Analysis of Work Poverty in South East Midlands

Skills Advisory Panel

Author Paul Thompson Date 19/8/19

Version V1.0

Analysis of Work Poverty in South East Midlands 19/8/19 Page 1 of 15

Analysis of Work Poverty in South East Midlands

This analysis of Work Poverty in the SEMLEP area has been commissioned as an action from the Skills Advisory Panel on 26 June 2019.

Summary

Main findings of the research are:

• Hourly pay for full-time jobs for place of residency are below the national averages in Luton, Corby, Kettering, Northampton and Wellingborough. • Hourly pay for part-time jobs for place of residency are below the national averages in Milton Keynes, Corby, Kettering, Northampton and Wellingborough • Hourly pay for part-time jobs for place of residency are below the Real Living Wage in Corby and Wellingborough • The highest proportion of the percentage of children in low-income families are in Luton and Corby • The highest number of children in low-income families in in Luton • Luton is in the lowest 12% nationally for the Indices of Multiple Deprivation • Corby and Wellingborough have the lowest social mobility from school in England • Luton, Northampton and Wellingborough are within the lowest 33% in England for social mobility from adulthood • Workforce with NVQ4+ qualifications is at or below the national average except for South Northamptonshire • The workforce with no qualifications is at or above national average for all except Central Bedfordshire and Corby • Free School Meals (FSM), an indicator of social deprivation are higher than the national average in Corby and Luton • The access children eligible for FSM have to ‘good’ or ‘outstanding’ rated primary schools by Ofsted is low in Corby, Northampton and Wellingborough • The access children eligible for FSM have to ‘good’ or ‘outstanding’ rated secondary schools by Ofsted is low in Corby, Daventry, Kettering and Wellingborough • The percentage of children eligible for FSM achieving at least the expected level in reading, writing and maths at the end of Key Stage 2 is low in Bedford, Corby, East Northamptonshire, South Northamptonshire and Wellingborough. • The average attainment 8 score for pupils eligible for FSM is low in Kettering, Aylesbury Vale, Daventry and Corby • Pupils eligible for FSM achieving 2 or more A-Levels or equivalent is low in Corby and Wellingborough

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Recommendations within Scope of Growing People to Contribute to Progression

For the Talent Pipeline: • Ensure young people understand the importance of skills and qualifications • Campaign in schools to promote opportunities, inspire and raise aspirations for both young people and parents/carers • Information to guide people towards opportunities in higher level occupations • Ensure people are aware of pathways into higher level occupations • Ensure pathways to higher level occupations are in place and accessible • Use the impact of digital and Brexit to promote and signpost opportunity for the future • Promote National Retraining Scheme • Promote ESF funded activity • Promote Further Education • Promote The Open University products to enhance other local provision • Promote local Independent Training Providers with evidence of impact

Business Related: • Attract businesses with technical, specialist digital skill based and/or higher level occupations into focus areas • Encourage and support employer engagement in schools to show the relevance of numeracy and literacy • Encourage and support employer engagement in schools to promote opportunities, inspire and raise aspirations for both young people and parents/carers • Encourage businesses to pay at Real Living Wage or above for Part-Time positions • Promote the integration of childcare into employee benefits to support both low-income and those close to low-income families • Encourage the reduction of travel to work mileage and/or transport that is accessible and affordable

Recommended Focus: Based on work poverty indicators and Universal Credit being paid for those in work, focus should be: 1. Luton, Northampton, Wellingborough, Corby 2. Bedford, Daventry, Kettering, Milton Keynes 3. East Northamptonshire 4. Aylesbury Vale, Central Bedfordshire, South Northamptonshire

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SEMLEP Work Poverty Analysis

The research for Work Poverty in the SEMLEP area has been based on criteria informed by the work of Joseph Rowntree Foundation plus a range of data indicators:

