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Contents Foreword 05 Background to the report 09 1. What is poverty? 12 2. Trends and projections 19 Divergent trends 19 Future poverty trends 22 Forces influencing poverty 23 3. Why poverty matters – to us all 29 Families and parents 31 Child development and lifelong health 32 Stress and mental health 34 Education 34 Economic costs 36 4. Causes of poverty 38 Market, state and individual: all three matter 38 Low wages, insecure jobs and unemployment 40 Lack of skills 40 Family problems 40 Ineffective benefit system 41 High costs, including housing 41 5a. High costs driving poverty 44 Spending more on essentials 45 Step 1: Making markets work for low-income consumers 53 Step 2: People have access to enablers 60 Step 3: Reduce demand where possible 67 Step 4: Fair distribution of – and compensation for – cost 70 5b. Housing and poverty 72 Step 1: Increasing the supply of affordable homes 75 Step 2: More help with unaffordable housing costs 80 Step 3: Pushing up standards, particularly in the PRS 85 Step 4: A bigger role for social landlords 86 6. Childhood poverty 90 Step 1: Supporting family life and relationships 91 Step 2: Raise and protect family incomes 102 Step 3: Help parents balance work and parenting 108 Step 4: Strengthen early years childcare and education 113 Step 5: Provide all children with an excellent school education 123 Step 6: Support transition to adulthood 132 UK poverty: Causes, costs and solutions 02 7. Working-age poverty 140 Step 1: Better jobs 141 Step 2: Place-based inclusive economic growth strategies 154 Step 3: Stronger support services to improve skills, opportunities and prospects 165 Step 4: More effective social security 181 8. Poverty in later life 202 Step 1: Reducing current pensioner poverty 206 Step 2: Lowering costs and meeting needs 209 Step 3: Preventing poverty for future pensioners 214 9. Poverty and complex needs 218 Conclusion: the solvable problem of poverty 249 Notes and references 251 Acknowledgements 368 UK poverty: Causes, costs and solutions 03 UK Poverty: Causes, costs and solutions Foreword We can conquer poverty In 1929, former Prime Minister David Lloyd George made a pledge to the nation: “We can conquer unemployment. We mobilised for war. Let us mobilise for prosperity.” In 2016, it is time we made a new pledge – we can conquer poverty. Poverty in the UK is real, costly and harmful, affecting millions of people. We can do something about it if we choose to. JRF’s comprehensive, long- term strategy shows how governments, businesses, communities and citizens can all mobilise for a sustainable prosperity; for a UK free from poverty. Why fight poverty? Julia Unwin CBE Chief Executive, The level of poverty in the UK is shameful. This should be a place Joseph Rowntree Foundation where everyone can achieve a decent, secure standard of living. Instead, millions of people – many from working families – are struggling to meet their needs. People in poverty experience daily insecurity and uncertainty, and are excluded from the norms of a wealthy society, facing impossible decisions about money, and getting into debt. Poverty causes families significant harm, affecting people’s health and well-being, eroding confidence and capability, and damaging life chances. But it also damages wider society and the economy, depriving it of the skills and talents of people who could otherwise contribute. People experiencing poverty are treated with pity, scorn or even disgust – emotions that prevent action. Together these emotions create a sense that poverty in the UK is about a group of people who are entirely different from the rest of us with different motivations and desires. In reality, poverty can affect almost anyone. It fundamentally affects how communities work, and the ability of families to nurture and support. It affects the economy, costing the public purse £78 billion a year and £70 billion in benefits. The continued existence of high levels of poverty in this country is not a problem for ‘them’ – it is a problem for everyone who wants to see a stronger, safer, more sustainable society. It is easy to be blinded by simplistic and superficial responses. You can blame individuals for the bad decisions they make, and fool yourself into believing it could never happen to you. Or you can blame national structures – if only the system of tax and benefits could be fundamentally redesigned, and structural inequality abolished, then poverty could be ended. UK poverty: Causes, costs and solutions 05 Foreword These two arguments have run their course. Neither argument is an accurate explanation of poverty in the UK, and neither offers a workable solution on its own. Instead they cancel each other out, and the resulting inaction is causing great harm. Structures and choices must be considered together for policy to be effective. In an otherwise