Causes of Wealth Inequality in the UK

Learning Intentions Identify the causes of wealth inequality in the UK •Understand the reasons, both political and social / economic, for the continued existence of poverty in the UK

Success Criteria Create a mind map detailing the causes of Wealth inequality in the UK Provide detailed answers to knowledge questions about wealth inequality Answer a 12 mark essay on the topic of wealth inequality

Poverty rates are highest among children and their parents The sociologist Peter Townsend defined poverty as “lacking the resources to meet those basic needs, including social participation, which other take for granted.” The UK Poverty line is classed as earning 60% or less of the average income in the UK. Poverty rates are highest among children and their parents The group with the highest level of poverty are lone parent families Of the 12 million working age adults and children in poverty in the UK, 8 million live in families where at least one person is in work (sometimes referred to as the “working poor”) 30% of children and 16% of pensioners now live in poverty KNOWLEDGE

Causes of Wealth Inequalities in the UK KNOWLEDGE Factors that influence wealth Government policy Unemployment Low Pay Social Exclusion Gender Ethnicity Age Geography Poor Education & Skills

Often referred to as the “Poverty Cycle” it is clear that there is no one single cause of poverty/wealth inequalities in the UK.

Unemployment & Worklessness Unemployment and worklessness are a key contributory factor that can lead to poverty. Those who are unemployed can find themselves trapped in a cycle of deprivation as they do not have the income needed for a basic standard or living or the opportunities to gain the skills required to gain employment. Worklessness is when in an individual cannot work, often due to health reasons, or because they might have caring responsibilities that make it very difficult to find suitable employment 60% of working-age adults in workless households were in poverty in 2017 compared with just 16% of those in working households. Evidence JRF 2017 KNOWLEDGE

Low Pay KNOWLEDGE Employment on its own is often not enough to escape poverty as low pay is a key contributory factor that can lead to poverty. Paid work is not, on its own, a guarantee of being free from poverty. Low pay, part- time working and not living in a two adult household increases the risk of poverty as those on a low income are less likely to have the finances needed to meet the high cost of living in the UK. The high cost of housing in the UK is considered to be a major issue for those in low paid employment. 20% of the poorest 5th of the UK population have debt problems compared with 10% of the second poorest 5th and 0.9% of the richest 5th. The poorest 5th of the UK populations have on average £174 a week after housing costs compared to the second poorest 5th who have £299 and the richest 5th who have £880 a week after housing costs. 47% of working age adults on the lowest incomes spend 1/3rd of their income on housing. Evidence (JRF 2018) https://www.jrf.org.uk/data?search_api_views_fulltext=income The Working Poor: Families on the Breadline

Current UK Living Wage/ Minimum Wage (April 2018 rates): The legal amount a worker MUST be paid per hour, age dependent. KNOWLEDGE “Cost of Living Wage”: the estimated amount a worker must earn per hour to meet the basic standard of living in the UK (The Living Wage Foundation)

Education and Skills KNOWLEDGE Educational attainment is an indicator of wealth inequality as the likelihood is that the poorer the education an individual has, the more likely it is that they will live in poverty. Those with a higher level of qualifications will have more skills and thus be more employable. It is also likely that they will have the skills and knowledge that are desirable in professions that pay well such as law and medicine (linking to social class). This makes it less likely that they will experience poverty in contrast to those who are low skilled, with a poorer education who will be limited in their employment options. Simply put, the more educated you are the more likely you are to get a job and be paid well. Evidence (JRF 2017)

In 2016 around 86% of working age people educated to degree level were in employment compared to around 44% of those with no qualifications. In 2016, people educated to degree level received an average full time hourly pay of about £8.30 more than those with no qualifications. KNOWLEDGE

Tasks Unemployment and Worklessness: Explain why this factor can lead to poverty or make it more likely that someone is in poverty. What evidence is there to support your explanation? How significant a factor do you think this issue is as a cause of poverty in the UK? Low Pay Poor Education and Skills

