This section describes living standards among the population of Hackney and the City, and the important links with health and wellbeing.

Living standards relate to the material circumstances in which people live, and are influenced by levels of income and wealth, as well as access to goods and services.  Living standards can be measured in different ways; here the Indices of Multiple Deprivation 2015 (IMD2015) are used as an overall summary measure of relative deprivation (for a full description see Box 1), along with other specific indicators including child poverty. 1 2

Child poverty is a complex issue and there is no simple, agreed way of defining it.  At a basic level, it means families do not have enough money to provide a decent standard of living and an enjoyable childhood for their children.  This chapter will use HM Revenues & Customs (HMRC) data based on the previous official measure of child poverty (Box 1), which was determined by the Child Poverty Act 2010. 3

As well as describing living standards in Hackney and the City and how these are linked to population health and wellbeing, this section also summarises the impact of recent successive welfare reforms introduced by the national government (see Box 2 and Figure 1).  The various benefit cuts that have been introduced have reduced absolute levels of income among many working age households, including those in work.

The Institute for Fiscal Studies (IFS) report that the biggest losers from all of the changes to taxes and benefits implemented between 2015/16 and 2019/20 (up to and including the July 2015 Budget) are those on the lowest incomes. 4  They conclude that this will lead to an increase in the number of people living in absolute and relative poverty. While planned increases in the minimum wage help many on the lowest hourly earnings, this will not mitigate against the impact of welfare reform for most low income families. 5

Box 1: Definitions and measures of deprivation

Absolute deprivation – an absence of the minimum resources required to afford the basic necessities for life.

Child poverty (HMRC previous ‘official’ measure) – percentage of dependent children under 20 living in families with household income below 60% of the national median income A before housing costs are deducted.

Index of Multiple Deprivation 2015 (IMD2015) B   – IMD2015 updates IMD2010, using data largely from 2012-13.  It is based on 37 separate indicators, organised across seven domains C and combined using appropriate weights to produce an overall relative measure of local deprivation across England.  IMD2015 is a summary measure calculated at neighbourhood level – specifically Lower Layer Super Output Areas (LSOAs), which contain an average population of 1,500 people.  As it is an area based measure, not everyone living in a ‘deprived’ LSOA as measured by IMD2015 will themselves be deprived. At local authority level, the measure reported here is ‘rank of average score’ in the constituent LSOAs.

Income deprivation – This is one of the seven IMD domains and measures the proportion of the population experiencing deprivation relating to low income. The definition of low income used includes both those people who are out-of-work, and those who are in work on low earnings.

Income Deprivation Affecting Children Index (IDACI) – This measures the proportion of all children up to age 15 living in income deprived families.D  IDACI is a subset of the Income Deprivation IMD domain.

Income Deprivation Affecting Older People Index (IDAOPI) – This measures the proportion of all those aged 60 or over who experience income deprivation. IDAOPI is a sub-set of the Income Deprivation IMD domain.

Relative deprivation – exists where living standards are significantly below those enjoyed by the majority of the population.

 

Box 2: Summary of key recent welfare reforms

There have been significant changes to welfare provision in the UK in recent years, with most changes introduced through Housing Benefit regulations and the Welfare Reform and Work Act 2016.  The stated aims of these reforms are to get many people currently on benefits in to work and out of poverty, and reduce the scope for fraud and error.  A summary of some of the key reforms are set out below (see Figure 1 for a detailed timeline).

