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    UK poverty and inequality

    I've been pondering and researching about this a lot recently so I'm starting this thread to gather my thoughts on the topic.

    Firstly, it's quite hard to find a lot of the information I went looking for.

    Take, for instance, if you want to work out how poor the poorest 10% of the UK actually is. How would you go about doing that?

    Well, the government publishes incomes by centile, both before and after tax, see here: https://www.gov.uk/government/statis...-and-after-tax

    Handy no? Except it only covers individuals who have some liability to pay income tax, so the lowest centile starts at about £12,000 (I'll have to check the exact amount when I'm on a computer again, can't view the full sheet on my phone). So, this doesn't include people with no income, people with very low incomes, some pensioners, asylum seekers, etc, etc.

    Then, how much would you earn if you were working 35 hours a week on minimum wage? It's currently £9.50 per hour (if you're over 23). So if you miraculously had a full-time 35 hour per week job with holiday and sick pay, you'd get £17,290. But even on minimum wage, you get taxed, so your actual take home pay would be £15,364.17.

    How much do you need for a decent standard of living in the UK? The Joseph Rowntree Foundation has a minimum income standard calculator that allows you to plug in various variables, like how many children you have and how old they are, to see how much you need to earn to cover what the average person thinks is a decent standard of living: https://www.jrf.org.uk/income-benefi...come-standards

    For my family, for example, with two adults and two primary school age children, it says that as a household we need to earn £35,824, which you could almost do with two adults working full-time minimum wage jobs.
    ​​​​​​
    However, some of the assumptions made in that calculator are a bit questionable. You can click on the button saying show outgoings / income and, for example, it suggests that the household would be spending £93.02 on rent per week. That's £403 per month.

    I used to pay £400 rent for a single room in a 4-person house share in Green Lanes in 2008. I looked on Rightmove and the only place I could find where you can rent a 2 bed flat for £400 per month is Middlesbrough. Where I live the cheapest 2 bedroom property within 10 miles costs £795 per month. There is precisely one flat in my town that is on the market for £895 and the next cheapest flats are all over £1,000.

    To be continued. I have lots of thoughts in this area. I'm just gathering info at the moment.
    Last edited by Balderdasha; 21-05-2022, 08:09.

    #2
    So, going back to my question of what is the income of the UK's poorest 10% of people, how many people are there in the UK whose income is so low that they don't pay income tax? There are an estimated 32.2 million individual income tax payers in the UK compared to about 53.9 million adults over the age of 18 in the UK. So that's about 21.7 million adults who are not paying income tax.

    Comment


      #3
      There are about 12.4 million people in the UK on the state pension and about 5.9 million people on universal credit. There are about 2.66 million university students. That makes up the bulk of those 21.7 million people. There are also some people who are on legacy benefits and haven't yet been transferred over to universal credit.

      Comment


        #4
        Ok, so how much money does the UK benefits system currently provide?

        I used the turn2us calculator recommended by the government to see what would be available for a family of 4, 2 adults, 2 primary school children, privately renting, no savings, both adults out of work and actively seeking work, no disabilities.

        That family would be eligible for £407.25 per week made up of universal credit, child benefit and council tax support. That's £21,177 per year, or £14,647 less than the Joseph Rowntree Foundation thinks my family would need for a decent standard of living even if we moved to Middlesbrough to rent the £400 per month flat.

        Comment


          #5
          Lots more thoughts to come, but I'm going to sleep for tonight.

          Comment


            #6
            Looking forward to this, I might even pluck up the courage to contribute (I work in this area, local government).

            Comment


              #7
              Originally posted by MarkF View Post
              Looking forward to this,

              Indeed.

              Comment


                #8
                Morning again. Time for some more thoughts.

                So, what does the Joseph Rowntree Foundation minimum income standard actually mean? What is "a decent standard of living" or what do I mean by poverty?
                ​​​​​
                There is a good explanation here: https://livingincome.org.uk/about/mi...dard-explained

                It lays out four categories of income:

                Thriving (those above the Minimum Income Standard / MIS) – able to afford a decent standard of living.

                Surviving (those above 75% of the MIS) – getting by day-to-day but under pressure, finding it difficult to manage unexpected costs and events.

                Struggling (those below 75% of the MIS) – falling substantially short of a decent standard of living a struggling person is likely to be experiencing some form of material deprivation, where they cannot afford certain essential items and activities.

                Destitute – a person who is destitute cannot afford to eat, keep clean and stay warm and dry.