Geographical Location The area in which someone lives can also increase the chance that a person may find themselves in poverty. People in rural and coastal communities tend to be employed in lower paid work often related to tourism such as retail, visitor attractions, hotels, bars and restaurants. In contrast, urban based communities are more likely to have higher concentrations of well paid jobs such as in law, finance, and marketing and sectors. However, within cities there are communities that may be isolated and suffer from the so called “Poverty Premium”. This means that people on low incomes may spend more on goods and services because the areas they live in may see less competition between retailers and so they suffer higher costs in shops while being less likely to be able to afford to travel far for cheaper groceries. KNOWLEDGE

The poverty premium means that 73% (5 The poverty premium means that 73% (5.8 million people) are paying an extra £74 a year in car insurance and an extra £266 a year on food shopping because of difficulties accessing good value shops. Evidence (JFR 2017) KNOWLEDGE What is the Poverty Premium?

Discrimination (Gender and Ethnicity) KNOWLEDGE For women and minority groups discrimination can be a factor that increases the chances of being in poverty. For these groups, stereotypes and discriminatory views have historically been a barrier that has held individuals back in education and the world of work. Women have historically been expected to perform more caring functions both at home and in the workplace and this is evidenced in the vast numbers of women in professions described by the 5 C’s. Ethnic minorities have suffered from both direct and indirect racism where they have been denied access to education or even opportunities to interview for jobs. The 5 C’s – female dominated industries: Cleaning Catering Clerical (Admin) Cashiering (retail) Childcare Evidence (JRF 2017)

Government Policies – The Benefits System KNOWLEDGE Individuals who are on benefits can be vulnerable to economic problems as they rely on the state for some or all their income. This makes them more at risk of experiencing poverty if the government chooses to limit or reduce the benefits individuals receive. Families have, in recent decades, benefited by receiving support in the form of Child Benefit to help pay for clothes and food of children. Many benefits were also credited with protecting low income families, such as Child Tax Credits. However, in recent years, under Conservative-led governments, there have been changes to benefits where there has been a fall in the value of some of these benefits and who can claim specific types of benefits.

Single earner couples lost £11 a week In 2016 families where two parents work full time benefited from better pay and tax cuts - their net income increased by £8 a week Families where one parent worked part time and the other full time lost £2 a week Single earner couples lost £11 a week Lone parents working full time lost £16 a week Lone parents working part time lost £26 a week Read the article: “I spent a week living on Universal Credit” and take notes on the reporter’s experience Universal Credit - Is it working? KNOWLEDGE

Age Age in the UK is a good indicator of how likely someone might experience poverty. Generally children are those more likely to be in poverty. This is because they are entirely dependent on the income of others and so if they live in a low earning household then this increases the chances of them suffering from social deprivation. In recent times the elderly have seen lower levels of poverty overall although some elderly people suffer from extreme poverty. Many older people have benefited from buying property when house prices were relatively low (such as the 1970s/80s) whilst house prices have massively risen in recent decades providing assets to older owners. On the other hand, pensioners who have no private pension and do not own property have suffered greatly from rises in the cost of living, such as fuel prices, food and housing costs, [1] https://www.jrf.org.uk/data/poverty-rate-person-type-over-time-after-housing-costs-ahc KNOWLEDGE

The poverty rate amongst children is 30% The poverty rate for pensioners is 15.8% KNOWLEDGE Watch the clips below about poverty in the UK and take down notes on the issues children and/or pensioners in poverty face in the UK today. Look out for: Housing costs Food Fuel Costs Benefits changes Education The reality of Childhood Poverty in the UK Childhood and Pensioner Poverty

Location Explain why this factor can lead to poverty or make it more likely that someone is in poverty. What evidence is there to support your explanation? How significant a factor do you think this issue is as a cause of poverty in the UK? Benefits Discrimination and Age

Growing Up Poor – Shelby’s Story Social Life/Lifestyle Lesson Starter Growing Up Poor – Shelby’s Story https://www.youtube.com/watch?v=PaI_GnH_FlE As you watch the clip take notes on: Money Food and Housing Education Social Life/Lifestyle