The report covers issues from work and education to health and housing.  The analysis is built around a set of 50 indicators organised into six chapters, four focused on particular age groups, one looking at low income and one at community issues. 

The report provides an overall picture of what has happened to poverty and social exclusion since the Labour Government came into office in 1997.  Its conclusions include:

• Half of all the children still in poverty are living in families doing paid work.  Unless the scale of in-work poverty can be reduced, future substantial reductions in child poverty are very unlikely.
• The big fall in poverty among pensioners has been a major success of the anti-poverty strategy.  By contrast, the failure to reduce poverty among working-age adults has been a major weakness.
• Progress in the numbers reaching ‘headline’ standards at age 11 and 16 has been made but this diverts attention from the quarter of 19-year-olds who fail to reach a minimum educational standard.

Despite the reduced risks of poverty for both working and workless families, the 2004/05 target was not achieved. A major reason for this is that the number of children needing tax credits in order to escape from in-work poverty has been going up. More specifically, as shown in Figure 2, the number of children in working families who were either in poverty despite tax credits, or would have been in poverty but for the credits, went up from 2.3 million in 1998/99 to 2.8 million in 2004/05. Figure 2 also shows that tax credits lifted 0.8 million more children out of poverty in 2004/05 than their predecessor did in 1998/99. This implies that the target was missed not because the Government did too little but because the underlying problem got much worse.

Figure 2

Figure 2: Tax credits now take around 1 million children in working households out of low income – but 1¾ million still remain in low income

Poverty among adults

For pensioners, the record has been very good, with the overall pensioner poverty rate falling from 27% in the late 1990s to 17% in 2004/05. Over the same time, the rate for single pensioners fell by a half from 33%.

By contrast, the 19% poverty rate among working-age adults has barely changed for at least a decade. At 6.2 million, the number of working-age adults in poverty now exceeds the pensioner poverty and child poverty combined. Within the overall total, there have been some changes in the mix: for example, the number of adults in in-work poverty has risen and now accounts for nearly half the total.

Working-age disabled adults are especially at risk: the 30% poverty rate among disabled adults aged 25 to retirement is not only twice the non-disabled rate but is also higher than a decade ago. The main reason for this is that most are not in paid work. Yet it is also clear that disabled people face formidable barriers in finding work. The most striking evidence of this is that graduates with a work-limiting disability have a higher chance of being out of, but wanting, work than a non-disabled adult who has no qualifications at all. Neither a willingness to work, nor self-improvement through education, are therefore sufficient to give disabled adults anything like the same economic prospects as their non-disabled peers.

What accounts for the contrasting experience of pensioner and working-age adult poverty? As with child poverty, part of the explanation is the scale of in-work poverty meaning that the assumption of 'work as the route out of poverty' is simply not true for many. There is an additional reason, however, which relates to the second key proposition of the Government's anti-poverty strategy, namely, 'security for those who cannot (work)'. This proposition raises two questions: first, who counts as being 'unable' to work; and second, what would constitute 'security' for them?

For pensioners, both answers are clear, namely, 'all of them' and 'a level of income support close to, or above, the poverty line'. This has provided the basis for an effective policy delivered through the Pensioner 'Minimum Income Guarantee', beginning in 1999, and 'Pension Credit', beginning in 2003. Such means-tested benefits do not address the root of the problem, but used as here to deliver big increases in benefits to those with the lowest incomes, they can have rapid and substantial effects.

For working-age adults, neither answer is clear. Whereas benefits for pensioners and households with children have at worst kept up with earnings since 1997, benefits for working-age adults without children have fallen 20% further behind earnings.

Educational outcomes at the bottom

At age 11, the evidence suggests a steady and sustained improvement. By contrast, the story at age 16 and beyond is one of stagnation from around 2000 onwards, following an earlier period of slight improvement. Wider awareness of this is clouded because the proportion in England and Wales failing to reach the headline measure at age 16 – achieving at least five GCSEs at grade C or above – has declined steadily from 57% in 1994/95 to 44% in 2004/05.

The vast majority of 16-year-olds achieve five GCSEs at any grade and this therefore seems a better candidate for a minimum standard at 16 than five GCSEs at A to C. Figure 3 shows that, in the mid-1990s, 14% of 16-year-olds failed to reach that level. By 1998/99, that proportion had dropped to 12%, where it has remained ever since. This picture of stagnation can also be seen in levels of attainment for 19-year-olds. As Figure 4 shows, 27% of 19-year-olds in 2005/06 lacked qualifications to NVQ2 or equivalent. This is the same as in 1998/99.

Figure 3

Figure 3: One in ten 16-year-olds still obtains fewer than 5 GCSEs, the same as in 1999/00. This lack of improvement contrasts with the continuing improvement in 5 GCSEs at grade C or above

Figure 4

Figure 4: One in four 19-year-olds still fails to achieve a basic level of qualification and up to one in ten have no qualifications at all.

Substantial and sustained reductions in poverty depend on raising the level of qualifications among older teenagers and young adults in the bottom quarter of educational achievement. Lack of progress here is a major concern for longer term progress on reducing poverty.

For more information

The full report, Monitoring poverty and social exclusion 2006 by Guy Palmer, Tom MacInnes and Peter Kenway, is published by the Joseph Rowntree Foundation. Separate reports by the same team, looking specifically at Scotland (2006), Northern Ireland (2006) and Wales (2005), are also available.