Category Archives: in-work poverty

Family Support and Child Poverty

Steve Crossley, freshly released from the burden of responsibility for this blog, has penned a readable report on the role of Family Support in addressing Child Poverty: ‘Family support’ and child poverty.

Based on a review of available evaluation evidence, Steve concludes that family support projects, while important for helping families, are NOT a way of tackling child poverty, because while they tackle some issues caused or exacerbated by poverty, but do not tackle the causes of that poverty.  He points out that the scale of resources invested in supporting families is dwarfed by the resources that are being taken away from families through welfare reform, cuts to public services and falling real wages.


Implementing the Living Wage in local authorities

This week is Living Wage Week in the UK and, as part of this, we have just published our fourth Working Paper looking at the challenges and obstacles local authorities have faced – and overcome – in implementing the Living Wage.

The UK Living Wage is £7.65 and, at the time of writing, a number of local authorities in the North East (and hopefully beyond) are considering how they can implement the Living Wage. At present, none of the 12 local authorities in the region pay all of their staff over the UK Living Wage. During discussions with a number of local authorities, they have expressed concern over what the Living Wage might mean for pay structures, or for commissioning and procurement arrangements. These discussions suggested that a Working Paper exploring how other local authorities had appraoched these issues might be of benefit to local authorities who have yet to implement the Living Wage.

The Working Paper can be accessed by clicking on the image below, and below this are two related presentations that I have given recently looking at the wider role of employers in tackling poverty in the UK.

Working Paper 4 – Implementing the Living Wage in Local Authorities

Paper 4

Presentation delivered to South Tyneside Living Wage Commission (June 2013)

STLW

Presentation delivered to Business in the Community Peer Learning Network (October 2013)

BITC

If you would like any more info on our work with employers in the North East and the role they can play in tackling poverty, please feel free to get in touch with us.

Kind regards,

Steve

s.j.crossley@durham.ac.uk


Valuing the person over the function

Why Paying a Living Wage Makes Business Sense

Guest post by David Van der Velde, Managing Director of Web Development Company, Consult and Design International.

Consult and Design recently joined hundreds of other employers in pledging to pay a living wage to all our staff, see www.livingwage.org.uk/employers. In this blog post, I will clarify why this is a positive move for our business, for our staff, for our clients and for society at large. I will explain why I am advising businesses to join us and other living wage employers such as PWC, Amnesty, NCVO and KPMG as well as my thoughts on what the living wage (or an increase in the minimum wage) means for how we think about our staff and where government should be targeting public policy.

So what are our reasons for becoming a Living Wage employer?

Consult and Design is a knowledge-based business, investing heavily in the skills of our workforce. We know the value of bringing good people into the business, giving them the proper financial support and training in order that they can contribute to the success of the business, not just by doing their job adequately but also by staying committed to the on-going success of the business. When staff are treated well they put their whole self into the job. By treating our staff well, we attract talented and creative people who are constantly finding new ways to improve what we do and the way do it.

Staff who feel valued and respected are more likely to go the extra mile to provide a good service to our clients and make sure that the work they produce is of the highest quality.

The alternative to looking after our staff in this way would be increased staff turnover (with associated recruitment and training costs), more sick leave, reduced productivity for us and a lower quality of work for our clients. This really isn’t an alternative. (See 1. “The Business Case for the Living Wage”)

What about unskilled workers?

All this is easy enough to say for a highly skilled, knowledge based business, but there is an argument that a higher minimum wage or ‘Living Wage’ will force some businesses to shed unskilled jobs in order to accommodate the increase in costs, or alternatively pass higher costs on to their customers.

Will consumer prices rise?

In terms of higher costs to the consumer, if paying the living wage was accepted as the norm, then without any government intervention the tendency would be for this to increase the costs of production and therefore the price paid by the customer. Studies have found however (2), that much if not all of this loss can be offset by reductions in staff turnover and the associated recruitment and training costs. As stated above, the improved staff loyalty that results from paying a living wage results in greater productivity (again offsetting costs) and better quality of work (meaning better quality for the customer.) With this in mind cost increases are likely to be marginal and customers will see a rise in the quality of the goods/services they purchase, resulting in better overall value.

