Inequalities in WealthKey Points

• Measuring wealth and income• Evidence of wealth inequalities:

Types of Poverty Extent of poverty in the UK

• Causes of wealth inequalities• Consequences of wealth inequalities• Responses to tackle wealth inequalities

Measuring Wealth and Income

Measuring Wealth & Income

• What is the difference between income and wealth:

• Income – the money that people earn from work, investments or claiming benefits.

• Wealth – the ownership of assets e.g. Property, shares and savings.

C

Evidence of Wealth Inequalities

Evidence of Wealth Inequalities

• The UK is a very unequal country in terms of wealth distribution. Wealth inequalities in the UK are growing.

• Evidence of the growing wealth inequalities is the development of the Super Rich. • The Sunday Times “Rich List” of the

wealthiest people in the country - wealth possessed by a minority of people.

C

Who is this?

Gopichand Hinduja and his brother Srichand made their fortunes in industry and finance.

They are the richest people in 2014 UK with a wealth of £11.9 billion!

Who else is on the ‘Rich List’?

Richard Branson - £3.6 billion

Roman Abramovich, £8.52 billion

Mike Ashley, £3.75 billion

Sir Philip and Lady Green £3.88 billion

Which celebrities are on the ‘Rich List’?

The Beckhams - £210 million

Jamie Oliver - £240 million

Simon Cowell- £300 million

Evidence of Wealth Inequalities

• Other evidence of the growing wealth inequalities in Britain in the increasing amount of poverty that exists.

C

Definitions of Poverty

• What is poverty?– Lack of income or wealth means you cannot

afford the basic necessities you require for an adequate standard of living.

• Main definitions of poverty– Absolute

• Poverty in less developed countries. An individual cannot afford the basic necessities to survive.

– Relative• Poverty in a developed country. In the UK a

household that earns less than 60% of the average household income is considered to be in income poverty (poverty line).

C

Cycle of Poverty

A Poverty Line

• A Poverty line or low income threshold is the minimum amount of income you need to have for a adequate standard of living.

• The current poverty line/low income threshold is a household whose income is 60% of the UK’s average income (after housing is paid)

• If a household income is below this then it is in poverty.

Low Income ThresholdA single parent with two children under 14 yrs =

£182 per week

Low Income Threshold

A couple with two children under 14 yrs =

£260 per week

C

Key Facts

1 in 6 people in Scotland are poor

210,000 children in Scotland are in

poverty. 90,000 are in severe poverty.

72% of children in severe poverty live in

households where both parents are

unemployed

In severe poverty households, one in

five cannot afford to celebrate their

birthday or Christmas

C

Evidence of Wealth Inequalities Tasks• Read pg 15-24 of the ‘Social Issues in the UK’

textbook.1. Explain what PSE is why it is important.2. Summarise the extent of wealth and poverty in the UK

according to the Joseph Rowntree Foundation Survey.3. What factors are considered when deciding if an

individual is experiencing ‘deprivation’? Why do people criticise these factors?

4. Outline the key findings from the British Social Attitudes Survey (2010), mentioning:• Evidence of the extent of poverty in the UK• Public views on how to deal with wealth

inequalities5. Outline the main groups vulnerable to poverty (pg 16-

24). For each group take notes on:a) The extent of poverty amongst this groupb) Why this group is vulnerable to povertyc) Any other relevant information

Causes of Wealth Inequalities

Causes of Wealth Inequalities C

Government Policy

• The Government and its policies has a huge impact on people’s income – how?– Decide taxation levels– Economic policies – Benefits – Employment Laws

Unemployment• In Oct 2014, 6% of the UK population or just under 2 million

people were unemployed - lowest unemployment rate since the financial crisis began in 2008.

• Unemployment rate in Inverclyde rose from 3.8% in Dec 2006 to 4.9% in Nov 2011.

