Out of work household figures – simplistic and misleading

Number of out of work households has fallen by 670,940

As the election draws ever nearer, the political parties are ramping up their self-defence and, more commonly, their attack of the opposition. In a recent campaign (30/Oct/2014), Tories are claiming “Under Conservatives, the number of households with no one in work has fallen by 670 thousand” and it comes with the addendum that “Under Labour it rose”. If this is true then perhaps Labour were recklessly enabling people to stay unemployed  and claim benefits, something the Conservatives have claimed for a long time.

As ever, there is no link to the data behind this assertion on either the email, the Facebook page or the Share the Facts site. However, it can safely be assumed that this is the 29th Oct 2014 release of the ONS’s Working and Workless Households statistics.

In this post, the claims of the Conservatives will be compared with the actual data and, sadly, will be found to be misleading and unfounded. In fact, they can be seen to tell a very different story, one where retirees and stay-at-home parents are being forced into work to help them stay afloat during the current, ongoing, cost of living crisis.

This dataset looks at numbers of fully working households (where everyone aged 16-64 is in employment), non-working households (where no-one 16-64 is employed) and mixed households in the UK. It contains various tables that break the data down using information like ‘households with children’ and ‘student households’ etc. Throughout this article I will refer to different ‘Tables’, meaning tables within this ONS data set.

Conservatives have reduced non-working households

So, the first thing is to try to recreate that figure of 670,000 reduced workless households. This is a ‘since Conservatives came to power’ figure so we can assume that it’s from around May 2010 until the latest figures. The data is made available for April-June of each year so let’s look at those figures for 2010 and 2014.

Table A is the most basic breakdown of households, presenting how many homes are in work, out of work or mixed and it is there that we do find the 671,000 figure quoted by the Conservatives. Column L has the figures for ‘All Workless Households’ and in Apr-Jun 2010 there were 3.952 million which has fallen by 671,000 to 3.281 million in Apr-Jun 2014.

At first glance  the Conservatives are telling the truth. Their economic policy has reduced those benefits scroungers.

Work-shy students

To be nit-picky for a moment, I’d like to point to a minor discrepancy with this figure. Table A2 contains the same figures but with ‘student households’ removed. The numbers are similar, a reduction of 661,000 under Conservative rule but they are not the same. This second table is surely the more accurate one  to use and the one I will use for most of my analysis.

There are many reasons why this number may have dropped. There are less people starting university so there may simply be less student households. Perhaps students are staying at home with parents that work because they can’t afford private accommodation. The point is, the Conservatives should not be including student households in their headline figure. It’s presumably not done to inflate the numbers but it is just sloppy, grabbing the first table that supports your argument and inadvertently claiming that Tories have gotten students off benefits.

the Conservatives should not be including student households in their headline figure. It’s presumably not done to inflate the number but is just sloppy, grabbing the first table that supports your argument

Job creation or home sharing?

Another matter to consider is the effect of the bedroom tax and other welfare capping measures that may have encouraged people to share housing when out of work.  The government released some figures on the effect of the bedroom tax in July 2014 and from Table 1 (bedroom tax data), some statistics are presented that summarise how people have changed their living arrangements so that they are no longer subject to the bedroom tax. Reasons given include 3,600 people moving to the private rental sector (to live with a non-dependent) 61,510 households that have increased their bedroom entitlement.

It’s hard to work out the full effect of this on the workless homes figures because it is not known whether increase in bedroom entitlement is due to successfully arguing for the need of a spare room, or due to people sharing accommodation. Also, in cases where people have moved in together, we have no way of knowing if they are both workless or otherwise. However, the bedroom tax may have changed living arrangements without changing employment status for tens of thousands of people.

the bedroom tax may have changed living arrangements without changing employment status for tens of thousands of people

Perhaps more important are the other cuts to benefits that the coalition government has brought in throughout its term. Shelter provides a pdf of cuts that may affect your housing benefit. The bedroom tax has been in place since 2013 and to date has only had small effect on living arrangements (despite 522,000 people facing benefit cuts as a result). But other cuts to housing benefit have been in place longer.

Since April 2011, private renters have faced benefit cap policy that has limited the amount payable in an attempt to encourage claimants to move to cheaper accommodation. For many people this payment was limited to the lowest third of market rent in their area – which may have restricted people to the cost of a room in a shared house.

