Memorandum submitted to the Scottish Affairs
Committee by Adrian Sinfield, School of Social and Political Studies,
University of Edinburgh
PREVENTING AND
REDUCING POVERTY
IN SCOTLAND
Summary
1. Poverty is "the biggest scar of
a civilised society", in the words of the then Secretary
of State for Scotland to your 2000 inquiry. Six years later the
words being used by government are still much more vigorous than
the resources and policies backing them up. Given its seriousness,
higher priority and greater urgency need to be given to preventing
and reducing poverty.
2. Poverty cannot be tackled without a larger,
more preventive and better integrated package of measures. Recommendations
should include:
— Preventive measures to promote more
decent work with decent pay, removing "family-unfriendly"
working conditions and enabling workers to stay and progress in
their jobs
— The governmental setting of a poverty
line and a minimum income standard
— A national antipoverty strategy with
a clear statement of who holds what responsibilities
— Social security benefits set above
the poverty level
— The "poverty-proofing"
of all government policies as part of "mainstreaming social
inclusion"
— Free and nutritious school meals
— Rights and advice services on benefits,
taxes and employment rights.
Introduction
3. To your previous inquiry I argued that
five requirements for a successful and sustained tackling of poverty
were not being met—a) good data on the scale and nature
of poverty; b) clear policy responsibilities for tackling it;
c) close attention to its prevention; d) social security benefits
above the poverty line; and e) the "poverty-proofing"
of all government policies (Sinfield, 2000). Six years later there
has been significant progress with substantial falls in poverty
for older people and children. There are now more and better data
on poverty in Scotland, but the lines of strategic command and
accountability in tackling poverty could still be made clearer.
Preventive strategies are in place but need to be increased and
strengthened. Benefits are still inadequate, especially for adults
of working age, and "poverty-proofing" could be expanded
and "mainstreamed".
The continuing inadequacy of official measures
of poverty
4. While a new measure of poverty combining
incomes below 70% of median income and measures of deprivation
may be helpful, we still do not know how much is needed to allow
an acceptable standard of living. The work now starting at the
Centre for Research in Social Policy at Loughborough University
to identify "a socially agreed, empirically based, minimum
income standard" is very much to be welcomed (on the need
for MIS, see Veit-Wilson, 1998).
5. This is not only important for successfully
tackling poverty. Using an inadequate measure can have a counter-productive
effect on policymaking. First and foremost, the raising of incomes
to a level which is not in fact high enough to take people out
of poverty may not lead to the improvement in health, quality
of life or behaviour which is expected. In consequence, both policies
and people in poverty are liable to be blamed for continuing problems
with a fall in support for maintaining programmes and spending.
The backlash against the government and "the poor" will
make it more difficult to maintain existing programmes, let alone
strengthen them.
Preventing Poverty
6. The Scottish Executive strategy, Closing
the Opportunity Gap, gives explicit emphasis to preventing
both the occurrence and recurrence of poverty in the overall statement
of its three aims and its six objectives. Prevention is also carried
through in some of the ten targets, but not as much or as vigorously
as it needs to be.
7. The value of strong preventive strategies
cannot be overstated. However good policies to help people out
of poverty or to alleviate it, the problem will not be significantly
reduced unless ways to prevent poverty from occurring in the first
place are given much greater attention and significantly strengthened.
Countries like Finland and Sweden with a stronger preventive focus
have much lower rates of poverty than most countries I examined
(Sinfield, 2006). Finland calls its own strategy "the National
Action Plan for Preventing Poverty and Social Exclusion":
"The four pillars of Nordic social security—income-based
security, basic security for everyone, income transfers to low-income
population groups, and equitable welfare services regardless of
wealth, gender or domicile—form a basis upon which the prevention
of poverty and social exclusion is built" (Finland, NAPs/incl
2003-2005, p 19, quoted in Sinfield, 2006, p 2).