• Proportion of administration and elementary occupations, an indicator of lower paid occupations – ONS Annual Population Survey • Hourly pay for full-time and part-time based on place of residency – ONS Annual Survey of Hours and Earnings - Resident Analysis • Ratio of full-time to part-time jobs – Calculated from job numbers shown in above data • Percentage of children in low-income families – HMRC Personal tax credits: Children in low-income families local measure: 2016 • Index of multiple deprivation – MHLCG, English indices of deprivation 2015 • Social mobility from schools and adulthood - Social Mobility Index, Social Mobility Commission, November 2017 • Qualifications NVQ4+ and no qualifications – ONS Annual Population Survey • Universal Credit, Local Authority by Employment Status, July 2019 – Department for Work and Pensions

Living Wages The current living wages are below.

National Living Wage per Hour Based on a percentage of medium earnings (currently 55%, to be 60% by 2020). +25 £8.21 (Government aiming for £9.00 for 2020) 21-24 £7.70 National Minimum Wage 18-20 £6.15 Under 18 £4.35 Apprentices £3.90

Real Living Wage Based on what people need to live calculated according to the cost of living, based on household goods and services. £9.00 per hour

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SEMLEP Area in Work Poverty Indicators The tables below provide an indication of performance for areas with the South East Midlands versus averages for England. Each figure is the variance compared to the national average and colour coded to highlight ‘cold spots’, i.e. areas of focus: • Red – indicates poor performance related to national average • Orange - indicates poor but close performance related to national average

Variance and Comparison to National Averages

Proportion of Admin & Hourly Pay Hourly Pay Ratio of Elementary Full-Time Part-Time Full-Time to Children in Occupations Resident Resident Part-Time low-income (%) (GBP) (GBP) Jobs families (%)

Aylesbury Vale -7% 1.64 0.63 0.25 -7.4%

Bedford 2% -0.06 0.62 -0.13 -2.2%

Central Bedfordshire -1% 1.38 0.45 0.00 -6.0%

Luton 5% -0.72 0.08 -0.06 2.7%

Milton Keynes -4% 0.43 -0.36 0.89 -2.1%

Northamptonshire 2% -1.02 -0.30 0.47 -4.1%

Corby -6% -3.17 -0.39 0.24 0.1%

Daventry 5% 0.24 -0.22 0.35 -7.5%

East Northamptonshire -6% 0.16 -0.15 0.37 -6.0%

Kettering -3% -1.16 -0.77 0.10 -3.1%

Northampton 5% -1.06 -0.30 0.54 -1.5%

South Northamptonshire 0% 0.77 0.51 0.46 -11.1%

Wellingborough 8% -2.67 -1.06 1.17 -1.2%

England 21% 14.49 9.38 2.54 17.0%

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Index of Social Multiple Social Mobility Qualifications No Deprivation Mobility from NVQ4+ Qualifications (IMD) from School Adulthood (%) (%)

Aylesbury Vale 0.87 290 65 1% 0%

Bedford 0.47 162 105 0% 3%

Central Bedfordshire 0.81 240 95 0% -1%

Luton 0.12 78 248 -2% 5%

Milton Keynes 0.56 185 100 0% 0%

Northamptonshire -8% 1%

Corby 0.23 324 270 -16% -1%

Daventry 0.73 284 47 -4% 4%

East Northamptonshire 0.68 302 98 -15% 2%

Kettering 0.52 311 133 -6% 0%

Northampton 0.33 293 227 -6% 0%

South Northamptonshire 0.97 148 33 4% 2%

Wellingborough 0.41 323 249 -12% 5%

Position out Position out England 1.00 44% 5% of 324 of 324

Observations

Proportion of Admin and Elementary Occupations • High proportion of administrative and elementary occupations in Wellingborough, Daventry, Northampton and Luton • Higher than national average in Bedford • At national average in South Northamptonshire • SEMLEP area average is above national average

