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NEW INDICATORS SHOW EXTENT OF POVERTY AND SOCIAL EXCLUSION IN LATE 1990s

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'I believe in greater equality. If the next Labour government has not raised the living standards of the poorest by...
'I believe in greater equality. If the next Labour government has not raised the living standards of the poorest by the end of its time in office it will have failed.' Tony Blair, July 1996

The government is today urged to adopt more than 40 indicators to monitor progress in tackling social exclusion. The scale of the challenge facing the government in its bid to achieve greater social cohesion is revealed, in a country where more than ten million people live in relative poverty and over two million children are growing up in families where no adult is in work.

The indicators, in a report for the Joseph Rowntree Foundation, show that more than four million working-age adults would like jobs, but do not have them, while young adults experience double the unemployment rate for the population as a whole.

Exclusions from secondary schools have risen fourfold since the start of the decade. Births to school-age mothers have reached their highest ever level. The number of juveniles in Young Offender Institutions and prisons has risen nearly 40 per cent in five years.

These statistics are among 46 key indicators proposed as the model for an official report on poverty and social exclusion that could be annually updated. They suggest that the government came to power at a time when the gap between rich and poor was widening again after a modest decline in the middle years of the previous administration led by John Major.

Compiled by the New Policy Institute, the indicators are constructed from official data on household incomes, employment, health, education, crime and other barometers of social cohesion. Using the latest available statistics - extending into 1997 - the report shows that some indicators are improving, but highlights many areas of great concern:

Poverty and low income - income inequality rose steeply in the 1980s and early 1990s from four million people living in households with less than half average income (before housing costs) to around 11 million. After a modest fa ll in the mid-1990s, figures for 1996/7 show a renewed increase to 10.5 million. Households living in relative poverty include 3.6 million couples and their children, 2.1 million pensioners and 1.3 million lone parents and their children.

Children - figures for 1996/7 show over three million children living in households with less than half average income. Children born into the bottom two social classes used in official statistics are 25 per cent more likely to be underweight than those in the top three classes, with a consequently higher risk of poor health in later life. Children in the bottom two classes run twice the risk of accidental death faced by those in the top three.

Young adults - although youth unemployment has fallen, young people under 25 are twice as likely to be out of work as adults. The proportion of young people without qualifications has also declined, but almost a third of 19-year olds still lack such basic credentials as five GCSE passes or an NVQ level 2. Use of drug treatment agencies by young people is 50 per cent higher than in 1993. Youth suicide rates are below their 1990s peak, but those for young men in the bottom two social classes are 50 per cent above those for the top three.

Adults - recorded unemployment declined during the 1990s as job seekers found work. But the number of people on the fringes of the labour market who are not officially unemployed, but want work has increased. In total, about four million adults would like to work, but don't. Other figures suggest that manual workers are twice as likely to develop long-standing illnesses or disabilities before they retire as professional workers. Adults in the bottom two social classes are twice as likely to report feelings of anxiety and depression as those in the top three.

Older people - age is no longer synonymous with poverty, but 60 per cent of pensioners remain in the bottom 40 per cent of the income distribution. About one million pensioners have no income other than the state retirement pension and b enefits. Their vulnerability is underlined by figures showing that they spend about half as much on food as those with private incomes. Older people with low incomes are also more prone to moderate anxiety and depression.

Communities - participation in community-based activities is an important mechanism for social inclusion. Yet only a third of the poorest fifth of the population play an active part in social, political or community organisations compared with two thirds of those in the richest fifth. Poor households are one and a half times as likely to feel dissatisfied with their neighbourhood as households on average. In spite of a higher risk of being burgled, more than half the poorest homes lack contents insurance compared with one in five households overall.

The report's authors argue that a regularly updated report on poverty and social exclusion is essential if government and the wider public are to know what progress is being made. They recommend that responsibility for updating the indicators should be passed on a long-term basis to the Office of National Statistics.

