UK POVERTY

GCSE ECONOMICS: UNIT 12

The Causes of Poverty

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2UK POVERTY Today you will...

Understand what causes Poverty

Identify the main cause of poverty and justify your choice

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2UK POVERTY

Starter: What are the causes of poverty?

Create a mini-mind map on the computer on the causes of poverty

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Causes of poverty #1: Unemployment

In December 2013 the UK unemployment rate was 7.4% Those individuals willing and able to work (i.e. economically active) but

unemployed can find themselves in relative poverty A single adult aged over 25 receives only £71.70 per week in

Jobseekers Allowance government payments This is well below the 60% threshold of the average (medium) income

in the UK of £256 per week Furthermore The Joseph Rowntree Foundation said that to have an

adequate standard of living a single person needs to earn £200.64 a week

Without any other source of income the unemployed will be in relative poverty – however these individuals may be in receipt of other government handouts such as housing benefits

Other issues: long term unemployment leads to a…loss of skills, family breakdowns, poor health and mental issues

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Causes of poverty #2: Lack of qualifications

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Causes of poverty #2: Lack of qualifications

The lower a young adult's qualifications, the more likely they are to be lacking paid work (either unemployed or economically inactive). All levels of qualifications from GCSE to Degree appear to make a noticeable difference.

Also the lower a young adult's qualifications, the more likely they are to be in low-paid work. All levels of qualifications appear to make a noticeable difference compared with the level below.

The overall conclusion is that staying on in education post-16, and preferably post-18, is important, in terms of both getting work and, if in work, getting a reasonable rate of pay.

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Causes of poverty #3: Illness & Disability

Individuals suffering from illness or disability (physical or learning) are less likely to find and hold down employment, leading to poverty

Those born with a long-standing illness or disability are also more likely to have fewer qualifications or experience which means that should they find employment it is likely to be low paid or part-time.

Around a third of all disabled adults aged 25 to retirement age are living in low-income households.  This is twice the rate of that for non-disabled adults, as it has been throughout the last decade.

Unemployment, especially long-term, can lead to the risk of developing mental illness; indeed those in poverty are more likely to develop mental illness (see below)

Poverty site: “Adults in the poorest fifth are much more likely to be at risk of developing a mental illness as those on average incomes: around 24% compared with 14%.”

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Causes of poverty #4: Age

Age is often a factor which indirectly causes poverty; age is normally combined with another factor to explain causation.

Increasingly those adults aged 16 to 24 are in low-income households (1.7 million); with youth unemployment remaining close to the one million mark it’s not surprising that they find themselves in poverty. 

At any age being a lone-parent is one major cause of poverty; having to balance the care and financially responsibilities of a parent can mean you slip into poverty

Indeed 80% of lone parents in low-income households are aged 25 or older, with only 20% being under 25.

Of the 1.6 million adults aged 34 to 42 in low-income households, 1 million are in families where someone is working (low pay?) and most of these are couples with children. 

At 45%, working couples with children are a much greater proportion of the adults aged 34-42 in low-income households than that for any of the other age groups.

Of the 1.2 million adults aged 52 to 60 in low-income households, 600,000 have a disabled adult in the family and most of these are workless. 

At 35%, workless families with someone who is disabled are a much greater proportion of theadults aged 52-60 in low-income households than that for any of the other age groups.

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Causes of poverty #5: Debt

Many adults in poverty are in arrears (have amounts overdue) with their bills

20% of workless working-age families are in arrears with their bills, compared to 5% for all-working families.

The bills that families are most likely to be behind with are Council Tax, water, electricity and gas.

Families on low incomes increasingly turn to short term money lenders and buy household items on hire purchase (e.g. Bright Homes), where interest rates and the total amount repayable are extremely high

Debt invariable leads to more debt creating a vicious cycle which is difficult for families and adults to escape

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Causes of poverty #6: Lack of information

One cause of poverty is the lack of take-up of benefits which adults are entitled to; this may be due to ignorance or the lack of information available to those in need

Often those of retirement age fail to apply (take-up) the benefits they are entitled to

Around a third (33%) of all pensioner households entitled to Pension Credit (i.e. a pension) are not claiming it (1.3 million households).

Two-fifths (40%) of all pensioner households entitled to Council Tax Benefit (i.e. a discount on their monthly council tax) are not claiming it (1.7 million households).

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Causes of poverty #7: Government Policy

Out of work/low income benefits have been cut and become harder to access.

Disability benefit has been cut and reformed. These reforms mean that many disabled people have lost benefits entirely.

Many council houses have been sold off which means that many people are stuck on the waiting list for years.

Public sector jobs have been cut which leads to higher unemployment.

Public sector wages have been cut.Less public sector workers means less support for

people to access to help them out of poverty.

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Causes of poverty #8: Economic Transition

Deindustrialisation There used to be a great many jobs in industry such as:

mining, factories, dock workers that have now disappeared.

This often means that there are more unemployed people than available jobs.

This leads to more service jobs which are lower paid.

Housing boom/bubble Between the late 80’s and mid 2000’s house prices

raised dramatically. This made people who already owned houses rich. It means that people who do not own a house are very

likely to be unable to afford one.

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Causes of poverty #9: Discrimination

Black and ethic minority people are more likely to be in poverty than white people in the UK.

Women are more likely to be unemployed or on lower pay.

People with disabilities but able to work are more likely to be unemployed than non-disabled people.

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Causes of poverty #10: Relationship Breakdown

Relationship breakdown is a leading cause of poverty for women and children.

This is because women are more likely to keep the children and be unable to work.

Childcare can be very expensive and can cost more than a persons wages.

Even if the single parent can work they will be usually be less well off than if there were two working adults in the family.

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Causes of poverty #11: Child Poverty

Children born into poverty are likely to stay in poverty.

Less access to education.

More likely to suffer abuse and become damaged by it.

Likely to have lower aspirations than more affluent peers.

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2UK POVERTY Poverty: Over to you

What do you think is the biggest cause of poverty in the UK?

Final Judgement paragraph?

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2UK POVERTY Today you will...

Understand what causes Poverty

Identify the main cause of poverty and justify your choice