On the edge: the working families who struggle to make ends meet
A new report tells the stories of people experiencing in-work poverty in Liverpool, with further cuts only set to make it worse
Karolina Nowak lives in a small, red-brick terrace house near Toxteth, south Liverpool. A mother of two in her 20s, she is currently on maternity leave from her part-time retail job. Finances were tight enough when she had her first child. But now she is on statutory maternity pay, it’s even harder. Her husband Micha is a manual worker in a nearby factory on the minimum wage, and has been doing overtime to try to bridge the financial gap. As a result, the £52 a week working families tax credits the couple used to receive has been cut to £26. At the same time their rent, council tax, and utility bills have increased. Now it’s a struggle to make ends meet.
Her six-month-old son wriggles and laughs on her lap as she discusses the extra strain having a second child has put upon the family’s finances. “Micha is on minimum wage, full time. But he’s doing overtime, because I’m on maternity leave, and last week he did 74 hours,” she explains. “It costs our family life, we hardly see him. And you don’t even see the money because he pays more tax on it.” After rent, bills and food, the family have £44 left over, which they’re rarely able to save. Their car needs new tyres, but they can’t afford to replace them yet and Karolina’s daughter Lydia has returned home with a letter about a school trip costing £10. When Nowak looked into whether it was worth getting a full-time job and finding a childcare place for her son, she worked out that at £33 for six hours of childcare a day, while she earned £39, with travel costs on top, it simply made no financial sense. Instead, she will work at weekends, when her husband is at home.
Nowak’s story is far from unique. The family live in the second poorest area in the city, with the fourth highest child poverty rate. Five of the 20 most deprived areas in England are in Liverpool. Working poverty is common in Liverpool. But a new study seeks to bring to life the difficulties faced by households in working poverty and expose the impact of the coalition government’s welfare policy, even as the new Conservative government seeks to find ways to cut the welfare bill by a further £12bn.
The idea was the brainchild of Siw Jones, manager of North Liverpool Citizens’ Advice Bureau. On the eve of swingeing benefit cuts in April 2013, she pulled a copy of Maud Pember Reeves’ Round About a Pound a Week from her bookshelf by chance. The 1913 study of a working class community in Vauxhall, in which women were asked to keep a diary detailing their household income and expenditure, was published exactly a century earlier, Jones noted. She wondered: what would a similar experiment in Liverpool show?
Two years later, Getting By? A Year in the Life of 30 Working Families in Liverpool, has been published. The report comprises interviews with Liverpool families with one or more children under the age of 18, and at least one family member in employment. Over the course of the year, the families kept spending diaries, as in the Vauxhall study, to enable researchers to examine how families in low-paid work cope and struggle with the ordinary and unexpected costs of running a household.
The resulting report tells the first-hand stories of working families trying to make ends meet, in 164 pages subdivided by themes such as work, the cost of living, and family life. Paul Kyprianou, research manager at Praxis, the community interest company that took on the research, felt it was important to put the voices of the families at the heart of the report. “We wanted to make more of working poverty: the statistics are there, but the stories weren’t,” he says. “And we wanted to counterbalance shows such as Benefits Street – we didn’t want it to be sensationalised: this is typical of thousands of working families.”
In the spending diaries, the families list every penny of income, from wages and benefits to tax credits. Pete Williams and his wife Gill have two children, and were expecting another while filling in their diary. While Gill cares for their young children, Pete works in the service industry and is on a zero-hours contract. He is paid £6.31 an hour, and calls in every day except Sunday to see if he has work. He ends up working nearly every day.
“He goes in at 8am every morning and he’s there all day,” Gill says. “Last week he did 47 hours, the week before that was 50 hours.” According to the diary, the family spend £95.40 more than their combined income from earnings, child tax credits and child benefit. The only thing keeping them afloat is Pete’s redundancy payment from a previous job and a small inheritance Gill’s father left when he died recently.
Life expectancy in Norris Green, where many of the families live, is four to five years lower than the national average, and Lynn Wallace, who manages Norris Green Credit Union, attributes it to health problems arising from poverty. She has seen both an increase in customers since the advent of welfare reform, and an escalation in the severity of cases coming through the door.
