This document discusses inequality and poverty in the UK. It provides statistics on poverty rates in the UK and Europe. Persistent poverty rates in the UK, which measure those in poverty for multiple years, have been below the EU average in recent years. However, the overall poverty rate in the UK places it 12th highest among EU countries. The document also discusses definitions of poverty, including relative poverty defined as income below 60% of the national median. It examines policies that could help reduce poverty such as increasing earnings through education initiatives and minimum wage laws, increasing employment through training programs and tax credits, and providing social transfers for those unable to work.

1. Inequality and Equality in the UK
Today
Week 1
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3. 3

4. How unequal is Britain?
• Inequality of income: calculating
• The definition of the poverty line
• Absolute poverty: problem with the concept
• Familes w/o children suffer from poverty
• Government policies succeeded relatively
(with some groups more than others)
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6. • 1. Are people of higher social class given much
more respect than those of a lower social class
in Britain?
• 2. Generally, do people of higher social
classes in this country get easier treatment by
the police and courts than people of lower
classes do?
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7. • 3. In actual practice, do people of lower social
class background have the same chance to get
good jobs as people of higher class
backgrounds?
• 4. In fact, in Britain do all persons, regardless
of social class background, have an equal
opportunity to get a college or university
education?
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8. • 5. Regardless of social class, does anyone
willing and able to work have an equal chance
to earn a good income in this country?
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9. The importance of figures
• Statistics on proportions of populations falling
below given fractions of average income have
come to play a central role in the discussion of
poverty
• . The proportion below half national median
income, for instance, has been used as the
basis for one major cross-country comparison
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10. • The Commission of the European
Communities (1991) has used the proportion
below half national mean expenditure as the
basis for its own figures on poverty within
Europe
• Within the UK, estimates of proportions below
fractions of mean income have come to be
widely regarded as the closest thing to
officially published statistics on poverty
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11. Figures in the UK and Europe
• In 2014, 6.5% of people in the UK were in
persistent income poverty, equivalent to
approximately 3.9 million people. This is
considerably less than half of the overall
relative income-poverty rate, which in 2014
stood at 16.8%.
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12. • Persistent poverty rates in the UK differ from
overall poverty rates in terms of how they
compare with other EU countries.
• While UK overall relative income poverty rates
were above or close to the EU average
throughout the period 2008 to 2014 , persistent
poverty rates were below the EU average rates
throughout the same period. Since 2012, there
has been a widening of the gap between the
persistent poverty rate for the UK and the overall
EU average
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14. Terminology
• Persistent poverty
• The effects of experiencing relative low
income for long periods of time have been
well documented and it is generally agreed
that persistent poverty has a much more
detrimental effect on individuals and families
than experiencing a low income for short
periods of time.
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15. • Relative low income
• refers to an individual living on an equivalised
disposable income of less than 60% of the
national median. Where this occurs, they are
said to be at risk of poverty.
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16. • A household’s disposable income
• is the money available for spending after
Income Tax, National Insurance and Council
Tax are subtracted. It consists of wages and
salaries from employment and self-
employment, investment income, private and
state pensions and other benefits.
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17. • Equivalisation adjusts the income to take into
account the size and composition of the
household. Income in this analysis is
equivalised using the modified Organisation
for Economic Co-operation and Development
(OECD) scale.
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18. • Persistent poverty rates measure the
percentage of the population that are at-risk-
of-poverty in the current year and at least 2
out of the 3 preceding years. This is the
definition used by the European Commission
as part of their indicators to monitor poverty
and social exclusion across the EU.
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19. • The 2014 UK persistent poverty rate
is one of the lowest in the EU , however
the overall poverty rate of 16.8% placed
the UK 12th highest out of the 28
EU countries.
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22. • The United Nations defined absolute poverty
as
“a condition characterised by severe
deprivation of basic human needs, including
food, safe drinking water, sanitation facilities,
health, shelter, education and information. It
depends not only on income but also on access
to services.”UN World Summit for economic
development (1995)
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23. • Absolute poverty could be set at a constant
real income level, e.g. real income of $500 per
year. However, it would have to take into
account different living standards between
countries. $500 would be insufficient to gain
shelter in New York, but maybe in Africa. The
UN summit on poverty called for countries to
develop their own measure.