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Hourly Pay Full-Time Resident • Below national averages in Luton, Corby, Kettering, Northampton and Wellingborough • SEMLEP area average is below national average

Hourly Pay Part-Time Resident • Below national averages in Milton Keynes, Corby, Kettering, Northampton and Wellingborough • Below Real Living Wage in Corby and Wellingborough • SEMLEP area average is above national average

Ratio of Full-Time to Part-Time Jobs • Below national average in Bedford and Luton • SEMLEP area average is above national average

% of Children in low-income families • Luton and Corby have the highest proportion of children in low-income families • Luton has the highest number of children in low-income families • There are high numbers of children in low-income families in Milton Keynes, Northampton, Bedford and Central Bedfordshire • Central Bedfordshire and Corby have a high proportion of lone parents • All areas have higher than national averages for children with lone parents except Daventry and Bedford • Luton has a higher ratio of families with 4+ children • SEMLEP area average is below national average

Index of Multiple Deprivation (IMD) • Luton is in the lowest 12% for IMD • Corby and Northampton are in the lowest 33% for IMD • Wellingborough and Bedford are in lowest 50% for IMD

Social Mobility from Adulthood • Luton, Northampton and Wellingborough are within the lowest 33% in England

Qualifications • Workforce with NVQ4+ - at or below national average except for South Northamptonshire • No qualifications - at or above national average for all except Central Bedfordshire and Corby • Workforce with NVQ4+ - SEMLEP area average is below national average • No qualifications - SEMLEP area average is above national average

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Areas of Focus Based on Weighted Scoring

A weighting has been applied to the in Work Poverty Indicators variations to the national averages based on:

• Red box/White text indicator – 2 points • Red box/Black text indicator – 1 point • Population density ranking – High 3 points/Medium 2 points/Low 1 point/Rural 0 points

Weighted Score Areas of Focus

1 Aylesbury Vale

6 Bedford

1 Central Bedfordshire

13 Luton

7 Milton Keynes

12 Corby

7 Daventry

4 East Northamptonshire

8 Kettering

13 Northampton

0 South Northamptonshire

14 Wellingborough

Group focus based on weighting: 1. Luton, Northampton, Wellingborough, Corby 2. Milton Keynes, Daventry, Kettering 3. Bedford, East Northamptonshire 4. Aylesbury Vale, Central Bedfordshire, South Northamptonshire

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Social Mobility from School The data behind ‘Social Mobility from School:

• Corby and Wellingborough have the lowest social mobility from school in England • Aylesbury Vale, Central Bedfordshire, Daventry, East Northamptonshire, Kettering and Northampton are within the lowest 25% in England • Bedford and Milton Keynes are in the lowest 50% in England

Free School Meals (FSM) are used as another indicator of social deprivation.

% of children % of children % of children eligible for FSM eligible for FSM eligible for FSM achieving at least Percentage of attending a attending a the expected pupils eligible primary school secondary school level in reading, and claiming Free rated rated writing and School Meals 'outstanding' or 'outstanding' or maths at the end Local Authority (FSM) 'good' by Ofsted 'good' by Ofsted of Key Stage 2

Aylesbury Vale n/a 7.20 -40.29 -6.48

Bedford 9.2% 11.29 8.91 -11.26

Central Bedfordshire 6.2% 2.21 -4.78 -7.38

Luton 15.2% -4.24 17.02 2.51

Milton Keynes 9.8% -3.76 -1.92 4.45

Corby 13.5% -29.56 -38.64 -8.10

Daventry 10.5% 7.44 -39.83 -6.11

East Northamptonshire 9.0% -7.48 -26.27 -9.13

Kettering 10.2% -9.11 -37.27 -1.60

Northampton 10.5% -17.04 -19.69 -2.85

South Northamptonshire 4.7% -1.14 8.77 -8.27

Wellingborough 10.7% -27.72 -32.15 -14.16

England Average 12.4% 83.58 72.57 33.27

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The table above shows that the access children eligible for FSM have to ‘good’ or ‘outstanding’ rated schools by Ofsted is low in some areas: • Primary – Corby, Northampton and Wellingborough • Secondary - Corby, Daventry, Kettering and Wellingborough

The percentage of children eligible for FSM achieving at least the expected level in reading, writing and maths at the end of Key Stage 2 is lower in Bedford, Corby, East Northamptonshire, South Northamptonshire and Wellingborough.

