A friend of mine who has lived in poverty for some time – and is an angry, energetic activist – tells of an interview she did with a journalist about her experience of fuel poverty and the choices she has to make living on the breadline.

At the close of the interview, the journalist said to her ‘but you’re not really poor are you?’, with a knowing, conspiratorial nod.

My friend asked ‘what do you mean?’, to which he explained ‘well, you’ve got great hair, posh looking glasses and lipstick.’

So apparently people can’t be poor and have pride in their appearance at the same time.

But the reality is that my friend is one of the world’s best budgeters and is able to find the best bargains (take note Messrs Osbourne, Johnson and Cameron). She chose well when she received her glasses from the NHS. She has her hair done for free at a local training college and her good taste means she selects quality, stylish items from her local charity shop.

But is seems that’s not good enough – she needs to be conspicuously poor.

This story speaks to a much wider issue of hidden poverty, but also assumptions, misunderstandings and stereotypes.

For example, earlier this year I was part of a radio phone-in about people claiming disability related benefits. The allegation was being made – not for the first time – that most people do so fraudulently, when they are actually fit and well and just too lazy to work. The protagonist’s claim was that because he sees people walking around near his local cafe, dragging their walking sticks, rather than leaning on them, and clearly not at work, then they must be faking a disability and thus fraudulently claiming benefits.

But one only needs to remember that we live in a society in which over half of people receiving disability related benefits are doing so on the basis of poor mental health to recognise that people leaning on their walking sticks isn’t a good proxy for the number of people who don’t ‘really need’ benefits. And more than this, the assumptions contained in the journalist’s allegations and assertions are that style and taste is only the prerogative of those with money.

Writ-large this is a dangerous imposition of superiority and social hierarchy, in which people buy taste, and through this demonstrate some sort of higher value – apparently showing the world they have money, are more successful and somehow inherently better than others.

We know that it is getting worse – in Scotland, for example, two fifths of the increase in income during the last decade has gone to the richest 10% of the population).

We know that it is worse than most other European countries – the UK is up there with Greece, Bulgaria and Lithuania.

Many of us know that now the greatest inequality seems to be not between those in work and those out of work, but between those in work – between those who earn mountains and brag about it, and those who earn an hourly wage so low they remain below the poverty line.

And we know that, combined with decreasing social mobility, the UK’s inequality means people have no hope of ever climbing an increasingly steep and sparsely-runged ladder.

What is so amazing is the lack of appreciation of how interconnected the talons of inequality are with our various social and environmental problems.

In an unequal society, in which resources are owned, enjoyed and controlled by the few rather than being shared amongst more people, the (often not very subtle) message to those at the bottom of the hierarchy is that they have lost the competition. Worse, there is an implicit assumption that they deserve their lower status because they are somehow less able, less talented, less gifted.

This ignores the opportunities, privilege and support showered on those who already ‘have’ – the education, the social connections, the resources, the confidence, the exclusive access to jobs and so on. I often wonder why we don’t expect more from such people than ‘socially useless’ work in finance or wallowing in inherited wealth. What happened to ‘from those to whom much is given, much is expected’?

But there is a much more profound, longer term impact of inequality.

Firstly, it corrodes our social institutions that make us civilised and humane. The more distant we are from each other – the more we inhabit different worlds, live in different localities, send our children to different schools, shop in different establishments, experience different health care –, the less we recognise each other.

The less we recognise each other, the less we appreciate our connections with each other.

The less we appreciate our connection with each other, the less we empathise for each other.

The less we empathise with each other, the less we care for each other.

And the less we care for each other, the less willing we are to contribute to shared support systems.

Hence we should start recognising the growing tax evasion and the paring down and tightening up of our mechanisms of social protection as a function of our increasingly unequal society. These shifts will also make inequality far, far worse.

Secondly, inequality fuels materialism that leads to conspicuous consumption – people try to demonstrate their status outwardly through possessions that denote conformity to some social grouping. Materialistic pursuits crowd out our time and emotional energy for more valuable pursuits such as community involvement. It can also lead to debt. And such consumption is completely rubbish for the environment – in every sense of the word ‘rubbish’!

And finally, inequality generates angst and anxiety about one’s status. Evidence from around the world shows that living with stress, anxiety and a sense of alienation leads to socially destructive behaviours and premature death. Inequality really is a matter of life and death.

