Anti-poverty policy needs better benefits

It is a pity the government is so mired in its own muck that it
hasn’t time to celebrate the good news. Tax credits have reduced
severe hardship among low-income families by 40 per cent in the two
years to 2001.

Two reports published last week, based on surveys of 8,000 families
by the Policy Studies Institute, show a dramatic reduction in child
poverty defined in terms of living standards rather than income.
They counted items that families ought to have but go without, such
as hot meals, clothes and family outings. Added to these were
factors such as debts and overcrowding to arrive at a nine-point
hardship scale.

Institute deputy director Alan Marsh, writing in The
Guardian,¹ said the results revealed that seven out
of 10 British families scored zero while only 8 per cent were in
severe hardship (three to nine points). In 1999, 41 per cent of
out-of-work families caring for two million children were in severe
hardship. Two years later, the figure had dropped to 28 per cent
for lone parents and 22 per cent for couples who were out-of-work.

Critics claim that if you give the poor extra cash they spend it on
booze, fags and lottery tickets. This research indicates they
invest it in food, children’s shoes and reducing debt. “No one has
ever been able to show this beforeÉon a national scale,” Marsh
says.

Those who also hugely improved their lot had managed the move from
joblessness to low-paid work supported by tax credits, reducing
rates of severe hardships from 31 per cent to 11 per cent in two
years.

The research raises two key points. One is the question of why the
taxpayer is subsidising employers by compensating employees for the
lousy wages they receive. Then there is the plight of a core of
families containing a million children who may never be able to
make the step into sustained employment, and the hurdles faced by
some ethnic minorities – especially Pakistani and Bangladeshi
families – disadvantaged by language and poor qualifications.

The government has focused on shifting people into work and
compensating for inadequate pay. Should a second, more clearly
defined, strand of policy now concentrate on those who, through ill
health or vulnerability, remain embedded in extreme hardship
because they cannot make that step?

Couldn’t they be trusted with a significant increase in basic
out-of-work benefits so the lift out of poverty truly becomes
universal?

¹ Alan Marsh, The
Guardian, 5 August.