The encouragement to move into shared accommodation was explicitly added to the law in January 2012 when people aged 25-35 were limited to claim only up to the cost of a room, not a whole property. This age group is one of the most likely to claim housing benefit as youth unemployment has stayed low despite reported improvements in employment. Peak unemployment in that age group was 8.1% of almost 8.5 million people which means that in any year from 2012, around 650,000 out of work 25-34 year olds were under new pressure to live in shared accommodation through benefits cuts, potentially lowering the workless house figures by hundreds of thousands.

Again, it is hard to tell the actual effect of this on workless household figures because there is no data kept (as far as I know) on the numbers within each household or movement due to unemployment. But it does seem reasonable to assume we will see more people in shared accommodation when the next census is conducted.

the increase in working households does not match the decrease in workless households

One final issue that may encourage people to share in mixed employment housing and thus mask the numbers ‘out of work’ is the fact that UK rental costs have hit record highs at the same time as these cuts to housing benefit. Limiting housing benefit when rent is rampantly hiking guarantees that the unemployed must look for the cheapest options which is almost always a room in a shared house. This merging of households may be responsible for the fact that the increase in working households does not match the decrease in workless households.

Reduced unemployment or forced into work?

The original propaganda graphic also claims that Conservatives are “getting families off benefits and into work” which suggests that the greatest shift in workless households has been unemployed benefits claimants finding work.

However, there are other types of workless people included in the stats. ‘Economically Inactive’ includes people in retirement and otherwise not employed but not claiming benefits such as stay-at-home parents. If these people are opting to enter employment it is not a reduction in benefits claimants and we must ask the question, why do they now feel the need to work?

Looking at Table A2 (the same figures but without student households), the total drop in workless households is 661,000. The reduction in households where every person of working age was economically inactive is 481,000. That means that many households that were able to survive on savings and pensions previously have been forced back into work. That is quite a different story to the original claim.   

many households that were able to survive on savings and pensions previously have been forced back into work

 The one thing that could be said for this is that there ought to be more people paying tax in order to help cover the benefits bill but with wages and productivity staying low there is a good chance these workers will not be  paying much in tax. More importantly, the fact that so many people can no longer afford to live without extra income is highly symptomatic of the cost of living crisis that is pushing people into poverty.

Hidden in the self-congratulation of the simplistic Conservative promotion is the misery of millions unable to eat or pay rent.

Did Labour encourage workless households?

One final thing that deserves a mention is the allegation that Labour presided over a continuous increase in benefits claimants and worklessness. This is implied in the Conservative graphic – Labour oversaw a rise in workless households whereas the Conservatives are getting people off benefits.

As stated above, workless households do not necessarily equate to benefits claimants or a poor society. Specifically, changes in numbers of workless households do not need to reflect changes in numbers of benefits claimants. However, even if those things were true, would it be fair to say that Labour policy saw some sort of increasing trend in workless households (and all associated negativity)?

The 1997 election that saw Labour come into power was in May. Starting with the figures from April to June 1997, total workless households (not including students) was 3.625 million. By April to June of 2010 the number stood at 3.822 million – so it did rise over Labour’s total time in office. However, from 1997 to 2008 it had actually fallen and stayed low, as can be seen in the graph below.

Total workless households 1996-2014
Total Workless Households can be seen to fall and stay low for the first 12 years of Labour’s government (red columns). The rise is purely related to the global recession at end of 2007.

The rise in workless households only happens at the very end of Labour’s government and can clearly be linked to the Great Recession of 2008-2013 .  Although some people may argue that Labour could have done more to help prepare for and alleviate the global recession, that is different to the implication that Labour encouraged whole households onto benefits.

After all that…

This has been a longer post than intended – it had really started as nit-picking over which tables had been used and a moan about the lack of references provided by propaganda departments when producing these misleading info-graphics.

As the issue has been teased out however, it has been shown that the Conservatives have grabbed an easily misunderstood statistic to promote themselves and attack their main opposition. This statistic does not necessarily describe a reduction in unemployment but may represent the effect of increased home sharing brought about by Tory cuts to housing benefits and soaring cost of rent.

More than that, this statistic actually tells the story of retirees and other legitimate non-workers who had not been claiming benefits but instead living off savings and partner’s income, being forced into work due to a cost of living crisis in the UK. Is that something to be proud of?

The Conservative’s cheap swipe at Labour is another misuse of this statistic because they imply a general trend, perhaps through some fault of character or ideology, but the increase under Labour was an anomaly entirely related to a global recession of unprecedented scale that all governments were harmed by.

Sadly, not many people will take the time to dig into this sort of claim. The media are under-resourced so fail to provide an extra level of scrutiny and the opposition parties seem completely disinclined to treat such matters with in depth analysis, content only to respond in similar misleading soundbites.

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