                It's really hard to find exactly what's included in the Minimum Income Standard. Yesterday, I found a page that had a heat map of the percentage of people who think certain things are necessary for adults and for children e.g. how many people think a warm coat is essential vs how many people think a phone or a dishwasher is essential. It had it split out by different category of responder e.g. whether men or women or older or younger people or conservative voters vs labour voters had different opinions. I can't find it today so if anyone else can I'd be grateful for the link.

                However, today, I found this, which has the detailed budgets: https://www.lboro.ac.uk/research/crs...ehold-budgets/

                The closest budget to my family is the two parent, one primary school child, one pre-school child which was us two years ago. It budgets for that family type to spend £784.18 per week, which is £3,398.11 per month or £40,777.36 per year.

                A few highlights. It includes £10 per week to spend on alcohol but nothing for tobacco. It assumes a UK holiday costing £1,061.84 per year and no foreign holidays. It assumes that you're renting and not paying for any household goods. It assumes you have no pets.
                ​​​​​​
                Last edited by Balderdasha; 21-05-2022, 10:06.

                Comment


                  #9
                  So if, according to the previous calculation for my family with two primary school children and thus lower childcare costs, the minimum income standard would be £35,824, then surviving is above £26,868 and struggling is below £26,868. So the £21,177 we'd get from benefits would place us in struggling but probably not quite destitute.
                  Last edited by Balderdasha; 21-05-2022, 10:07.

                  Comment


                    #10
                    This is the Joseph Rowntree Foundation definition of destitution.
                    People are destitute if:
                    a) They, or their children, have lacked two or more of these six essentials over the past month, because they cannot afford them:
                    • shelter (have slept rough for one or more nights)
                    • food (have had fewer than two meals a day for two or more days)
                    • heating their home (have been unable to do this for five or more days)
                    • lighting their home (have been unable to do this for five or more days)
                    • clothing and footwear (appropriate for weather)
                    • basic toiletries (soap, shampoo, toothpaste, toothbrush).

                    OR

                    b) Their income is so extremely low that they are unable to purchase these essentials for themselves or their children.

                    JRF felt the need to provide lots of qualifications for this.

                    To check that people were going without these items because they could not afford them we: asked respondents if this was the reason; checked that their income was below the standard relative poverty line (i.e. 60 per cent of median income after housing costs for the relevant household size); and checked that they had no or negligible savings.

                    We set the relevant weekly ‘destitution’ income thresholds by averaging: the actual spend on these
                    essentials of the poorest 10 per cent of the population; 80 per cent of the JRF Minimum Income Standard costs for equivalent items; and the amount that the public thought was needed for a relevant sized household to avoid destitution. The resulting (after housing costs) weekly amounts were £70 for a single adult living alone, £90 for a lone parent with one child, £100 for a couple, and £140 for a couple with two children. We also checked that households had insufficient savings to make up for the income shortfall.

                    NB, those figures are from 2015, so a couple with two children needed £140 per week in 2015, after housing costs, to avoid destitution.
                    Last edited by Balderdasha; 21-05-2022, 10:07.

                    Comment


                      #11
                      Relative poverty vs absolute poverty.

                      Relative poverty is household income lower than 60% of the median income. So what is this? Again, hard to find the numbers.

                      Median household disposable income in the UK in 2021 was £31,400. Median annual pay for full-time employees was £31,285.

                      This appears to be the best figure for 2020: https://www.gov.uk/government/statis...0%20per%20year).

                      Average (median) household income after housing costs of £24,900, putting the relative poverty line at £14,940.

                      Absolute poverty on the other hand is defined as:

                      People are considered to be living in absolute poverty if their household income is less than 60 per cent of the median income in 2010-11 uprated for inflation.

                      Which means what exactly?

                      According to this government page: https://www.ons.gov.uk/peoplepopulat...d%20FYE%202021.

                      the "median equivalised disposable income" in 2010/11 was £27,479.

                      So many different definitions, so much confusion. What would that be if uprated for inflation to 2022? How is that different from median disposable household income or income after housing costs?

                      Comment


                        #12
                        Ok, enough for today, but still lots more thoughts so I'll come back to this.

                        Still to come. The cost of taking away the £20 weekly uplift in universal credit. Food bank usage in the UK. The Sunday Times Rich List 2022 (teaser, I crunched the numbers and you could pay for all 5.9 million people on universal credit to keep the £20 uplift for a year, just by taxing 10% of the amount that the 100 richest people in the UK increased their wealth by in the last year).