Dr Peter Kenway, director of the New Policy Institute, said: 'Just as the Bank of England's regular report on inflation has helped to raise the standard of debate about economic policy, so a regular Poverty and Social Exclusion Report would increase public awareness and understanding of the needs of a significant minority of the population. An official, but independent, report on progress would underline the government's commitment to meeting those needs.'

He added: 'The range of indicators brought together in this report make it clear that the private sector as well as government has a role in tackling social exclusion by ensuring that people with low incomes have better access to essential services, including personal finance and transport as well as health and education.'

Monitoring poverty and social exclusion: Labour's inheritance by Catherine Howarth, Peter Kenway, Guy Palmer and Cathy Street is published by the Joseph Rowntree Foundation and available from York Publishing Services, 64 Hallfield Road, Layerthorpe, York YO31 7ZW (01904 430033), price 16.95 plus£1.50 p&p.

Summary of findings:

December Ref - D48

Monitoring poverty and social exclusion

The New Policy Institute has constructed the first set of indicators to present a wide view of poverty and social exclusion in Britain. Forty-six indicators show the numbers of people facing difficulties at various points in their lives. The indicators can be updated regularly to monitor trends and help the government 'keep its eye on the ball' in tackling social exclusion.

- The number living on low incomes relative to the average is far higher than 20 years ago, with the numbers in households with below half average income rising from 4 million in 1982 to more than 11 million in 1992. Although the number fell in the mid-1990s, 1996/97 again showed a significant increase of over 9 per cent to 10.5 million individuals.

- Children are more likely than adults to live in poverty and more than 2.5 million live in workless households. Those born in the bottom two social classes are 25 per cent more likely to be underweight as babies and twice as likely to die in childhood accidents. They are three times as likely to be excluded from school if they are black than if they are white.

- Young adults have twice the average rate of unemployment, and those who have jobs are five times as likely to be paid below half the male average wage than older workers. Suicide rates amongst young men with no known occupation are nearly four times the rate as those amongst young men in social classes I and II.

- Over 4 million working-age adults would like to work but do not. Whilst the number officially counted as unemployed has dropped from 3 million to less than 2 million in the last five years, the number of other 'inactive' people who want work actually rose from 2 to 2.5 million.

- Thirty per cent of pensioners are in the bottom fifth of the income distribution and 1.5 million live off state pensions and benefits alone. Poorer pensioners are more likely to suffer from ill-health, disability and anxiety, and to have low spending on items such as food.

- Disadvantage is concentrated within certain communities. Eighty per cent of households in social housing have a weekly income of less than£200, and in 70 per cent of such households the head of the household is not in paid work. Although much more likely to be burgled, over 50 per cent of the poorest fifth of households do not have household insurance.

Background

Social exclusion has become an issue of central policy interest. Growing inequality in the 1980s led to renewed concern about not just poverty itself, but the degree to which groups of people are being excluded from participation in work, lack full access to services and in other ways find themselves outside the mainstream of society. The setting up of the Social Exclusion Unit in 1997 symbolised a desire by government to address the problems facing the most disadvantaged in this wider context.

But, although combating poverty and social exclusion is a stated priority of the present Government, success is not assured and reform inevitably takes time to have an effect. In these circumstances, what is needed is an authoritative, yet independent, assessment of where matters stand on poverty and social exclusion which can be repeated regularly. In producing one, this country would be following the example of others, such as the United States, who have their own regular poverty reports.

The New Policy Institute has produced a first set of forty-six key indicators, each capable of regular updating. The twofold objective is to demonstrate the feasibility of such a report and to create a set of baseline indicators. These can be updated to monitor progress on tackling social exclusion and help the Government 'keep its eye on the ball' in achieving its objectives in this area. The baseline statistics mainly cover the period up to 1996 and early 1997, describing the situation immediately before the present Government took office. They also show where the Labour Government inherited a generally improving situation and where things were deteriorating.

