The relentless rise of in-work poverty

14th Jun 2012

The level of poverty among children in the UK remains unacceptable, says Chris Goulden, and getting more people into work won’t fix the problem by itself.

No matter what measure of poverty you prefer, the level of poverty among children in the UK remains unacceptable – and getting more people into work won’t fix the problem by itself.

Comment on today’s poverty figures will rightly focus on Labour’s ‘exceptional effort’ to halve child poverty by 2011 (it fell by a third). 

The statistics show that child poverty (using the figure of 60 per cent below median) was 18 per cent in 2011, down from 26 per cent in 1999. In other words, child poverty means being below a poverty line of £385 per week for a family of four, with one primary and one secondary school age child, or £169 per week for a single childless adult. This amount has to cover rent, bills, food, clothing and other essential items and activities. 

Our Minimum Income Standards research shows that, typically, the official poverty line is below what the public agree to be an acceptable minimum standard of living. We are publishing our annual update of this research in early July, but the respective standards in 2011 for those family types were £540 and £184.

Average incomes down, in-work poverty up

The decline in family poverty is being driven by what is happening to lone parents, whose risk of poverty (now 22 per cent) has almost halved since the nineties, whereas two-parent families have seen little improvement (steady at around 15 per cent). 

Another part of the reason for a drop in poverty this year is that median incomes – and thus the poverty line itself – have gone down. You have to go back to 2002/03 before the poverty line was lower. In fact, the average income within every decile of the population has declined in the last year. 

Despite this, the so-called absolute measure of child poverty (it really measures relative spending power of people on lower incomes) remained static at 11 per cent, also down from 26 per cent when it was fixed in 1999. If this measure goes up, then things are getting really bad.

Another undesirable feature of this year’s stats is a further rise in the proportion of children in poverty whose parents have jobs. Now 61 per cent of children in poverty have working parents, up from 45 per cent in the mid-nineties. 

Given the renewed focus (again) on work as the route out of poverty, we have to get to grips with problems in the job market that prevent work from being an effective solution by itself. The extent of low-paid and low-hour jobs is one of the reasons, alongside the impact of benefit cuts, which are likely to lead to an increase in poverty among all groups by 2020

This year’s figures are the calm before the storm.