25 February 2020

To improve the nation’s health, we must redesign markets to loosen the grip of poverty

By Helen Barnard

Reading the Marmot Review on heath inequality is like looking at our nation’s reflection in a mirror. The latest report does not reveal a pretty picture. Happily, we know many of the answers that will help update our look.

In our society, we believe in compassion and justice – we know it just isn’t right that people in the most affluent areas can expect many more years of healthy life than those in the poorest areas. People in the poorest areas can expect to live healthily to 52, whereas those in the richest areas can expect to live healthily to 70. These gaps in healthy life expectancy have grown larger in recent years, especially for women.

The report builds on decades of evidence showing the main drivers of our worsening health are ‘social and economic determinants’ – public-health-speak for poverty. It’s no accident that the North East has seen the largest increase in poverty and the slowest rate of improvement in life expectancy – indeed, it is now the region with the lowest life expectancy in the country. Between 2010-12 and 2016-18, life expectancy in the North East stagnated for men and actually declined for women.

This is not normal. The review points out that the slowdown in life expectancy for poorer communities, women and those living in the North is the longest for 120 years and is not shared by most other OECD countries.

Poverty is about far more than a lack of money: living locked in poverty means constant stress and anxiety, feeling trapped with no way out, feeling humiliated and shamed. It places immense strain on families and relationships: money and debt are the top cause of arguments between couples. Children worry about their parents skipping meals or battling ill health.

Parents strive to give their children the best start in life but see them missing out on opportunities. Many are stuck in damp or overcrowded homes, or are homeless, living in grim B&Bs or badly converted office blocks. You can see the daily toll poverty takes on people’s health, leading to more mental health difficulties, more heart attacks and respiratory illnesses.

So how do we solve this problem? Much of the answer lies in designing better functioning markets. Our labour market has many positive features. It has successfully delivered record high employment, while the National Living Wage has boosted the pay of those on the lowest wages. But too many workers are still trapped in low-paid, insecure jobs, struggling to afford the rent, constantly scared of falling into debt or homelessness.

Many would like to work more hours or have the skills for better jobs but find themselves locked out because of the cost and inflexibility of transport and childcare. Others are stuck because of low skills or poor literacy and numeracy. The last decade has seen the proportion taking part in adult education plummet. Both employers and the Government have failed to invest in training low paid workers.

The Government’s promise to ‘level up’ across our nation holds out the prospect of boosting weak local economies, opening up better quality jobs and opportunities in parts of the country that have felt overlooked for far too long. To achieve it will take years of sustained investment, not only in infrastructure, but also in people and skills. It requires employers to do more to open up better paid jobs to parents, carers and disabled people, who are be shut out of work or stuck in low paid jobs.

Better jobs will boost incomes; but bringing down costs is just as important. The biggest cost faced by most families is housing. In recent years, our mixed housing market has become ever more unbalanced. Home ownership in the UK peaked around the year 2000 and has been steadily decreasing since then. Over the same period, the private rented sector doubled in size, whilst the social housing sector shrank. This has led to many more families locked in poverty, ending up trapped in the private rented sector, struggling to afford high rents, facing insecurity, with health problems worsened by damp and overcrowding.

Housing Benefit should provide families on low incomes with an anchor against these pressures but has become ineffective since the link with real rents was broken in 2012. The Government is taking some welcome steps to improve the private rented sector, but it urgently needs to expand the social rented sector to stem the tide of homelessness and start to rebalance the UK’s housing market.

Our consumer markets generally work well, with strong competition driving down prices; but people on low incomes still pay a ‘poverty premium’ for some essential goods and services, which helps keep them locked in poverty. Fair By Design, who work to eliminate that premium estimate that around 10 million people in the UK who live in poverty pay extra for a range of essential goods and services such as energy, financial services such as loans or insurance, and for buying items for their homes. If you need to top-up the electricity to do the washing and are on a pre-pay meter, on average, you will pay a third more than paying by Direct Debit, which you can’t afford. That must change.

Businesses should commit to ‘poverty premium proofing’ their products and services to ensure low-income customers aren’t paying more for essentials. The best way to do this is by working directly with those consumers to design services which meet their needs, and creating tailored offers like basic, low-cost contents insurance products.

Regulators should also do much more. The Competition and Markets Authority (CMA) has been a leader in looking at the poverty premium. It should now develop a partnership across regulators, learning from good practice in different sectors to reduce the poverty premium in all its forms, starting with the higher prices low-income consumers pay for essential services, including the extra cost of customer loyalty.

Finally, our public services, including social security, must provide the steady anchor we all need to be able to rely on in tough times.

This is an endeavour which requires a real partnership between communities, employers, businesses and the government. We will need to keep at it. But the prize is worth it: we can loosen the grip of poverty, improve the nation’s health, right the injustice of large and widening gaps in healthy life expectancy and boost our economy and productivity.

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Helen Barnard is Deputy Director of Policy and Partnerships at the Joseph Rowntree Foundation