Water poverty in England and Wales: an update

Jonathan Bradshaw and Gill Main write:
We published an article on this subject based on an analysis of 2009/10 data from the Family Resources Survey[1].

This note updates that analysis but does not reproduce all the policy discussion in the article because these arguments really have not changed.

Water charges have continued to rise - faster than general inflation (CPI and RPI) and faster than average net equivalent disposable incomes. See Figure 1.

Figure 1: Trends in prices, earnings and water prices. 2005=100.

OFWAT is negotiating with the water companies to achieve a real terms reduction in water prices of 5% 2015-2020. To achieve this would be a huge break in their past achievements. But a real terms reduction in prices does not mean a reduction in water poverty. Since 2010 incomes have been falling behind prices and behind water prices and we don’t know when that pattern is going to end.

Water poverty has been conventionally defined as households spending more than 3% or 5% on water and sewerage. These thresholds are arbitrary and it would be a good idea for the government and the regulators to invest in the kind of exercise that has led to the redefinition of fuel poverty as a result of the Sir John Hills report[2].

Table 1 is the result of analysis of the Family Resources Surveys from 2009/10 to 2011/12 the most recent available. Water poverty rates using the 3% threshold have increased over the whole period. The water poverty gap (the average reduction in water charges needed per week by those in water poverty if they are to be lifted out of water poverty) has fallen slightly.

Table 1: Water poverty rates and gaps 2009/10-2011/12

	Water poverty rate >3%	Water poverty rate >5%	Water poverty gap 3% £ per week	Water poverty gap 5% £ per week
2009/10[3]	22.3	9.8	3.48	3.63
2010/11	22.4	9.2	3.18	3.33
2011/12	23.5	10.0	3.43	3.49

Source: Own analysis of the Family Resources Surveys

There is no easy solution to water poverty.

The Water Sure scheme is not being taken up and touches the edge of the problem. The South West subsidy is ill directed. There is also a huge and growing water debt problem.

The water companies don’t know enough about consumers to target relief successfully and it is not a priority for them to attempt this work at the present time.

The best solutions are

1.      Fiercer regulation of prices by OFWAT.

2.      Faster introduction of water meters.

3.      Then tilting tariffs so consumers who wash their cars or fill their ponds/swimming pools with drinking water pay a premium.

4.      But meanwhile, and anyway, the key is really an increase in cash benefits and low wages so that they exceed water price increases.

5.      More research on this subject is also needed - by OFWAT, CCWater and/or the water companies.

No one funded this analysis!

September 2014.

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[1] Bradshaw, J. and Huby, M. (2013) Water poverty in England and Wales, Journal of Poverty and Social Justice, 21, 2, 137-148

[2] https://www.gov.uk/government/publications/final-report-of-the-fuel-poverty-review

[3] These numbers are slightly different than given in Bradshaw and Huby for 2009/10 (for reasons that we cannot fathom) but they are a consistent basis for each year.

Note:  This article gives the views of the author, and not the position of the Social Policy Research Unit, nor of the University of York.

Presentations at the Third Peter Townsend Memorial Conference: Poverty and Social Exclusion in the UK

Jonathan Bradshaw and Gill Main will give presentations at the Third Peter Townsend Memorial Conference: Poverty and Social Exclusion in the UK in London on 19-20 June 2014. Jonathan will speak on 'How many poor and deprived children are there in the UK?' and Gill on 'What do children need?'.

How many working poor parents might be able to work more?

Jonathan Bradshaw and Gill Main

19 March 2014

Paul Gregg has written an interesting blog on working poverty https://smcpcommission.blog.gov.uk/2014/03/18/working-poverty-whats-going-on/

in which he suggests that the Universal Credit rules might be used to identify the working poor who might be expected to work more. The expectation in UC is that:

·                  One adult in a couple is in full-time work.

·                  Lone parents, or the second adult in a couple:

o    Work full-time if the youngest child is aged 13+.

o    Work part-time if the youngest child is aged 5-12.

o    Are not expected to work if the youngest child is under 5 years old.

It is possible to estimate an approximate size of these groups using secondary analysis of the Households Below Average Income (HBAI) data for 2011/12.

In 2011/12 17.5% of children were in households in poverty (income less than 60% median BHC). Of these 20.0% were with lone parents not in employment and 14.3% were with couples not in employment. So the rest 65.7% were working poor.  Of these, 4.3% had lone parents in full-time employment and 5.3% had couples both in full-time employment who could not be expected to work more. This leaves 90.4% of the working poor with children with a possible potential to work more.

The proportion of poor children with parents with working potential are as follows:

·         With lone parents working part-time whose youngest child is 13+=3.9%

·         With couples one adult working full-time and one part-time whose youngest child is 13+=2.1%

·         With couples one adult working full-time and one not working  whose youngest child is over 5=12.6%

·         With couples both working part-time=16.7%

The self-employed present problems because the HBAI classification is “Couple with children; one or more full time self-employed”. It is possible to identify that 41.4% of these have two adults working full-time. The rest have one adult working part-time or not at all.

·         With couple one adult full-time self-employed and one adult working part-time or not working with youngest child over 5= 6.5% (or 1.8% if youngest child 13+)

That gives a total of 41.8% (or 37.1% if 13+ for the self-employed) of children in working poor households where the adults have some more working potential.

This of course assumes the work is available. There may be other barriers to exploiting their work potential including disability or caring responsibilities. We found that 16.7% of those with work potential had an adult only with a disability, 6.8% had a disabled child only and 3.8% had a disabled adult and a disabled child. If these are deducted then the proportion with work potential would be 30.4% (or 27%).

It would be possible to obtain a more accurate assessment of the working potential using the Family Resources Survey.

The tables below provides a more detailed summary of the data.

	Households with children in the sample	%	Children in the UK	%
	6364	100	13088001	100
Equivalent income less than 60% median before housing costs	1058	16.6	2293048	17.5
		100		100
No employment	429	40.5	785871	34.3
Lone parents unemployed	283	26.7	458563	20.0
Couples unemployed	146	13.8	327308	14.3
Some employment	629	59.5	1507177	65.7
		100		100
Lone parents
Working fulltime	39	6.2	6411	4.3
Working part-time	74	11.8	146247	9.7
Of which youngest child 13+	29	4.6	58786	3.9
Couples
Couples both full-time	37	5.9	80937	5.3
Couples full-time and part- time	74	11.8	175293	11.6
Of which youngest child 13+	16	2.5	32033	2.1
Couples one working full-time one not working	152	24.2	428705	28.4
Of which youngest child 5+	78	12.4	191194	12.6
Couples both part-time	100	15.9	252671	16.7
Self employed	153	24.3	359216	23.8
Couples both full-time	66	10.5	148875	9.9
One part-time/not working	87	13.8	210341	14.0
Of which youngest child 5+	43	6.8	97226	6.5
Or 13+	Or 12	Or 1.9	Or 26728	Or 1.8
Total with some work potential		42.2 or 37.3		41.8 or 37.1

		Work intensity of household			Total
		Not working	Some work potential	Fully working
	No disabled members	55.3%	72.8%	81.5%	69.8%
	Disabled adult(s) only	29.5%	16.7%	8.7%	18.3%
	disabled child(ren) only	6.2%	(6.8%)	7.3%	6.8%
	Disabled adults and children	9.1%	(3.8%)	(2.4%)	5.1%
Total		100.0%	100.0%	100.0%	100.0%

Brackets indicate small numbers

Note:  This article gives the views of the author, and not the position of the Social Policy Research Unit, nor of the University of York.