Former Leeds West MP and staunch SVP member and patron John Battle examines the hidden scourge of in-work poverty.
Roy, in his forties, has spent long periods trying to get work as he has no recognised qualifications. The Department for Work and Pensions (DWP) signed him up to an employment agency to be available as a cleaner. He worked on a zero-hours contract at irregular hours at the O2 Arena in Leeds until the Covid-19 lockdown. The O2 Arena closed and Roy got told there was no more work. The agency signed him off and he was not entitled to be furloughed on a supportive income.
He was recently referred back to the agency to do some hours at the O2 Arena again as it prepares to reopen. His hours are few and irregular. He expected to be paid for them at the end of his first week back to be told that he would be paid at the end of the month. His DWP payments stopped until he produced wage slips, which meant that he could not get Universal Credit. Desperate for money he took £40 from his partner’s purse and as a result of the consequent row, their relationship has broken down.
Roy wants to get back to work. He said: “I try so hard. I’m willing to do anything, but working isn’t paying the bills.”
Roy is one of thousands trying to get back into work after the Covid lockdown, after struggling for months to survive with the help of a local foodbank. He worries that failing to keep up with his rent, which is in arrears, will now mean his family lose their home.
Acting to change perceptions
Over 130,000 households in England were made homeless during the first year of the pandemic, despite the Government’s ban on evictions. Our local parish SVP Conference alone has helped four evicted families re-establish a home in the last six months.
The special contribution, that special charism of the SVP, is a quiet, understated rootedness, tuned into and in regular contact through its members with people, individuals and families in real need. Our support and comment is fully derived from their lived experiences and their suffering which is shared with us as SVP members. That privileged access puts us in a uniquely responsible position to act.
In 1984, I was appointed as the first director of the ecumenical charity Church Action on Poverty and our first published report was entitled ‘Low Pay: The Cause of Poverty’. Today more than half the people living in poverty in Britain are in work, and for millions working ‘flexibility’ is a tool for generating their poverty.
In the decades since 1984, the perceived stigma and shame around welfare benefits has not dissipated. Often inaccurate media reports of “the work-shy”, “scroungers” and “freeloaders” persist, and the welfare state is more than ever regarded as an unwanted prop for the “lazy unemployed”. It is not viewed as a support for the low and underpaid in work, even though it remains true that the majority of the poor in our society are actually working.
Despite recent reforms, the introduction of Universal Credit and the merging of benefits to streamline the claiming system, the welfare state is not a safety net for thousands in work, especially those in temporary, part-time work, on zero-hours contracts, or self-employed. Moreover, most work is in the expanding service sector of the economy (especially retail and distribution) that has replaced manufacturing as basic employers.
There are now more part-time workers relative to their full-time counterparts than there used to be. Currently some six million people are claiming Universal Credit as a low income work top-up or unemployment benefit, however the Welfare at a Social Distance Project recently spelled out that over 500,000 people actually entitled to Universal Credit support do not claim it, not least because of the associated stigma.
The rise of unsustainable debt
Young people are the least likely group in our society to seek help despite being among the hardest hit during the pandemic. According to Citizens Advice, 45% of 18 to 34 year-olds in the UK have used ‘Buy Now Pay Later’ offers in the last 12 months, and half did it without realizing what they were taking on. This group is piling up the most unsustainable debt.
Furthermore, two million people earning less than £120 a week are not eligible for Statutory Sick Pay. Those who most need sick pay are barred from receiving it because they are too poor! Two years ago, the government promised “extending the protection to those earning less than the lower earnings limit” - it has yet to happen.
The Resolution Foundation think tank has also spelled out that the pandemic has shone a spotlight on the flaws and gaps in the current welfare system. Nearly a third of people earning between £10,000 and £20,000 per year have reported a decline in their finances during the pandemic, according to research by Scottish Widows. They estimate that 14 million have suffered a hit to their income, affecting their ability to pay essential costs since March 2020.
The number of people in debt soared from 1.7 million to 2.4 million between March 2020 and January 2021 according to the charity Step Change. Reduced social security, low wages and high rents have left 2.4 million people living in destitution, needing help with food, clothing and hygiene products. Additionally, studies have shown that low income families have been disproportionately affected by the pandemic crisis with more than a third seeing their incomes squeezed as a result of higher fuel and food costs, not least while at home under lock down. Self-isolation and home schooling put families under increased financial pressure as people lost wages and jobs.
Put simply, millions work but do not take home enough money for them and their families to live on, and the pandemic has made things worse. Increasingly they are referred, even by the DWP, to go to charity food banks rather than to support and entitlements from the state to which they are entitled. Food bank use increased by 33% during the pandemic. The Trussell Trust reports distributing 2.5 million food parcels between April 2020 and March 2021, and this is only a fraction of total food aid given out by local authorities, schools and charities including the SVP.