• Causes of unemployment– Economic & political factors

• Structural and technological changes• Govt policies• Competition and world trade• EU policies

– Personal reasons• Education• Lifestyle choices

Low Pay• Three victims of low income:1.Women– Domestic duties – P/time work

2.Low-skilled workers– Lack of job security

3.Workers in certain geographical areas– Pockets of low pay e.g. NE England– Low pay in rural areas e.g. farming

Social Exclusion• What is social exclusion?– Living on a low income.– Unable to take part in

society.– Unable to purchase

goods and services that most people take for granted.

• Social exclusion makes it more likely to be on a low income or unemployed.

Gender

• Women, in particular, lone parents are more likely to live in poverty – Why?– Lower paid jobs– Part-time jobs– Discrimination (glass ceiling)–Welfare dependency– Live longer

Ethnicity• Some ethnic minority groups are more

likely to live in poverty than others.• Who?– Pakistani, Bangladeshi and Black Caribbean

• Why?– Culture (women in the home)– Education (Pakistani & Bangladeshi have lower

qualifications than White, Indian and Chinese groups = lower paid jobs)

– Discrimination

Age• The young and the old are vulnerable to poverty.• Children

– child poverty has increased.– Vulnerable: lone-parent families, unemployed

families & larger families.– Poverty continues into adulthood.

• Elderly– Female older people more at risk of poverty– As people get older they are less likely to claim

benefits.– Impact of pensions

Geography

• North- South Divide– Poverty worst in North of England,

Scotland and Wales than it is in the South East of England.

• Links to areas of high unemployment (economic blackspots).

• Poverty & Wealth side by side,

Causes of Wealth Inequalities Tasks

• Take notes on each of the causes of wealth inequality.

• Make sure you put your notes under clear headings – this will help with future revision.

• Ensure that you include some facts and figures on the extent to which it is a cause of wealth inequalities and not just why it is a cause.

Library Research• You will have gathered notes on the main

causes of wealth inequalities in the UK.• Today, your task is to update your notes

with new statistics and research e.g. current unemployment rates or national minimum wage/living wage rates etc.

• Remember to put your note s under clear headings e.g. Unemployment or Geography.

Update your evidence

• Government Policies– http://www.poverty.ac.uk/tags/governm

ent-policy– http://www.poverty.ac.uk/tags/governm

ent-cuts

• Unemployment– http://www.bbc.co.uk/news/business-296

27831– Parliament Website - Youth Unemploym

ent

Update your evidence

• Low Pay– http://rt.com/uk/204483-low-pay-poverty

-trap/– http://www.poverty.org.uk/51/index.sht

ml– http://www.bbc.co.uk/news/uk-politics-2

9771470

• Social Exclusion– Social Exclusion– http://www.poverty.ac.uk/editorial/childh

ood-deprivation-linked-adult-social-exclusion

Update your evidence

• Gender– http://www.poverty.org.uk/07/index.shtml– http://www.theguardian.com/money/2003/sep/17/wome

nandmoney.socialexclusion– http://www.fawcettsociety.org.uk/2013/11/equal-pay/– Telegraph article

• Race– http://www.irr.org.uk/research/statistics/poverty/– http://www.poverty.org.uk/06/index.shtml

Update your evidence

• Age– http://www.ageuk.org.uk/money-matters/income-and-

tax/living-on-a-low-income-in-later-life/?tpbr=en-GB-SC– http://www.theguardian.com/society/2012/jan/23/

growing-numbers-pensioners-fuel-poverty– http://www.poverty.org.uk/64/index.shtml– http://www.cpag.org.uk/child-poverty-facts-and-figures

• Geography– http://www.bbc.co.uk/news/business-27694833– Parliament Document - download link– http://www.bbc.co.uk/news/uk-scotland-20768002

Causes of Wealth Inequalities Tasks

Extension Task•Read the section ‘Reasons’ on pg 19-21 and complete the questions in the coloured boxes.•Read the ‘Employment and unemployment’ section on pg 21-24 and complete the questions in the coloured boxes.

Consequences of Wealth Inequalities

Consequences of Wealth Inequalities

• Poor housing• Homelessness• Poor standard of living• Difficulties getting a job• Mental & physical ill-health• Inequalities in education• Social exclusion

C

Consequences of Wealth Inequalities Tasks

• Read pg 20-21 of the Social Issues in the UK textbook.