Will unemployment increase?

Before the minimum wage was introduced in the UK in April 1999, it was opposed by business lobbies and some on the political right, with David Cameron quoted in the Stafford Chronicle, 21 February 1996 saying  ‘Labour’s plans for minimum wages, would send unemployment straight back up.’ This has not been borne out by data (3) – empirical work on the impact of the introduction of the minimum wage suggests that ‘while it may have had an adverse effect on employment in particular sectors, the overall effect on employment has been broadly neutral.’

How should businesses change the way they work to meet the living wage standard?

In short, if businesses are given enough time to plan for the change then smart businesses will recognise the need to change the way that jobs are organised so that the value their staff contribute can make paying the living wage viable.

In some sectors, for smaller businesses and in certain contexts it may be necessary for public policy to offer financial support and incentives to counteract any increased burden on employers, which could stifle enterprise and growth.

This is less of a problem for the knowledge based businesses, where investment in staff is the norm and retention of trained staff a priority. For businesses employing a large proportion of unskilled, minimum wage staff the culture change needs to be a bit more radical.

Moving from a ‘function-centric’ to a ‘person-centric’ employment model

We need to move away from the ‘function-centric’ model where a business owner asks a question like –  “what’s the cheapest way I can keep the floor clean?” to a “person-centric” model where the question is framed as “how can I get the best value out of employing Mary?”

Once the question is framed in this way the business becomes more interested in the employee as a whole person, with all the potential they bring. This increases the likelihood of the organisation wanting to invest in Mary’s training and future productivity.

The social impact of low pay

The final argument for paying a living wage lies in the impact this has on the communities in which we live, work and do business.

At Consult and Design we work with a lot of voluntary sector organisations some of whom support disadvantaged children, families and communities. The Joseph Rowntree Foundation’s report (4) on ‘The Role of the low pay, no pay cycle in recurrent poverty’ shows that low pay and the associated job insecurity has a significant detrimental impact on health, child poverty and debt in communities.

So should government act and how?

These days, everyone would agree that it makes sense for governments to intervene to prevent business from polluting the environment because of the negative impact on communities and the cost to the public sector of cleaning up. In the same way it makes sense for public policy to take account of the effect in communities of low pay and the cost of dealing with the resultant social problems further down the line.

By increasing the statutory minimum wage to a living wage level, the public sector will make long term savings, which far outweigh the potential costs incurred by businesses.

That said, at Consult and Design our experience of recruiting staff has meant investing heavily in their skills, putting in time to train staff and pay their wages while they learn. We have benefitted from subsidies to recruit young people, which have offset some of these costs and enabled us to create permanent well-paid jobs for the young people we recruit.

If we can recognise the benefit to the public purse of creating well paid jobs and training staff, then there ought to be a mechanism for supporting and rewarding this activity.

I would like to see a system where small to medium enterprises (SME’s) could employ new staff at a lower rate whilst they are in training, with the difference in pay being made up by the government. The success of businesses in creating permanent posts from these subsidised contracts should be recorded to prevent abuse of the system, to reward the business that are successful employers and to inform minimum wage job seekers about those firms where they have the best opportunities to progress.

1.             The Business Case for the Living Wage

https://www.google.co.uk/url?sa=t&rct=j&q=&esrc=s&source=web&cd=4&ved=0CFEQFjAD&url=http%3A%2F%2Fwww.unisoneastern.org.uk%2Fassets%2Fdownload%2F841&ei=j8tSUqyqBKrK0QWn8oGoAQ&usg=AFQjCNGrCQQvU4x3xcY1ZpAXyM89jiN0OA&sig2=ubgrrMY33oLA55A30-1lQg

2.         Employers’ Role in the Low Pay, No Pay Cycle

http://www.jrf.org.uk/publications/employers-role-low-pay-no-pay

3.         “The Employment Effects of the National Minimum Wage”,

Economic Journal, 114, C110-116.  Stewart, Mark B. (2004b)

4.         ‘The Role of the low pay, no pay cycle in recurrent poverty’

http://www.jrf.org.uk/publications/understanding-recurrent-poverty

David Van der Velde, Managing Director of Web Development Company, Consult and Design International.

www.consultanddesign.com


“How and why did we let it become acceptable for a full time job not to pay enough to live on?”

