Housing Tenure And Housing Costs Are Driving Poverty
According to new research released by Cardiff University the increase in working poverty between 2004/05 and 2014/15 was experienced by families living in the private rented sector and social housing – without any increase for owner-occupiers.
“I expect this to continue in the coming years, and I think we’re going to hear much more about the link between housing costs and poverty,” said Dr Rod Hick, Senior Lecturer in Social Policy, who led the research. “There has been a shift away from owner-occupation and a significant growth in the private rented sector – it’s not clear to me that this shift is going to abate any time soon,” he said.
The research sees this as “problematic” from a poverty perspective because the private rented sector is associated with high housing costs and elevated poverty rates. A continued shift toward the private rented sector is likely to generate upward pressures on poverty rates in the UK. Nor does the research see low pay and in-work poverty as the same thing, identifying most low-paid workers as not in poverty because many of them live in households with additional earners.
“You can’t simply assume that workers who are low paid experience in-work poverty,” says Hick. “One needs to know something about their wider household circumstances, both in terms of other income sources, and the number of family members who are dependent on the family income.”
Among those living in jobless households who go on to find work, a quarter will enter in-work poverty, with the research finding lone parents and families with three or more children as over-represented in this group. “Many people find this transition hard to understand, perhaps even hard to accept,” says Hick. “I think it points to the difficulty of reconciling work and family life for families with children, and the need for policy to be supportive of those making these transitions into the labour market.”
The research suggests one way to do this is by providing more publicly-provided childcare – a policy proposal outlined by Jeremy Corbyn at the recent Labour conference – which might make it easier for parents to work additional hours when they wish to.
“Our analysis demonstrates that tax credits were highly effective at reducing poverty for families who received them,” says Hick. “But through a combination of design and take-up, receipt by families without children was very low, despite such families making up almost one-half of those in in-work poverty.”
The research takes issues with Universal Credit being labelled a ‘simplification’ when it not only amalgamates six social security benefits into one, but also introduces significant changes, too. Specifically citing no additional payments for third or subsequent children, the “big problem” with Universal Credit is, the research says, the significant cuts built into it and likely to sharply drive up poverty, and especially child poverty, as has been forecast. And the research reinforces the case against claimants facing lengthy waits for an initial payment with the risk – and increasingly actuality – of severe hardship in the interim.
“The National Living Wage is not, in fact, a living wage, but is a more generous minimum wage,” says Hick. “While there has been something of a sleight of hand in attempting to portray it as a living wage, it has to be recognised that it does represent a significant increase in the minimum wage, at least for people aged 25 and over – so in that sense it’s a welcome development.
Analysis by the Resolution Foundation shows that the gains that will accrue from this increase in the minimum wage for those on low incomes will not offset the cuts imposed under Universal Credit and the ongoing freeze of most working-age payments. “The latter is quite a substantial cut when we consider the cumulative impact of this freeze over a number of years,” says Hick.
“The tax credit system, while expensive, did make a significant difference in terms of raising the incomes of low income working households.
“Reforms to this system need to be made with great care – indeed, with greater care than is being taken at present,” he says.
