The Hardship Below Inequality

Rev Paul Nicolson, Taxpayers Against Poverty

The Hardship Below Inequality.

The State should never create polices which impose such trauma and uncertainty on vulnerable households as they are now experiencing from the Coalition’s caps and cuts to benefits. People supporting an extreme free market ideology tend to see the trauma as collateral damage; a better position is that progressive taxes should be paid to protect vulnerable people from circumstances beyond their control rather than make those circumstances impossible to manage.

The first group of cases. The cuts in council budgets by Central government.

In March 2011 the Birmingham council took a policy decision only to fund individual budgets of disabled people where the need was rated as critical and to drop funding for substantial needs which were previously supported. The council was taken to court and lost. The trauma and worry for these very vulnerable people and their families should never have happened. 1

The litigants

W is 65 years old has learning disabilities and Mental Health issues. She receives care from the council and her car plan identifies many areas of daily life which pose her risks.

M is 25 with severe learning disabilities. He currently receives residential respite care but is soon to leave college when he will require day centre provision or equivalent day time activities. His needs are critical in the area of ‘Autonomy of Freedom and Personal Choice’, but substantial in others. M’s mother is worried that this will mean he will not qualify for care. She describes how M will follow her around all the time and that he needs constant supervision as he does not protect himself from dangers.

G is 36 years old. She is not able to take care of her own personal needs and cannot protect herself from risk. She lives with her parents, both in their 60s, who think it is time for her to move into residential care. Her epilepsy is rated as critical while other matters relating to managing her health and safety and the risk of harm to herself and others are rated as substantial.

H is 29 years old. He has a severe learning disability, autism, is profoundly deaf and has scoliosis of the spine. H has a wide range of complex needs and can present with challenging behaviour

1 The lawyers proposed the cut was unlawful because, inter alia: (i) there had been a failure by the authority to have due regard to the disability equality duty pursuant to s 49A of the Disability Discrimination Act 1995 (‘the 1995 Act’) and, (ii) the authority had failed to ask itself the right questions in accordance with principles laid down in Secretary of State for Education and Science v Tameside Metropolitan BC [1976] 3 All ER 665. The authority in making its decisions failed to ask whether a decision with that potential impact would be consistent with the need to pay due regard to the principles of disability equality

including smearing and eating his own faeces. H lives at home with his parents, an arrangement which depends upon the council providing 92 nights of respite care annually. He has been assessed as having a mixture of ‘critical’ and ‘substantial’ needs, including ‘substantial’ needs relating to his requirement for daytime provision. He has been assessed as needing a staffing ratio of 2:1 to go out into the community. It is said that such a staffing level is only a realistic possibility if support remains funded by the council.

The second group of cases. The housing benefit caps.

Westminster council have given the following families a discretionary housing payment because they cannot afford their rent due to the housing benefit caps. However that payment will run out. Where they will find a secure home is now left undecided. (Z2K NextDoor project)

1. A family whose 10 year old son has a brain tumour;

2. Another receiving 24 hour support from social services because neither parent is currently able to care for their 10 month old son;

3. And one with a mother, diagnosed with paranoid schizophrenia, who has two young children, both with developmental learning difficulties.

Inequality affects everyone

Richard Wilkinson reviewed the international statistics of income inequality and described what greater equality brings.

“In societies where income differences between rich and poor are smaller, the statistics show not only that community life is stronger and people are much more likely to trust each other, but also that there is less violence – including substantially lower homicide rates, that health is better and life expectancy is several years longer, that prison populations are smaller, birth rates among teenagers are lower, levels of educational attainment among school children tend to be higher, and lastly, there is more social mobility. In all cases, where income differences are narrower, outcomes are better (Wilkinson 2005).

This important quantative work, like all national statistics, needs supplementing with a description of the poor quality of life, the hardship, and the low incomes experienced by people at the bottom end of, or below, inequality; statistics never describe the damage done to households when incomes are so low they create unmanageable debts and illness. It should also be supplemented by a recent IMF report which tells us that

“…….the periods 1920-1929 and 1983-2008 both exhibited a large increase in the income share of the rich, a large increase in leverage for the remainder, and an eventual financial and real crisis. The paper presents a theoretical model where these features arise endogenously as a result of a shift in bargaining powers over incomes. A financial crisis can reduce leverage if it is very large and not accompanied by a real contraction. But restoration of the lower income group’s bargaining power is more effective. IMF 20102” 2 Inequality, Leverage and Crises – http://www.imf.org/external/pubs/ft/wp/2010/wp10268.pdf

Hardship ignored by policy makers

Too often laws, regulations and guidance are drafted by authors and income levels are set by ministers in the UK who are unaware of, or ignore, the depth of hardship and income poverty that already exists. The poll tax was a classic example in the 1990s; housing benefit and universal credit caps are repeating that mistake in the 2010s.

This description of hardship has been drawn from my experience of working with people in hardship for over 40 years, the case work of the Zacchaeus 2000 Trust and some recent case histories of the debts of the poorest citizens researched by the University of Brighton.

1. Hardship happens whenever incomes in work or unemployment are too low to cover necessary expenditure; and when such circumstances are beyond the control of its victims.

2. Necessary minimum expenditure includes food, fuel, water, clothing, transport, some personal necessities, rent, council tax, fines, insurance, and pensions. Too often choices have to be made between the paying the rent, heating or eating.

