Housing is now at the front line of poverty
This year’s report shows a picture of employment with both light and shade alongside one for housing of unrelieved gloom.
Our annual Monitoring Poverty and Social Exclusion report was launched at the start of the week. As always, it covered a range of different indicators and topics. Overall, it showed a changing picture of poverty in the UK, with housing now at its frontline, and younger working-age adults increasingly at risk.
The overall level of poverty – the proportion of people living in a low income household – is broadly the same today, at 21%, as it was a decade ago. This 21% represents around 13 million people. But under this surface, there have been big changes. Falls in pensioner poverty have been accompanied by rises in poverty among young adults. As a result, there are now more 16 to 24 year olds in low income households than over 65s.
Pensioner poverty is declining and will continue to do so for some time. But the “triple lock”, which will deliver a rise in the state pension of 2.5% next April at a time when inflation is zero, does not apply to the means-tested Pension Credit which is what drove pensioner poverty down. On top of this, the steady rise in the state pension age for women, and the requirement that both members of a couple have to be over pension-age to qualify for Pension Credit, means this safe haven of retirement is receding rapidly for many who need it most.
Turning to housing, people in poverty are now split evenly between private renters, social renters and owner occupiers, the number in the private rented sector having doubled in a decade.
Falls in poverty among workless or retired households are matched by rises in working families – most people in poverty now live in a family where at least one adult is in paid work.
The last couple of years present a mixed picture of the labour market. Unemployment is down, almost back at its pre-crisis level, at around 1.8 million people. The proportion of workless, working age households has fallen to its lowest level, 16%, for at least 20 years. The number of people working part-time but wanting full-time work has fallen by 100,000 in the last two years. The lone parent employment rate is up.
Falling unemployment and “under-employment”, lower worklessness, higher lone parent employment – all of these are clearly better than their opposites. Yet the problems with work from a poverty point of view mean none of them can just be assumed to be unalloyed good.
So there are some five million people earning less than the living wage. Earnings across the distribution are still way below their 2008 levels. There has also been a big rise in the number of self-employed people accompanied by a big fall in average income from self-employment. Put all this together – rising numbers in work, but earned incomes flat or falling – and in work poverty will rise. This rise has probably been the most notable feature of the last few years.
At the same time, the experience of poverty for those out of work, in particular the financial support they are entitled to receive from the state, has changed drastically and quickly. Compared to five years ago, the system is much harsher and less consistent. For example, 500,000 people had their jobseeker’s allowance stopped last year following a sanction. This is roughly double the level of 2006, when a similar number of people were claiming JSA. If you do not or cannot carry out the tasks asked of you by Job Centre Plus, support is withdrawn. A further 500,000 had their claim referred for sanction, with all the anxiety that entails, though their payments were not ultimately suspended.
The number of families affected when the overall benefit cap is lowered will treble to almost 100,000. Those affected will primarily be families with two or more children in rented housing, but not just those living in London.
Last year, 1.3 million workless households across England had to pay council tax from which they were exempt until three years ago. Some remain exempt if their local authority has chosen to continue to protect the incomes of poorer households. Among those who now have to pay, the amounts vary greatly, 2.3 million households will pay at least £150in 2015/16. This means that even as low income workers – those earning up to £10,000 a year – are exempted from income tax, low income workless households – with annual incomes as low as £3,500 are dragged into council tax. For those who can’t pay, rising debt, court summons and further costs are their lot.
Against this backdrop of rising numbers of working poor and an increasingly harsh and arbitrary settlement for those not in work, we are seeing increasing problems in the housing market. The graph below pulls together some of the indicators from the report, showing the change in the last five years.
Evictions by private sector landlords have trebled in five years and are now only just behind the number of evictions by social sector landlords. Both are more than double the number of mortgage repossessions, the sharp drop in which is the one bright spot, attributable to the sustained very low level of interest rates. Homelessness is up by a third. The number in temporary accommodation has risen by a quarter, almost all of which increase is to temporary accommodation outside their own local authority area.
These dislocations are only the most visible signs of pressure on people through housing. Evidence suggests that most families affected by housing benefit cuts (through the overall benefit cap, bedroom tax or changes for private renters) have remained in their home for the time being and absorbing the financial “hit”.
The rising number of working poor gives the lie to any simple idea that work is the route out of poverty. Too many jobs pay too little or offer too few hours for that to be true. But when we see rising numbers of evictions, rising homelessness and the cost of housing eating up a growing chunk of people’s income, the importance of housing as a frontline poverty issue becomes clear.
If trends in employment are going in the right direction, trends in housing are going in the wrong direction. A revolution in housing – which isn’t just about a bigger building programme –is now key to getting poverty moving downward once more.