Belfast Telegraph

Economy Watch: Encouraging signs are out there on tackling poverty levels in NI


Close to a million people in Northern Ireland earn less than the NI median wage
Close to a million people in Northern Ireland earn less than the NI median wage

By Andrew Webb, chief economist, Grant Thornton

Two weeks ago, Economy Watch raised the important issue of the cost of living. It noted that while Northern Ireland has relatively lower average wages than Ireland and many parts of the UK, house price cost differentials might act to equalise discretionary spending power.

This point may be borne out by the fact that in Northern Ireland we spend relatively more than our southern neighbours on clothing, car ownership and recreation, and relatively less on housing, healthcare, and restaurants and hotels.

The cost-of-living point is well made and a timely addition to the economic conversation, coming just as I was turning my attention to some new statistics on poverty and some excellent new research on housing in Northern Ireland.

Back in 2016, as an Assembly election loomed, I noted that, on the basis of 'relative poverty' (income below 60% of the median after housing costs have been deducted), one in five people in Northern Ireland were in poverty. This equated to about 380,000 people and was unchanged over the term of that last Assembly.

Perhaps it is a case of policies taking time to bear fruit, or the mitigation of welfare reform implementation, or even a case of benefits inflating faster than wages, but there has been some encouraging movement on poverty levels, according to the latest figures contained in the Households Below Average Income report released two weeks ago.

The report concludes that the number of people living in relative poverty has fallen to 16% in 2018, down from 22% in 2014.

At face value, this marks some excellent progress - 50,000 fewer people are living in relative poverty, after all. Of course, this performance prompts questions and challenges about the data.

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Firstly, with the UK median household income at £507 per week, this means that to be considered relatively poor equates to a household income of £304.

Does that sound like a lot with which to cover food, clothing, transport, housing and household bills? The Joseph Rowntree Foundation's minimum income standard suggests that a single person requires about £213 per week before rent costs for a minimum standard of living.

A couple with two young (below age 10) children require £480 per week before rent or childcare costs. This suggests there could be many people who, while not considered as being in 'relatively poverty, fall short of a minimum standard of living and struggle to make ends meet.

This point is backed up by the figure for average expenditure per week by Northern Ireland households - £497. A second point to consider in these new poverty statistics is the reasonably arbitrary nature of the definition of poverty.

I wonder about the extent to which those that were previously under the 60% of median income threshold are now just above it, say at 61%, 62% or 63% of UK median incomes - relatively poor in all but official statistics.

Helpfully there is data for the number of people in each £10 income bracket. This data shows that there are 55,000 people earning between £5 and £10 a week more than those considered relatively poor.

Across Northern Ireland, there are close to 930,000 people here earning less than the NI median weekly wage. Remember JAMs, the 'just about managing' families that our political class were at pains to support a few years back?

They may have fallen off the media and political agenda for now but they still exist in significant numbers.

Linked to the above is another topic that received some excellent analysis recently. The Detail has undertaken a series of analysis and commentary on social housing here.

As the analysis by The Detail reiterated, there are close to 40,000 applicants on the social housing waiting list here and at the current rate of building (last year 1,682 social houses were completed) it would take 22-and-a-half years to clear the present backlog.

It would take 16 years to build sufficient housing for the 26,000-plus applicants that are considered to be priority cases.

Clearly, social housing policy requires a step change in order to deliver good quality housing for those that need it. So much of our economic performance is linked to housing; construction employment, environmental improvements, health and wellbeing all gain from increasing house building.

I was pleased to see this topic receiving the level of coverage afforded to it. The economic and societal benefits of addressing housing could be massive, to the extent that I had hoped that the Belfast City Region Growth Deal would have taken it on as a single item agenda and made a significant intervention.

In the absence of that, other ways to find significant funding need to be considered. Issues such as developer contributions or land value capture mechanisms should all be on the agenda.

In next week's Economy Watch, we hear from Paul MacFlynn, senior economist, Neri

Belfast Telegraph