Millions face low pay,no pay poverty
Britain's poorest families are facing hidden cuts worth more than 30% of their annual income by 2017 as public services are rationed or withdrawn to meet the coalition's tough spending targets, new research commissioned by the TUC reveals.
As George Osborne puts the final touches to his autumn statement on 5 December, which is expected to give more details about a planned £10bn of welfare savings over the next five years, the TUC's analysis shows that reductions in benefits and tax credits are being compounded by the impact of budget cuts across government.
"The chancellor's fresh assault on the welfare budget is set to cause considerable financial harm for millions of families," it says. "But unless George Osborne changes course, these cuts will be dwarfed by massive reductions in public services."
The TUC's report comes alongside a stark warning from the Joseph Rowntree Foundation about the growth of in-work poverty in Britain. In its annual Monitoring Poverty report, the charity finds that 6.1 million people in working households live in poverty – more than the 5.1 million who live in working-age households where no one has a job.
Julia Unwin, the foundation's chief executive, said: "The most distinctive characteristic of poverty today is the very high number of working people who are also poor."
The TUC's analysis, meanwhile, shows the hefty cost of austerity to low-income households. Through detailed analysis of survey findings on who uses public services, and data from the Treasury, it has built up a meticulous picture of how planned spending cuts will affect households across the country.
By 2016-17, the last year for which the government has so far issued spending plans, the cumulative cost of lost public services for the poorest 10th of households in cash terms will have been £3,995 – or 31.7% of their average annual income.
For those in the top 10th of the income scale, many of whom may use public transport infrequently, opt out of public schooling and healthcare, and are less likely to call on services such as Sure Start centres for children, the impact will be much smaller: £2,805, or 2.5% of annual income.
The biggest cuts in percentage terms are in further and higher education, policing and social care.
.....The extent of in-work poverty is laid bare in a new Joseph Rowntree Foundation (JRF) report, which highlights the insecurity faced by millions of working people.
The annual Monitoring poverty and social exclusion report, written by the New Policy Institute (NPI), highlights the dynamic nature of poverty, caused in the main by people moving in and out of jobs, and an underemployed workforce.The report shows the close links between the two, and found that 6.1 million people living in poverty are in working households. Excluding pensioners,
this is higher than the 5.1 million people in workless households in poverty.
Underemployment, the number of people lacking the paid work they want, stands at 6.5 million, according to the report. The number working parttime but wanting full-time work is now 1.4 million, up by 500,000 since 2009.
Meanwhile, 4.4 million jobs pay less than £7 an hour. Low paid work is common among hotels and restaurants, finance and services, IT, and wholesale, retail and transport jobs. The number of working families receiving working tax credits — payments to top up wages — has risen by 50% since 2003, to 3.3 million in 2012.
But people move in and out of work, and in and out of poverty, as the findings show:
almost five million people have claimed Jobseeker’s Allowance (JSA) at least once in the last two years, around one in six of economically active people;
the turnover of people moving on and off JSA is substantial: 42% of claims were made within six months of the last claim. Half stop claiming within three months; and
while 18% of people are in low income at any one time, 33% experienced at least one period of low income in a four year period, and 11% are in low income for more than half of that time.
Equally depressing - millions of households are heading for a long period of stagnant living standards unless bold steps are taken to ensure that growth over the next decade is broadly shared, according to a think tank’s landmark investigation into the squeeze on incomes.
Even with a return to steady growth, it’s now entirely possible living standards for a large swath of low and middle households will be no higher by 2020 than they were in 2000. Yet actions can be taken to alter this course.
The findings are contained in the final report of the Commission on Living Standards, a broad group of leading employers, trade unionists, economists and heads of parents’ groups brought together by the independent think tank the Resolution Foundation.
The report sets out a full explanation for the challenge now facing low to middle income households, the risk that the benefits of a period of growth could bypass millions of working households, and key recommendations on how to avoid this.
The report sets out a comprehensive agenda to ensure that growth feeds through into rising prosperity for those on low to middle incomes, with recommendations spanning low pay, improving employment levels and reform of the tax and benefit system.
The report is clear that future improvements in living standards will have to come from higher employment and pay rather than rising state support.
And just one example is a 4.2% tube and bus fare rise in London, contrasted with a rate of inflation (IE the rate of rising prices) of 2.7% and an average pay increase of 1.5% since 2011:
London tube and bus fares to rise from January - Boris Johnson says fares in the capital will increase by an average of 4.2% in the new year
And as winter begins to set it, it has been revealed that government support to help families struggling in fuel poverty has been cut by more than a quarter in the past few years, according to a new report.
Money going to the fuel poor in England as a result of Government policies will have been reduced by 26% by next year compared to 2009 levels, the study by the Association for the Conservation of Energy (ACE).
And the amount of support specifically for energy efficiency measures such as insulation for households which are paying more than 10% of their income heating their homes will have fallen by 44%.
This is despite energy efficiency being the best way to help people cut fuel bills and keep warm, anti-fuel poverty campaigners said.
