A report published in June 2014 highlights a serious concern for communities across Scotland for spiraling poverty being placed on residents as part of the Welfare Reform Bill.
The Welfare Reform Bill, which has been introduced in Scotland since 2010, is a range of initiatives to lower our economic deficit. The initiatives include;
Housing Benefit – Local Housing Allowance
Changes to the rules governing assistance with the cost of housing for low-income households in the private rented sector. The new rules apply to rent levels, ‘excess’ payments, property size, age limits for sole occupancy, and indexation for inflation.
Increases in the deductions from Housing Benefit, Council Tax Benefit and other income-based benefits to reflect the contribution that non-dependant household members are expected to make towards the household’s housing costs
Household benefit cap
New ceiling on total payments per household, applying to the sum of a wide range of benefits for working age claimants
Disability Living Allowance
Replacement of DLA by Personal Independence Payments (PIP), including more stringent and frequent medical tests, as the basis for financial support to help offset the additional costs faced by individuals with disabilities
Replacement of Incapacity Benefit and related benefits by Employment and Support Allowance (ESA), with more stringent medical tests, greater conditionality and time-limiting of non-means tested entitlement for all but the most severely ill or disabled
Three-year freeze, and withdrawal of benefit from households including a higher earner
Reductions in payment rates and eligibility for Child Tax Credit and Working Tax Credit, paid to lower and middle income households
1 per cent up-rating
Reduction in annual up-rating of value of most working-age benefits
The report (Report on Local Impact of Welfare Reform – Session 4) 1 identifies impoverished communities will face an ever increasing burden, with the gap between impoverished communities and better off areas increasing.
Within Fife, the Central Belt will be the hardest hit economically.
The Buckhaven, Methil and Wemyss Villages Ward is estimated to be losing the most at; £700 per working age adult, per annum.
Followed secondly by the Lochs Ward, which has been estimated to lose: £680 per working age adult, per annum 2.
Followed thirdly by the Lochgelly and Cardenden Ward, which has been estimated to be losing: £650 per working age adult, per annum.
Further to this, a map, plotting out child poverty rates across the UK, shows that in 2012 3;
- the Lochs Ward had an estimated 914 children in poverty (30%),
- the Cowdenbeath Ward had an estimated 669 children in poverty (29%),
- and the Lochgelly and Cardenden Ward had an estimated 778 children in poverty (29%)
Spiralling food costs, which have increased by 12.6% since 2010, has also resulted in the introduction of Food Banks across Fife, with a food bank introduced in the Lochs Ward and public calls for a Foodbank in the Cowdenbeath Ward.
Rising energy costs, which has increased by 37% since 2010, has led to increases in fuel poverty, with Fife Council identifying the 50 most fuel poor areas in the local authority area with 4;
- Lochgelly East the fourth highest fuel poor area at 38.60%
- Lochgelly West and Lumphinnans at the 20th highest fuel poor area with 35.08% estimated in fuel poverty
Is Austerity Working?
Austerity measures introduced to tackle the budget deficit after the collapse of the banking system due to highly improper and unethical trading schemes is currently supported within UK politics, implemented by the Conservative and Liberal Democratic coalition, with Labour announcing that they will not remove the current Austerity measures if they win the next general election.
With cross party support for the continuation of austerity measures, stark warnings have been issued by Oxfam and the Red Cross;
The Institute for Fiscal Studies found that the net direct effect of the coalition government’s tax and benefit changes will be to increase both absolute and relative poverty. Over the decade to 2020, an additional 800,000 children are expected to be living in poverty – almost one in four British children. Over the same period, an extra 1.5 million working age adults are expected to fall into poverty, bringing the total to 17.5 per cent of this group. When incomes are adjusted to account for inflation, absolute poverty has already seen its largest year on year increase in a decade, rising by 900,000 in 2012.
Oxfam Case Study 5
A substantial percentage of National Societies report a growing number of people living below the poverty line and needing assistance, and also a rise in the intensity of poverty, whereby those who were already poor are now poorer, as well as a widening gap between the rich and the poor. This means that those living at the margins of mainstream society – and those who are socially excluded – have grown in their numbers and the distance to re-socialize, rehabilitate, find a job and re-join society has also increased.
