Poverty set to stay in Wales

The latest figures on poverty in Wales released by the Department for Work and Pensions make for gloomy reading.

It is some comfort that the percentage of the population living on low incomes(1) has not gone up, but the fact that nearly one in four people in Wales lives in relative poverty is no cause for celebration either.

There are some important points here that the Welsh Government’s forthcoming refreshed Tackling Poverty Action Plan needs to address.

1. The proportion of Wales’s population living in relative poverty has remained unchanged since the mid 2000s, at around 23%. Some years it is up a percentage point or two, other years it is down, but there has been no real change for about 7 years.  Poverty seems to be a deeply entrenched feature of the Welsh economy and society, against which the Welsh Government needs to take some radical action.
2. Children continue to be much more likely to live in relative poverty than any other group of people, and are now more than twice as likely to live in households on low incomes than pensioners. And the trend is on the up.  The Welsh Government needs to prioritise families – parents as well as children – in its forthcoming plan.
3. Pensioners are the poverty success story. Relative poverty has fallen substantially and steadily since the mid-1990s, mainly because of decisions by successive governments to maintain pensions and other pensioner benefits.  Even so, one in seven older people is still living below the poverty threshold, so they cannot be ignored.

Underlying the figures on relative poverty are more worrying figures on ‘absolute’ poverty.  Relative poverty is a measure of inequality, because it is measured against median income, i.e. that of a household in the middle between rich and poor.  Absolute poverty measures actual income of those in poverty compared with the previous year, adjusted only for inflation – it takes no account of the income of the rest of population.

For children, absolute poverty as well as relative poverty is on an upward trend. The increase is not just because of changes in median incomes, but because there are now more children in households living below a fixed poverty threshold than there were in 2010/11.  The increase in numbers cannot be dismissed as a statistical quirk – this is real, and growing, hardship that needs to be addressed.

The outlook for the next few years is bleak. Welfare reform is forecast to increase both the numbers in poverty and the depth of poverty, particularly amongst workless families. For those in work, wages and income-related benefits look set to remain static.

There is an opportunity in Wales to ‘do something different’. While taxation, benefits and the overall economic climate are not in the Welsh Government’s powers, there is plenty more it can do. Let’s see if the Tackling Poverty Action Plan is up to the challenge.

The outlook for the next few years is bleak. Welfare reform is forecast to increase both the numbers in poverty and the depth of poverty, particularly amongst workless families. For those in work, wages and income-related benefits look set to remain static.

There is an opportunity in Wales to ‘do something different’. While taxation, benefits and the overall economic climate are not in the Welsh Government’s powers, there is plenty more it can do. Let’s see if the Tackling Poverty Action Plan is up to the challenge.

Victoria Winckler is Director of the Bevan Foundation.  Further analysis will be available shortly to Bevan Foundation members.  

(1) Defined as people living in households whose income is less than 60% of the income of other similar households, in 2012 and after housing costs.