Private Renting, Poverty and Social Exclusion in Scotland

by Ken Gibb

I have been meaning to write something in response to the excellent Joseph Rowntree Foundation Report published last week (Monitoring Poverty and Social Exclusion in Scotland 2015) but I have only now found the time.

Peter Kenway and colleagues point to successes like the steep fall in pensioner poverty and the smaller but still important fall in child poverty since the late 1990s, as well as the benefit of lower housing costs and a larger social rented sector in Scotland. Against that however, working age benefit levels are low relative to minimum income standards. And, there has been a large, sustained increase in JSA claimants being sanctioned or referred for sanctions.

As a result of low income and disparities created by area deprivation, Scotland still performs poorly in respect of big structural inequalities such as premature mortality, the slow rate of progress addressing the educational attainment gap, and in terms of insecurity and low pay at work. The authors also report little progress in terms of the Scottish Government’s wider solidarity target of increasing the share of income going to the poorest 30% of the population.

The report team note important changes to the problems that characterise poverty in Scotland: a rising share of those who are poor being younger adults; a larger proportion living in the private rented sector; and, a rising share of those on low pay having higher education qualifications.

The most recent data for 2012-13 shows an increase in child and working age poverty. The authors state it may only be one year’s data but it may ‘mark the start of a turn for the worse which, if left unchecked, would squander the gains Scotland has made over 15 years’.

The report goes on to identify a number of initiatives and remaining challenges about poverty and exclusion in Scotland. Here I am going to focus on what they have to say about housing and I want to focus on that one aspect of poverty and exclusion, though I could have just as easily concentrated on in-work poverty, health inequalities or sanctions – all of which feature prominently.

One indicator is the changing number of children, working age people and pensioners by housing tenure. A comparison is made for these figures between the three years 2000-01 to 2002-03 as against 2010-11 to 2012-13. Overall, the numbers fell by 230,000 with big falls in social renting (280,000) and home ownership (90,000) but a steep rise in private renting poverty (140,000). The rise in PRS poverty was largely explained by people of working age, whereas where it fell it was more split across the different categories (working age, children and pensioners).

A second indicator looks at housing cost as a percentage of income by tenure and contrasts the same time periods as above (and compares Scotland with England in the latter 2010-11 to 2012-13 period). Social renting costs remained broadly unchanged in Scotland (though were significantly higher in England – 18% versus 24%); home ownership costs fell from 13% to 11% (and remained a little higher in England); private renting rose from 20% to 24% (but still lagged well behind England at 29%). The authors also report that difference between the average private and social rent is larger in Scotland than in any English region outside of London.

Third, the analysis looked at households who report they are cold in winter by tenure and by working age versus pensioner households (all as a percentage of all households). Thus, 18% of pensioners and 22% of non-pensioners said that their heating sometimes failed to keep them warm in winter. By tenure, 19% of homeowners, 32% in social renting and 37% in the private rented sector. This is a different calculation to the official fuel poverty measure but the authors argue that a self-reported subjective measure captures the reality of heating cold homes better.

What are we to make of this? First, I think these indicators really do nail the fact that the private rented sector, albeit a diverse and in places functional part of the housing system, is also the locus for emerging and disproportionate poverty problems in Scotland. And this is despite the several years of good work to improve the sector and the ongoing private rental strategy.

Second, one cannot understate the importance of the interaction of low wages and take-up of in-work housing benefit. The increased flexibility of working arrangements in a context of employer power and declining skill levels of jobs creates further complications. One problem concerns the burden placed by rising private rents but also the importance of transport and childcare costs. A second is the risk of proposed further sanctions under Universal Credit for people in work receiving UC and deemed not to be seeking more hours’ work. This exemplifies the case of the left hand not knowing what the right hand is doing. It will force further conditionality on workers receiving benefits when many have increasingly little control over their hours.

Third, the poverty monitor is challenging for the Scottish Government. While they can rightly point to the areas where wider structural factors prevail (UK markets, globalisation or UK Government policy), several of the pinch points are areas of devolved policy like education, health and, to an extent, housing. The new JRF report presents a mixed picture and poses difficult questions both for Scottish and UK Governments. And right now, as Kenway and colleagues argue, public agencies have to do their best to support those confronting the consequences of the present UK conditionality system.