Poverty

Poverty can be measured in two ways:

Absolute poverty – this looks at the amount of people who live below a certain level of income
Relative poverty – this looks at the extent to which a households income is less than the average income in the UK. Relative poverty measures allow us to look at inequalities in incomes and wealth

Alleviating Poverty

The government try and alleviate poverty and create a more even distribution of income and wealth

Policies that they use include:

Working credit and tax credit schemes to encourage low-income households to work
National minimum wage legislation
Schemes encouraging long term unemployed to work e.g. new deal
Minimum guaranteed incomes for pensioners
Progressive tax – pay more they more you earn and tax free allowances
Benefits

Working Credit & Tax Credit

Working credit and tax credit schemes aim to encourage people to go to work on a full or part time basis
These schemes allow lower income families to gain more income from working than under previous schemes

National Minimum Wage

This legislation has meant that the lowest paid workers have a guaranteed wage level
This can lead to increases in absolute poverty

Schemes Encouraging Long Term Unemployed to Work

These schemes are part of a long term strategy to decrease unemployment levels
If people work they will be better off then if they claim benefits
It is better for the government to have lower levels of unemployment as it means they don’t have to pay out for unemployment benefits and they gain revenue through taxation

Minimum Guarenteed Income Schemes for Pensioners

Pensioners are one of the groups of the population most affected by poverty
In the UK the current % of pensioners living in poverty is 17%
This figure has fallen and this is can partly be attributed to the pension credit scheme

Progressive Taxation

In the UK a progressive taxation is operated by the government
Progressive taxation means that at higher salary levels you pay more
There is a tax free amount that all people receive and the rate of tax increases as salary increases

Benefits

People who are unemployed, on low incomes or disabled can claim benefits. Unemployed people can claim unemployment benefits to cover living costs

Benefits are paid to people for the following:

Policies and Poverty Reduction

In the past 10 years poverty levels have not been reduced in the UK

The main reason why poverty has not been reduced is that benefits have not risen at the same price as wage levels so income inequality has risen

Effective Ways to Decrease Poverty

The most effective ways to reduce poverty include:

Increasing the progressiveness of the tax system so it is more equitable
Use wage inflation as a basis for increasing the value of benefits and tax credits
Investment in training to reduce unemployment
Look at indirect taxation and its effects on incomes

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