When looking aghast at the state of the world, we could do worse than remind ourselves that it is the inequality that underpins so many of our dire problems.

We’re used to hearing – depressingly often these days – about people living in poverty as being variously feckless, undeserving, or suffering from dependency: in short, as passive, unthinking victims. What if, instead, we started from the premise that people living in poverty are, like everyone else, rational actors in their own lives – doing the best they can, in the circumstances in which they find themselves?

That is the logic of the Sustainable Livelihoods Approach to poverty analysis and community development (SLA), used in Oxfam’s international work, and which Oxfam and Church Action on Poverty (CAP) have been pioneering in the UK.

Rather than starting from a negative view of what people in poverty lack (such as work, money, or skills), the SLA starts by considering people’s assets. While they may often lack financial assets, people in poverty have strengths and capabilities, which they draw upon to construct strategies to get by. These may include social capital, physical assets (eg a car, or the tools of a trade), human capital, and the resources that people can draw on because of where they live, such as public services. Recognising these assets, how they are distributed within the household, and thinking about how to unlock their potential, adds depth to our understanding of poverty.

In considering what impacts on people’s decisions to pursue new livelihoods strategies – to take up training, to start a new job, or to move in pursuit of one – it is important to take account of risk and vulnerability. Livelihood decisions can put existing assets at risk. For example, someone on benefits who takes up insecure or temporary employment may be risking their financial stability for a job that could end up leaving them worse off. For families on low incomes, vulnerability to shocks may be a key factor in decisions. So, for example, in the absence of robust social insurance, it may not make sense for someone to move away from extended family to take a job, when they can provide emergency child care, offer a spare room, or make a loan in a time of crisis.

Men (and women) make their own histories, but they do not make them in circumstances of their own choosing. While the SLA recognises that people in poverty are active and rational drivers of their own lives, it does not deny the importance of the context in which they make their decisions and build their livelihoods. How institutions, regulations, the economy – and the political and policy context more broadly – shape the conditions in which people live, at the neighbourhood, local, or national level, is of crucial importance to how successful their livelihoods will be. But what the SLA in its totality tells us is that it is important that those policies and that context are redesigned in a way that goes with the grain of people’s livelihoods – which requires understanding the reality of the lives of people in poverty.

Together, these insights combine to tell us that people experiencing poverty are active in their careful assessment of risk and make rational decisions and choices about their lives, in light of the external and internal constraints they face. Any approach to poverty reduction which rests upon a demonisation or ‘othering’ of people living in poverty, which treats their decisions as somehow irrational, has failed to understand their reality, and will thus fail in its aims.

Oxfam and CAP have used the SLA at community level across the UK since 2005. This work has helped us to identify and act upon individual, household and local issues, and to help improve the lives of people and communities. But it has also demonstrated to us that there are limitations to what can be achieved locally, and pinpointed areas of national policy that need to change. Informed by these findings, we have sought to explore the potential of the SLA at a national level to help poverty-proof policy work.

One area of public policy illuminates what this means in practice. In some aspects, the Coalition government’s approach to welfare reform has embodied SLA principles. At present, the benefits system leaves people who leave unemployment at risk of debt and ultimately being worse off if their job doesn’t work out, or even when awaiting their first paycheque. The Centre for Social Justice’s work, on which the universal credit is largely based, began by studying the landscape of financial incentives faced by benefit claimants, and sought to reconstruct the system to improve that. By smoothing the transition between unemployment and work – and, crucially, by providing support based on income changes in real time – universal credit will reduce much of the risk attendant in moving between unemployment and work, or between different jobs or number of hours in a job.

Other aspects of welfare reform could be improved by using an SLA analysis. This government continues to extend conditionality and sanctions on the one hand and to run down benefit levels on the other. This modern version of the ‘principle of less eligibility’, practised by successive governments, has conspicuously failed to end mass unemployment (often described as ‘welfare dependency’). Far more positive would be to focus on supporting people at an individual level to address these barriers by building on their strengths. The Work Programme, which is the government’s vehicle to achieve this, is compromised by taking an outcome-focused approach in which the only outcome assigned any value is employment. In reality, there may be many interim steps – such as therapeutic activities, or training – on the road to a sustainable livelihood which will enrich people’s lives in themselves, and act as a stepping stone to employment.