8. In Scotland, as the rest of the UK, emphasis
on individual responsibility for poverty by previous governments
led to the neglect of wider, structural causes and so the role
which government at all levels and other major public and private
actors can play in preventing poverty. The National Minimum Wage
and Working and Child Tax Credits are significant signs of change,
but there is still a severe lack of balance between concerns with
individual and structural factors.
The importance of high, and preferably full, employment
9. The maintenance of high employment is
one of the most important structural measures in preventing poverty,
so the much improved level is a valuable advance. However, the
"work first" strategy has focused too much on getting
people into work and so lifting them out of poverty, but too little
on helping people keep their jobs and cope with difficulties that
make it harder, if not impossible, to continue in work.
10. It may be thought that this preventive
role goes without saying but, with much competition for scarce
resources, policies that are not explicitly stated may, quite
simply, go. One obvious problem is the low level of incomes for
many in work despite the National Minimum Wage increasing faster
than inflation. Working poverty has become a major problem: many
who are told they can escape chronic poverty out of work by getting
a job find themselves with little, if any, improvement in their
income, additional work-related costs and new pressures of coping
with inadequate pay despite tax credits.
11. It may be a particularly severe problem
in this country (EC, 2003). Over the five years to 2000, the UK
had the lowest proportion of workers leaving poor quality jobs
for high quality ones and also the highest rate back into poor
ones. Poor quality work includes both poor pay and poor working
conditions. Polly Toynbee's Hard Work (2003) demonstrated
graphically how persistent family-unfriendly practices makes it
more difficult for parents, especially lone mothers, to remain
in work, except at a personal and social cost to themselves and
their children. This was evident in many health and education
jobs contracted-out from the public sector.
12. The Scottish Executive's target C encouraging
"public sector and large employers to tackle aspects of in-work
poverty by providing employees with opportunity to develop skills
and progress in their career" is particularly important for
preventing poverty from recurring. NHSScotland is to set an example
of good practice "by providing 1000 job opportunities, with
support for training and progression once in post". Promoting
employer awareness of the ways in which improvements in work organisation
and conditions, and the general area of "work-life balance",
could help prevent poverty by enabling parents, older workers
and those suffering from some form of disability to retain their
jobs and progress in them without personal cost. Building on the
experience of target C, the Scottish Executive, regional and local
bodies of all types could become models of good practice. They
should also ensure that those they contract meet the same standards.
13. The Chartered Institute of Personnel
and Development has argued that the government could give much
closer attention to what employers might do in tackling problems
of economic inactivity (Philpott, 2006). Their own research found
that "more than 6 in 10 employers deliberately exclude one
or other core jobless group", but experience shows that much
could be done to overcome these attitudes, given proper support
and encouragement from the government. It is regrettable that
the DWP's recent welfare reform proposals have underplayed the
importance of adjustments on the demand side to tackle forms of
discrimination and promote better work-life balance. The better
organisation of work and better-directed HRM practices could assist
the prevention and reduction of poverty—a neglected European
Social Inclusion objective (Sinfield, 2006, p. 6). Measures to
enable people with disabilities, especially mental health problems,
to keep their jobs may protect them from poverty, given their
greater difficulties once unemployed (SEU, 2004).
14. The preventive value of good monitoring
and advice on the National Minimum Wage, tax credits and benefits
is also great. Movements in and out of work are made much more
difficult by problems with any of these, especially with substantial
staff cuts in the DWP and HMRC. Such activity pays for itself,
bringing more resources into Scotland.
The preventive role of a good social security
system
15. The role of social security in preventing
poverty in the first place has received insufficient attention
here, in comparison to European countries with less poverty who
make greater use of more generous universal and contributory social
security programmes to prevent poverty and depend less on means-testing
for those already in poverty.
16. Basic benefit levels are currently insufficient
to bring people up to the government's own poverty level. It has
to face up to the fact that inadequate benefits create additional
problems for parents unable to find work and having to bring up
their children in poverty. A major European survey has shown "a
vicious cycle of disadvantage, whereby people can be progressively
marginalised from the employment structure. But the central
factor underlying this process is poverty. Unemployment heightens
the risk of people falling into poverty, and poverty in turn makes
it more difficult for people to return to work" (Gallie,
Paugam and Jacobs, 2002, p. 18, emphasis added).
