5 Surprising Facts About Poverty

Following nationwide protest against government austerity measures poverty and wealth inequality are very much on people’s minds. The government is continuing to cut housing benefits and in a recent speech David Cameron said he will be reducing work benefits, which will affect people who are homeless but working low wage or zero hours contract jobs.

Regardless of what you think about inequality in the UK and the government’s austerity measures there are some facts about poverty that you should be aware of, but may not be. Here’s a roundup of what I think everyone should know about poverty.

1. The extent of wealth inequality in the UK

An ICM poll has found a staggering difference between how we think wealth is distributed in the UK and how it actually is distributed.

We think the poorest fifth of the population has 9% of the wealth and the richest fifth has 40% or more. Well, at least we’re right about the “or more” part.

Actually, the poorest fifth has only less than 1% while the richest fifth has 60% of the wealth. The richest in our society can earn more in three days than some people in full time work will earn in a year. The UK is close to the USA in terms of the gap between rich and poor.

If you're interested, there is a lot more helpful information about inequality in the UK at inequalitybriefing.org.

2. The facts about welfare spending

Before the general election, figures were sent out by the government to everyone in the UK who paid income tax showing how a quarter of the budget was spent on 'welfare'. Many assumed this meant benefits for people out of work. But the truth is only 14% of the budget was spent on 'working age benefits' while the other 11% was spent on public services, pensions and care for the long term elderly, sick or disabled. The remaining 14% includes benefits for people who are in work and benefits aimed at families. The amount of the budget spent on people unemployed or with low incomes was only 6%. Some people might think a lot is being spent on unemployment benefits but it's not much compared to things like education, health or even defence.

3. Wealth inequality hurts everyone

Work by social epidemiologists Richard Wilkinson and Kate Pickett has unearthed an astounding trend with wide ranging social implications. In their book ‘The Spirit Level’ they lay out how inequality can harm everyone, poor and rich.

In the book they provide evidence that more unequal countries do worse on a number of social health indicators, such as literacy, child wellbeing, violence and even longevity. Countries with less wealth but greater equality aren’t as likely to suffer from these problems as societies with more wealth and less equality. Even if you’re a millionaire, if you live in an unequal society you’re more likely to suffer from mental and physical illness as well as a host of social problems.

Why is this? The working hypothesis is stress, which adversely affects health, is caused by status anxiety. Pressure to succeed in a cutthroat society which does little or nothing to remedy inequality takes its toll on everyone regardless of whether you actually succeed or not.

Many of the people New Hope serves are people whose mental health has been adversely affected by low self esteem. This is expected when social success is perceived to be something deserved and the result of effort when it actually has much to do with your circumstances, as it is in our society.

4. People in poverty are underrepresented politically

People in extreme poverty are not adequately represented by politicians. The poorer you are the less likely you are to vote. This means the interests and problems of people who are poor are not getting being talked about.

A poll by the Joseph Rowntree Foundation shows people who claim to be less well off are less likely to vote and have less interest in politics generally. This could be the result of a feeling of suspicion and hopelessness caused by a lack of faith in politics. But it could also be the result of barriers to voting. People who are poor but are in full time employment might not be able to miss time off work to go and vote. It might also be because such people have less access to information or resources like the internet or televised debates, so don’t feel able to make an informed decision.

Whatever the reason, I think more steps should be taken to make politics more inclusive for people in poverty. Then the interests of those people might be better understood and better met.

5. Poverty impairs cognitive function and behaviour

Poverty seems to act as a mental straight jacket. A study by Eldar Shafir, Sendhil Mullainathan et al found people under financial constraint, or who even just think about debt, do worse cognitively. This happens because poverty related concerns use up mental resources or ‘bandwidth’. Shafir and Mullainathan have expanded on their results in the book ‘Scarcity: Why having too little means so much’.

People often think poverty is due to a failure of character but actually poverty could be causing people to make bad decisions which do not take long term goals into account. An inability to save money or plan for the future would cause otherwise competent people to be trapped in a cycle of scarcity.

Back in 2014, I blogged about the Trussell Trust’s scheme to give out financial advice at food banks. Given the new research on scarcity this could be just what people need. Thanks to a donation from comic relief this service will go nationwide for the next 5 years starting in September. Free financial advice to people who are struggling could help to undo the pernicious effect poverty has on people’s ability to make decisions. Hopefully the service will continue to be funded beyond the next five years if enough people become aware of it.

It’s clear that we need to change the way we think about poverty. We need to put less blame on those who are in poverty and do more work to understand their often complex situations. Who knows what else we will learn in the future and what new solutions we will come up with to tackle this problem which we face as a society?

Alex Charlton