Finally, the government must pay far more attention to what happens beneath the household level. At present, Universal Credit is based upon a single, household-level analysis, leading to a single, household-level payment. This is fraught with danger, since resources are not distributed equally within households, and how money goes into a household – for example, whether payments to children are labelled and paid to the main carer – enormously impacts upon the well-being of members of that household.

Taking a Sustainable Livelihoods Approach to welfare reform and many other aspects of public policy can enrich the analysis undertaken and the solutions offered. A recent joint report of Oxfam, IPPR North, CAP and Urban Forum, Community Assets First, explores the potential application of SLA to the policy areas of welfare reform, homes and neighbourhoods, financial inclusion, and community and society. Following on this work, we would urge policymakers, researchers, and community practitioners to use the SLA to help them develop a more holistic approach to anti-poverty work, an approach which works with the grain of people’s livelihoods, and takes them as active participants in their own lives – and in changing them for the better.

So far, so typical. A new government scores cheap and easy points with sections of the media and the public by talking tough on benefit claimants, selectively quoting statistics to further that aim. Public attitudes having been softened up over time by successive governments so that this kind of talk ceases to shock. The Need Not Greed campaign, of which Oxfam is a member, is clear that it is the outmoded benefits system, which has failed to develop with the modern labour market, that forces people into working informally (“cash in hand” and “off the books”), just to get by. We’re not talking about massive defrauding of the system, but people who want to work, but are held back by the system.

But perhaps it’s better to let the government – in the form of the recent consultation paper on welfare reform, championed by Iain Duncan Smith – speak for itself: ‘fraud is always wrong, but we must recognise that the benefits system is making matters worse by pushing valuable work, and the aspiration that this can engender, underground’. If Cameron is serious about tackling fraud – and not just chasing headlines – then it is this systemic failure that he needs to devote his energies to.

Oxfam argues that, by raising the amount of money people can earn before their benefits are affected, and lowering the rate at which they are withdrawn thereafter, work that is now informal will be brought into the light. People who can only do small amounts of work – because that’s all that’s available, because that’s all that they can manage right now, or because that’s what fits with their caring or other responsibilities – will be empowered to do so.

Policymakers also need to engage seriously with the vulnerability of people living on benefits and seeking to get back into work – putting security back into social security. Forced to subsist on tiny incomes, and with few assets to draw upon, such people are understandably risk averse. Benefits should help them manage that risk, stepping into the breach whenever work dries up, or if a new job doesn’t work out. At the moment, it can take weeks to process claims for various benefits, and taking those difficult first steps into work can become a debt crisis from which it can take years to recover.

Happily, the government’s consultation paper on welfare reform engages with this, and some of the solutions it proposes would genuinely make a difference. I’d suggest the Prime Minister joins his Work and Pensions Secretary in engaging with the substantive, structural problems in the welfare system – of which benefit fraud is but a symptom – and leave the sensationalism to the tabloids.

Strikingly, yet again, the cost of living for the poorest has risen faster than for the rest of society. At around 5%, the Minimum Income Standard rose half a percentage point higher than average inflation. Over the past decade, this has added up: the minimum cost of living has risen by 43% compared with 27% and 35% for CPI and RPI inflation respectively. That difference has been largely driven by the soaring cost of essentials like food and energy. Earlier this year, food price inflation peaked at 5.7%, compared with 4.4% for overall inflation. In August 2008, those figures were 14.5% and 4.7%, and there’s every chance there are further food price spikes around the corner.

All this means that the poorest need above-average increases in incomes just to stand still. Indeed, the JRF calculates that a family of four needs to earn 24% more than a year ago, while a lone parent with one child needs 20% more. This is partly about the rising cost of living, and partly because of the freezing or cutting of in-work benefits. There’s more detail in Chris’s blog.

In reality, however, government action is driving incomes in the opposite direction. A swathe of benefit cuts are reducing the incomes of millions of people, while a change to uprating to the lower, CPI measure of inflation will see decreases locked in year-on-year. Meanwhile, the National Minimum Wage continues to fall in real terms, with decreases in October 2008 and 2010 and a freeze in 2009. That’s before accounting for the fact that average inflation underestimates the real cost of living for people in poverty.

