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Poverty and Inequality
Transcript of Poverty and Inequality
It is often associated with the idea of income "fairness". It is generally considered "unfair" if the rich have a disproportionally larger portion of a country's income compared to their population. Poverty and Inequality What is Poverty? What does poverty actually look like? Further thoughts and Questions "Poverty is defined relative to the standards of living in a society at a specific time. People live in poverty when they are denied an income sufficient for their material needs and when these circumstances exclude them from taking part in activities which are an accepted part of daily life in that society" Are current policies the best policies to use?
What alternatives could the government consider?
Is poverty inevitable? Can poverty ever be completely eradicated?
Is inequality that much of an issue? Child Poverty Institute of Fiscal Studies (IFS) figures estimate that there are 3.5 million children living in poverty in the UK and predict a steep rise in the numbers in coming years. Relative Poverty
"Where resources are so seriously below those experienced by the median averages of society that an individual or family are in effect, excluded from ordinary living patterns, customs and activities." Absolute Poverty "Absolute poverty is where people fail to meet the minimal requirements necessary to afford minimal standards of food, clothing, health care and shelter." Effect of taxation and transfers on Gini-Coefficients What is Income inequality?
•Back to Work Bonus
•Child's Special Allowance
•Child Tax Credit
•Council Tax Benefit, administered by local authorities
•Constant Attendance Allowance, see industrial disablement benefit below
•Disability Living Allowance
•Income related Employment and Support Allowance
•Housing Benefit, administered by local authorities
•Industrial Injuries Benefit,
•In-work emergency discretion fund payment
•In-work emergency fund payment
•Payments out of the Social Fund to people on a low income to help with maternity expenses, funeral costs, financial crises and as community care grants
•Pensioner's Christmas Bonus
•State Pension credit
•Reduced Earnings Allowance, see industrial disablement benefit above
•Retirement Allowance, see industrial disablement benefit above
•Return to work credit, including the self-employment credit
•Severe Disablement Allowance
•War Widow's pension,
•Working Tax Credit.
•2005: National Rural Employment Guarantee Act, guaranteeing 100 days of minimum wage employment to rural households.
Starting rate for savings 10% £0 - £2,710
Basic tax rate 20% £0 - 34,370
Higher tax rate 40% Over £34,370
Additional rate 50% Over £150,000 Income Tax Rates 2012 - 13 0% 1-180,000
30% 800,001 and above Edd, Tom and Sunny United Kingdom India Lorenz Curve Analysis Nobel Prize-winning Economist Joseph Stiglitz:
"Rising inequality is partly to blame for stagnating growth in the US and UK because of lack of aggregate demand."
"If your gave more money to the people in the middle and the bottom, it would have I believe a strong benefit to economic growth." The super-rich – the top 1% of earners – now pocket 10p in every pound of income paid in Britain.
The poorest 50% take home only 18p of every pound between them.
There is still a widening gap between those at the very top and the rest of society. "Income inequality among working-age people has risen faster in Britain than in any other rich nation since the mid-1970s" -
report by the OECD Income inequality in the UK fell sharply in 2010–11.
The largest one-year fall since at least 1962.
A large fall in real incomes at the top of the income distribution fell more than the lower quintiles.
Future prospects for inequality however are uncertain.
£18 billion welfare cuts by 2014–15 will reduce incomes proportionately more towards the bottom of the income distribution which will cause negative effects for inequality. Issues that the DWP should prioritize Get more people into work
Providing better support services to help people get out of poverty
Improving long-term prospects through education and training
Improving the level of benefits for people not working and long term disabled
A living wage?
A wage appropriate for where you live could have huge distributory effects for poverty and inequality.
Higher for wages in expensive places to live?
Wages of at least least £7.45 per hour outside London and £8.55 within the capital, would boost the nationwide income by £6.5bn a year.
There could be an estimated saving of £2bn a year to the govt for an increase in taxes and a reduction in benefits. A living wage? [Reference] The Resolution Foundation and the Institute for Public Policy Research (IPPR). References http://www.jrf.org.uk/reporting-poverty/facts-figures