Economic Crisis. Third Sector, Social Economy and Solidarity Economy in United Kingdom

AutorAlex Murdock
Cargo del AutorProfessor of Not for Profit Management & Leadership Head, Centre for Government & Charity Management London South Bank University

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1 Introduction

This paper builds on a presentation made to a conference held at University Abat Oliba in October 2010. The paper examines the approach to poverty and draws the distinction between the traditional approach of absolute poverty and the current approach of relative deprivation. The paper will start by briefly examining the background of how poverty has been conceived in the UK. The current recession will be introduced with a comparison of the policies of the previous Labour Government and the current Coalition government.

The paper will then examine and comment on data on low income and relative deprivation drawn primarily from the a web site sponsored by the Joseph Rowntree Foundation (The Poverty site)1. This is an invaluable source of quite recent data gathered from a wide range of sources.

The paper will then examine the effect of the recession on poverty as reported by three key organisations which are charities in the UK. These organisations are as follows:

· The Citizens Advice Bureau: a national organisation which uses mainly volunteers to provide advice and support to people in need (with a particular reference to debt and poverty)

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· Shelter: a national campaigning organisation focussed on the homeless

· The Child Poverty Action Group ; an organisation which is particularly focussed on children

· Finally the paper will offer some thoughts as to the direction of travel in the UK (primarily England and Wales) in respect of poverty and relative deprivation.

2 The background of poverty in the UK

The history of poverty in the UK can be traced back to the 1630’s with the Commissioners for the poor. (HM 1630, Himmelfarb 1984). Government sought to regulate support for the poor based upon an estimate based on ‘less eligibility’ namely that the rate for relief should be less attractive that the rate of pay of the lowest paid worker. This was in order to ensure that work would be more attractive than non-work. This guided much of the early work on poverty. Poverty was typically relieved not by cash payments but by ‘indoor relief ’ -through residential facilities- the so-called workhouse or alms house or through provision of necessities such as food. The recent welfare reforms of the Labour and Coalition government have some echoes of these early principles.

From the latter part of the 19th Century alternative conceptions of poverty have evolved. Townsend (a leading writer on poverty ) identifies these as based on concepts of subsistence, basic needs and relative deprivation. (Townsend 1993, 1985, 1979). The concept of subsistence was assisted by various surveys and the work of social reformers such as Joseph Rown-tree. The concept of a ‘poverty line’ evolved whereby if a families income fell below this they were deemed to be unable to afford the basic necessities. Townsend (1979) criticised the focus on subsistence as it neglected the social dimensions and the ability of people to take a full role in society. The concept of basic needs added to subsistence such elements as transport, sanitation, drinking water and health care together with a recognition that for a household to function it needed shelter and furniture.

From this the concepts of absolute and relative poverty emerged. (Beveridge,1942, Foster, 1998) Absolute poverty is still relevant as the ‘dollar a day’ campaign in developing countries has demonstrated. Organisations such as the World Bank have defined absolute poverty as less than $1

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per day. The $1 per day measure of absolute poverty is seen as not so relevant in developed economies such as the UK. Some would argue that it is still relevant in respect of the denial of basic necessities to some categories of individual (such as failed asylum seekers). Relative deprivation brings with it the social dimension in which typically leads to a measure of the situation of the individual (or family) compared to that of society generally. Hence even though the basic subsistence needs are met a person may suffer relative deprivation because their income is markedly lower than the income of others. A measure of relative deprivation accepted in the UK is when a person’s income is below that of 60% of the median income. This is used as the measure of Low Income.

A household is defined as having a ‘low income’ if its income is less than 60 per cent of the median UK household income for the year. The value of this 60 per cent threshold varies according to how many adults and children live in the household2.

It is important to understand this concept in terms of both the concept of the media and of the 60th percentile. The median (for non statisticians) is different from the arithmetic mean. The median is found by (metaphorically) lining up the population from highest to lowest in income and then going to the mid point. In the context of the UK the median income is less than the mean income because the extremes of high income (billionaires ) will not have the same effect. Extremes of low income are less likely as the welfare state assures almost all of a basic income. The actual median income in the UK before tax was £18,500 and the mean income was £26,8003. Therefore 60% of the median income is £11100 (representing the average for the UK not for all people!).

In 2007/08 Low Income was defined as £115 for a single adult with no dependent children, £195 for a lone parent with two children under 14, £199 for a couple with no dependent children and £279 for a couple with two children under 14. (MacInnes 2010:16).

However according to Townsend relative deprivation is not simply measured in financial terms and this guides the reported analysis which follows. Changes in expectations means that items which were regarded

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as ‘luxuries’ by the previous generation become the norm for the current generation. This is recognised in changes in such indices such as the Cost of Living Index when new products such as televisions and DVD players replace radios and cassette recorders. Relative deprivation is seen in terms of a lack of the resources to enable participation in society. Therefore access to education and training become pertinent together with the opportunity to surmount barriers to mobility into higher skilled professional work. The income threshold still remains important, however, as it is assumed that below a threshold income impediments will exist to engagement in society as a full citizen. This has brought to the forefront the concept of ‘social exclusion’ which has clear links to relative deprivation.

2. 1 Poverty, Social exclusion and the Government in the UK

Joseph Rowntree Foundation produces regular and authoritative reports on the state of poverty and social exclusion in the UK. (Gordon et al 2000), Other reports have also highlighted inequality and social exclusion. (Pantazis, 2005, Hills, John et al 2009, Government Equalities Office Jan 2010).

The most recent Rowntree report (McKinnes et al 2010) has been able to identify the impact of the recently departed Labour government whilst also taking into account the initial aspects of recession. The report notes that problems were emerging before the onset of recession.

"At the heart of this report is the recession -for the simple reason that a recession inevitably means lower employment which in turn means more poverty. But while the recession is central, it is less so for its direct impact on poverty (which it is too early to assess) than for what it signifies. For one thing that the recession was not was the tipping point at which things started to go wrong. Instead, across several key indicators, it is now clear that the turn actually came much earlier, in 2004 or 2005" (McKinnes 2010:6).

The Report also identifies that gradual policy change (‘conservative’ with a non-political meaning) has been more effective than more radical change. This is a finding which may be highly significant given the radical changes proposed by the new Coalition government.

".where progress has been made, the type of policy change that is needed is of the gradual variety, ‘conservative’ (with a small ‘c’) rather than radical, in order to try to preserve what has been done

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up to now. And this, of course, is the case, irrespective of who forms the next government". McKinnes 2010:6).

Much of the focus of the Labour Government (both professed and in policy terms) had been on the relief of child poverty. There had been considerable success in this respect with the number of children in low income households being reduced by 700,000 by 2004 with a corresponding rate of reduction in child poverty from 34% to 28%. However the Rowntree report notes that since 2004 the rate of child poverty has risen -in effect wiping out about half of the gains made. The Joseph Rowntree report suggests that part of the explanation for this may be found in ‘low income’ and a reliance on devices such as Child Benefit (a universal benefit) and Child Tax Credit. See Diagram 1.


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