relevant10. There is clear
potential for dispute between the UK Government and the Scottish Government’s
role in funding the childcare support required to make sense of the UK policy. Bolder
reforms than we have seen in the last decade are needed if Scotland aspires to offer
the consistent quality and low cost of childcare that parents in the Nordic countries
experience.

The Scottish Government Framework has little to say on how to tackle in-work
poverty. The scale of the problem is acknowledged, but there is not much sense that
a distinctively Scottish solution is being crafted. References to individual capability
appear to downplay the role of macro-economic demand for higher-skilled and better-
paid employment. This view of springing the poverty trap through higher wages or
longer hours is at odds with the experience of many who swapped poverty on
benefits for in-work poverty in the last decade. Most were better off in work, or ought
to have been if they had taken up the full range of grants, benefit run-ons and tax
credits available. But many found these were still not enough to ‘pull themselves out
of poverty’ to borrow a term used in the Framework. Low-paid employees without
children found it particularly tough to do this. Compared with the previous system of
topping-up low family incomes, tax credits in the last decade appear to have
improved the chances of getting into work and, critically, staying in work. However,
they do not appear any more effective in helping wage progression.

Longer-term measures to tackle poverty and drivers of low income

Governments are increasingly concerned to tackle the root causes of poverty. The
Framework identifies tackling discrimination as a long-term action, noting the higher
levels of poverty experienced by many disabled people, minority ethnic communities
and women. But the primary focus appears to be on ‘getting it right’ in the early
years. Publication of the Scottish Government’s Early Years Framework highlights
the need to sharpen the early years focus within health services, social work and
education as well as improving childcare services especially for vulnerable children.
All of this looks to be heading in the right direction, but doubts remain about the pace
of reform and questions about what kind of targeting for which children are far from

9
 Achieving our Potential: A Framework to tackle poverty and income inequality in Scotland
10
  Part of the JET Programme (Jobs, Education & Training) cited in Commission on Social
Justice (1994) Social Justice: Strategies for National Renewal, IPPR: London.


                                                                                            6
resolved. For example, views differ widely on the best way to support children in the
care of parents with a severe drug or alcohol addiction.

Supporting those in or at risk of poverty

This section of the Framework sets out a range of actions that local authorities and
their Community Planning partners can take to reduce poverty or lessen the risk of
those on the margins of poverty getting stuck. While there is much that is positive
about the Scottish Government’s proposals, some assessment of the degree of
difficulty in putting them in place is also needed. For example, legislation on
extending free school meals places a new requirement on local authorities to be
delivered within the overall spending settlement. This points to a new era of rationing
within much tighter local budgets, reflected as well in the policy on Free Personal
Care (FPC). We can expect tensions associated with assessment of need and
variations in service level to intensify against a backdrop of Council Tax rates being
frozen and falling revenues from other local sources. It is very likely that additional
forms of targeting will be required.

The burden of paying full Council Tax on low incomes is identified under this
heading. Because the threshold for CTB eligibility has not risen consistently in line
with earnings, more people on relatively low incomes receive no assistance with
Council Tax. This means that those on the edge of poverty – notably the extra 10%
of households who are now included in the Solidarity target – pay the highest share
of income in Council Tax, while those on the lowest incomes are usually eligible for
full CTB. The Scottish Government’s proposal to bring in a Local Income Tax (LIT)
proved too controversial to introduce in this parliament. Whatever its pros and cons,
one probable benefit of LIT would be to reduce the local tax rate on the nearly-poor
and eradicate the persistent issue of eligible pensioner households not claiming CTB.
Any reform of Council Tax should be judged on how far it resolves these issues.
Introducing new bands on more expensive properties might be both efficient and
equitable but would not deal with these concerns.

At the local level, Community Planning Partnerships could take a more strategic view
on tackling poverty. A missing part of the tackling poverty agenda involves linking
household income with patterns of spending, notably on essential goods and
services. Low-income households tend to pay more as a share of income for
essentials like gas and electricity, due to higher tariffs, higher use (related to house
condition or being at home more often) and more costly methods of bill payment.
One bold action would be to negotiate discounts on energy tariffs for residents who
wish to participate in a group scheme designed to improve energy efficiency. Large
RSLs like Glasgow Housing Association might be particularly well placed to drive
down underlying energy prices through its bulk procurement power and follow some
of the successful community energy projects seen in rural and island communities.
Many businesses are essential service providers as well as employers, developers
and regeneration agents. Engaging them around their core business, in order to
deliver greater local benefit, seems like one of the most promising ways to involve
the private sector in CPPs.