Our own St Vincent’s Centre in Leeds was quick off the mark at the start of the Covid crisis and distributed thousands of food parcels and meals, earning a reputation as one of the city’s “lifelines”. But as the Independent Food Aid Network puts it: “Food banks cannot continue to take responsibility for the impact of insecure and inadequately paid employment.” Yet when pressed to keep the £20 Universal Credit uplift, the Prime Minister simply reiterated the worn-out refrain: “Getting people into work is the best route out of poverty.”
But charity is not the solution to in-work poverty. Even before the pandemic one-in-four families receiving Universal Credit had cut food intake or had meal patterns disrupted because of the low level of the basic safety net for families. The freeze on working age benefits in the recent years of austerity has contributed to this income reduction. The government’s emergency pandemic measures certainly helped, introducing the furlough scheme and a £20-a-week increase in Universal Credit. But both the furlough scheme and that £20-a-week increase are to be discontinued in October this year. It is estimated that up to six million families stand to lose £1,040-a-year in financial support as a result.
Meanwhile, in August the energy regulator announced that fuel bills are set to soar from October. The 11 million households which pay by direct debit will see an average dual fuel bill rise by £139. But for the four million on prepayment meters (typically the economically vulnerable) their average bill will rise by £153.
As Mike Brewer, the chief economist at the Resolution Foundation, puts it: “Simply returning to the old system is not good enough after what the country has gone through.”
So, what are the positive suggestions?
Already pressure has been building from charities including the SVP and Caritas, churches, the TUC, and poverty analysts to maintain the £20 Universal Credit uplift. The Resolution Foundation goes beyond simply asking to maintain the £20 a week boost and calls for levelling up support for the under 25s and raising the child element of Universal Credit by £5-a-week to directly help families.
The TUC has made a case for workers to continue to receive 80% of their wage for any time on the scheme, with a guarantee that no-one falls below the statutory minimum wage for their normal working hours. Any worker working less than 90% of their normal working hours to be offered funded training options. Companies must demonstrate a reduction in demand (including restructuring) and not pay dividends while using the scheme. There should be time limits but with limited exceptions. For many years such a scheme has operated in Germany, Japan and other OECD (Organisation for Economic Co-operation and Development) countries to shield workers during tough economic periods.
It is worth adding that since the 1979 peak of 13.2 million workers there has been a dramatic fall in trade union membership. Most of the unionised jobs are in the public sector and members in the private sector are in companies that have long had collective bargaining agreements. In the new companies of the service sectors unions are virtually unknown. Yet there is a strong current of support in Catholic social teaching from Rerum Novarum through the encyclicals of Pope St John Paul II, Emeritus Pope Benedict and now Pope Francis for their vital contribution as a means of tackling working poverty.
A real living wage:
Despite the government renaming the statutory legal minimum wage as the “living wage”, the Living Wage Foundation carries out serious research work campaigning for a real living wage, which is an hourly rate assessed in accordance with basic income needs and economic capacity to increase wages. Encouragingly, an increasing number of employers are signing up to it as a matter of social justice, but it is an hourly rate and does not resolve the problem of insufficient hours of work.
There are economic and political debates around introducing a basic income for all as already trialed in some countries. The Joseph Rowntree Foundation (JRF) has examined the issue and concluded that a Universal Basic Income “is not a silver bullet that would immediately and straightforwardly solve poverty”, adding that there is a “growing consensus that the current social security system is inadequate and does not provide the effective public service we need to protect people from poverty.” In its report, the JRF called for a “social security system that provides adequate support, reduces poverty and removes the indignities and stigma associated with the present system”, concluding that this is “a vital part of ending the injustice of poverty in the UK.”
From listening into action
The SVP listens to and directly supports low-income families, and from witnessing the lived experiences of many of the people with whom we work, we are in a unique position to provide an objective analysis of the realities they face.
St Vincent gave us a lead when he said: “To serve those who are poor is to go to God and you should see God in them.”
Pope Francis is challengingly direct: “Christians are called to confront the poverty of our brothers and sisters to touch it, to make it our own and to take practical steps to alleviate it.”
Saint Oscar Romero, the Archbishop of El Salvador murdered for defending the poor, said: “When the Church hears the cry of the oppressed it cannot but denounce the social structures that give rise to and perpetuate the misery from which the cry arises.”
This is part of our SVP mission here today.
“Despite our deeply held conviction that all men and women are created equal, many of our brothers and sisters in the human family are effectively excluded from the financial world. If we are to come out of this situation as a better, more humane and solitary world, new creative forms of political and economic participation must be devised, sensitive to the voice of the poor and committed to including them in building our common future.”
- Pope Francis' message to the recent meeting of the World Bank
That challenge applies to us in the SVP in the face of the working poor here in our own society.