3. Necessary expenditure is increased by debts. These include fines, courts, bailiff’s costs, liability orders costs for council tax, payment of court orders, debt collectors, bank charges, the high interest of doorstep payday lenders and loan sharks, DWP overpayments, sanctions, civil penalties, caps and cuts.

4. Debts occur due to the innocent mistakes of both claimants and officials in the delivery of welfare. People then borrow to eat or to pay bills or pay off other debts. A visit to a food bank is evidence of hardship.

5. Circumstances beyond the control of welfare claimants that lead to hardship include sudden unexpected illness, a divorce or separation from a partner who leaves when debts have not been paid, a serious accident in the family, a bereavement and funeral costs, a pay cut, redundancy, unemployment, flooding and any accidents or theft for which the claimants cannot afford insurance.

6. The Royal College of Psychiatrists reports that 50% of people in debt have mental health problems; 25% of people with a diagnosed mental health conditions are in debt3.

7. Hardship exacerbates the risks of low birth weight of babies born to women who are unable to afford a healthy diet before they conceive and while they are pregnant; JSA, currently £71 a week, is too low to live on. Low birth weight associated with foetal growth restriction is the strongest predictor of poor learning ability, school performance, behavioural disorders and crime4.

8. Hardship leads to an inability to communicate with the authorities, courts and creditors due to lack of a landline phone and dependence on pay-as-you-go mobiles that run out of money when claimants run out of money, normally once a week.

3 Foresight Report for the Government Office for Science. (‘Mental Capital and Wellbeing – making the most of ourselves in the 21st Century’.)

4 Institute of Brain Chemistry and Human Nutrition – brief submitted to MPs and Peers by the Zacchaeus 2000 Trust during the passage of the Child Poverty Act 2010.

This description of hardship was drafted to provide Government departments with sight of the actual hardship already suffered by welfare claimants, and others with very low incomes, to assist in the drafting of all relevant laws, regulations or guidance. 5

Unmanageable debt

The Church Urban Fund was6 right to draw attention to the larger and increasing numbers of people living in deprivation in the northern than in southern parishes. However comparing the numbers in deprivation between parishes tends to leave out the degree of poverty which is equally devastating in north and south; there is evidence to suggest that it is worse still in the areas where rents are highest, like in London and the Southeast.

The adult unemployment benefit throughout the UK is £71 a week, with £56.25 for the under 25 year olds, after rent and council tax. It is half the government’s poverty threshold and 42% of the Joseph Rowntree minimum income standard. Where rents exceed the housing benefit caps the consequent arrears, with any existing debts, have to be paid out of that £71 a week or hit the already inadequate benefits of the children or the disabled, which are being cut; hence the growing number of food banks and forced migration out of high rent properties into parishes with existing deprivation. Where rents do not exceed the caps the unemployed tenants with no other source of income are still very short of money needed to buy the minimum quantities of necessities.

The Universal Credit cap limiting the total amount of benefit any family can receive will particularly add even more to the misery of large families in high rent properties when it is introduced in 2013. The same circumstances apply to the national minimum wage which was never intended to relieve poverty. Statutory minimum incomes in employment and unemployment are now totally disconnected from the size of families, rents or the minimum quantities and prices of other necessities in the market needed for healthy living throughout the UK.

Parliament has lost sight of hardship. It has placed disproportionate burdens on the backs of her poorest and powerless citizens since the 1979 election of the Thatcher government while easing the life of the already wealthy. Nowhere is this more self-evident than in the field of housing.

The crisis made by UK governments.

The current financial crisis began when the Thatcher government deregulated lending, removed rent control and allowed the free movement of capital in and out of the UK. The Blair/Brown governments let it rip. For thirty years the Banks flooded money into a housing market in short supply forcing up prices and rents; landlords profited from housing benefit payments in annual billions rising to £21 billion in 2010. The Brown Government introduced the Local Housing Allowance in 2008; it is a housing benefit cap hitting the tenants not the landlords. In 2010

5 It has been discussed with officials in the MOJ, the DWP, the DCLG and the Cabinet Office and distributed to MPs and Peers as they debated the Welfare Reform Act, The Legal Advice, Punishment and Sentencing of Offenders Bill and the Local Government Finance Bill. 6ONLINE LOOKUP TOOL FOR PARISHES IN ENGLAND http://www.cuf.org.uk/research/poverty-in-numbers

Cameron/Osborne government hit the tenants even harder with much harsher HB caps. Landlords continue to profit excessively.

Money now pours into London property from nations with GDPs in surplus, from the £11.5 trillion parked in overseas tax havens and any old Colombian drug dealer whose laundered money is forcing rents above the caps; and tenants, however vulnerable, into misery, forced migration, overcrowding to make the rent fit the cap, into rent arrears, or to who knows where in the UK – in fact into dire hardship. The irony is, the worse the poverty and related debt, the worse the costs to the health and education services and hence to the tax payers.

It should not be too much for our political leaders in this very wealthy nation to create policies which ensure that every citizen of the UK has an income which provides at least the minimum quantities of goods and services necessary for health and wellbeing and a decent affordable home to go with it; but, tragically, advocating let alone doing that seems to be beyond them.

Rev Paul Nicolson, Taxpayers Against Poverty, 93 Campbell Road, Tottenham London N17 OBF – 0208 3765455 – 07961177889 – taxpayersagainstpoverttap@gmail.com paulnicolson@z2k.org Taxpayers Against Poverty – www.facebook.com also at www.z2k.org and www.pha.org