                                                                                      7
Propositions

Drawing on the issues raised in the paper, ten concluding propositions are set out for
discussion among Network members.

   1. The target to halve child poverty by 2010 can still be met. Halving child
      poverty from the 1998 level by the end of 2010 will cost around £4 billion.
      Some cost-neutral reforms could be introduced, such as targeting tax credits
      more tightly on low-paid families. Other areas require substantial extra
      investment, including expanding access to low-cost, flexible childcare.

   2. But more money is not enough: As well as ensuring people on the lowest
      incomes become better off in monetary terms, action to improve
      neighbourhood services, extend flexible working, support family functioning,
      encourage safe drinking and promote community safety will also be needed.

   3. The Solidarity target demands a broader approach to Scottish policy:
      Improving the position of the 30% of Scots on lowest incomes means a dual
      focus on reducing both worklessness and low pay is required. Better
      programmes to improve job retention and skills progression, as well as
      access to work, will be needed. Reforming local taxation will be central to
      reducing the risk of poverty for older people. Another challenge will be to
      reduce child poverty without further disadvantage to poor households without
      children.

   4. Secondary school reform is essential: Headline data on school attainment
      show more young people meeting ‘benchmark’ standards. But this misses the
      lack of progress in the last decade for about one in five young people. The
      Curriculum for Excellence needs to offer a break with the dominant model of
      academic learning and offer a more authentic mix of skills for life, work and
      learning.

   5. Work first won’t do: The next era of welfare-to-work policies needs to focus
      on skills development rather than just ‘work-first’ measures. The Scottish
      Government faces a choice between the North American model of ‘labour
      force attachment’ or aiming to develop human capital approaches more
      familiar in the Nordic countries and the Netherlands. Many elements for
      success (in-work support services, skills development, childcare support,
      funding for apprenticeships) are within the Scottish Government’s remit.

   6. Don’t forget about place: We know that most people in low-income
      neighbourhoods are not poor, but the risk of persistent poverty is found
      disproportionately in Scotland’s cities and largest towns. While increasing
      employment and enterprise in these places remains key, efforts to improve
      public spaces and community safety, address violence, support unpaid carers
      and promote a culture of volunteering are also among the strands needed for
      ‘place-making.’

   7. Tackling poverty is not just a job for Westminster: The Scottish
      Government’s Framework is important in challenging the view that the ‘real’
      powers lie with Westminster in the shape of taxes, benefits and employment
      policies. While these will remain the major drivers of policy, decisions taken
      by Holyrood, local authorities and the voluntary sector can add significant
      value. Tackling poverty is a complex task requiring much greater co-
      ordination between departments and levels of government.


                                                                                       8
8. Private service providers have a role: Efforts to engage business with
   Community Planning Partnerships have often been half-hearted and
   superficial. As well as being major developers and employers, many provide
   essential goods and services (e.g. energy, financial services, transport).
   Public agencies have considerable bargaining powers through procurement
   decisions to influence how business treats low-income consumers. Ensuring
   the poor no longer pay more for basic services would reduce outgoings and
   increase disposable income.

9. ‘Business as usual’ should become unusual: Tight public finances will
   compel policy-makers to find better ways to use resources. When the
   recovery comes, government and business should reflect on which of these
   reforms should continue. The broader challenge will be to usher in a ‘carbon-
   conscious’ recovery. Government has a responsibility to ensure necessary
   moves to place a higher price on carbon emissions do not penalise poorer
   households. Tax cuts, grants and direct action to improve energy efficiency
   should be introduced.

10. Resolving complex issues should start with some basic questions: It is
    easy to feel defeated by the scale of issues associated with tackling poverty.
    Policy responses in the last decade have become more complex – in part to
    deal with the nature of the problem, but also because of the instinct to tinker,
    target and micro-manage. Accumulated evidence from the last decade in
    terms of what worked, what didn’t and why should now be drawn upon. Even
    the most complex issues can be understood better by starting with some
    basic questions, e.g. who or where is the policy/practice aimed at; what is it
    expected to achieve; why do we think it will have this effect; how and when
    will we know if this happens; and are we willing to learn and adapt?




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