In the New Statesman earlier this week (reported on here, here and here, but no direct link available to the article at time of writing), Guy Opperman, the Conservative MP for Hexham in Northumberland, called for employers to pay their employees a Living Wage. This is significant in that he is the first Conservative MP to proactively call for employers to do this. David Cameron has previously called the Living Wage ‘an idea whose time has come’ and Boris Johnson is a big supporter, but it is not a subject that Conservative MPs regularly promote and only one Conservative council has become Living Wage employers, to the best of my knowledge.

We have also heard in recent weeks that the Conservatives may be attempting to position themselves as the ‘party of the low paid’ in the North. One could choose to see Guy Opperman’s announcement in this light, but we shouldn’t forget that he has ‘form’ in this area already. He was also the first Conservative MP to speak out against regional pay. At the time he said there was ‘no economic argument’ for regional pay and highlighted the importance of public sector pay in supporting and hopefully stimulating the region’s economy

“I am very concerned that regional pay would lead to a reduction in the pay packets of some public sector workers in the North East. I do not believe reducing public sector pay will help stimulate private economic growth.”

All of this is, therefore, very interesting for the North East. We have one of only two Conservative MPs in the North East arguing for a Living Wage, in a region with no Conservative controlled councils – but also a region with no public sector employers paying all of their staff the UK Living Wage of £7.45 per hour. So, as someone remarked to me on Wednesday, you could argue there is definitely room for a bit of competition for the votes of low paid workers in the North East.

Of course, if this is part of a Conservative plan to become the party of the low-paid, there are lots of other issues that Mr Opperman’s colleagues could address as well as pay. We know that low paid jobs are very often part-time and/or temporary and the recent attention on zero hours contracts highlights the insecurity of much low paid work that is one offer at present. Becoming a Living Wage employer doesn’t make a great deal of difference to employees if they’re only working a couple of hours a week – or none at all.

For now though, we should be grateful that MPs in the region are talking about this issue (Middlesbrough MP Andy Macdonald recently announced his desire to see Middlesbrough becoming a Living Wage town and, to be fair to him, we didn’t give that the coverage it perhaps deserved) and it is particularly heartening that a Conservative MP in the North East is offering the glimpse of a political consensus on improving the pay of our lowest paid workers.

You can – and should – follow Guy Opperman on Twitter – @guyoppermanmp


What is the ‘economic reality’?

An interesting blog post from Shaun Rafferty at JRF last week suggested, in the byline to the post, that ‘Economic reality means the Living Wage can’t be compulsory’ and then went on to argue that lobbying to make the Living Wage compulsory was ‘self-defeating’ because ‘It’s an economic reality that in the current operating environment there are many employers who genuinely couldn’t afford to pay their staff the Living Wage.’

This got me thinking about what the economic ‘reality’ is and I guess my reality is slightly different from Shaun’s (more post-modernism later). My view of the economic situation is that many people in this country ‘have never had it so good’, so to speak, but that this affluence sits quite uncomfortably alongside poverty. There are huge inequalities in wealth, but still ots of wealth in the UK as the figures below help to demonstrate.

The ONS suggested last year that household wealth in the UK had hit £10.3 trillion in 2008/10. The ONS website states that

Mean household total wealth grew from £373,000 in 2006/08 to £418,000 in 2008/10; the region with the highest mean value in 2008/10 was the South East at £562,000; the lowest was the North East where mean household total wealth was £322,000

Ruth Levitas used the table recently to highlight how the top 10% of earners received 10% more of total net income in 2009/10 than they did in 1979 whereas the bottom 10% saw their proportion drop from 4% of total net income down to 1% over the same period. So, the put it quite bluntly, the rich have got richer and the poor have got poorer over the last 30 years.

