More jobs needed to tackle poverty

More than half of children living in poverty have a parent in paid employment, finds the Joseph Rowntree Foundation in their report, Monitoring Poverty and Social Exclusion 2011.

The report, produced with the New Policy Institute, warns that ‘the coalition does not have a comprehensive anti-poverty strategy and relies too much on the tax and benefits system alone to encourage people into work, mistakes also made by Labour’. It is also highly critical of the lack of a plan to address problems associated with the rise of badly paid and insecure jobs – more than half of all children in poverty are living with a parent in paid work. It says that:

  • ‘A conservative estimate is that the country lacks at least 4m paid jobs. In this situation reforms aimed at improving incentives to enter work will increase the number scrambling for vacancies while doing next to nothing to reduce poverty.’
  • At present people in work and receiving tax credits face a tax rate of 73 per cent on extra earnings, worse than under Labour, who had set a rate of 69 per cent. When universal credit comes in, this rate will rise to 76 per cent.

The report notes that although the government, like the previous Labour government, is keen to ‘make work pay’, work often does not pay enough. This is in part because of the spread of low pay over the last 30 years, leading to a rise to 58 per cent in the proportion of children living in households in which at least one parent has a job.

The report’s key findings cover:

  • In the year to 2009/10, the child poverty rate fell to 29 per cent, the second fall in two years.
  • The poverty rate for working-age adults without dependent children rose both in 2009/10 and over the last decade. It now stands at 20 per cent.
  • The pensioner poverty rate, at 16 per cent, is now around half the rate it was in 1997.
  • By mid-2011, six million people were unemployed, lacking but wanting work or working part time because no full-time job was available. Though no higher than the previous year, this was two million higher than in 2004.
  • The proportion of households in fuel poverty has risen significantly in the last few years.
  • Changes to the tax credit system mean that an additional 1.4 million working households on low incomes now face marginal effective tax rates of over 70 per cent.
  • The number of households accepted as homeless in England rose in 2010/11 for the first time since 2003/04 and now stands at 65,000.

The full report is available on the Joseph Rowntree Foundation website.