% of young people eligible for FSM at age 15 achieving 2 or more A-levels or Average attainment 8 equivalent score for pupils eligible qualifications by the Local Authority for FSM age of 19

Aylesbury Vale -4.44 2.57

Bedford -0.34 1.59

Central Bedfordshire -2.14 -5.39

Luton 3.26 15.32 Milton Keynes -2.04 4.04

Corby -3.44 -11.49

Daventry -3.64 -2.51

East Northamptonshire -2.84 -6.96

Kettering -6.04 -6.03

Northampton -1.34 -4.36

South Northamptonshire 3.76 7.19 Wellingborough -0.64 -9.20

England Average 38.04 32.27

The table above shows significantly lower attainment scores for pupils eligible for FSM for:

• Average attainment 8 score – Kettering, Aylesbury Vale, Daventry and Corby • Achieving 2 or more A-Levels or equivalent – Corby and Wellingborough

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Universal Credit Universal Credit is a payment to help with your living costs and as such is an indicator of need for additional support for those in work. Universal Credit includes elements from the previous benefit system including income support, income-related employment and support allowance and working tax credit.

Universal Credit Universal Credit in not in Universal Credit Universal Credit employment/in employment in employment Total In employment employment

Aylesbury Vale 1803 1224 3029 98,700 1.2%

Bedford 5127 2775 7901 81,900 3.4%

Central Bedfordshire 2865 1809 4674 149,100 1.2%

Corby 2612 1824 4435 34,800 5.2%

Daventry 1725 1108 2831 44,200 2.5%

East Northamptonshire 1305 896 2195 46,500 1.9%

Kettering 1719 1042 2767 44,700 2.3%

Luton 4029 1971 5997 98,600 2.0%

Milton Keynes 3429 2294 5720 127,600 1.8%

Northampton 3668 2212 5882 114,000 1.9%

South Northamptonshire 542 420 957 41,500 1.0%

Wellingborough 1328 765 2089 34,500 2.2%

SEMLEP 30152 18340 48477 916,100 2.0%

England 1286694 659045 1945736 26,264,100 2.5%

East Midlands 93125 51899 145024 2,210,200 2.3%

East of England 110974 62592 173566 2,950,400 2.1%

The table above shows that Universal Credit being paid to those in work is:

• Highest number in Bedford • High numbers over 1750 in Milton Keynes, Northampton, Luton, Corby, Central Bedfordshire • Highest proportion of workforce in Corby • High proportion of workforce over and the same as national average in Bedford and Daventry

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National Work Poverty Analysis

“Rising employment, skills and pay contributed greatly to reductions in poverty over the last 20 years. However, they have also led to a shift in the composition of poverty away from being primarily concentrated in workless households and towards greater in-work poverty. Poverty in the UK today is fairly evenly split between workless households and those in work.” Joseph Rowntree Foundation, UK Poverty 2017

This review aims to identify the challenges and reasoning behind Work Poverty within the SEMLEP area.

The Joseph Rowntree Foundation is an independent social change organisation working to solve UK poverty and regularly produce comprehensive reports on the causes and impact of poverty.

Skills based extracts from the Joseph Rowntree Foundation, ‘UK Poverty 2017’ report.

• Skills and qualifications have a considerable influence on the risk of poverty, affecting both employment and pay. Those with no or low skills are far more likely to be in poverty than those with higher levels of skills.