The Minimum Income Standard was a groundbreaking piece of work, as it tells us what ordinary people see as the minimum required to take part in society. This latest annual update is no less important, as it shows that much more is needed to meet the basic imperative of making sure poor people don’t continue to fall further behind.

This year’s update highlights some surprisingly big increases in what people need to earn just to make ends meet. It is clear that many millions of people in the UK do not manage to reach the standard and – for working families with children in particular – it’s getting much harder to do so.

For a family of four, the wage needed has risen to £18,400 per year before tax for each parent (assuming that both of them work full-time, and require childcare). This is a 24 per cent rise on the same figure in April 2010. For a lone parent with one child, the gross wage required has leapt to £18,200 from £12,500 last year. Equally large increases of above 20 per cent can be seen for most other working families who have to pay for childcare.

The cause of this rise can be put down to a combination of the freezing or cutting of in-work benefits, especially Childcare Tax Credits and Child Benefit, alongside a continuing increase in prices. Because of how Tax Credits are tapered (i.e. reduced as your wages rise), families have to earn more to cover even a small reduction in benefits.

These figures certainly demonstrate, then, that the squeeze has already begun. But it is not just low-income families in work and using childcare who are feeling the pinch. If you have to survive on out-of-work benefits, a couple with two children will only get 63 per cent of their minimum needs met and a lone parent with one child only 64 per cent. Pensioners, in contrast, are able to reach their minimum income standard if (and it is a big if) they collect all the benefits to which they are entitled to on top of their state pension. For single adults with no dependants, the amount provided by benefits falls to 44 per cent.

More positively for single people, if they do have a job and earn enough, they do benefit from the rise in the income tax personal allowance. This has offset some of the other pressures on their costs of living.

Projections last December by the Institute for Fiscal Studies, funded by JRF, have already shown that relative poverty is expected to rise considerably over the next three or four years. The analysis provided today by the Minimum Income Standard is further evidence of the pressure on budgets being felt by families on low incomes. This pressure looks set to continue escalating and is unlikely to be alleviated by the introduction of Universal Credit in 2013; not least because the Government is considering a new formula for childcare support which would cut entitlements further to save money. And, on top of all this, if earnings do not start to grow again soon, and if prices keep on rising, the future looks bleak indeed.

Encouragingly, the campaign is gaining strength and important international support. Earlier this month, a thousand economists wrote to G20 finance ministers meeting in Washington to show their support for the tax. Gathered from 53 countries, experts such as Professor Jeffrey Sachs (advisor to Ban Ki-Moon) commended the tax as ‘technically feasible’ and ‘morally right’, and urged politicians take action that could raise billions of dollars to help the world’s poor.

Several fantastic events have helped raise awareness of and support for the tax among the public. Half a million people descended on London to ‘March for the Alternative’ on the 26^th of March, with the Robin Hood Tax cited as a strong part of the argument against cuts.  Indignation at the banks’ ability to ‘get away with it’ was the key note at the NEF/ Fink Club event ‘Where did all our money go?’, while a debate at St Paul’s Cathedral ‘Should we bank on the Robin Hood Tax?’, chaired by Evan Davis,  focused on to what extent banks have a responsibility to contribute to the common good and whether, if so, the Robin Hood Tax might be the solution.

It’s easy to get lost in abstractions and debates, but ultimately the Robin Hood Tax is about raising vital funds for real people, both abroad and here in the UK. To understand more about where such revenue might be spent Robin Hood (or at least four of his merry band) took to the road to find out more about the vital services people across the country rely on – services which now face crippling cuts. Bill Nighy joined the visit to a food bank in Wales, Sam West visited a Sure Start centre in Corby, and many other people and services were able to share their stories and fears for the future.

What can you do? Watch, read, find out more and please please spread the word. For more info, and all the latest visit the RHT site – http://robinhoodtax.org/

I can’t wait till I get the chance to vote for Isha – she’ll be a tremendous Prime Minister!

Why her words are so profound (she certainly isn’t the only wee person who has said they’d like to be Prime Minister) is that her words reflect what we need more of in our political system.  We need brave politicians (as brave as wee Isha) who are willing to contemplate, let alone implement, changes to a system that perpetuates, and arguably depends on, poverty.