17. Recognition of the positive, poverty-preventing
potential of social security continues to be made more difficult
by routine use of the policy slogans of "active" labour
market measures which help people into work and "passive"
benefits which encourage dependency. Calling benefits "passive"
discounts evidence that a good benefits system helps people avoid
poverty, enabling them to cope and plan more easily when earnings
are interrupted for whatever reason (Sinfield, 2001). That a generous
benefits system can be effective in promoting employment and preventing
poverty has at last been acknowledged by OECD in reviewing its
Jobs Study (OECD, 2006).
18. My 2000 note drew particularly on the
Independent Inquiry into Inequalities in Health chaired by Sir
Donald Acheson since its findings and recommendations applied
at least as strongly to Scotland as to England. Its Report made
it very clear that health inequalities can only be tackled by
a strategy which includes "upstream" as well as "downstream"
policies. "Upstream" ones are needed to "tackle
the causal chains which run back into and from the basic structure
of society" (Acheson, 1998, pp 7-8): success here prevents
poverty from occurring in the first place. The very first "areas
for future policy development" they identified were "poverty
and income, tax and benefits". All the research of which
I am aware continues to support this conclusion, but this understanding,
now widely accepted in the health field, has not been joined up
and integrated into policymaking in other areas. A greater emphasis
on preventive structural policies is essential.
Taxation policies also have a role in tackling
poverty
19. The importance of tax policies in tackling
poverty has been demonstrated by tax credits, but the tax system
still works against the reduction of poverty in other ways. For
many years the government's own statistics show the poorest fifth
paying a larger proportion of their income in all forms of taxes
than the average, and even more than the richest fifth. The introduction
of Child and Working Tax Credits has helped to reduce this inequity
but not to remove it entirely (Jones, 2006, Table 3). Given the
heavy incidence of council tax and indirect taxes on them, those
in poverty are contributing to financing much-heralded measures
to reduce their poverty. Council tax and other regressive taxes
need urgent attention (Orton, 2006; Bramley et al, 2006).
20. Tax reliefs supporting some groups in
society, generally the better-off, at the expense of others, generally
the poorer, provide an invisible tax welfare state for the privileged.
In 2000 I gave two examples of tax reliefs making it much easier
for the better-off to avoid poverty than those on lower incomes.
There has been little change so I will only map out their main
dimensions.
21. Pensions tax relief: Currently
£13.7 billion of taxpayers' money have been released by the
government through income tax reliefs to occupational and personal
pensions to encourage and help people to make better private provision
for their old age (HMRC, 2006, Table 1.5, after tax deducted on
pensions paid). Despite changes to these reliefs this year, this
cost may even increase. The government has at last confirmed independent
estimates of its "upside-down" nature. In 2004-05 60%
of the tax reliefs on employees' contributions to pensions went
to those paying the higher rate of tax or who would be without
this relief (Hansard, 2005, col. 52W)—only
one in eight of all taxpayers receiving that relief. Income tax
is later due on the pension received but not on the lump-sum.
The loss of revenue from these reliefs cost the taxpayer twice
as much as Pension Credit which is targeting those older people
on the lowest incomes. Another £7.4 billion was not collected
in employers' National Insurance contributions on their payments
to private pensions. There is still no evidence that these reliefs
provide value for money,
22. Tax relief on private payments on
the termination of employment: The first £30,000 of any
payments on the termination of employment (but not retirement)
are exempted from income tax. In lost revenue this costs £1
billion, twice as much as the contribution-related element of
the Jobseeker's Allowance, the survivor of National Insurance
Unemployment Benefit—what Beveridge intended as the main
protection during unemployment (HMRC, 2006, Table 1.5). The maximum
contribution-based JSA benefit for a single person of £1,493.70
is taxable and any payment beyond six months subject to means-testing.
