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The price of poverty - for The Inverness Courier
FAMILIES on low incomes spend approximately £1000 a year more than those on higher incomes for essential household services such as electricity, gas, insurance and access to cash. This “poverty premium” was itemised in a report by Save the Children published last week.
Alongside the fact that the poorest 10 per cent of people pay a higher proportion of their income in tax, this report demonstrates the appalling truth that it costs more to be poor in Britain today. Despite progress in some areas, Tony Blair will leave Britain a more unequal society than it was when he came into office.
Fuel poverty is a major part of the problem revealed by Save the Children, and it is particularly acute in the Highlands and Islands because the weather is colder, more people rely on expensive heating oil, and old houses tend to be poorly insulated.
Many people on low incomes use prepayment meters to for their gas and electricity, and so do not benefit from direct debit discounts, costing at least £100 more a year.
There is a lot that we can learn from international experience, which is why I spent six days last week in New Zealand and Australia seeing the radical steps they are taking to help more people into work.
One of the big problems in Britain is that our benefits system is a highly complicated mix of different means-tested benefits, which means that for many people it is not at all clear that they would be better off in work.
In New Zealand, they are cutting through this by moving towards a Single Core Benefit paid to anyone who is out of work, whatever the reason. Extra costs that people have, for example due to a disability or childcare costs for a parent, would be paid through a separate system and would not be lost if a job is found, improving incentives and making the system cleared.
There is clear evidence that the voluntary, not-for-profit, and private sector are more effective at helping people into work than the state system. In part, this is because it is often easier for people to discuss their needs with people who are not also responsible for deciding benefit entitlement. In Inverness, organisations like the SHIRLIE project help to back up the point.
In Australia, they have put in place a system in which all back-to-work help after three months unemployment is provided by a network of voluntary and private sector groups. The benefits are clear with more people moved into work and supported after finding a job and so real savings to the taxpayer too. One of the big barriers to this in Britain is that the Treasury is not able to support long-term “spend-to-save” measures, and so today’s penny-pinching means billions of unnecessary spending in the future.
Posted on: 13/03/2007