Much of the reduction is due to elimination of the Warm Front programme, which helped people install efficiency measures, while other efficiency schemes will also have less funding.
The report estimates that the number of struggling households who will have energy efficiency measures installed in their homes to help them keep warm for less will fall from 150,000 in 2009 to 100,000 in 2013.
The number of homes being treated will fall from 3.8% of the total in fuel poverty in 2009 to just 2.6% of the 3.9 million households estimated to be in fuel poverty in England by the end of this year.
In total the annual funding from Government policies for energy efficiency measures and income support on fuel bills such as winter fuel payments will fall from £3.9 billion in 2009 to £2.7 billion in 2013, the report says.
Of that total, only around a third goes to fuel poor households because the schemes are more widely targeted or it is difficult to focus funding on vulnerable families.
Households in fuel poverty will see funding decline from £1.2 billion to £879 million in 2013, the report warns.
The study was commissioned by the Energy Bill Revolution, which points out that at the same time the Treasury will be levying more than £2 billion in carbon taxes from consumer bills to account for the pollution caused by generating electricity.
The Energy Bill Revolution is a movement of people committed to ensuring warm homes and lower bills for all. We are an alliance of children's and older people's charities, health and disability groups, environment groups, consumer groups, trade unions, businesses, politicians and public figures.
But most importantly, we are people like you. A movement of people who, by joining the Energy Bill Revolution, signing the petition, emailing MPs, and spreading the word to friends and family, are playing a crucial role in helping to end fuel poverty once and for all.
Also it would be wrong to think that the coutry is suffering a recession and everyone has to feel the pinch, as evidenced by a recent pay survey which shows pay gains of past 25 years:
Britain’s highest-paid employees have seen their salaries more than double in real terms over the past 25 years, a much faster rise than for the lower paid, a study by the Office for National Statistics has found.
However, the introduction of the national minimum wage in 1999 has allowed those at the bottom of the ladder to partially claw back their relative position.
The study found that, after adjusting for price increases, full-time employees were on average 62 per cent better off in 2011 than in 1986.
In April 2011 the average full-time employee earned £12.62 an hour excluding overtime, compared with £3.87 a quarter of a century earlier.
Generally the higher earners have done better, with the top 1 per cent enjoying the biggest increase between 1986 and 2011, at 117 per cent.
The top 10 per cent saw an increase of 81 per cent, while the bottom tenth had a 47 per cent increase. The bottom 1 per cent had a 70 per cent increase.
In 1986, the top 1 per cent earned eight times more than the bottom 1 per cent, but now they earn 10 times more per hour.
Wage inequality– the ratio of the highest to lowest earners – rose steeply between 1986 and 1998, but fell back after the minimum wage was introduced.
Since 1998 the bottom 1 per cent have achieved a real increase of 51 per cent, compared with an increase of 30 per cent for the top 1 per cent.
But the really worrying news is that the chancellor may have to extend the squeeze on public spending until 2018 if the recent deterioration in growth prospects and tax receipts turns out to be permanent, a think tank has said.
The Institute for Fiscal Studies said George Osborne may have to find another £11bn from tax rises or spending cuts if the economy does not pick up.
This is on top of £8bn of cuts already mooted in the Budget. Mr Osborne will deliver his Autumn Statement on 5 December.
Meawhile for those unfortunate enough to be on welfare at the moment - The government's flagship welfare-to-work programme has failed to hit its main target, official figures show.
Under the scheme, firms and charities are paid to help find jobs for the long-term unemployed. But only 3.53% of people found a job for six months or more - missing the coalition's 5.5% target.
The figures, which cover the 13 months from June 2011 to July 2012, showed that of the 878,000 people who joined the programme, only 31,000 found a job for six months or more.
The Department for Work and Pensions had told providers they should get 5.5% of people on the programme into sustained employment.
Only 3.5% of people referred to work programme find long-term jobs - None of welfare-to-work
scheme's 18 contractors reached target of getting 5.5% of clients a job for at least six months
And Welfare minister Lord Freud admitted today that appeals against decisions by hated benefits assessor Atos had cost over £25 million in the first half of 2012.
The Department of Work and Pensions, in charge of the disastrous scheme, took a hit for £11.3m and the courts £14.9m.
He revealed the figures after Labour's Baroness Wilkins told peers at Lords question time that 40 per cent of people who appealed had been successful.
"In total that figure is roughly accurate," Lord Freud conceded.
He went further though....The government's welfare reform minister has suggested lone parents, sickness claimants and other people on benefits are too comfortable not having to work for their income, saying they are able to "have a lifestyle" on the state.
In an interview with House Magazine, Lord Freud is reported to have said the benefits system is "dreadful" and discourages poor people from taking the risks he implied they should be willing to bear to change their circumstances.
"The incapacity benefits, the lone parents, the people who are self-employed for year after year and only earn hundreds of pounds or a few thousand pounds, the people waiting for their work ability assessment then not going to it – all kinds of areas where people are able to have a lifestyle off benefits and actually off conditionality," the Conservative peer said.
Elsewhere it was also revealed that vulnerable people may find it difficult to cope with central features of the universal credit benefit system, especially online claims and the proposed single monthly payment, MPs have warned.