But how do we make sure our leaders are already so enlightened, rather, than having to spend time and energy ‘enlightening’ them?

Why is it that our political leaders are so removed, so remote? 

Part of the reason is that they continue to listen to a self-appointed intelligentsia preaching that poverty is caused by personal or individual deficiencies; that poor people simply need more ‘structure’ in their lives, more love, and basically more of what the intelligentsia like to think they epitomise.

Instead, what we need are leaders who appreciate and understand that we need to face up to a system that not only perpetuates but also systemically ‘invents poverty’, as Isha said.

Why? Because of the inequality that defaces our society and our economy. Because of power imbalances that mean that our political and economic leaders are all too often drawn from a narrow group of distant people, not those who understand what it means to be poor and the many ways in which people are actively prevented from moving out of poverty.

Changing this requires looking at our unequal structures that concentrate power and influence in the hands of those who already have great wealth.  It also means stepping back from the deference we seem to pay to the least deserving – those who use their power to keep it for themselves and those like them.

In doing so we’ll need to explore practical progress en route to tackling the systemic causes of poverty and inequality.  Asset focused development and participatory budgeting are mechanisms to empower communities to create and own the solutions.  They represent a shift of real power, focusing on assets rather than deficits in our communities and transfer of budgets.  This is so much more substantive than the current modes of consultation which are invariably within predetermined parameters and where the issues up for consultation are the low-level minutiae, the details, not the very agenda itself.  It is about doing the economy for ourselves, not allowing ourselves to be dominated by an economy that doesn’t work for the people. 

Here’s hoping Isha gets a run for Prime Minister soon, because I have every confidence that she will be able to shift power and wealth from the few to the many, to structure our economy so that it serves the people, rather than the other way around.

Despite the fact that the event was by, for, about and from people living in poverty in Scotland, the audience was brought to attention by a welcome to ‘Honourable Lord Provost, Distinguished Guests, ladies and gentlemen’.  Such a hierarchy in offering welcome always annoys me – it reminds me of the order of pews in churches a hundred years ago, with the rich, the landed, the powerful and the connected getting the best seats at the front.  Perhaps today’s parallel is the spectrum of seats and corporate boxes at the football?  Though in this case, I like to think that in using the term ‘Distinguished Guests’ it was the people who were experiencing poverty present at the Poverty Truth Commission whom the announcer had in mind. 

And in a way, it was the very opposite of any implied hierarchy that was the theme of the whole afternoon.  The Poverty Truth Commission talked of the importance of the 30 or so Commissioners (people living in poverty and members of Scotland’s ‘civic society’) all ‘leaving their labels and titles at the door’ during their deliberations.  This was about treating each other as equals, as fellow Scots, as fellow community members, as fellow Commissioners. 

To me, this was one of the most crucial lessons that emerged from the Commission’s work.  That we are a rich country (where, as the Poverty Truth Commission reminds us, people still go hungry) which implicitly and explicitly tolerates great extremes of wealth is surely due, at least to some degree, to a lack of empathy; namely those holding power and wealth lacking empathy with those experiencing poverty and vulnerability. Distance between these groups perpetuates ‘othering’ and assumptions of difference, which deepen gulfs of recognition and understanding.  Ultimately, a lack of connection undermines solidarity and concern for one another.

What the process of a Poverty Truth Commission sought to do was break down this distance.  This ethos, of participation, involvement and going beyond simplistic consultation is mirrored in the Poverty Alliance’s EPIC (evidence, participation, change) project.

But it seems we need a scaling up of such projects so that they are not necessary.  We will know we’re there when the principles of projects like the Poverty Truth Commission and EPIC are reflected in the very doing of politics and where political decisions and our economic and social and institutional structures are based on deep empathy, rather than on exclusion, elitism, vested interests and stigma.

One of the calls made by the Poverty Truth Commission was for the ‘people of Scotland to share our growing outrage at the huge and growing levels of disparity which exist between rich and poor’.  Reversing these disparities would, of course, be the real reconciliation. 

And such reconciliation is more important than any VIP could imagine: current inequalities are tearing up the fabric of concern and empathy that are necessary to support our vital institutions of social support, welfare, common good and shared interests.  Without these institutions, we are essentially two countries and two societies, with two, very different, futures.