Picture1

More recently, the Sunday Time published its Rich List for this year which showed that ‘The wealth of the richest 1,000 has reached a record high – £450bn. The increase in wealth is significant, with 11 new billionaires being added to the list between 2012 and 2013.’

However, not all employers are in the top 10% of earners and Shaun’s point was about the operating environment, but last year it was reported in The Telegraph that business investment in the UK was slow ‘despite a corporate cash pile now worth more than £754bn’. The figure, taken from an Ernst & Young ITEM Club report, equates to 50% of gross domestic product and the report was expected to say that say that ‘while businesses are in a strong position, British households remain under intense pressure.’ (my emphasis)

And, of course, there is the issue of tax avoidance and evasion. HMRC conservatively estimate the tax gap as around £32 billion. Richard Murphy at Tax Justice UK has estimated it at potentially in excess of £120 billion. Put simply, if everyone paid the tax they were supposed and paid it on time, there would be more than enough for poverty to be eradicated in the UK and, if distributed differently, there is more than enough money to ensure that all employers could afford to pay the Living Wage to their staff.

There is almost blanket acceptance of the ‘need’ for austerity and the tough ‘operating environment’ that this creates, not least in social policy areas such as poverty and low-pay, where policy solutions have to ‘fiscally credible’. However, the figures above – from diverse sources – suggest that the economic reality might not be all it seems. Indeed, if we were to get all post-modern about it (and I said I would return to this) we might begin to think that the ‘economic reality’ was in fact a ‘hyperreality’ – a simulation or representation of reality that is difficult to distinguish from reality.

 

 


Responsible business has to start with responsible employment

This week is Business in the Community’s ‘Responsible Business Week’ and we’re very pleased to be able to help report that one large employer in the North East shares our view that responsible business practice has to start with the treatment of employees, including their pay.

fabrick

Fabrick Housing Group, which manages 14,000 properties and is based in the Tees Valley but covers an area from North Tyneside to York, have recently decided to become a Living Wage employer and are pursuing accreditation for this as well. They have also been keen to promote this decision and managed to get an article in Inside Housing magazine, highlighting that other housing providers could also make the pledge. A press release from Fabrick states that they are now encouraging their suppliers to join up and sign up to become Living Wage employers

Heather Ashton, Group Director of Finance and Corporate Services for Fabrick, who recently led a BitC ‘Seeing is Believing’ visit on in-work poverty in the North East said: “This is really important to us as an employer and we want the living wage to become a real consideration for businesses that become our suppliers too. We work very closely with local suppliers and when we award a contract, we will offer them a fair price to make sure they can provide the living wage” and “Offering the living wage helps tackle poverty and reduce the massive inequalities in our society.”

The decision to become a Living Wage employer has meant that 29 people received a pay increase of around ten per cent, but the decision to apply for accreditation and to encourage suppliers to sign up as well will bring benefits to a far larger number of low paid workers.

And, we also found out that Aquila Way, another housing provider in the North East have also just become accredited Living Wage employers and we’re sure that others are about to follow as well. This means that we now have more housing providers than local authorities in the North East paying the Living Wage…

For more information about Fabrick Housing Group, contact Helen Sturdy, Communications and Media Officer, on 01642 773616.

If you’d like to know more about how to become a Living Wage employer, please click here

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“People where I live want to work….”

A couple of weeks ago we highlighted the discussions that had taken place in the House of Lords concerning the benefits up-rating bill and the strength of feeling around it. Yesterday, in discussions about the Jobseekers (Back to work schemes) Bill – more commonly understood as being about the ‘Poundland case’ – it was the turn of the MPs. The discussion based around the government’s proposal to introduce emergency legislation which would mean that they would not have to re-pay £130,000,000 that had been withheld  from people whose benefits had been sanctioned illegally.