The work and pensions select committee has urged the government to consider delaying the introduction of the new system unless the difficulties can be adequately addressed.
Universal credit pilots are due to begin in north-west England in April 2013 and the full national scheme, starting with new claimants, is due to start in October 2013.
At prime minister's questions, David Cameron, speaking before the publication of the select committee report, insisted the scheme – the biggest shakeup of welfare since the late 1940s – was on course and due to start on time.
But in five major warnings, the committee said:
•Provisions to pay claimants their housing benefits directly, rather than to landlords, could pose problems for some vulnerable claimants unable to manage regular rent payments.
•Disabled claimants may receive less than other claimants. The committee warned: "Transitional protection will mean that they do not lose in cash terms immediately, but this protection will erode over time, will be lost if their circumstances change, and is not available to new claimants".
•Tax, accountancy and business organisations have warned that the introduction of monthly universal credit payments using information about claimants' employment earnings taken from HMRC data feeds may fail to work.
•The implementation programme may be too fast. The committee said: "There are still a lot of key decisions to be made on the details of how universal credit will work, before claims can be processed."
•The decision to localise council tax support under a proliferation of local schemes, rather than including it within universal credit, will work against the government's objective of simplification of the benefits system.
Also....Poorest 400,000 families worse off under universal credit, finds report - Chartered Institute of Housing says lone-parent households, those on minimum wage and officially in poverty will lose out
And also hundreds of thousands of poor people say they have been put off applying for or collecting benefits because of the perceived stigma generated by false media depictions of "scroungers" – leading many to forgo essentials such as food and fuel, a new report claims.
Analysis by researchers, led by the University of Kent's social policy team, said polls and focus groups had revealed a quarter of claimants had "delayed or avoided asking for" vital welfare payments because of "misleading news coverage driven by [government] policy".
This "climate of fear" means 1.8 million people have potentially been too scared to seek help they are entitled to from the state. Such is the scale of successive governments' disinformation that the report calls for ministers to abandon briefing journalists ahead of their speeches and asks Whitehall departments to seek corrections "for predictable and repeated media misinterpretations".
All of which leads inevitably to debt and credit, but the worse-off and those with poor credit-ratings, often resort to 'pay day lenders', whose rate of interests often run into the thousands and a new survey published revealed that the situation is reaching crisis point with more than 5m people expected to turn to expensive short-term credit in the next few months.
The survey by insolvency firm R3 reports that one in 10 people who use payday loans is forced to choose to pay back the loans and extortionate interest rather than use their cash to buy food.
Even more frightening is the fact that one in three payday loans is taken out to pay for other payday loans.
David Fisher, Director of Credit, at the OFT, said: “We expect payday firms to be responsible, making sure they only lend to those who are able to repay the debt. We would be particularly concerned if payday lenders were deliberately targeting vulnerable consumers.”
Co-operative Labour MP Stella Creasey, who has campaigned against what she calls legal loan sharks, said: “The public know these loans are toxic, but what choice do they have when they’re trying to keep a roof above their heads or pay to get to work?
“I warned ministers in 2010 that they were facing a debt crisis if they didn’t stop these companies exploiting our lax credit regulation. In two years they have done nothing and millions more are now facing a debt-laden Christmas and New Year.”
Our evidence published today revealed that many aggressive lenders are planning to cash-in on struggling people this Christmas by encouraging them to take out expensive short-term credit.
Of course we are lucky in Hackney, in that we have access to a community credit union, find out more at: http://londoncu.co.uk/
Application form at: http://www.hackney.gov.uk/Assets/Documents/London-Community-Credit-Union-Leaflet.pdf
Finally, something that pretty much sums up the current government as the coalition has been accused of presiding over a sham "listening exercise" on NHS reform last year, as a leaked document reveals how the private health lobby worked with Downing Street behind the scenes to ensure that the new legislation went ahead.
David Worskett, the industry's chief lobbyist, cleared his group's public statements with officials and was personally thanked by No 10 for arranging the publication of a letter from clinicians in support of the reforms during the key "pause" period last year, called to reflect on the proposed reforms.
A series of phone calls between the lobbyist and Downing Street's health adviser was followed by a welcome "addition" to a major speech by the prime minister, according to a five-page document written for members of the private healthcare lobby group. The government claimed at the time that it would call a temporary halt to its efforts to introduce more competition within the NHS through its controversial health and social care bill. The prime minister told doctors and nurses: "We are taking this time to pause, to listen, to reflect and to improve our NHS modernisation plans. Let me be clear: this is a genuine chance to make a difference."
But in the document, obtained by the website Social Investigations, Worskett, director of NHS Partners Network, the lobby group representing companies such as Circle and Care UK, wrote: "I did brief the new No 10 health policy adviser very fully, and indeed 'cleared' our materials with him. I have had several other 'stock take' phone conversations with him.
So not much to be cheery about at the moment, but at least the cracks are begining to appear as is apprently, the public's ability to see through the spin and flim-flam to what is really happening to our communities and futures.....