Examination of Witnesses (Questions 360
- 379)
TUESDAY 6 MARCH 2007
MS SUE
MIDDLETON AND
MR GUY
PALMER
Q360 Chairman:
The Foundation's current research themes include matters such
as housing, drugs and alcohol, immigration, etc., etc. How important
would you rate "poverty and disadvantage"; is it the
most important matter you look into, or are there other issues
you consider even more important?
Ms Middleton: I think Guy will
answer that one.
Mr Palmer: The Joseph Rowntree
Foundation has two basic main priorities; one is poverty and social
exclusion and the other is housing and neighbourhoods. All the
other issues you mention are very much smaller programmes from
the JRF.
Q361 Chairman:
Why do you think these are the priorities of the Foundation?
Mr Palmer: When Joseph Rowntree
set up the Foundation that was what he said its remit should be.
Seebohm Rowntree did some ground-breaking work in York, where
he was one of the first people to talk about the nature of poverty,
as it was then, and the Foundation was set up precisely to stimulate
research in the areas of poverty and housing.
Q362 Mr Davidson:
In your submission, you mention that annual reports on Poverty
and Social Exclusion in Great Britain have been produced since
1998 and then since 2002; reports for Scotland have been identified
separately. Can I ask why you decided to do Scotland separately
at that stage?
Ms Middleton: I think that is
for Guy to answer.
Mr Palmer: The UK report covers
Scotland as well as all the rest of the UK. We decided that because
there were Scottish political institutions, there were Scottish
policies, and so forth, we should also do a Scottish-specific
report.
Q363 Mr Davidson:
It is a natural progression, is it, that, having done it since
1998, after four years or so of that you did a Scottish one as
well?
Mr Palmer: Yes; which now we do
every two years and we do ones in Wales and Northern Ireland as
well.
Ms Middleton: Of course, the data
have improved, have they not.
Q364 Mr Davidson:
I just wondered if there was any additional significance. In your
paragraph 7.1, I am not sure if I am reading too much into this,
it does look, from that, as if poverty in Scotland is coming down
quite substantially, because it says here that in 2001 23% of
people in Scotland were poor, and then by 2004-05 it is down to
18%. You mention that the UK figure is 20%, but that was in 2004-05.
You have not given comparable figures here for 2001 so I am not
sure whether or not the rate of decline in Scotland is faster.
It would appear from this that poverty in Scotland is lower than
in the UK as a whole, which I would have thought would be counter-intuitive;
people generally would have the impression that, with areas like
Glasgow, and so on, across the UK as a whole, poverty in Scotland
was higher?
Mr Palmer: We tend not to quote
single year numbers because any single year number has quite an
uncertainty to it. The broad thrust is that poverty has been reducing
in Scotland, as it has been reducing elsewhere; it has been reducing
very quickly for pensioners, reasonably quickly for children.
It has been increasing for working-age adults without children,
which has slowed up the overall rate. Overall, the Scottish poverty
rate is slightly below the Great Britain average. I think that
is surprising to most people but that is what the statistics say.
Q365 Mr Davidson:
That is a pity, is it not; the only reason is because it will
not confirm their prejudices?
Mr Palmer: In some ways, you have
illustrated why we do the Scotland report. In some sense, the
Scotland report is a good-news report, in part.
Q366 Mr Davidson:
Has the rate fallen faster in Scotland than in the UK as a whole?
Mr Palmer: It has fallen a bit
faster.
Ms Middleton: Scotland is no different
from the UK, in the sense that there are pockets of severe poverty
in the UK, which would make you think, if you were there, that
actually poverty as a whole was a lot worse even than it is. The
interesting thing about Scotland is, before I came, I had some
other work we have been doing, looking at severe child poverty,
in other words, looking at the children who are at the bottom
of the pile, and, again, on the measure that we used for that,
there was something like just over 10% cent of children in the
UK who were severely poor, and in Scotland it was about 9%. Again,
whatever measure you use, Scotland looks like the national average.
As in the UK, you have got pockets, but remember that even though
you have these pockets of concentrations of poverty, most people
who are poor do not live in those pockets, and that, of course,
is the danger for focusing attention purely on those pockets.