Summary of the poverty and social exclusion indicators

Indicator (latest year of data shown)TrendTrend

(Economic indicators are shown in italics)over medium termover latest year

Income

1 Gap between low and median income (1996/97)ImprovingWorsening

2 Individuals with below 50% of average income (1996/97)ImprovingWorsening

3 Intensity of low income (number below 40% of average income, 1996/97)SteadyWorsening

4 Long-term recipients of benefits (1997)WorseningSteady

5 Individuals with spells of low income (1994)SteadySteady

6 Self-reported difficulty managing financially (%) (1996)ImprovingImproving

Children

7 Children living in workless households (1997)SteadySteady

8 Children living in households with below half average income (1996/97)ImprovingWorsening

9 Low birthweight babies (%) (1996)WorseningSteady

10 Accidental deaths (1996)ImprovingImproving

11 Pupils gaining no GCSE grade C or above (1995/96)ImprovingSteady

12 Permanently excluded from school (1996/97)WorseningSteady

13 Children whose parents divorce (1996)ImprovingImproving

14 Births to girls conceiving under age 16 (1996)WorseningWorsening

15 Children in young offenders' institutions (1997)WorseningWorsening

Young adults

16 Unemployed (1997)ImprovingImproving

17 On low rates of pay (1998)SteadyImproving

18 On severe hardship payments (16- and 17-year-olds) (1997)WorseningImproving

19 Starting drug treatment (1997)WorseningWorsening

20 Suicide (1997)ImprovingSteady

21 Without a basic qualification (19-year-olds) (1996)ImprovingImproving

22 With a criminal record (23-year-olds) (1996)Improvingn/a

Adults age 25 to retirement

23 Individuals wanting paid work (1997)ImprovingImproving

24 Households without work for 2 years or more (1998 )WorseningSteady

25 On low rates of pay (1998)SteadyImproving

26 Insecure in employment (1997)WorseningWorsening

27 Without access to training (1997)SteadySteady

28 Premature death (1992)Worseningn/a

29 Limiting long-standing illness or disability (1996)WorseningWorsening

20 Depression (1994/95)WorseningSteady

Older people

31 Pensioners with no private income (1995/96)SteadyImproving

32 Spending on essentials (1996/97)SteadySteady

33 Limiting long-standing illness or disability (1996)WorseningWorsening

34 Anxiety (1996)SteadySteady

35 Help from social services to live at home (%) (1997)WorseningWorsening

36 Without a telephone (1996/97)ImprovingImproving

Communities

37 Polarisation of work (%) (1996)Steadyn/a

38 Spending on travel (poorest, relative to middle income) (1996/97)SteadyWorsening

39 Lacking a bank or building society account (1995/96)n/aImproving

40 Non-participation in civic organisations (1995)ImprovingImproving

41 Dissatisfaction with local area (%) (1997/98)ImprovingImproving

42 Vulnerability to crime (1996)n/an/a

43 Homes lacking central heating (1996/97)ImprovingImproving

44 Households in temporary accommodation (1997)ImprovingImproving

45 Overcrowding (1996)ImprovingImproving

46 Mortgage arrears (1997)ImprovingImproving

The indicators

Reflecting the importance of multiple disadvantage to individuals, the indicators are mainly grouped according to the life stages of the people affected rather than according to types of problem such as poor housing or employment difficulties, although separate sections deal with income and with communities.

Income

Income inequality rose steeply during the second half of the 1980s but peaked in 1992. The number of people living in households on below half average income is now 10.5 million, compared with 4 million in 1979 (see Figure 1). Although there was some fall in this number in the mid-1990s, the latest reported year (1996/97) saw a renewed rise. The livin g standards of the poorest have hardly risen over the last 20 years, even in absolute terms, and over 2.5 million people are still below half the average income of 1979 (adjusted for prices).

Lone parent families are the household type with by far the greatest chance of having low income. Over 50 per cent of such households had less than half average income in 1996/97. Low income families are also concentrated, with some exceptions, in social housing such that 80 per cent of households in social housing have a weekly income of less than£200 in 1996/97. Furthermore, the number of households dependent on out-of-work benefits for two years or more has risen throughout the 1990s, showing that the persistence of low income is also growing.

