Young, working and renting: Report reveals changing picture of UK poverty

24th Nov 2014

Today (24 November) the Joseph Rowntree Foundation reveals the changing picture of poverty in the UK with the launch of its annual report Monitoring Poverty and Social Exclusion written by the New Policy Institute (NPI).

This is the most up-to-date and comprehensive guide to the state of the nation ahead of the General Election in 2015 – the definitive story of how the UK’s economic recovery is affecting people in poverty.

It shows a dramatic change in who is most at risk of poverty compared to 10 years ago.  It highlights: 

  • A big rise in the proportion of adults under 25 in poverty, and a big fall among the over 75s (indicator 7A). 
  • More people in poverty living in working families - meaning as many are now in working families as workless ones (indicator 8A).
  • More people in poverty living in private rented housing - meaning as many are now in private as social rented accommodation (indicator 11A).

The labour market has changed significantly in the last ten years: there has been a vast increase in insecure work – zero hours contracts, part time work and low-paid self-employment, which means that getting a job does not necessarily mean getting out of poverty. The report shows:  

  • Two thirds of people who moved from unemployment into work in the last year are paid below the Living Wage (indicator 29B). 
  • The long term prospects for people in low paid work are not good either: only a fifth of low paid employees have left low paid work completely 10 years later (indicator 29B). 
  • The average self-employed person earns 13% less than they did five years ago (indicator 24A).
  • There are around 1.4m contracts not guaranteeing a minimum number of hours, and over half are in the lower-paying food, accommodation, retail and admin sectors (indicator 22B)

There is some welcome news: for example, there has been a vast reduction in pensioner poverty (which is now at the lowest on record) and the employment rate in the UK is close to its historic high. However: 

  • Incomes are lower on average than a decade ago and the worst off have seen the biggest falls – nearly 10% lower than a decade ago (indicator 1A).
  • Average wages for men working full time (in real terms) have dropped from £13.90 to £12.90 per hour between 2008 and 2013 (indicator 25B). 
  • For women (whose employment rate has never been higher) wages fell from £10.80 per hour to £10.30 in the same period (indicator 25B). 
  • For the lowest paid quarter of men, hourly pay fell by 70p per hour; for women, 40p per hour (indicator 25B).  

The report highlights the way the housing market has had a negative impact on people in poverty. There is not enough social housing, which means more people in poverty are living with insecure tenancies in the private rented sector. 

  • The number of private landlord repossessions is now higher than the number of mortgage repossessions (17,000 compared to 15,000 in 2013/14) (indicator 17A).
  • The end of a private rented sector tenancy is now the most common cause of homelessness (indicator 18B). The number of Housing Benefit claimants has risen by over a million in the last 10 years (indicator 12A), and despite an overall drop in the number of claimants in the last year, there was an increase in working people claiming Housing Benefit and the average amount they claim is rising.

The research found that the welfare system and public services are not delivering as well as they should be - and can vary vastly from one area of the country to another: 

  • In some English local authorities, three quarters of children eligible for free school meals do not get five ‘good’ GCSEs (indicator 50).  
  • The 15 best local areas for this level of GCSE attainment for the same group are all in London (indicator 50). 
  • Jobseeker’s Allowance claimants are now more likely to be sanctioned for not attending the Work Programme than to get a job through it (indicator 35B).
  • Over 60,000 disabled people had to wait for more than 9 months for their employment support allowance claim to be assessed (indicator 36B). 

Julia Unwin, Chief Executive of JRF, said:

“This year’s report shows a real change in UK society over a relatively short period of time. We are concerned that the economic recovery we face will still have  so many people living in poverty. It is a risk, waste and cost we cannot afford: we will never reach our full economic potential with so many people struggling to make ends meet. 

“A comprehensive strategy is needed to tackle poverty in the UK. It must tackle the root causes of poverty, such as low pay and the high cost of essentials. This research in particular demonstrates that affordable housing has to be part of the answer to tackling poverty: all main political parties need to focus now on providing more decent, affordable homes for people on low incomes.”

Tom MacInnes, Research Director at the NPI, said:

“This report highlights some good news on employment – but earnings and incomes are still lower than five years ago, and most people who moved from unemployment into work can only find a low paid job. Government has focussed its efforts on welfare reform, but tackling poverty needs a wider scope, covering the job market, the costs and security of housing and the quality of services provided to people on low incomes.”