Wot Recovery?

 “We are concerned that the economic recovery we face will still have so many people living in poverty." - Julia Unwin, Joseph Rowntree Foundation chief executive.

Young adults and people in work are now more likely to be in poverty in Britain following a huge increase in insecure employment such as zero hours contracts, an influential study warns today. The study, conducted on behalf of the Joseph Rowntree Foundation by the New Policy Institute, found that while employment was close to a historic high, millions of Britons were struggling to cope with a reality of insecure work and incomes which have fallen on average by 9 per cent in the five years to 2013.

The JRF says as many people in working families as in unemployed ones now live in poverty, after a decade of labour market upheaval which means a job is no longer a guarantee of an end to poverty. Half of all people in poverty now live in a family with someone in paid work, with some 40 per cent of adults in employment now also in poverty. Its annual report says the rise of part-time work and low-paid self-employment has been accompanied by a sharp increase in the number of under-25s living below the breadline as they struggle to cope with falling incomes, poor prospects and high costs from housing to food.

A lack of affordable housing also means those living in poverty are now as likely to be in private, usually rented, accommodation – at higher risk of eviction and homelessness – as in local authority or social housing. Some 13 million people in the UK are classified as living in relative poverty – meaning their household income is below 60 per cent of the average. The reliance of many on private rented accommodation with insecure tenancies means that the number of landlord repossessions – 17,000 – is now higher than mortgage repossessions – 15,000.

The prevalence of zero hours contracts – of which there are now some 1.4 million – and part-time work has contributed to a situation where two-thirds of people who moved from unemployment into work in the past year are being paid less than the living wage – the amount needed to cover basic costs of living. Many are also effectively trapped in low-paid work, with only 20 per cent of employees having left that income bracket after a decade in employment. The average self-employed person now earns 13 per cent less than they did five years ago. The report found that without tackling core problems such as low pay and the high price of essentials, in particular housing, poverty would not diminish. The failure of wages to keep pace with costs means the number of working people claiming housing benefit is rising while average hourly pay has fallen in five years from £13.90 to £12.90 for men and from £10.80 to £10.30 for women.

The study also found that claimants of jobseeker’s allowance are now more likely to be punished for not attending the Government’s welfare-to-work programme than to find employment through it.

Alison Garnham, the chief executive of the Child Poverty Action Group, said: “This comprehensive analysis paints a bleak picture. Families have long been told by politicians that work is the answer but are finding that it isn’t. As long as the only work they get is insecure and low paid, they will continue to face hardship and financial misery.”