“One of the most punitive measures in Norris Green is the bedroom tax. People are becoming more transient, as they move into short-term private tenancies,” Wallace says. “Older people who have lived all their life somewhere, who are now caring for grandchildren nearby, are having to downsize and leave the area. And to have contributed tax and national insurance for most of your life, and then find yourself moving from home to home in the private sector, is an absolute disgrace.”
Jones pulls out a list of the most common debts reported to North Liverpool CAB before the recession, and now. In 2008, the most common debts were credit cards, unsecured personal loans and catalogue debts. Now, council tax arrears is the most common, making up 17.5% of all debts reported to them: more than double the rate it was seven years ago. The next most common debt categories: water bills, fuel debt, rent arrears, and magistrates’ fines for non-payment of TV licences, illustrate the extent to which households in the area are struggling to pay even basic bills. “We’re finding people working well into their 70s and 80s just to make ends meet,” says Helen McKeown, an advice session supervisor at North Liverpool CAB. “It affects everyone.”
At the same time, the CAB has lost legal aid funding which prevents staff supporting people through the sanctions appeals process, and limits how much advice they can fund. “It’s absolutely disgusting,” Jones says. “People’s rights are being removed through a rapid change in the benefits system and at the same time their recourse to representation, and their access to justice, has been removed.”
The complexity of the benefit system is mentioned repeatedly by families. Often, even when they increase their hours of work, they see no change in their earnings, as they lose tax credits.
“I’m getting penalised if I have to do extra hours to get the money in,” says Michelle Jones, a single parent, who has a minimum wage job in a nearby supermarket. “My rent and my council tax benefits, that all went down when my wages went up. Now I’m thinking, ‘Is it even worthwhile working?’” After rent, bills and basic outgoings, Jones and her daughter are left with only £8.39, for emergencies. When her hours were marginally increased, Jones received two benefit overpayments and was forced to take out a loan from high-interest payday loan company Wonga to pay them back. She is still paying it off over a year later. The unrelenting financial pressure has taken its toll: “I’ve had to go on antidepressants because of the stress that it’s left me in.”
Moving over to universal credit, as some families in Liverpool are beginning to do, brings its own problems. When switching from income support, the process can take well over a month, leaving families with no money in the meantime. If they can’t rely on family members or friends to tide them over, their gas and electricity is cut off, or they resort to payday lenders.
Councillor Frank Hont, the cabinet member for social inclusion, fairness and equalities at Liverpool city council, who wrote the foreword to the book, believes the problems faced by the working poor are universal. “We’ve tried to get the message across without coming across as whingeing Scousers. If you walk around the city, it’s fantastic,” he says. “But walk a mile and a half in any direction, and you will find severe deprivation. We’ve got fantastic regeneration in the city, but we do have problems. We’re proud of what we do, but there are real problems we’re trying to tackle.”
The research group plans to follow the families every year for the next five years, but also hopes to replicate the study in other areas of the country, to continue to highlight the struggle the working poor face to make ends meet.
For the families involved in the book, work often doesn’t pay. But all interviewees were steadfast on the importance of having a job for their mental health and for the example they set their children.
The return to power of the Conservative party with an absolute majority after the election, brings little hope to those linked to the project. The continuation of the bedroom tax, the ongoing rollout of universal credit, and £12bn of promised welfare cuts signify if not more of the same, even more entrenched poverty for working families in the city. Asked if they think the situation will improve or get worse over the next five years, the women in the Citizens’ Advice Bureau reply forcefully in unison: “Worse!”
Karolina, an expert in surviving on almost nothing, has an elegant and simple solution to the problem of in-work poverty. “Wages need to go up. When food, gas, rent goes up, so should the wages. It should be in proportion.” She’s optimistic about the impact the research will have, too. “I’m hoping the project changes things. If you go through the book, it’s so touching. All the families on the minimum wage say the same thing. And politicians really need to see that and change something.”