On the 22nd August, the Big Lottery Fund announced that it was ‘Preventing the poverty premium’ and was investing £31million to help achieve this. I was, as one might expect, heartened when I saw this news because,as Martin Lewis, the ‘Money Saving Expert’ points out in the press release ‘it costs more to be poor’. Save the Children estimated in 2011 that the ‘poverty premium’ costs an average low income family around £1280 per year and a report by Barnardo’s at the end of 2011 highlighted the impact of high cost credit on the lives of low incomes families, calling it ‘a vicious cycle’. CPAG , in their ‘manifesto for success‘ in ending child poverty identified ‘ending the poverty premium’ as one of ten vital steps. The document states:
An authoritative analysis of the problem (with the telling subtitle: ‘the limits of competitive markets in the provision of essential services to lowincome consumers’) shows that poorer consumers get a worse deal with food, housing, water supply, telecommunications, public transport, financial services and energy.
The reason for these market failures are complex and intertwined. Access to some lower-cost goods or services may be closed to low income consumers, for example, through redlining (advertising to some groups and not to others), while access to the same cost or similar quality services may be limited because of credit records.
Differential pricing for different forms of payment exclude or disadvantage poorer groups. For example, direct debits (which exacerbate problems like fuel poverty) are more likely to be used by the well-banked majority, rather than the financially excluded. And access to cheaper goods, for example, bulk purchases at supermarkets which may need a car to access, systemically disadvantage poorer people.
However, on closer inspection of the Big Lottery programme, none of these issues are being addressed. Instead, according to the accompanying press release the focus of the projects will be on helping ‘an estimated 150,000 tenants across England become more financially aware and more confident in money management’ and it notes that ‘there has been close to a 10 per cent surge in debt relief orders since the same quarter last year’. With these comments and others throughout the document, the press release gives the impression that the fault for paying a poverty premium lies with the individuals for not being ‘savvy’ enough to negotiate what the Chair of BLF England called ‘ the maze of modern money management’. It appears to be an admission that the system is unfair and complex and the answer is to make people more aware of how unfair and complex it is, rather than making the system fairer and simpler.
There is, however, lots of evidence that suggests that the vast majority of low income families are very skilled at managing their money.Ruth Lister highlights some of this evidence in her book Poverty (2004, pp133-134), noting that Gilliat (2001)states:
many of the poor are very good managers of their poverty. They are resourceful and use their money and time with great expediency. They are precise about planning hosuehold accounts and ruthless about expenditure, savagely cutting back to keep out of debt. They set priorities and cut out luxuries. Despite this they understandably describe such work as sacrficie and relentless struggle.
Vaitlingham (2002) notes that: in general, poor people manage their finances with care, skill and resourcefulness. There is no evidence to suggest that there are two types ofpoor families – those who can cope and those who can’t although McCrone (1994) suggests that whilst a distinction can be made, it represents ‘a very fine line’.
The problem, I would argue, appears to be that there are many families who do not have sufficient money to meet their needs. An insufficient income will always be insufficient, no matter how carefully it is eked out. One might achieve, in the words of Spike Milligan, ‘a more pleasant form of misery’ with a bit of financial nous, but it is hardly likely to be life changing. George Orwell made a very good point in The Road to Wigan Pier when he wrote that we, as a society, allow families to live with in poverty and then have the cheek to tell them how to spend their limited income more wisely: ‘First you condemn a family to live on thirty shillings a week, and then you have the damned impertinence to tell them how they are to spend their money’. And it all, of course, contributes to the narrative that people with an ‘income and resources so inadequate as to preclude them from having a standard of living considered acceptable in the society in which they live’ are somehow to blame for their circumstances. If these people are to blame for their circumstances, then it naturally follows that poverty can be solved by focusing on them, and not problems caused by wider society.
There is, however, sufficient wealth and resources in the UK to ensure that no-one lives in fear of poverty. The problem is with how the wealth and resources are distributed and used rather than a problem of an absolute lack of resources, which is in contrast with the families highlighted above. Finally, and in another example of what a strange society we live in, there is also the slightly unfortunate irony that it is left to a charitable fund whose sole source of income is from a form of gambling to support advice to low income families on how to manage their money better…..