People with mortgages are the 'new poor'

WORKING families with mortgages and the struggling self-employed are the 'new poor' to emerge from a select committee report on poverty during the Thatcher years.

The report, Low Income Statistics: Low Income Families 1979-1989, published by the Social Security Committee yesterday, shows a striking new trend in the type of people classified as living below the poverty line.

The figures, which the Government did not want published, show the number of families that have a full-time worker living on incomes of less than the basic unemployment benefit rate has doubled from 470,000 to almost one million over a decade.

Researchers from the Institute for Fiscal Studies revealed that about half the 970,000 families with a worker living below this poverty line were self-employed and two-thirds of them - 620,000 - had mortgages. In 1979, of the 470,000 working families below the poverty line, fewer than half - 200,000 - had a mortgage.

Home owners on low incomes have been ensnared in the poverty trap because of benefit rules. If they were unemployed and receiving Income Support, the Department of Social Security would pay the mortgage interest. But interest will not be paid for those in full-time work - defined as working over 16 hours a week.

Also, people on low incomes who live in rented accommodation are entitled to Housing Benefit, which pays a substantial proportion of the rent, but working people with mortgages get no such assistance.

Steve Webb, an economist who conducted the research, said that if the DSS paid building society interest for employed people with mortgages, almost 500,000 of the 620,000 would not be below the poverty line.

He said: 'The groups we have traditionally thought of as being poor, such as pensioners, are tending to get better off and their place is being taken, in part, by a new poor such as lower paid workers with mortgages and the self- employed.'

Charities working with families living below the poverty line, such as the National Association of Citizens' Advice Bureaux and the Children's Society, confirmed that the biggest increase in poverty was among people with mortgages. Ian Sparks, the Children's Society director, said: 'Unlike families on Income Support, those in low-paid work get no help with mortgage interest repayments. They get into extreme difficulties and this often leads to the repossession of their homes.'

Ministers believe the Government will have to tackle the plight of house-owners who cannot afford their mortgage repayments as a priority for winning back wavering Tory voters.

They fear the collapse of confidence in the housing market has undermined support for the Tory party among many home-owners who purchased their homes under the Thatcher right-to-buy legislation.

One former ministerial policy adviser said the Government should consider replacing mortgage tax relief - no longer regarded as a taboo area - with a new benefit directed at the low-paid facing difficulties in paying.

Peter Lilley, Secretary of State for Social Security, is believed to be preparing a wide-ranging review of benefits.

Launching the report, which showed that the number of people living on incomes even lower than state benefit rose by almost 50 per cent to three million, Frank Field, the committee chairman, called for a review of the effectiveness of the welfare state, which spends pounds 80bn on benefits a year.

Low Income Statistics: Low Income Families 1979-1989; HMSO; pounds 10.

Start your day with The Independent, sign up for daily news emails
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
ebooks
ebooksA year of political gossip, levity and intrigue from the sharpest pen in Westminster
Voices
Focus E15 Mothers led a protest to highlight the lack of affordable housing in London
voicesLondon’s housing crisis amounts to an abuse of human rights, says Grace Dent
News
i100
Life and Style
food + drinkClue: You'll either love them or you'll hate them
News
Howard Marks has been diagnosed with inoperable cancer, he has announced
people
News
newsIf you're India's Narendra Modi, it seems the answer is a pinstripe suit emblazoned with your own name
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Recruitment Genius: Operations Coordinator - Pallet Network

£18000 - £20000 per annum: Recruitment Genius: Opportunity to join established...

Tradewind Recruitment: Geography Teacher

£90 - £140 per day: Tradewind Recruitment: On behalf of a successful academy i...

Investigo: Finance Business Partner

£45000 - £50000 per annum: Investigo: My client, a global leader in providing ...

Austen Lloyd: Commercial Property Solicitor - West London

Excellent Salary: Austen Lloyd: WEST LONDON - An excellent new opportunity wit...

Day In a Page

Syria crisis: Celebrities call on David Cameron to take more refugees as one young mother tells of torture by Assad regime

Celebrities call on David Cameron to take more Syrian refugees

One young mother tells of torture by Assad regime
The enemy within: People who hear voices in their heads are being encouraged to talk back – with promising results

The enemy within

People who hear voices in their heads are being encouraged to talk back
'In Auschwitz you got used to anything'

'In Auschwitz you got used to anything'

Survivors of the Nazi concentration camp remember its horror, 70 years on
Autumn/winter menswear 2015: The uniforms that make up modern life come to the fore

Autumn/winter menswear 2015

The uniforms that make up modern life come to the fore
'I'm gay, and plan to fight military homophobia'

'I'm gay, and plan to fight military homophobia'

Army general planning to come out
Iraq invasion 2003: The bloody warnings six wise men gave to Tony Blair as he prepared to launch poorly planned campaign

What the six wise men told Tony Blair

Months before the invasion of Iraq in 2003, experts sought to warn the PM about his plans. Here, four of them recall that day
25 years of The Independent on Sunday: The stories, the writers and the changes over the last quarter of a century

25 years of The Independent on Sunday

The stories, the writers and the changes over the last quarter of a century
Homeless Veterans appeal: 'Really caring is a dangerous emotion in this kind of work'

Homeless Veterans appeal

As head of The Soldiers' Charity, Martin Rutledge has to temper compassion with realism. He tells Chris Green how his Army career prepared him
Wu-Tang Clan and The Sexual Objects offer fans a chance to own the only copies of their latest albums

Smash hit go under the hammer

It's nice to pick up a new record once in a while, but the purchasers of two latest releases can go a step further - by buying the only copy
Geeks who rocked the world: Documentary looks back at origins of the computer-games industry

The geeks who rocked the world

A new documentary looks back at origins of the computer-games industry
Belle & Sebastian interview: Stuart Murdoch reveals how the band is taking a new direction

Belle & Sebastian is taking a new direction

Twenty years ago, Belle & Sebastian was a fey indie band from Glasgow. It still is – except today, as prime mover Stuart Murdoch admits, it has a global cult following, from Hollywood to South Korea
America: Land of the free, home of the political dynasty

America: Land of the free, home of the political dynasty

These days in the US things are pretty much stuck where they are, both in politics and society at large, says Rupert Cornwell
A graphic history of US civil rights – in comic book form

A graphic history of US civil rights – in comic book form

A veteran of the Fifties campaigns is inspiring a new generation of activists
Winston Churchill: the enigma of a British hero

Winston Churchill: the enigma of a British hero

A C Benson called him 'a horrid little fellow', George Orwell would have shot him, but what a giant he seems now, says DJ Taylor
Growing mussels: Precious freshwater shellfish are thriving in a unique green project

Growing mussels

Precious freshwater shellfish are thriving in a unique green project