Is poverty out of control?

We asked six leading experts to give their verdict on the events of 2011 in the key areas of public services, local economic development, civil society, poverty, sustainability and housing and suggest the way forward in 2012. In the third part of the series, Julia Unwin argues poverty in the UK should not be accepted as a fact of life, but that its eradication requires a new course of action

Campaign poster created by Net Efekt for Oxfam to raise awareness of UK poverty.

The past year has been a terrible one for people living in poverty. We read report after report showing that poverty is on the rise – but is it out of control? You could be easily forgiven for thinking that it is. But it is worth remembering that even in our current stringent economic environment we are one of the richest countries in the world: of course we can stop people being poor. Poverty is not inevitable.

The continuing impact of the global financial crisis, the austerity measures to deal with the deficit and the mayhem in the Eurozone in 2011, have all affected our economy and have particularly affected poorer people and places. Unemployment is going up, notably among young people, and we know from the past that this sort of generation-wide unemployment can have a lasting and damaging impact.

But it is not just the global financial crisis. The current government is repeating the same mistakes as Labour on poverty reduction. Our annual report on poverty and social exclusion this year warns that the government does not have a comprehensive anti-poverty strategy, and relies too much on the tax and benefits system to encourage people into work.

Exactly the same mistake was made by Labour. Encouraging people into work is of course important, and tax and benefits can help to do this, but relying on these levers alone will never meet the challenge.

Work will never provide a reliable route out of poverty when the jobs on offer are poorly paid, offer little security with no hope of progression. And nobody will, nor should they, take the huge step of going to work unless they believe that their children will be cared for properly. A labour market that only offers temporary poorly paid jobs, combined with childcare that is patchy, unreliable and often unaffordable, will never support people to find a permanent route out of poverty through work.

And poverty is not just about income, it is also about expenditure. Our own research establishing a minimum income for a reasonable way of life clearly shows that over the past decade, the cost of a ‘minimum’ basket of goods and services has risen by 43%, compared to a 27% increase in the Consumer Price Index (CPI). These differences matter greatly because many people on low incomes rely on benefits and tax credits which are now uprated by the CPI.

It also shows that, while living costs have risen by about 5%, families with children need to earn a lot more than that to meet the minimum income standard. Families requiring childcare would typically have to earn at least 20% more this year than in 2010 (before tax and benefits) to meet the minimum income standard. This is because child benefit has been frozen and tax credits have been reduced for many families. Most significantly, tax credits helping low-income families meet childcare costs have been cut.

So poor people have been hugely affected by the changes over the past year, both economic and political.

At a time of vanishingly low growth, with high inflation in fuel and food which are such a major part of most poor people’s budgets, is it simply inevitable? Do we have to wait for a return to growth before anything can be done?

I would emphatically say no. There are five things we could do, and all of these taken together would stop these terrible impacts.

1. Improve the jobs on offer – unless jobs have the prospect of progression, and therefore some rewards for success, they will continue to trap people in low pay.

2. Improve childcare – high quality flexible and affordable childcare needs to be readily available. And in an ageing society, care for older people needs to be easily accessible also.

3. Investment in infrastructure should be encouraged to create jobs – rebalancing the economy through a jobless recovery is no response to addressing poverty.

4. Encourage social and community enterprises to help share and reduce costs – to ensure the huge inflationary increases – in fuel, and in food – don’t irreparably damage the very tight budgets of poor people.

5. Acknowledge that the threat of destitution is no way to shape behaviour – we need to ensure that everyone, whatever their circumstances, has the means to lead a life free from the sort of fear that destroys capability, limits contribution and strangles aspiration – that is the hallmark of a civilised society.

• Read the other articles in this series by Simon Parker on public sector shrinkage; Julian Dobson on sustainability in austerity; Brendan Nevin on the crisis in housing; Neil McInroy on alternatives to economic growth and Toby Blume on civil society stepping up