Two of the strongest interventions came from MPs from the North East – Ian Lavery of Wansbeck and Grahame Morris from Easington. Below are some of the comments that they made in opposing the bill, which went against the wishes and official position of the Labour leadership. Politicians often get a hard time in our country at the present time and are often accused of being ‘out of touch’ with what is happening in ‘real life’. The comments below suggest that this might well be an unfair accusation in some cases. I appreciate that I could be accused of regional – or indeed political – bias in highlighting these contributions to the debate. I fully accept the regional bias charge and would also remind readers that the official Labour position was to abstain from the bill. (For info, 6 North East MPs voted against the bill – the two below, Ian Mearns, Dave Anderson, Mary Glindon & Nick Brown, three voted for the Bill – Guy Opperman, James Wharton and Ian Swales – but I couldn’t find contributions form them. The rest didn’t vote, from what I can gather). However, in order to redress the potential political bias somewhat, I have given the final word to Iain Duncan Smith, and have emphasised some of his comments  as they may be of particular interest….

Ian Lavery

The Bill is being introduced to save the taxpayer up to £130 million, yet it deprives the most vulnerable people who have been on workfare and are looking to better themselves in employment. It has been introduced to deny £130 million compensation to 300,000 people who would like decent employment with decent wages, terms and conditions. The Government have introduced emergency legislation to prevent those people from getting only what the Court of Appeal says they deserve. That is an absolute outrage.

I am certain that the 300,000 people the Court says have a claim because of the illegal actions of the Minister’s Department should receive it—there is no doubt about it. The Bill is being introduced by the DWP and the Government to deprive many hard-working people, and many people who want to be hard-working, of any finance whatever. Is that in the best interests of the economy? It is an absolute disgrace. Those people will spend money in the economy. They might get £50, £100 or £72 a week, but they will spend it, because it is the only money they have. The Minister should not seek to deprive those people and leave them with no finances whatever.

The Bill turns my stomach. The impact assessment states: “A retrospective transfer of public money to this group of claimants would represent poor value to the taxpayer”.

What a disgrace to say such a thing in Government documents with reference to the people I have mentioned 10, 15 or 20 times previously. That will not give them self-esteem. They are doing their very best.

Members of Parliament discuss with constituents, and often people away from the constituency, the merits and otherwise of policies. I often meet people with a very different view from the people the hon. Gentleman has met. That is not to say that that has not been said, but the people I meet want decent jobs. They want the opportunity to get up in the morning and  go to work for a decent wage. They would accept the minimum wage even though, at this point in time, it is not high enough. Where I live, 25 people are after every single job in the jobcentre. That means that 24 are not getting employment for every single opportunity. People want to work for the best intentions and the right reasons. They want self-esteem and finances. People where I live want to work—I am sure that extends throughout the country.

Saying that paying claimants the money that the Court says they should be paid—the result of the ruling means that the £130 million can be paid—does not represent good value for the taxpayer is an absolute disgrace. It is not the type of language we would expect from any Government. It is not right to talk about people as, “This group of claimants.” They are ordinary people with feelings, and many of them want to get on in life.

The impact assessment states: “If the Department cannot make these retrospective changes, then further reductions in benefits might be required in order to find the money to repay the sanctions.”

That is blackmail of the highest order—I make no apology for the strength of my feeling on that. If people are due finances, they should get them, particularly following a court ruling, but the Government are saying, “If we pay these people, we might have to cut benefits for other people as a result because that is where we have to find the money.” That is emotional blackmail. It is totally and utterly bang out of order. They are trying to set people who are looking for work and on benefits against each other. That is absolutely unacceptable.

Some 300,000 people will be denied their legal rights if the Bill is passed. This is just another ideological attack on the unemployed and the less well-off, despite a High Court judgment. Why does the Minister not just accept the court of law? Give these people what they are entitled to. It is the Minister’s mess. Why should they suffer?

