Friday, 23 January 2015

For Richer, for Poorer. And a Tartan Trident.

If you take a bus down Ferry Road in Edinburgh you will move from wealth to poverty as you head west. Or you can just stand in Stewart's Melville (private) College's playing fields and chuck a stone west to Pilton. You will be throwing your stone from an area ranked as amongst the least deprived into an area that is the most deprived, according to the Scottish Index of Multiple Deprivation.

Edinburgh, deprived

This week two reports have talked about poverty.

What Do We Know about In-Work Poverty? [1] shows that most poor people (52%) in Scotland live in homes where at least one person has a job.  Worse, the proportion of poor children in homes with an adult in work has increased from 40% in 1999 to almost two thirds today.

What is going on? Doesn't a job give you an income? Well yes, and poverty is of course related to work (the rate of poverty amongst households where no-one is in paid work is of course higher.) But people in low-paid jobs - earning less than £7.40 an hour - have double the poverty risk of all workers. Low-paid women are especially vulnerable; mothers returning to work are more likely to end up in low-paid jobs, says the report, which highlights the almost 20% difference in wages paid to men versus women in the private sector.

Scotland comes off badly in the low-pay stakes compared to other countries: 19.5% of employees in Scotland were low-paid in 2011 compared to say 14% in New Zealand or 15% in Spain.

Low-wage work is a dead end - workers are less likely to be offered training, and more low-paid workers become unemployed than their better paid colleagues. So families are juggling low-pay, no-pay and benefits and it is, above all, the children who suffer.

Meanwhile, Oxfam has shown in Wealth: Having It All and Wanting More [2] - published this week in time for Davos - the link between wealth, business and tax. The richest 1% own 48% of global wealth - and the trend is upwards, for the rich. The pyramid is skewed so the richest fifth of the population own more than nine-tenths of the wealth, meaning that the rest of humanity, the 80%, scrabble over just 5.5% of global wealth.

Cleverly, Oxfam shows that the businesses that our wealthiest people invest in are the same businesses that spend the most on lobbying on budget issues, particularly lobbying to reduce taxation. Thus there is a vicious circle in which wealth is held by a very few, who ensure via their businesses that taxes…for those few rich…remain low. This explains why David Cameron and Giddy Gordon Osborne have been so reluctant to do the obvious thing - tax wealth, to reduce the poverty gap.

This is stupid economics. As the Child Poverty Action Group (CPAG) has shown [3], a child growing up in a poor household is likely to have a poor outcome - to become a poor adult - because of a range of issues including stress and poor health. CPAG has calculated the cost - to all of us - of allowing poverty to take hold. The cost of allowing 110,000 children in Scotland to be affected by in-work poverty could be £1.1 billion

£1.1 billion! We could almost afford to buy our own Tartan Trident for that…

1 What Do We Know about In-Work Poverty? A Summary of the Evidence (Social Research Series. Edinburgh: The Scottish Government, January 21, 2015.

2 Hardoon, Deborah. Wealth: Having It All and Wanting More. Cowley, UK: Oxfam International, January 19, 2015.

3  Farthing, Rys. Local Authorities and Child Poverty: Balancing Threats and Opportunities. London: Child Poverty Action Group, July 2013.

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