Inequality, poverty, social exclusion and policy

1. Inequality, poverty, social exclusion and policy John Hills ESRC Research Centre for Analysis of Social Exclusion International Centre for Health and Society 23 October 2002

2. Views of ‘what is social exclusion?’ • Links between dimensions of exclusion • Links over time: incomes • Does talking about ‘social exclusion’ change the policy agenda? • How well are current policies matching up?

3. What is ‘social exclusion’? Social Exclusion Unit “… a short-hand label for what can happen when individuals or areas suffer from a concentration of linked problems such as unemployment, poor skills, low income, poor housing, high crime, bad health and family breakdown”

4. Ruth Levitas (‘The Inclusive Society’) MUD: Code for ‘the underclass’ SID: Focus on participation in paid work. Ignores importance of unpaid work and poverty of non-workers RED: Poverty is the central issue, but goes beyond material poverty, and focuses on processes that produce inequality

5. Concepts of Social Exclusion Narrow focus Wider focus Static framework Income poverty Deprivation (multi-dimensional) Poverty as ‘non participation’ Exclusion as extreme deprivation Exclusion as a process affecting participation in several dimensions Income mobility / poverty dynamics Dynamic framework

6. ‘……incorporating multidimensional measures of disadvantage into poverty measurement…in effect forces one to make to make the shift to a dynamic analysis of processes’ (Nolan and Whelan, 1996)

7. ‘If…poverty is seen in terms of income deprivation only, then introducing the notion of social exclusion as part of poverty would vastly broaden the domain of poverty analysis. However, if poverty is seen as deprivation of basic capabilities, then there is no real expansion of domain of coverage, but a very important pointer to a useful investigative focus’ (Sen, 2000)

8. FOUR ASPECTS OF ‘SOCIALEXCLUSION’ • It is about participation in today’s society. Inclusion/exclusion are matters of degree. They are relative to the society in question. • Multi-dimensional: includes income/consumption poverty, but also involvement in productive activity, political participation and social interaction. • Dynamics: inclusion and exclusion are processes which happen over time. • Multi-layered: operates at different levels – individual, household, community/neighbourhood, institutions.

9. Evidence on extent of exclusion: summary • There’s not much social exclusion about: no evidence of an ‘underclass’ • There’s lots of social exclusion about: the links between dimensions and over time are strong, but not deterministic

10. No evidence of an underclass? The excluded group are, compared to general population: • Thirteen times as likely to have been in care • Thirteen times as likely to be unemployed • Ten times as likely to have been a regular truant and twenty times as likely to have been excluded from school • Six times as likely to have been a young father • Fifteen times as likely to be HIV positive • 80 per cent have writing skills, 65 per cent numeracy skills, and 50 per cent reading skills at or below age 11 • 60-70 per cent were using drugs • Over 70 per cent suffer from at least two mental disorders • Half had no GP

11. Indicators of social exclusion Source: Burchardt et al (2002)

12. Exclusion at a point in time, by year and by dimension (% of working-age population) Source: Burchardt et al (2002)

13. Exclusion on multiple dimensions, Wave 7 of BHPS Source: Burchardt et al (2002)

14. Low income and exclusion on different dimensions, wave 7 (%) Source: Burchardt et al (2002)

15. Exclusion over time on multiple dimensions, by Wave 8 Source: Burchardt et al (2002)

16. Short-term income mobility Source: Jarvis and Jenkins (1998); BHPS

17. Longer-term income mobility Source: DWP (2002); BHPS

18. Father’s earnings quartile Son’s earnings Quartile 1958 cohort Bottom 2 3 Top Bottom 30 29 25 17 2 28 25 26 20 3 23 24 25 29 Top 19 22 24 34 1970 cohort Bottom 38 30 19 13 2 25 29 29 16 3 22 22 27 28 Top 15 19 25 43 Intergenerational Earnings mobility: Source: Blanden et al (2002)

19. Fromchildhood poverty to low wage employment (%) Source: McKnight (2002)

20. Summary: Income mobility patterns • There is quite a lot of short-term mobility, but mostly short range • Current income is strongly linked to past income • Recurrent poverty is more common than remorseless poverty • Poverty in the UK and US is more persistent than in other OECD countries • There was little change in poverty persistence in the UK in the 1990s • Intergenerational links in earnings are strong but not determinant • Intergenerational links appear to have strengthened, comparing those growing up in 60s and 70s, with those growing up in 70s and 80s.

