Rich-poor divide ‘wider than 40 years ago’

The gap between rich and poor in the UK is wider now than 40 years ago, a government-commissioned report says.

“Deep-seated and systemic differences” remain between men and women and minority groups in pay and employment, the National Equality Panel found.

It said in areas such as neighbourhood renewal, taxes and education, policy action was needed to limit inequality.

The issues raised would need “sustained and focused action”, Equalities Minister Harriet Harman said.

“But for the sake of the right of every individual to reach their full potential, for the sake of a strong and meritocratic economy and to achieve a peaceful and cohesive society, that is the challenge that must be met,” she added.

Earning power

Apparent discrimination against people from ethnic minorities was revealed in the report, with those from nearly every minority group less likely to be in paid work than white British men and women.

The panel – set up by the government in 2008 – found that despite women up to the age of 44 having better qualifications than men, men were still paid up to 21% more per hour.

But the authors pointed out that some of the greatest differences come within social groups.

Among women, many work part-time, earning less than £7.20 an hour, much less than the median pay of £9.90 across the country.

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“Most political parties and people subscribe to the ideal of ‘equality of opportunity’,” panel chair Professor John Hills, of the London School of Economics, told the BBC.

“The challenge that our report puts down to all political parties is how do you create a level playing field when there are such large differences between the resources that different people have available to them.

“Things that allow you to buy a house in the catchment area of a good school or allow you to help your children get on the housing ladder. These are very big differences.”

The study said that the type of job and pay a parent had could have a cumulative effect throughout a person’s life, setting them on “tracks that make all sorts of differences”.

By retirement, the difference between rich and poor can be “colossal”, the report added.

The panel pointed out that half of those who have worked in the top professions have net assets worth more than £900,000, while a 10th of those who have had unskilled jobs have property, savings and possessions worth less than £8,000.

BBC social policy correspondent Gillian Hargreaves said the report would make “awkward reading for the government” as Labour had made tackling inequality a priority.

Theresa May, shadow minister for women and equalities, told the BBC that Labour’s policies had failed.

“It is shocking that after 13 years of a government that wanted to focus on child inequality, we’re still in this situation,” she said.

“Labour has had a one-dimensional approach, looking at the symptoms, not the causes. For example, one in six children are growing up in a workless household. We need policies that can make equality a reality.”

The Liberal Democrats’ children, schools and families spokesman, David Laws, said Gordon Brown’s government had “run out of ideas for tackling the lack of opportunity for so many children and the chasm that separates the rich from the poor”.

Full report – An anatomy of economic inequality in the UK [4 MB]

Summary – An anatomy of economic inequality in the UK [1.79 MB]

Taken from BBC News

Millions face retirement poverty

Millions of Britons are set to retire in poverty if the pensions deficit is not addressed, according to leading business consultants.

The Association of Consulting Actuaries (ACA) found that 87 per cent of defined benefit schemes were now closed – with one in five frozen and closed to new contributions.

Twenty-four per cent of employers will consider pension benefit reductions when they have to automatically enrol employees into a workplace scheme, according to the ACA report.

Out of the 390 businesses surveyed, only 32 per cent of employers have budgeted for the costs of auto-enrolment, with 15 per cent “considering” doing away with their existing pensions scheme altogether.

Commenting on the report, ACA chairman Keith Barton said he could only see a “deteriorating climate for pension savings.”

But he attempted to move responsibility away from the employers.

“Public policy seems to be locked into justifying ever heavier regulation and cost under the banner of protecting accrued benefits for generally older employees,” he said.

The enormous hole in corporate pension schemes came as a direct result of pension holidays taken by employers.

Many companies have in effect been defrauding their employees by taking pension holidays, preferring instead to enrich big shareholders and directors.

The ACA report lets employers “off the hook” by trying to shift the burden onto the state and employee.

There should second pension scheme requiring compulsory contributions from employers and the state funded by progressive taxation where necessary.

Taken from Morning Star

Benefits changes force tenants into poverty

A leading charity has criticised the government’s local housing allowance saying it is plunging claimants into poverty.

Housing charity Shelter said the local housing allowance (LHA), a new way of paying housing benefit which was introduced last year, has left thousands of tenants struggling to manage their finances – with many now in danger of losing their home.

LHA was intended to promote fairness, choice and personal responsibility among claimants by paying the money directly into their bank accounts rather than to their landlord.

But a survey of 450 people carried out by the charity found that for 81 per cent it had been “fairly” or “very difficult” to find a home that was affordable.

Six in 10 said they had had to make up shortfalls in their rent themselves.

Many respondents claimed that they had only been able to find the extra money by going without essentials such as food and heating.

Shelter said part of the problem was that the boundaries used to calculate the levels of the allowance people receive – known as broad rental market areas (BRMA) – were too large.

As a result, people in expensive parts of the BRMA were being forced to move to cheaper areas or find the shortfall in rent themselves.

But it warned that in cheaper areas, anecdotal evidence suggested some landlords were raising their rents as they knew the LHA would pay out more than they were charging.

Ninety-five per cent of people receiving the LHA said they were struggling to manage their finances, while the new system had contributed to more than a quarter of people falling behind with their rent.

A growing number of landlords are allegedly refusing to accept LHA claimants as tenants, with 60 per cent of people receiving the benefit saying they had struggled to find a landlord who would let them a property.

Shelter director of policy and campaigns Kay Boycott said: “Under this system tenants have no choice about whether their benefit is paid to them or to their landlord.

“Many claimants are already struggling financially, so when they get rent money paid into their bank account there is a huge temptation to spend it on necessities such as food or bills rather than paying their rent.

“It is vital that the government makes urgent changes to LHA to ensure claimants do not continue to be disadvantaged.”

Taken from Morning Star