prosperous society, high levels of poverty indicate failure by community, market and state, and all of these must be involved in the solutions. There have been many previous attempts to end poverty in this country, but these have been piecemeal and have only dealt with part of the problem – for example, focusing on reducing poverty for children, or on ending a particular type of poverty. In committing to develop a strategy across the different parts of the UK, JRF has also committed to developing a comprehensive approach that covers all generations, is based on the best available knowledge, and is as clear as we can be about the costs. Our approach demands a consensus. Stop-start approaches to poverty have fallen short, just as initiatives developed by individual players frequently stall. The nature of poverty in the UK demands a non-partisan, long-term approach, marshalling all the skills and resources of governments (national, local and central), business, employers, voluntary organisations, broader civil society, families and individuals. Why now? We live at a time of significant opportunity, change and uncertainty. The vote to leave the European Union was a decision of momentous, long-term importance – a decision made by many of the people who live in some of the UK’s most overlooked places. It is too early to identify the underlying reasons behind the referendum result with certainty or in detail, but we can be confident that distrust, dissatisfaction and anger are significant factors. For too long, the worst-off people and places across the UK, particularly in the North of England, have been left behind by uneven economic growth and fewer opportunities. The vote showed that addressing poverty is now not just a moral imperative, but a political and economic necessity. Should the UK fall into recession again, there is a risk that poverty will rise, due to fewer jobs and lower investment. At the very least, we can expect a period of political and financial volatility. The volatile global economy shapes the lives of every one of us in the UK. Our population is ageing, and while this is a cause for celebration and opportunity, it also brings challenges. Living longer means that more of us are living with long-term medical conditions, fluctuating and life- limiting conditions, learning difficulties and mental illness. The population is changing, as we become more diverse, more mixed, and much more mobile. Technological advances connect people better than ever before, and the new developments of robotics and further automation can both liberate UK poverty: Causes, costs and solutions 06 Foreword and challenge an already fast-changing labour market. Poverty weakens the UK’s economy in the face of unprecedented global competition. At the same time the structures for governance and administration in the UK are going through rapid and important change, while the housing crisis hits all tenures, and public expenditure is under enormous pressure. Along with the squeeze on the finances of the country, we face additional stress from the impact of climate change, which threatens certain parts of the country, and requires us all to better steward the nation’s natural resources. This is not a time for despair, nostalgia or panic. It is instead a time to reconnect with the founding values of JRF, and assess what they mean for the 21st century. I began this foreword with a pledge from Lloyd George. That pledge was co-authored by Seebohm Rowntree, son of our founder. Seebohm’s pioneering research into poverty at the turn of the 20th century moved Winston Churchill to say that Rowntree’s book “fairly made my hair stand on end”. We have been researching poverty for decades, and our strategy is firmly based on evidence, the expertise of practitioners, and people’s experience. This is a time of huge opportunity as we seek to shape a future in which poverty is no longer a scourge across the UK. Our vision of a poverty-free UK A UK free of poverty is not a utopian vision. Our strategy is both practical and hard-headed. It proposes a new success measure for a prosperous society – one that recognises the costs, the risks and the waste of poverty, and determines that in the 21st century UK it is possible to ensure that, within a generation: • no one is ever destitute • less than one in ten of the population are in poverty at any one time • nobody is in poverty for more than two years. This vision recognises that there are life events and experiences that can dramatically reduce the income of a household or an individual, but that in a strong and successful society there are mechanisms in place to avoid that and ensure such experiences are short-lived. Family breakdown can create poverty. A strong and successful society works to ensure that this does not become a scar on the life of the next generation.

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