21. Childhood experiences and risks of adult exclusion • Consistent and powerful childhood predictors of unfavourable adult outcomes: childhood poverty; family disruption; contact with police; and educational test scores. • Children who experienced consistent poverty were two and a half times as likely to have no qualifications by age 33. • Boys who were poor were a quarter as likely to gain degree-level qualifications. • Low income in adulthood is related to: poor performance at school; lack of parental interest in schooling (especially men); and childhood poverty • Adult benefit receipt is linked to: poor test scores; childhood poverty; father’s interest in schooling (men); and family circumstances (women) Source: Hobcraft (1998),

22. Adult negative outcomes showing largest odds ratio for each childhood variable (women) Source: Hobcraft (2002); NCDS

23. Source: Hobcraft and Kiernan (1999)

24. Drivers of links across the early life-course • Childhood circumstances matter • Early test scores have major links to outcomes • But controlling for a wide range of initial factors, childhood poverty is still associated with adverse outcomes • Family/demographic circumstances matter: eg. teenage motherhood is more strongly associated with adverse outcomes than poverty childhood • Particular childhood factors link most strongly to similar adult factors

25. Does a focus on ‘Social Exclusion’ change the policy response? • Does a focus on ‘social exclusion’ produce different policies to focus on ‘poverty’? • Are groups affected by persistent/recurrent low income different from poor in a snapshot? • Does a dynamic focus change policy to an ‘active welfare state’? • Do insights from longitudinal analysis change priorities? • What has impact been in practice since 1997?

26. Characteristics of those with low and persistently low income and persistently low income 1995-98

27. Four forms of intervention

28. Summary: Can focussing on ‘social exclusion’ help? • Focusing on ‘social exclusion’ can draw attention to deprivation beyond cash, or at least emphasise that this should be focus • Understanding dynamics does allow differentiation of circumstances and refinement of policy. • Thinking about dynamics suggests making sure that policy does achieve all of ‘prevention, promotion, protection and propulsion’. • Can be returns in identifying key events or characteristics with long-term effects. • Emphasis on inclusion may affect choice of service delivery. • But in practice…..?

29. Focussing on ‘social exclusion’ in practice: Policies since 1997 • Code for ‘the underclass’, with personal responsibility for their fate, and no cause for public action? • A diversion towards ‘softer’ issues, away from more difficult – and harder – ones of material deprivation and redistribution? • Certainly no lack of policy! • ‘Poverty’ has not been ignored: Blair’s child poverty pledge

30. Combination of SEU (long-term drivers) agenda and Treasury-driven (stealthy?) redistribution • Analysis suggests that this mixture is necessary – need both short-term protection and long-term prevention • Policies have navigated with public attitudes – hence emphasis on work-based strategies for working age population. • But in contrast to US, benefits for non-working families have also risen. • The big question is whether the scale of action is enough?

31. Real increases in benefits, April 1997 to April 2003

32. Five Labour Budgets: proportional changes in income % increase in income Income group (tenths of individuals) Source: Microsimulation Unit, Cambridge University

33. Modelled impact of 1997-2001 policies on child poverty in the UK Source: Sutherland (2001) Note: Poverty line is 60% of median equivalent income before housing costs. Figure shows first round impact effects only.

34. Proportion of children falling below 60% median relative income poverty lines evaluated in six-month periods Source: IFS

35. Impact of Labour Budgets 1997-2000 compared to income indexation of tax/benefit system Source: Sutherland (2000); Hills (2000)

36. Four possible conclusions • There’s not very much social exclusion about • There’s lots of social exclusion about • Talking about ‘social exclusion’ makes no difference to policy • Talking about social exclusion can make – and has made – a difference to policy