Poverty is caused by not having enough money. Nothing more complicated than that.
The Commission believes that poverty is a structural problem in society, not the fault of individuals. We have considered the evidence, and concluded that poverty affecting children in the North East is directly caused by:
a lack of available jobs
low wages and insecure employment in many jobs
changing benefit levels
barriers to employment such as chilcare costs
We do NOT believe that the problem is that people do not want to work or are not prepared to work hard enough or long enough. Research carried out on Teesside over a 12 year period has found an ‘enduring commitment to work’ in some of the most deprived neighbourhoods in the area, despite labour market experiences and a ‘churning’ in and out of employment that would dent most people’s resolve.
We also do NOT believe that the level of child poverty can be blamed on people's lifestyle choices, experiences and luck, though these can have an impact in individual cases. The evidence strongly suggests that issues such as drug and alcohol dependency, family breakdown and indebtedness are consequences, NOT causes, of poverty.
Education and skills is perhaps a more complex issue: a lack of marketable skills and qualifications is a key barrier to employment and progression, so is a direct factor in the poverty experienced by some people. But poor attainment in schools and a lack of qualifications is often the result of poverty. Weaknesses in education and training are therefore both a cause and an effect of poverty.
Absolute or relative?
As poverty is defined 'relative' to the median income, poverty levels are affected by the overall distribution of income in society. So, if the income of the rich grows faster than the income of the poor, poverty will increase. This happened for example between 1979 when the Conservatives took office, when child poverty affected 13% of children in the UK. By 1997, when they left office, the figure was up to 29%.
Countries with much lower income levels than the UK can have lower levels of poverty, because they have a flatter income distribution. For example, Slovenia (11%) and Cyprus (13%) have much lower levels of child poverty than the UK, despite being much less affluent.
This effect means that measured poverty could fall just because the incomes of the wealthy fell, without people in poverty experiencing any benefit.
In recent times in the UK, though, the increase in poverty has been driven largely not by this statistical effect, but by real, 'absolute' reductions in income for the poorest in society, as a result of unemployment, changes to welfare benefits and falling real wages. Chris Goulden's graph from this recent post below shows this clearly:
Households Below Average Income: An analysis of the income distribution 1994/95 – 2008/09, DWP, 2010
The Well-Being of Children in the UK, Jonathan Bradshaw, 2011
Work has to be a better route out of poverty. Most poor children have a working parent.