1.Describe what it is like living in poverty in Scotland.

2.What are the effects of poverty on children?

• Read pg 123 of the Modern Studies Guidance Notes.

3.Describe, in detail, what social exclusion is and how it impacts on people’s lives.

Responses to Wealth Inequalities

Responses to Wealth Inequalities

• Who tries to tackle poverty in the UK?– Central govt– Scottish govt– Local govt

C

Government Responses

• The government tries to tackle wealth inequalities in two main ways:a) Increase levels of employment and

employabilityb) Help the income levels of those not in

work (benefits)

C

Government Benefits

• Two types of benefits:

• Universal = entitled to irrespective of income/wealth.

• Means-tested = must meet certain criteria & are targeted at unemployed/low income individuals e.g. Job Seekers Allowance.

C

Responses to tackle Wealth Inequalities

National Govt Scottish Govt Local Authority

•Tax credits (USI/handout)•National Minimum Wage (UCI)•The New Deal (UCI)•Modern Apprenticeships (UCI)•Jobcentre Plus (UCI)•JSA (UCI)•Employment and Support Allowance (ESA) (Handout)•Winter fuel payment (UCI)•Pension Credit (UCI)•Sure start (Handout)

•Get Ready for Work (Handout)•Skillseekers (Handout)•Achieving Our Potential (Handout)• More Choices More Chances (Handout)

•Housing Benefit (Handout)•Council Tax Benefit (Handout)

Update – Nov 2013• National Minimum Wage

• Living Wage– UK: £7.65– London: £8.80

Year 21 and over 18-20 Under 18 Apprentice

2013 £6.31 £5.03 £3.72 £2.68

2012 £6.19 £4.98 £3.68 £2.65

2011 £6.08 £4.98 £3.68 £2.65

2010 £5.93 £4.92 £3.64 National Minimum Wage was introduced in 2010 -

£2.50

Responses to Wealth Inequalities Tasks

• Complete a bank of notes on the different responses to wealth inequalities. Try to include:a) Description of the response i.e. What is it? How does

it help reduce wealth inequalities?b) Evaluation of its effectiveness i.e. Has it been

successful? What evidence is there to show it has helped reduce wealth inequalities?

• Using the ‘Responses to tackle Wealth Inequalities’ table, write notes on each of the responses to wealth inequalities.– USI (UK Social Issues handout)– Handout

The Welfare Revolution

Govt Responses – The Welfare Revolution

• Recession has placed a threat to reducing poverty.

• The new Conservative/Lib Dem govt elected in 2010 had to cut the welfare budget by £18b by 2015.

• The emphasis has been to get people back to work.

• Govt at all levels must ensure that they provide a support network for those vulnerable to poverty.

Govt Responses – The Welfare Revolution

• The current govt is trying to reform the welfare system.

• Iain Duncan Smith (Secretary for DWP) wishes to:– Simplify & integrate benefits to create one

universal credit.– Those returning to work will have their benefits

withdrawn slower to convince them they were better off.

– Create jobs to ensure the l/term unemployed have opportunities.

Govt Responses – The Welfare Revolution

• The current govt’s response has been heavily criticised:– There are not enough jobs to get people back

to work– Some initiatives have hit the poorest families

rather than the middle/upper classes.• Increase in VAT• End of EMA in England• Changes to Child Benefit• Cuts to housing support• Cuts to Social Fund

Video

• Don't Cap my Benefits

Effectiveness of Government responses to

Wealth Inequalities

Effectiveness of Government responses to Wealth

Inequalities• In your last two tasks you should

have evaluating some of the government responses to dealing with wealth inequalities.

• Generally speaking, has the Govt’s responses helped to reduce wealth inequalities?

Effectiveness of Government responses to Wealth Inequalities Tasks

• Read pg 34-35 of the ‘Social Issues’ textbook; pg 153-4 of the ‘Higher Modern Studies Revision Notes’ and the ‘effectiveness of Govt responses’ handout.

• Take notes to evaluate whether the govt’s responses have helped to reduce the wealth inequalities gap.