  • Total household benefit payments have been capped for working age people from August 2013, at the equivalent of £18,200 a year in London for single adults and £26,000 for a couple (with/without children) or lone parent. 6  This cap will  shortly be lowered to £15,410 or £23,000, respectively. In Hackney, households already capped will be subject to the lower cap from November 2016; those capped for the first time will be affected from January 2017. The cap has been in place in the City of London since November 2016.
  • Removal of the spare room subsidy from 2013 (otherwise known as the introduction of ‘the bedroom tax’)7 8
  • Changes to Housing Benefit from May 2016, including removal of the family premium and a range of reforms to Local Housing Allowance (LHA) – including caps on the levels paid, and restrictions in the rate payable to under-35s.
  • Introduction of Universal Credit, which combines the six main working-age benefits E in to a single benefit payment for people in and out of work. It is being rolled out in a phased approach, applying to all claimants in Hackney from June 2018 and in the City from March 2017.
  • The replacement of Incapacity Benefit with Employment Support Allowance (ESA) in 2008 for new claims and from 2011 for reassessments.F9
  • Introduction of Personal Independence Payment (PiP), which replaces Disability Living Allowance (DLA) from 2013, for people aged 16-64 to help with some of the extra costs caused by long-term ill-health or a disability.
  • Freezing of working age benefits at 2015 rates for the next four years with no annual uprating – applied to JSA, ESA, Income Support and Working Tax Credit.
  • From 2017, replacement of Jobseeker’s Allowance (JSA) with a Youth Allowance for claimants aged 18-21 who are out of work, payable for a maximum of six months (after which time, if the young person has not found a job or apprenticeship, they are required to do community work).
  • Also from 2017, housing support for those aged 21 or under will be restricted; and it is expected that support for children through Tax Credits, Universal Credit and Housing Benefit will be restricted to two children.

In addition, changes made to the Access to Work (AtW) schemeG in October 2015 cap the value of available grants at £40,800.

 

Figure 1: Timeline of reforms affecting claimants in Hackney from 2008 to 2016

Figure 1: Timeline of reforms affecting claimants in Hackney from 2008 to 2016

Notes

  1. Median income is the middle point in the income range of all households, with equal numbers of households on incomes above and below this point
  2. Median income is the middle point in the income range of all households, with equal numbers of households on incomes above and below this point
  3. These are Income Deprivation; Employment Deprivation; Health Deprivation and Disability; Education, Skills and Training Deprivation; Crime; Barriers to Housing and Services; and Living Environment Deprivation.
  4. The word ‘family’ is used to designate a ‘benefit unit’, that is the claimant, any partner and any dependent children (those for whom Child Benefit is received).
  5. including Income Support, Working Tax Credit and Housing Benefit
  6. ESA is for people unable to work due to illness or disability who are not receiving Statutory Sick Pay (SSP). The maximum amount of SSP is 28 weeks and claims are made if a person has been ill four days in a row. ESA is provided if a person’s illness or disability affects their ability to work.
  7. Grants for practical or financial support for people with a disability or long-term physical or mental health condition to help them start or stay in work.

References

  1. Department for Communities and Local Government, “The English Indices of Deprivation 2015 – Statistical Release,” September 2015. [Online]. Available: https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/465791/English_Indices_of_Deprivation_2015_-_Statistical_Release.pdf (PDF document).
  2. The UK Data Service, “Deprivation data,” [Online]. Available: https://census.ukdataservice.ac.uk/get-data/related/deprivation.
  3. The National Archives, “Child Poverty Act 2010,” [Online]. Available: http://www.legislation.gov.uk/ukpga/2010/9/contents.
  4. Institute for Fiscal Studies, “The Impact of Proposed Tax, Benefit and Minimum Wage Reforms on Household Incomes and Work Incentives,” Institute for Fiscal Studies, 2015
  5. Institute for Fiscal Studies, Press Release: Nearly two-thirds of children in poverty live in working families, 2015.
  6. W. Wilson, “Briefing paper – Housing Benefit: withdrawing entitlement from 18-21 year olds,” House of Commons Library, 2015.
  7. Department for Work & Pensions, “Housing Benefit Claimant Factsheet – Removal of Spare Room Subsidy,” Department for Work & Pensions, 2014
  8. W. Wilson, “Briefing paper – Housing Benefit: withdrawing entitlement from 18-21 year olds,” House of Commons Library, 2015.
  9. H M Government, “Employment and Support Allowance (ESA),” [Online]. Available: https://www.gov.uk/employment-support-allowance/eligibility. [Accessed September 2016]