Most families in poverty 'in work'


Money Advice Service report

There are more working families living in poverty in the UK than non-working ones, a charity reported - the first time such a balance has been recorded.

Some 6.7 million working families live below the poverty line - an increase of 500,000 on last year - compared with a combined 6.3 million of retired families and the out-of-work, the Joseph Rowntree Foundation (JRF) said.

Households have been hit by a sustained and "unprecedented" fall in living standards, a report for the organisation found.

Average incomes have fallen by 8% since their peak in 2008. As a result, around 2 million people have an income that while above today's poverty line, would have been below the poverty line in 2008.
Of those in work, the number paid below the living wage rose from 4.6 million to five million in 2012.

Half of working families in poverty have an adult paid below the living wage.

Julia Unwin, chief executive of the JRF, said the research showed that millions of people were moving in and out of work, but rarely out of poverty itself.

She said: "Hard work is not working. We have a labour market that lacks pay and protection, with jobs offering precious little security and paltry wages that are insufficient to make ends meet."

The JRF did find a number of positive changes, including an improvement in the labour market with falling unemployment and underemployment and, over the longer term, improvements in health and education outcomes.

Unemployment of young adults has peaked at 21%, and total unemployment has begun to fall.

Families living in poverty are defined as those with income below 60% of the median, or middle, income for that year.

Median incomes in the UK in 2011/12 are now, in real terms, just below what they were in 2001/02 - £367 a week compared with £368 - the JRF said.

Its Monitoring Poverty and Social Exclusion report for 2013 was written by the New Policy Institute (NPI) and tracks the changes in poverty across a range of indicators.

It found that job insecurity is increasingly common, with one in six members of the workforce claiming Jobseekers' Allowance at some point in the last two years.

The largest group in poverty are working age adults without dependent children - 4.7 million people are in this situation, the highest on record.

There have also been major shifts in which groups are experiencing poverty, with the number of pensioners in poverty at a 30-year low.

The fall in median income over the last two years has wiped out all the gains of the previous decade, the JRF said.

But incomes for the poorest 10% have been falling for much longer, since 2004/05.

At the same time, there is a smaller but growing number of people living on incomes below the value of out-of-work benefits in very deep poverty.

The JRF said they are being hit by sanctions, overlapping measures from welfare reform and the falling value of benefits.

Some 400,000 families have been hit by overlapping benefit cuts from the so-called "bedroom tax", the under-occupation penalty, and council tax benefit. Two thirds of these families were already in poverty.

Ms Unwin said: "While a recovery may be gathering momentum in the statistics and official forecasts, for those at the bottom, improving pay and prospects remain a mirage.

"Recent economic improvements do not outweigh the damage inflicted during the downturn to the incomes of the poorest people across the country.

"Our report demonstrates there has been progress in some areas and the tide has turned on employment, but this not been matched by improvements in wages.

"We must strengthen our efforts to reduce poverty - it is damaging to the people who experience it and harmful to our economic prospects."

Peter Kenway, director at NPI and an author of the report, said: "Poorer members of society are under more pressure than at any time since the birth of the welfare state.

"The value of the safety net for working age adults is now sinking steadily. The support on offer to people who fall on hard times is increasingly threadbare, with benefit levels on a downward spiral.

"A strong safety net to catch those who fall is vital for social mobility - millions are saved by it every year even now - yet no leading politician will defend it."

Shadow work and pensions secretary Rachel Reeves said: "Under this out-of-touch Tory government wages aren't keeping up with prices and more and more workers are stuck on low pay.

"This is not only a major contributor to the cost-of-living crisis, it's a key driver behind the rising benefits bill.

"It's not right that millions of people are going out to work, working harder and harder, and can't afford to bring up their families.

"That's why Labour will strengthen the minimum wage, promote the living wage, and deal with the cost-of-living crisis so we can have a recovery that benefits working people."

Natalie Bennett, Green Party leader, said: "This is yet more evidence that we have an economy that simply isn't working for the people of Britain, although it is working nicely for multi-national companies and rich individuals.

"We clearly need to transform our economy, to bring manufacturing and food production back to Britain, rebuild strong local economies that provide stable, diverse jobs with a minimum wage that is a living wage."

She added: " Radical change needs to happen quickly, to reach one-planet living in a society in which everyone has access to the resources for a decent life."

TUC general secretary Frances O'Grady said: "Most politicians would be ashamed to see the number of public servants living in poverty double as a direct result of their policies.

"Instead, the Chancellor has revelled in his attacks on the living standards of those who educate and care for our families."

A DWP spokesman said: "Despite claims to the contrary, work absolutely remains the best route out poverty - children in workless families are around three times more likely to be in poverty than those in working families.

"Our welfare reforms are designed to further increase work incentives and improve the lives of some of the poorest families in our communities, with the Universal credit making three million households better off. And as this report recognises, we have helped to revive the labour market with record employment and over a million extra jobs created since 2010.

"The report also acknowledges - as do the latest annual poverty statistics - that the most vulnerable groups have been protected. Pensioner poverty fell by 100,000, disability poverty by 100,000 and the number of children in workless poor families has reduced by 100,000 children."