By contrast, the maximum tax benefit is £6,900 for a standard
rate taxpayer and £12,000 for a higher rate one with no requirement
to remain out of work. Relief could be limited to the state redundancy
payments maximum, £8,700. There is still no evidence of how
this tax benefit is distributed.
23. In these and other ways the income tax
system continues to protect some people from the risk of poverty
far more effectively than the social security system does the
majority of the population. This is not realised by either the
beneficiaries of these upside-down tax benefits or the rest of
the population whose own taxes may be correspondingly higher without
any of the advantages. In contrast to the new tax credits, these
tax benefits are not, and never have been, subject to the same
Parliamentary and public scrutiny and assessment as welfare state
programmes.
24. We need a new Comprehensive Spending
Review that examines how all government policies, including those
releasing tax revenue, affect the prevention and tackling of poverty,
identifying both those measures which are helpful and those which
are counter-productive to these ends.
Undermining preventive strategies
25. The workings of tax and benefits systems
show how impossible it is to engage with underlying causes of
poverty without taking account of ways in which resources are
distributed throughout the whole of society. Poverty therefore
has to be studied and tackled as a characteristic of society and
not just of those who are currently living in poverty. Within
the EU those countries with higher rates of poverty have also
had higher levels of income inequality (EC, 2006, p 81). Richard
Tawney's observation before the First World War remains as relevant
as ever:
"What thoughtful rich people call the problem
of poverty, thinking poor people call, with equal justice, the
problem of riches" (Tawney, 1913).
Widening and persistent inequality hinders recognition
of greater and deeper poverty, the structural causes underlying
it and the absence of robust and adaptable preventive strategies.
Those who have done well, or even just maintained their position,
are less likely to recognise the persistence of poverty, and more
likely to attribute what they do see to personal failings.
26. These arguments gain strength from what
Anthony Sampson identified as the greatest change in the last
40 years in the UK. In Who Runs this Place?, his last edition
of The Anatomy of Britain 42 years on, he concluded:
"Above all, the rich feel much less need
than their predecessors to account for their wealth, whether to
society, to governments or to God. Their attitudes and values
are not seriously challenged by anyone. The respect now shown
for wealth and money-making has been the most fundamental change
in Britain over four decades" (Sampson, 2004, his own summary
in The Observer, 28 March, 2004, based on p 342).
In this context it becomes more difficult to
win support for measures to help those in or close to poverty—one
more argument for strengthening preventive strategies.
27. The connection between economic and
social policy needs to be pushed much further. "What
is produced, how it is produced and where it is
produced have important effects on the production or elimination
of poverty. [We need] to move toward economic development paths
that are more poverty preventive" (Miller, 1999, p 1, emphasis
in the original).
"Poverty-proofing" and "mainstreaming
social inclusion"
28. The Scottish Executive is now making
use of "poverty-proofing". It has been a central and
effective part of the Irish government's anti-poverty strategy
for some eight years—see especially the poverty-proofing
of the Irish budget. The 2004 Budget highlights how the measures:
— help prevent people falling into
poverty;
— ameliorate/decreases (or increases)
the effects of poverty;
— contribute to the achievement of
the [poverty] targets;
— reach the target groups.
It presents the rationale and basis of the assessment
and outlines what changes might be introduced to change the effect
on poverty (Combat Poverty Agency, 2005, pp 15-16). A recent review
has strengthened its role under the new title of "poverty
impact assessment". Helen Johnston, the Director of Combat
Poverty in Ireland, has been in charge of the European-funded
programme to mainstream social inclusion with which the Scottish
Executive has been involved and the Committee might find it very
helpful to discuss its extension with her (MSI, 2006).
29. The fact that the Scottish Executive
is not responsible for social security or taxation policy is not
relevant for "mainstreaming social inclusion". If current
levels of benefit are inadequate to save people in Scotland from
poverty, the Scottish Executive has a duty to make this point
very clear to the British government just as it does any other
failing in British policy. This point applies equally strongly
to any counter-productive workings of the tax system.