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24. • The World Bank define poverty as:
“Poverty is pronounced deprivation in well-
being, and comprises many dimensions. It
includes low incomes and the inability to
acquire the basic goods and services necessary
for survival with dignity.”
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25. • Peter Townsend defined poverty “Individuals, families
and groups in the population can be said to be in
poverty when they lack the resources to obtain the
type of diet, participate in the activities and have the
living conditions and the amenities which are
customary, or at least widely encouraged or approved
in the societies to which they belong. Their resources
are so seriously below those commanded by the
average family that they are in effect excluded from
the ordinary living patterns, customs, and activities
(Townsend, P. (1979). Poverty in the United Kingdom.
London: Penguin page 31)
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27. • The attention given to these sorts of statistics
in the media and in policy-making circles is
considerable and important policy decisions
may be influenced by them.
• None-the-less relatively little is known about
the sampling distributions of the estimates
used and therefore about the statistical
reliability of the inferences being drawn.
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28. • while poverty is measured terms of money, it
is not just about money. Almost anything bad
you can think of, poor people have more of it.
More illness, more accidents, more crime,
fewer opportunities for their children and the
most fantastically expensive credit
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29. • public policy can be used to reduce
significantly and, indeed, eliminate poverty. In
order to reduce poverty people in poverty
should earn more, work more or receive
higher transfers
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30. • Transfers are non-contributory in the sense
that the recipient is not required to pay for
them through premiums or specific taxes)
• It is social assistance provided by public and
civic bodies to those living in poverty or in
danger of falling into poverty (e.g. non-
contributory pensions, child benefit, disability
allowance)
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31. What should be done?
Earning more
Working more
Transfers for workless households
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32. • Earning more
• Education low pay
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34. Education
• literacy scores across children in the UK are on
the low side, well below OECD average
• public expenditure on education in the UK has
substantially since the mid-1970s, reaching a
minimum in the late 1990s
• the relative pay of school teachers fell
significantly over the same period with a
decline in quality among the new entrants
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35. To employ the best teachers and heads in the
poorest schools
Provide financial incentives
Invest in children:
• (i) Support programmes to improve the health
of women of childbearing age
• (ii) Support early childhood interventions,
targeted to the most disavantaged children
who are at highest risk of school failure.
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36. • (iii) Support measures to raise the quality of
child care and early childhood education for
pre-school age children.
• (iv) Support after-school programmes and
mentoring programmes for schoolage children
and adolescents.
• (v) Support programmes to raise levels of
college attendance by high-ability youth from
low-income families
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37. Low pay
• pass laws to prevent low pay:
• minimum wage laws or fair wage legislation
(the problem here is the danger that this will
cut the employment of the low-skilled,
thereby raising worklessness and poverty from
another direction)
• The introduction of the National Minimum
Wage in 1999 appears to generated little
overall job loss
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38. • The existing policy where from 1999 to 2004,
the rise in the National Minimum wage from
£3.60 to £4.80 per hour represents a rise of
5,7% per annum slightly higher than the rate
of increase of average earnings
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39. Work more
• If we get back to the work pattern of 1979
(the turning point in poverty in the UK) and if
work were made to pay enough so that no
child living in a household with at least one
full-time worker was poor
• Child poverty would fall by 60%
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40. • Relevant policy
• Push policies Pull policies
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41. • Push policies
• training, job search assistance, subsidised
employment
• job-finding process is integrated in the benefit
system
• Each individual has a single personal adviser
• Sanctions for persons who do not participate
or turn down a suitable job
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42. • Pull policies
• The standard policy of the pull type is the tax
credit
• It is an in-work benefit or pay top-up which
depends on family circumstances
• In the UK, the Working Families Tax Credit
was fully phased in April 2000, replacing
Family Credit (FC), a benefit paid to low
earners with dependent children.
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