Grahame Morris

Members on both sides of the House by saying that, if the funds are not recovered from those who were incorrectly sanctioned, they will have to be recovered from elsewhere in the welfare budget. That is outrageous blackmail; I am sorry if that is not parliamentary language, but I find that deeply offensive. It goes against every grain of fairness in Members on both sides of the House. The view I am expressing is the view that has been unanimously expressed to me. I have received numerous e-mails and messages from my constituents over the past 48 hours, all of them asking me to vote against this Bill as it is unfair and unjust.

The Government, and especially Government Back Benchers, have characterised jobseekers who have been sanctioned as workshy and feckless—the sentiment expressed was “Are you really suggesting these people shouldn’t be sanctioned?” Let us have a look at the Work programme, however. It has gone from chaos to farce. We talk about “workshy”, but what about wage-shy employers who exploit the unemployed, with the connivance, approval and funding of the Government?

I oppose the concept of two nations, as does my party, but what will the consequences of these measures be? The Government are creating two nations. They are seeking to penalise and punish the poor for the mistakes of the rich and powerful, in part of a continuing series of policies that are badged as “austerity”. Those policies are pushing the poorest in society further into poverty.

We need to look at the situation we are in now. This is the wrong thing to do: it is unjust and unfair to give millionaires a £2,000 a week tax cut, at the same time as the right hon. Gentleman’s Government propose to deprive some of the poorest people, who have been illegally sanctioned, of large chunks of their income. It is outrageous, and it is rank hypocrisy for anyone to talk about rights with the emphasis on responsibility when it comes to workfare. If they are willing to undermine the judiciary and the rule of law, and vote for retrospective legislation to cover up the mistakes and failings of the Minister, who is asking that we legislate to place him above the law, that is a dangerous precedent to establish.

I cannot, in all conscience, support this desperate Bill, put forward by a desperate Government who have broken their own laws and now wish to forgo their legal obligations and withhold social security payments of £130 million to some of the poorest people in the country. Why do we not apply that method across the board? If the national emergency is such that it is right to deny access to social security to those who are entitled to it in order to safeguard the national economy, why do we not chase the tax exiles—those powerful individuals who own newspapers and luxury hotels, who pay no corporation tax and who have laid siege to a small Channel Island?

We are in the sorry situation of the Minister blackmailing hon. Members by threatening a collective punishment for all those in receipt of social security and welfare benefits if these changes do not go through, because the Department might have to find the money through further reductions elsewhere in its budget. I thought that it was the Secretary of State for Education and his advisers who were the bullies. It is now obvious that the Department for Work and Pensions has decided to sink to those standards by threatening Members of the House in this way, which is below what we would expect of a responsible Government and a responsible Minister.

 I did not come into Parliament to penalise and punish the vulnerable and the poor for the mistakes of the Government. The Department for Work and Pensions seems to be in a state of chaos. It is trying to save money by issuing unlawful sanctions for a Work programme that is not fit for purpose. It is making arbitrary cuts to disability living allowance and employment and support allowance, and is seeking to reduce the case load by 20%. Through the bedroom tax, it is cutting the incomes of disabled people and families with children. The welfare state under this coalition Government in 2013 is failing at every turn.

What we are seeing today is an abuse of power. This is an appalling Bill. I urge the Minister to take responsibility for his actions, even at this late stage, to put a stop to the Bill and to pay those who were unlawfully sanctioned because of his failings. I will vote against the Bill and I urge other hon. Members to do the same.

Iain Duncan Smith

I am listening carefully to what my right hon. Friend has to say. As the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), has made clear and my hon. Friend the Under-Secretary of State will make clear, all of these things are kept constantly under review. We want to improve them and that is what jobcentre staff do. They are brilliant at that, by the way, and they get better and better. My point on mandatory work activity is that it is not just work experience. It is also about changing culture: finding out whether someone is working and not declaring it; and getting people used to the idea of getting out of bed in the morning and attending somewhere where they do what they have been asked to do, because they have so got out of the habit of doing that, that even attending an interview has become a problem for them. This is not just about training; it is about getting people culturally back in line so that they can then be dealt with by advisers.


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