Enabling ‘pathways’ out of poverty must be a fundamental goal of any anti-poverty strategy. But how should such a strategy seek to achieve this? And how can we ensure that these ‘pathways’ translate into meaningful reductions in levels of poverty across Wales?
Across European nations, the promotion of paid work has become central to anti-poverty initiatives. The optimism that maximising employment rates would lead to a significant reduction in poverty has taken something of a battering in recent years as rates of in-work poverty have risen and forms of precarious work have proliferated. These trends demonstrate that more needs to be done, besides employment promotion and creation, in the drive against poverty. But we cannot neglect the role that paid work does play in lifting people out of poverty and maintaining living standards above the poverty line. Supporting the creation of well-paid jobs is of fundamental importance, including through encouraging so-called ‘anchor businesses’ whose large footprint can be significant in shaping local labour markets.
Research on in-work poverty finds that the amount of paid work performed at the household level is the strongest predictor of in-work poverty, and that when families do continue to experience poverty, despite having a working member, this tends to be less severe than where household members have no paid work. Promoting employment is therefore likely to be central to any anti-poverty strategy, and government can look to do this through enabling access to education and training programmes and by increasing the availability and affordability of childcare, to help parents balance paid work and caring responsibilities.
We must also recognise, however, that work fails to lift a substantial number of families above the poverty line and that, for some, taking on more paid work simply isn’t an option: because all working-age adults are in employment, or because they’re working full-time, or looking after children or other family members. These are just some of the reasons why paid work can’t be the only pathway out of poverty.
Greater support for families with children, and especially for larger families, is crucial: evidence shows that since the two-child limit was imposed on tax credits and Universal Credit, child poverty has been rising, with most of this increase accounted for by families with three or more children. Tackling the cost of housing, especially in the private rented sector, is also necessary as housing costs act as an important mediator between household income and the standard of living that families can achieve. Even where household incomes are not very low, high rent levels can pull families into poverty.
And this brings us to a broader point. Promoting pathways out of poverty will not reduce the level of poverty in Wales unless the pitfalls of poverty entry are avoided. Poverty is subject to what some social scientists call ‘churn’, with many people moving in and out of poverty from one year to the next. If poverty is to be reduced, then preventing these poverty entries is as important as promoting pathways out of poverty.
Social security has a fundamental role to play here, acting as a safety net in times of need. There’s growing recognition that, across the UK, the social security system is simply not fulfilling its job, with inadequate payment rates and design rules that mean Universal Credit claimants must wait five weeks for an initial payment. While advance payments are now made available, this contributes to large numbers of Universal Credit claimants being subject to deductions to already inadequate payments. A re-think is badly required.
The fundamental importance of social security to tackling poverty poses a challenge for the Welsh Government since social security powers, in the main, continue to be held at Westminster. Greater powers in relation to this important policy area might be sought but this is fraught with risk if solidarities are not maintained. The expansion of existing devolved schemes, such as the Discretionary Assistance Fund, to mitigate hardship during times of need can help, but recent research by the Bevan Foundation finds that awareness of this scheme is low, even amongst low-income families in Wales. Moving forward is likely to require raising awareness of existing devolved schemes, as well as careful and perhaps enhanced use of existing powers combined with considering whether further powers may be needed.
With inflation threatening a significant deterioration in living standards across Wales, as it is internationally, the focus right now is understandably on the supports that families will need to help them through a difficult winter. What Poverty and Social Exclusion: A way forward does is provide a platform for attempts to reduce poverty in Wales in the years ahead. It demonstrates the value of having a strategy, of thinking holistically, and of the need to take action on multiple dimensions of deprivation. It provides policymakers with a wealth of ideas about how poverty in Wales might be meaningfully reduced, by promoting pathways out of poverty and preventing the pitfalls of poverty entry.