Some National Societies also report the rise of a group of people living above the poverty line but still having difficulties to make ends meet (termed as ‘working poor’), who are becoming more vulnerable because of fiscal erosion – inflation rate (especially energy prices) rising more than salaries
International Federation of Red Cross and Red Crescent Societies 6
Nobel Prize winner for Economics in 2001, Joseph Stiglitz has accused Europe’s leaders of being gripped by ‘deficit fetishism‘ and clearly states ‘Austerity doesn’t work, it does not lead to more efficient, faster growing economies‘
The Organisation of Economic and Social Development has highlighted that the UK is becoming one of the top unequal countries in the OECD, with the gap between the poor and rich greatly increasing. Further to this the OECD warn 7;
With households under pressure and budgets for social support under scrutiny, more and more people report dissatisfaction with their lives, and trust in Governments have tumbled. There are also signs that the crisis will cast long shadows on people’s future well-being. Indeed, some of the social consequences of the crisis, in areas like family formation, fertility and health, will be felt only in the long term. Fertility rates have dropped further since the start of the crisis, deepening the demographic and fiscal challenges of ageing. Families have also cut back on essential spending, including on food, compromising their current and future well-being. It is still too early to quantify the longer-term effect on people’s health, but unemployment and economic difficulties are known to contribute to a range of health problems, including mental illness.
Austerity measures are clearly not working and have only resulted in the gap between the rich and poor widening with inequality rising faster in the UK than in any other country according to the OECD and the Scottish Government’s Fiscal Commission.
PSE UK (Poverty and Social Exclusion in the UK) has conducted the largest study of poverty and deprivation in the UK and concluded 8;
The percentage of households falling below society’s minimum standard of living has increased from 14% to 33% over the last 30 years, despite the size of the economy doubling.
In Scotland today, when we compare people’s actual living standards with the minimum standards which the public thinks everyone should have, we find that:
- almost one million people cannot afford adequate housing conditions
- 800,000 people are too poor to engage in common social activities, and
- over a quarter of a million children and adults aren’t properly fed
Is there a solution?
There is no easy solution, but Austerity measures are clearly not the answer, which will have long term social and health impacts within our communities in Fife and across Scotland.
Many economics are arguing for Keynesian Economics to be implemented, whereby two approaches should be adopted;
- A reduction in interest rates (monetary policy), and
- Government investment in infrastructure (fiscal policy).
Regardless of Austerity economics or Keynesian economics, Central Fife is continuing to suffer from greater and more intense poverty and inequality that will socially impact on our communities for many years to come.
In the short term, residents can help support local initiatives that aim to tackle the inequalities in our communities, and one area that is needing much support is the local food banks, with Lochgelly West Primary and Lochgelly Spiritualist Church seeking donations of tinned foods to be donated to the local food banks.
If you would like to help support the local food banks by donating tinned foods, please contact;
Lochgelly West Primary:
15 Main Street, Lochgelly, Fife, KY5 9NS
01592 583 445
Lochgelly Spiritualist Church:
37-39 Bank Street, Lochgelly, Fife, KY5 9DQ
- Scottish Government, Report on Local Impact of Welfare Reform – Session 4 http://www.scottish.parliament.uk/parliamentarybusiness/CurrentCommittees/78651.aspx ↩
- Scottish Government, Welfare Reform Committe – http://www.scottish.parliament.uk/S4_Welfare_Reform_Committee/Reports/Fife.pdf ↩
- Map of Child Poverty Rates in 2012 – https://www.google.com/fusiontables/embedviz?viz=MAP&q=select+col0%3E%3E0+from+1pbG39PpL48MPjfKnauSzmHCnuzksb98GCrt5B_Y&h=false&lat=56.20846311042404&lng=-3.1930848768904525&z=8&t=1&l=col0%3E%3E0 ↩
- Fuel Poverty Mapping of Fife, Fife Council & Changeworks – Fife Fuel Poverty Map – 25th March 14 (PDF) ↩
- Oxfam UK Case Study – The True Cost of Austerity and Inequality – http://www.oxfam.org/sites/www.oxfam.org/files/cs-true-cost-austerity-inequality-uk-120913-en.pdf ↩
- International Federation of Red Cross and Red Crescent Societies, Humanitarian Impacts of the Economic Crisis in Europe – http://www.ifrc.org/PageFiles/134339/1260300-Economic%20crisis%20Report_EN_LR.pdf ↩
- Society at a Glance 2014, OECD Social Indicators – http://www.keepeek.com/Digital-Asset-Management/oecd/social-issues-migration-health/society-at-a-glance-2014_soc_glance-2014-en#page1 ↩
- PSE Scotland – Poverty and Deprivation Report http://www.poverty.ac.uk/editorial/scottish-poverty-study-calls-governments-tackle-rising-deprivation ↩