Q367 Mr Davidson:
One of the issues you mentioned particularly about the working
poor was the extent to which poor people go in and out of unemployment;
is there a difference in that pattern between those who are in
pockets of severe unemployment, as distinct from those who are
scattered more widely? People who are scattered more widely might
be able to get into work more easily because there is perhaps
a more buoyant economy and then they find themselves falling out
again; whereas those who are in pockets of multiple deprivation,
partly because of the social attitudes and mores who might not
make as much effort, they might be conditioned not to try, with
fewer employment opportunities in their area. I just wondered
whether or not there was a difference?
Ms Middleton: I do not know the
evidence for that. I do not have evidence about that.
Mr Palmer: This is not quite answering
your question but there is some evidence that churning is greater
in the UK than it is in the rest of Europe. In other words, people
move between low-paid work and non-work more quickly and more
often in the UK than in the rest of Europe. I think there is also
some evidence that the way you move from low-paid work is back
out of work. Very few people move from low-paid work into progressively
higher-paid work; whereas, on the Continent, there are more career
paths out of low pay.
Q368 Mr Walker:
Why is that? One could take the view that your first job is not
your last job and that if you get a job it is easier to progress
up the career ladder into slightly higher-paying jobs, because
hopefully you are becoming more familiar with the workplace, your
confidence is growing, you are learning new skills, and so on
and so forth; but you are saying that is not the case at all really?
Ms Middleton: It does not happen
in the UK. One of the things that we found, and in the States
as well, with the American Welfare to Work programmes, is that,
possibly because of the emphasis on actually just getting people
into work and a lack of support for people once they are in work,
in other words, a lack of emphasis on policies to assist job retention,
it leads to people slipping out of work rather than moving up.
You move up, surely, by training, by career development initiatives
within the workplace, and employers in the UK are just not very
good at that.
Mr Palmer: Also, there has been,
historically, a different emphasis to policy. If you look at the
European Employment Strategy, until recently it gave quite a lot
of emphasis on the quality of jobs, reflecting a continental view
that the quality was as important as the quantity. In the UK,
we have concentrated more on the quantity of jobs and we have
been very successful in getting people into work. Arguably, there
is a tension between quantity and quality.
Q369 Mr Walker:
Quality jobs on the Continent, the structural unemployment is
about 10%, so they might be focusing on the quality but you have
hugely high levels of engrained unemployment. Do you think that
is a price worth paying?
Mr Palmer: No; but that illustrates
the tension. I would not make a judgment on the issue.
Q370 Mr Walker:
No; I am not meaning to be argumentative.
Mr Palmer: It does seem to me,
in principle, one ought to be able to do things on both quantity
and quality. Clearly, strategically, one of the big issues on
poverty is doing something about the quality of jobs at the bottom,
because a lot of people in poverty in Scotland, as elsewhere in
Great Britain, are in families where one of the adults is working.
Q371 Mr Walker:
Just to explore this a little further, if you have got low-quality
jobs but a high quantity of those jobs, those jobs are not going
to disappear, because obviously they need to be done otherwise
they would not exist. You can have high-quality jobs alongside
them, which would be nice, to have more high-quality jobs, but,
the low-quality jobs, who are we going to get to fill those jobs;
are we going to ask more people from Poland or Bulgaria to come
over and do them? I do not quite understand this. You cannot just
wave a magic wand and say, "McDonald's isn't going to flip
burgers any more," because what McDonald's does is flip burgers;
so who are you proposing should fill those low-quality jobs?
Mr Palmer: I think the issue is
about improving the quality of some of the jobs which exist. Quite
a lot of low-paid jobs are in the public sector, a lot are in
retail, McDonald's and so forth, but that is quite a small sector;
whereas the public sector is the biggest sector and I think it
is a fifth of all low-paid jobs in Scotland are in the public
sector.
Ms Middleton: The second highest
proportion of low-paid jobs is in the public sector.
Mr Palmer: It is not that intrinsically
they are low-quality jobs; they are jobs which are done predominantly
by women, who have not been unionised, where, for reasons of history
really, quite largely they are low-paid jobs.
Q372 Mr Walker:
That is different from low quality. Can you give me some definitions
of low-quality jobs in the public sector?
Mr Palmer: Low pay and low quality,
in practice, tend to go hand in hand, because jobs which are low-paid
tend to have bad benefits on sickness, and they quite often tend
to have quite tight rules on hours worked, poor pensions etc.