• Those people without qualifications are at a greater disadvantage in the labour market than used to be the case. In comparison, the proportion of people with the highest level of qualifications has increased greatly, but the benefit of having a high-level qualification in relation to getting a job has remained.

• Living in poverty as a child increases the risk of having low attainment at school, "At age 16, young people from poorer backgrounds are around a third less likely to achieve good qualifications".

• Adults in poverty, and those in low-paid jobs, are less likely to receive training and to progress into better jobs than those who are better paid.

• The group with the highest poverty throughout the last two decades is lone parents.

• The employment rates for people in families with three, four or more children are little different from 20 years ago, and are below the rates in 2000, suggesting that the fall in poverty among this group was not driven by rising employment.

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Qualifications and Pay Levels

Qualifications play a major part in affecting pay levels, although they are also affected by whether an employee is in part-time or full-time work.

• Full-time workers - pay increases at each level of qualification.

• Part-time workers - with equivalent GCSE/A-levels are paid almost the same as those with no qualifications, it is not until they have higher education qualifications that their pay rises significantly.

Education and skills are the strongest predictors of future poverty. Equipping young people and adults with the qualifications they need to get a secure, decently paid job are essential building blocks for raising living standards. However, while overall attainment is increasing, the gap in attainment between students from richer and poorer backgrounds remains stubbornly large.

The people with no or low qualifications are at an increasing disadvantage in the labour market. Qualifications are also far less effective in improving pay prospects for people working part-time. Part-time workers are paid less than their full-time counterparts, regardless of how high their qualifications are. Part-time workers also see no pay gains from qualifications until they reach degree-level – having the equivalent of GCSEs or A-levels does not lead to higher pay than for those with no qualifications at all for those in part-time work.

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Work and Poverty

A factor relating work and poverty is the number of workers in a household and whether they work full-time or part-time. Work gives strong protection against poverty if it is full-time or, for couples, one full-time and one part-time worker. Part-time work does not protect against poverty very effectively, nor does having a single full-time earner in a couple. Poverty rates have risen for single-earner couples and couples with only a part-time worker. JRF research identifies ‘jobs gaps’ that affects groups of people who cannot get work, or as much work as they would like:

• Involuntary part-time workers, who started to work part-time because no suitable full-time work was available

• Underemployed workers, who are working and want more hours but are unable to get them, including those who want more hours in their current job, those who want a different job with longer hours, and those who want an additional job. This category includes some involuntary part-time workers who are classified as such in the following analysis.

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Reasons for not working or limiting work hours:

• Health and caring for young children or disabled adults play a strong role in shaping how much work the adults in a family do, but the balance of these varies across different family types.

• For single-earner couples where the person in work is full-time, the vast majority of the non-working adults say that this is due to childcare responsibilities, with much smaller proportions citing either being disabled or caring for someone who is disabled. However, among those families where the person in work is part-time, disability plays a greater role in restricting the other adult’s capacity to work.

• Most lone parents who work part-time do not give any specific reason for not working full-time, but sizeable minorities cite either childcare or being disabled as restricting their work hours.

• Families where one adult works full-time and one part-time cite childcare as the biggest reason for the part-time earner not increasing their hours but being disabled or caring for someone who is disabled also affect smaller groups.

Ethnic Groups

Nationally, the highest rates of working-age adults in poverty are from Bangladeshi and Pakistani households. This correlates with the lowest rates of working-age female and male adults in employment are also from Bangladeshi and Pakistani households Poverty among children is much higher among the Bangladeshi, Pakistani, Black and Chinese ethnic groups than it is among the Indian or White ethnic groups

Conclusions

JRF suggest that solving poverty in the UK will require urgent action in two skills related areas:

• Improve education and skills, especially among children from low-income backgrounds and adults in low-paid work.

• Work with employers and business to create more and better jobs where they are needed, and to offer more opportunities and better pay to people who currently struggle to enter and gain from work – particularly disabled people, those caring for adults or children, and part-time workers.

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