Cutting the cost of living
30. The Scottish Executive can also play
an important part in helping to prevent and reduce poverty by
acting to help those vulnerable to poverty keep their cost of
living down. Many are brought into or kept in poverty by the extra
costs which they have to bear. Older people or those with disabilities
or very young children are especially liable to the costs created
by poorly-insulated and damp housing. The importance of food co-operatives,
access to allotments, access to credit at reasonable rates rather
than enforced dependence on loan sharks and the maintenance of
shops, post offices and banks in rural communities reducing the
need for travel all provide examples. There is already welcome
progress on some issues including the provision of nationwide
concessionary bus travel to older people and those with disabilities.
31. In particular the Scottish Executive
could re-introduce free and nutritious school meals as an excellent
example of both preventing and reducing poverty. There are more
than two children eligible for free school meals and not receiving
them for every three who are. Parents report that cost is a key
factor for over one in five of the primary, and nearly one in
three of the secondary, school pupils not receiving them. And
that is from the Scottish Executive's own research.
Adrian Sinfield
University of Edinburgh
October 2006
REFERENCES
Acheson, Sir Donald et al (1998) Independent
Inquiry into Inequalities in Health, London, The Stationery
Office.
Bramley, Glen et al (2006) Improving
Council Tax Collection Rates in Scotland, SE www.scotland.gov.uk/Publications/2006/07/18161737/131
Combat Poverty Agency (2005) Review of the
Poverty Proofing Process, Submission to the Office of Social
Inclusion, Dublin, CPA, August.
EC (2003) Employment in Europe 2003,
Brussels, EC
EC (2006) Joint Report on Social Protection
and Social Inclusion 2006, Brussels, EC.
Gallie, Duncan, Serge Paugam and Sheila Jacobs
(2002) "Unemployment, Poverty and Social Isolation: Is there
a Vicious Circle of Social Exclusion?" European Societies,
5 (1), pp 1-32.
HMRC (2006) Revenue and Customs Statistics—www.hmrc.gov.uk/stats/
Jones, Francis (2006) "The effects of taxes
and benefits on household income, 2004-05", Economic Trends,
May, pp 53-98.
Miller, S M (1999) "Prevention of Poverty",
CROP Newsletter, Comparative Research Programme on Poverty,
vol 6, no 2, May, pp 1-2.
MSI—Mainstreaming Social Inclusion (2006)
Better Policies, Better Outcomes: Promoting Mainstream Social
Inclusion, Brussels, EC—www.europemsi.eu
OECD (2006) Boosting Jobs and Incomes: Policy
Lessons from Reassessing the OECD Jobs Strategy, Paris, OECD.
Orton, Michael (2006) Struggling to pay council
tax: A new perspective on the debate about local taxation,
York, York Publishing Services and www.jrf.org.uk
Philpott, John (2006) "Getting to the Core
of Welfare to Work Policy", Scottish Anti-Poverty Review,
summer, pp.
Sampson, Anthony (2004) Who Runs this Place?
The Anatomy of Britain in the 21st Century, London, John Murray.
Sinfield, Adrian (2000) "Tackling and preventing
poverty", Scottish Affairs Committee, Poverty in Scotland,
Appendices, 59-xi, July, pp 331-7.
Sinfield, Adrian (2001) "Benefits and Research
in the Labour Market", European Journal of Social Security,
vol 3, no 3, pp 209-235.
Sinfield, Adrian (2006) "Preventing Poverty
in Europe", European Institute of Social Security conference,
Roskilde University, Denmark, www.ruc.dk/upload/application/pdf/f51d6748/Adrian—Sinfield.pdf
Social Exclusion Unit (2004) Mental Health
and Social Exclusion, London, SEU.
Tawney, R. H. (1913) "Poverty as an industrial
problem", reproduced in Memoranda on the Problem of Poverty,
London, William Morris Press.
Toynbee, Polly (2003) Hard Work: Life in
Low-Pay Britain, London, Bloomsbury.
Veit-Wilson, John (1998) Setting Adequacy
Standards: How governments define minimum incomes, Bristol,
Policy Press.
| 