Q373 Mr Davidson:
I want to pick up this point about quality. I was not entirely
clear whether or not you were saying that quality and low pay
essentially were the same thing, or whether or not therefore we
could tackle what you were describing as low-quality jobs by an
increase in the National Minimum Wage, or whether or not there
is a whole raft of other things, concerned with not only terms
and conditions but also the intrinsic involvement of the employee
in these particular jobs, which I can see is going to be more
difficult for us to tackle. Essentially, is it a question of,
in your view, low pay versus low quality?
Mr Palmer: No. I think quality
is a wider concept than low pay. It is low pay, it is a certain
amount of security, it is decent terms in terms of pensions and
sickness, and it is things like access to training. The public
sector scores quite well on all those issues, apart from low pay,
so in the public sector I think the issue is mainly the pay. In
your McDonald's type of example, I think you get quite a lot of
these things coming together.
Q374 Mr Davidson:
The second point is, and I wonder if maybe you can give us a note
on this, if it is possible, or point us in the right direction,
this question of lack of progression of people who get into low-quality
jobs. A lot of the Government's strategy is based on getting people
into work who then progress. If you are saying that really does
not work then I think that would require a rethink and we would
want to have evidence just to support, or otherwise, that statement?
Ms Middleton: The Government has
recognised that, in fact, and there is a very large evaluation
underway at the moment, called The Employment, Retention and Advancement
Demonstration Project, funded by the DWP, because of the recognition
that the New Deals, whilst they have been hugely successful in
some ways, retaining people in work and people advancing in work
has not been so successful. There is this very big evaluation
going on, to see what you can do about retention and advancement;
but it is not just a problem in the UK, as I said, it is a problem
in the States as well. Whilst the Welfare to Work programmes are
very successful at getting people into work, they are not so good
at retaining them, because there is a lot of churning. Of course,
if you are talking about where the people are coming from, the
sensible thing is to have policies which can retain people in
a job. In an entry-level job you go cooking burgers in McDonald's,
and that is okay if you are a student and you are doing it while
you are getting your degree, or whatever, and then you move on;
or as a starting-point, and the idea is to get that person moving
into a better job and then someone else comes in at the bottom
to cook the burgers. It is about how you advance people in that
way.
Q375 Mr Walker:
I want to focus on this public sector/private sector divide, because
I understood that outside the city many public sector jobs actually,
for the equivalent work, were paying higher rates now than the
private sector. I am sure I have had some anecdotal evidence,
certainly I have had discussions with people in Scotland who were
saying that a lot of young people in their communities aspire
to get a job in the public sector because of the pension, the
wage, the holidays, the flexi-time, which is a far more practive
proposition than a job in the private sector. I am just slightly
confused as to where these jobs exist in the public sector and
where the divide is you mentioned, that the public sector lags
behind the private sector in pay. Certainly, if you are talking
about mega city jobs it does, but there seems to be more and more
evidence that public sector jobs actually are offering equivalent
or better pay than the equivalent job in the private sector.
Ms Middleton: That is not exactly
what we said. What the statistics are showing us is that there
are very high concentrations of low pay in the retail sector,
that is the biggest sector, but the second biggest concentration
of low-paid workers is amongst those who are public sector workers,
not those who are employed by contractors, as you might expect,
so excluding those who are employed on contracts, but employed
directly by the public sector. The public sector has 22% of workers
employed directly by the public sector who are earning less then
£6.50 an hour.
Q376 Mr Walker:
Doing what?
Mr Palmer: Most of them are in
health and education. There are two ways of looking at them. The
statistics are not very good on this stuff, I am afraid. One is
that most of them are in health and education, and certainly most
of them are women and most of them are part-time, the classroom
assistant type. Then there is a second group, which goes under
the headings of cooking, cleaning, caring, which overlaps with
the first group.
Ms Middleton: Of course, there
is an argument which would say, in policy terms, what is the point
of one part of the public sector paying low pay for another part
of the public sector to pay tax credits to top it up and, given
that sort of inference, actually could drive up perhaps pay in
the private sector.
Q377 Mr McGovern:
The Government has said it intends to halve child poverty by 2010
and to end it completely by 2020. Could you comment on the progress,
or lack of progress; how do you think it has done so far?