Children

Children are particularly vulnerable both to low income and to certain aspects of poverty and exclusion. The larger than average families of poor people means that 25 per cent of children are in the bottom fifth of the income distribution compared with just 14 per cent in the top fifth. A third of children, nearly three million, live in households with below half average income, with this number having risen by 500,000 in 1996/97 after having fallen in the previous few years. The geographic concentration of poor children is also rising.

Income and social class have an important effect on children's health and well-being. Those born into the bottom two social classes are 25 per cent more likely to be underweight than those born into the top three. Less well known is the stark difference in the chance of accidental death, which is twice as high for the lower two classes than the upper three.

Certain aspects of social exclusion of children have seen sharp rises in the last few years. The number of children in young offenders' institutions is up 40 per cent in five years and school exclusions have risen fourfold over the same period. Black children are more than three times as likely to be permanently excluded from schools as white children.

Young adults

The economic situation of young adults is often fragile. Even though youth unemployment has fallen, under-25-year-olds are still twice as likely as all adults to be out of work. Those in work are also far more likely to be on low pay, with about one in three 16- to 24-year-old workers earning below£3.65 an hour, half the male average wage. While the percentage without qualifications has declined, nearly a third of 19-year-olds still lack a recognised basic qualification, such as an NVQ level 2 or five GCSEs.

A significant proportion also have severe difficulties with their lives, extreme symptoms of which include suicide and drug addiction. The number of young adult drug users starting treatment has risen by more than 50 per cent in the last five years. Although the youth suicide rate has fallen since its peak in 1990, it remains highly concentrated among the less privileged.

Adults

Recorded unemployment has gone down during the 1990s, as job-seekers have found work. But the number of people on the fringes of the labour market, not officially unemployed but wanting work, has actually risen over the same period, and now exceeds official unemployment. In total, over 4 million working-age adults in 1997 would have liked to be in paid work but were not (see Figure 4).

Many are also disadvantaged in work. Twenty-five per cent of those in distribution, hotels and catering jobs are paid less than£3.65, and a growing number, over 1.5 million, are in temporary employment, many unwillingly. Those without qualifications are very unlikely to be receiving job-related training.

Finally, economic fortunes and health outcomes are related. For example, manual workers are twice as likely to develop long-standing illnesses before retirement as professional workers. There is also a growing geographical concentration into deprived areas of men and women dying prematurely.

Older people

Although old age is no longer synonymous with poverty, 60 per cent o f pensioners are in the bottom 40 per cent of the income distribution. The 1.5 million who have no income other than their state pension are particularly vulnerable; for example, they spend about half as much on food as those with additional income. But they are also increasingly likely to have such everyday facilities as telephones.

Those from unskilled manual backgrounds are disproportionately represented among the 4 million older people who have their lives restricted by long-standing illness or disability. They are also more likely to be among the 4 million women and 1 million men over 60 who feel unsafe out alone after dark.

Communities

A final group of indicators relates to the quality of people's lives in their immediate environment. Monitoring this important aspect of social exclusion is constrained to some extent by a lack of suitable data. Whereas national statistics on many aspects of poverty and social exclusion are available, as are local studies on the particular problems in particular areas, regular, nationally comparable data on local conditions are still in short supply.

Community-based activity is an important mechanism for social inclusion, yet the poorest participate in civic organisations at only about half the rate of richer people, and are generally less satisfied with their neighbourhoods.

Two particular sources of exclusion picked up by the indicators are lack of access to financial services and poor housing. Nearly 20 per cent of the poorest fifth of the population lack bank accounts, which many would consider essential to full participation in a modern society, and over half lack house contents insurance, even though they are twice as likely to be burgled than those that do have it. Much data on poor housing is not available annually, but those problems for which figures are available - homes without central heating, overcrowding, households in temporary accommodation, and mortgage arrears - have all been reducing in recent years.

About the study

While the data were drawn from existing sources, the study involved a wide-ranging investigation of the availability and suitability of various indicators. Throughout, the New Policy Institute team worked in consultation with a much wider group, encompassing politicians, civil servants (particularly government statisticians), academic experts, researchers and campaigners (including those with first hand experience of the problems).

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