                        Comment


                          #13
                          (Also, in case anybody who knows about my bipolar wonders, yes, this type of fevered research is a sign of me heading more into hypomania rather than the depression that blighted the winter. I am aware of it and that's why I'm mitigating at least slightly by e.g. stopping last night to go to sleep and stopping now to go and eat and spend time with my family).

                          Comment


                            #14
                            Other situations in the UK.

                            This is what you get if you're an asylum seeker: https://www.gov.uk/asylum-support/what-youll-get

                            Somewhere to live, probably a bedsit or hostel and £40.85 a week per person for everything else. That's £2,124.20 a year to cover all your living expenses. And you're not allowed to work to top it up. That is beyond cruel.

                            There were 48,540 asylum applications (relating to 56,495 people) in the UK in 2021.

                            Comment


                              #15
                              As your housing cost comparisons demonstrate, it is a fool's errand to have one set of figures that are to apply across a nation as large and diverse as the UK.

                              While housing costs are the most obvious element in that, there are also real differences in travel and commuting costs, local taxes, relative need to have a private vehicle, etc.

                              Comment


                                #16
                                If you are fortunate enough to actually get refugee status, this is what happens: https://www.citizensadvice.org.uk/im...refugee-status

                                Your asylum support stops within 28 days of the decision. You can claim benefits but these won't start within at least five weeks. You lose your housing that was previously provided. You are then allowed to apply for work but how many people manage to find a job within 28 days of starting to look? And while trying to apply for a national insurance number and set up a bank account and move house...

                                Comment


                                  #17
                                  People can apply to their local council for housing support but due to a chronic shortage, many households get housed in bed and breakfasts if at all.

                                  There were 96,060 households in temporary accommodation at the end of September 2021. This was a 1.5% increase on the number a year previously, and is part of a long-term increase. A total of 121,680 dependent children were housed in temporary accommodation.

                                  From here: https://commonslibrary.parliament.uk...0accommodation.

                                  Comment


                                    #18
                                    If we assume that each household contains at least one adult, that's a minimum of 217,740 people living in temporary accommodation in 2021.

                                    Comment


                                      #19
                                      Meanwhile, what about homeless people?

                                      Overall, Crisis estimated that around 227,000 people were experiencing the worst forms of homelessness – rough sleeping, sleeping in vans and sheds, and stuck in B&Bs – across England, Scotland and Wales in 2021.

                                      Of those, the government estimates that on any given night 2,440 will be sleeping rough in the UK: https://www.gov.uk/government/statis...nd-autumn-2021

                                      I would take those estimates with a pinch of salt.

                                      Comment


                                        #20
                                        Those temporary housing figures seem very small to me, but that is a reflection of the disaster that is housing in this country.

                                        Last night, about 46,000 people spent the night in the NYC homeless shelter system, of whom roughly 15,000 were children.

                                        Comment


                                          #21
                                          Back to that definition of destitution, how many people does that category include?

                                          This seems to be the latest figures: https://www.poverty.ac.uk/editorial/destitution-uk-2020

                                          More than a million UK households experienced destitution at some point in 2019. These households contained 2.4 million people, including 550,000 children.

                                          Comment


                                            #22
                                            In other forms of deprivation, there were 3,557 women with 3,919 children and young people staying in domestic violence refuges across all services in England on one night in April 2017, with demand far outstripping supply.
                                            https://www.google.com/amp/s/amp.the...space-mps-hear

                                            Comment


                                              #23
                                              Income is not the only measure of inequality. Wealth distribution is even more unequal.

                                              The poorest 10% of households have wealth of £8,000 or less, mostly made up of personal belongings which are difficult to actually convert into cash if needed. The richest 1% of households have wealth of over £3.6 million.

                                              https://www.ons.gov.uk/peoplepopulat...018tomarch2020

                                              Comment


                                                #24
                                                This is an incredibly important point

                                                Comment


                                                  #25
                                                  In fact, many households have negative net wealth.

                                                  https://www.google.com/amp/s/amp.the...rices-benefits
                                                  ​​​​​
                                                  Analysis of Bank of England research carried out by the Jubilee Debt Campaign found that in September 2021 almost 10% of households reported that loan and interest repayments were a heavy financial burden, a 35% increase on the previous year’s figures.

                                                  This is not including mortgage debt, it's debt to credit cards, payday lenders, or loan sharks which have much higher interest rates.

                                                  Comment

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