Ms Middleton: We know that, in
the UK as a whole, Government missed its target slightly for the
reduction of a quarter. In Scotland, it depends which measure
you look at; on one measure the Government did slightly better
than its target, and on the other measure it missed it slightly
but did better in Scotland than in the UK as a whole. You may
have heard of, referred to in the paper, a project which the Foundation
undertook recently, when it brought together some of the best
economists in the country to brainstorm the issue of how you halve
child poverty by 2010 and how you end it by 2020. The conclusion
was that to halve it by 2010 is possible, it is possible by increasing
tax credits, and we came up with three different models of how
you could end it, by various combinations of benefits. We came
to the conclusion that, the total cost of a policy package which
could get to that target, particularly by increasing the Child
Tax Credit for poorer families and those with more children, you
could do it for around £4 billion to £5 billion, which
is a lot of shops at Sainsbury's but only about 0.3% of GDP. We
concluded that to get to the 2020 measure it is going to require
a lot more, in terms of education, in education, in skills and
in childcare. Of course, the parents of 2020 are actually now
in school, so we need major interventions in education to ensure
that generation has the qualifications which can help to avoid
poverty.
Mr Palmer: In terms of the 2005
target, to start with, the reason that Great Britain failed to
meet that target was quite largely because of lack of progress
in London. If you exclude London, Scotland, like the rest of Great
Britain, basically went along the lines of the target; relatively
little progress was made in London.
Ms Middleton: Inner London, in
particular.
Mr Palmer: If then you look at
the 2010 target, to halve it, the two biggest groups of children
who are still in poverty are those with lone parents who are not
working and couples who are working, and I think the issues are
rather different for those two groups. If a lone parent starts
working, the tax credit system is sufficient; no matter what they
are earning and no matter how many hours they are working to take
them out of poverty. In other words, there are very few lone parents
in work who are in poverty; so the policy agenda for that group,
for lone parents, is to get them into work, and the tax credit
system then will do the rest. For the couples, the other half,
where children are with couples, where one of the couple is working,
the issue is that usually it is only one of the couple who is
working and not the other or it is only part-time work that is
being done, and the tax credit system at the moment does not help
those families nearly as much as it helps lone parents, and certainly
does not take those families out of poverty. The policy agenda
there is either to do with having an objective that both the adults
in a couple should work, in which case they will be out of poverty
on the minimum wage, or to do something reasonably dramatic to
make tax credits more generous for couples. In terms of the 2020
target, if it is taken literally, it has never been achieved in
any western country and therefore we would be in totally unknown
territory. Personally, I much prefer a target which says "to
be amongst the best in Europe", and if you look at the best
in Europe, which are mainly the Nordic countries, they have child
poverty rates which are roughly half what the Great Britain child
poverty rate is currently.
Ms Middleton: I do not think anyone
in the world has ever got it below 5%, which I think was Finland,
in the 1970s, or something, they had it in the 1990s, I cannot
quite remember exactly but I think that is right. Guy is right,
of course, one of the things which has happened, which I think
people forget, and I think I did make a point in my opening statement,
is that whilst there are very large proportions of children in
lone parent families who are poor, because lone parents are still
a relatively small proportion of all families, there are still
very large numbers of children in couple families who are poor.
As Guy points out, they tend to be concentrated in working families.
What seemed to happen was that lone parents tended to be much
closer to the poverty line before all the policy initiatives started,
they were much closer to the poverty line, so it was much easier
to move the children in lone parent families out because they
had not got so far to go. If you look at where children in couple
families who are poor sit, they tend to be much further below
the poverty line and therefore they are harder to get above it.
Mr Palmer: The tax credit system
is much more generous to lone parents.
Ms Middleton: Yes, the tax credit
system is much more generous to lone parents.
Q378 Mr McGovern:
Ms Middleton, when you mentioned Scotland and it depending on
which target you use; were you referring to what Mr Palmer said
about whether or not London is included in the target?
Ms Middleton: No. I was referring
to whether you use a "before housing cost" measure of
poverty or an "after housing cost" measure of poverty.
The Government prefers the "before housing cost" measure,
which simply looks at incomes before housing costs are taken into
account. For example, as in London, if you have very high housing
costs, that will mask a lot of poverty, because you are not taking
housing cost into account. The "after housing cost"
measure, which I prefer to use personally, which takes out your
housing costs and looks at what disposable income you have got
left after your housing costs have been taken out, obviously gets
round that problem. On the "before housing cost" measure
Scotland hit the target, and on "after housing costs"
Scotland just missed it.
Q379 Mr McGovern:
That is two interpretations then of whether or not Scotland is
reaching the target; the third one presumably is whether or not
we include London?
Mr Palmer: No.
Ms Middleton: No.
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