Poverty falls for families and pensioners, but increases among adults without children

Monitoring poverty and social exclusion 2004, the latest annual review of progress, takes stock of 50 different indicators including measures of income, employment, education, health, housing and crime. It shows improvements over the past five to six years on 18 of the indicators, compared with eight that have grown worse.

However, it also suggests that a number of positive trends have stalled in recent years, including progress in reducing low achievement in schools. As a result, changes measured over the past year show only 10 improving indicators, against seven that have grown worse.

The monitoring shows that, on the most recent statistics, 12.4 million people (22 per cent of the population) were living in households with net incomes below the ‘poverty line’ (defined as 60 per cent of median household income after deducting housing costs). This figure for 2002/3 compares with 14 million people who lived in low-income households in 1996/7.

The number of children living in poor households fell over the same period from 4.3 million to 3.6 million. Allowing for tax credit changes introduced in April 2003, this suggests that the Government may well reach its short-term target of reducing child poverty by a quarter at the end of this year. The figures also show a reduction of 500,000 in the number of pensioners in poor households, which fell to 2.2 million in 2002/3.

However, the number of working-age adults without dependent children living in households below the poverty line showed an increase of 300,000 from 3.6 million in 1996/7 to 3.9 million in 2002/3. These figures are supported by the fact that Income Support for childless adults below retirement age has only risen in line with prices for the past decade, and fallen increasingly far behind earnings. By contrast, Income Support has increased by a third in real terms for couples with two children since 1998, and a quarter for couples with one child.

The review highlights three further areas of concern:

• Economically inactive people who want work: .The number of people recorded as ‘unemployed’ on official measures has halved in the past decade to around 850,000. The number of adults classified as ‘economically inactive but wanting work’ has also declined, but by only a seventh to 1.5 million. Focusing on people who have been out of work for more than two years, the report finds that long-term unemployment has fallen by five-sixths to just 70,000. This is dwarfed by the number of long-term sick and disabled people claiming out of work benefits, which has increased by a third since 1996 to reach 2.4 million.
• Low pay: Although work reduces the risk of poverty, it does not eliminate it. Two out of five people living in poor working-age households include at least one adult who is in paid work. The review also notes that seven million workers in the UK earn less than £6.50 an hour, including four million women. Two-fifths of those earning low pay rates are in the distribution, hotel and restaurant sector and a further quarter are in the public sector. Relatively few low-paid jobs are in production industries facing direct competition from low-wage producers abroad. The risk of low pay is especially high for young people lacking educational qualifications. Half of all 25- to 29-years olds who are working but lack A-level (or equivalent) qualifications earn below £6.50 an hour.
• Education: Progress in reducing the number of young people with few qualifications in the mid to late 1990s has stalled. In 2004 in England and Wales, 12 per cent of 16-year-olds failed to obtain five or more GCSE passes and 6 per cent obtained no passes at all. Both proportions were the same as in 2000. At junior school, around a quarter of 11-year-olds in England failed to reach Key Stage 2 in English and Maths. Again, there has been no improvement in the percentage since 2000.

Guy Palmer, Director of the New Policy Institute and co-author of the report, said: “There has been substantial success over the last decade in reducing child and pensioner poverty, and unemployment. There has been much less success in reducing the numbers of people who are economically inactive but want paid work, as well as long-term worklessness due to sickness and disability, and poverty among childless, working-age households. There is a large overlap between these groups and, clearly, they present a major challenge for future policy.”

Key findings in some of the other areas reviewed include:

Health
The proportion of premature deaths among adults aged under 65 fell by a sixth in the ten years up to 2002. However, premature death rates are still much higher in Scotland than in England or Wales. Measures of limiting, long-standing illness and mental illness remain unchanged, as do health inequalities among children.

Levels of obesity increased by two-fifths over the decade, and women with below-average incomes are twice as likely to be obese as those with high incomes. Half of all adults in the poorest fifth of the population aged 45-64 have a limiting, long-standing illness, double the rate among people on average incomes.

Crime
The number of burglaries has almost halved in ten years, although there has been little change in recent years. Homes without contents insurance – including half of all households in the poorest fifth – are three times as likely to be burgled as those that have insurance. Despite falling rates of property crime, most people continue to believe that national crime rates have been increasing. A third of women over 60 feel it is very unsafe to be out at night, a proportion that is unchanged from ten years ago.

Homelessness
The 100,000 households living in temporary accommodation is more than double the number in 1997. The 200,000 households accepted as ‘homeless’ by local authorities in England in 2003 was a quarter higher than in 2000. Households without dependent children accounted for two-thirds of those accepted as homeless.

Peter Kenway, joint Director of the NPI and co-author or the report, said: “Most of our indicators have shown improvement since 1997. But many show no improvement in the last few years. The high numbers of children failing to achieve basic educational qualifications and continuing health inequalities are two areas where renewed efforts will be required if future progress is to be achieved.”