It’s more expensive to be poor.
We needn’t hide, or try to justify it, but it is a fact of life.
We need to ameliorate the effects and structure government policies to improve the lot of those who take home the least. At the very least, we should not be making it worse.
It’s important that we don’t assume the poorest in our society are entirely reliant on benefits – it’s a myth, and the subject of the Poverty Committee’s last report. Sixteen per cent of the workforce were below the living wage last year. They were earning less than it costs to live in the Isle of Man.
It is for this reason that the Poverty Committee argued all benefits should be set with reference to the living wage, and that the minimum wage should be aligned with the living wage during the life of this administration.
However, there is a side to poverty that is not seen by many, even by those in the squeezed middle who are struggling to maintain a standard of living on modest incomes.
The most obvious is economies of scale. The cost of filling a 900-litre oil tank is now 92p per litre +VAT.
Manx Petroleum now allows orders as little as 250 litres, but at a cost of 104.5p per litre +VAT.
However, both it and Ellan Vannin Fuels offer a budgeting account to spread payments over the year.
Meanwhile, government is still struggling to implement monthly instalments for vehicle duty (car tax). The current system of tax on vehicle emissions also means that those who need to buy cheaper second-hand cars are paying more in vehicle duty than those with bigger, more expensive, less polluting vehicles.
It may be a longer drive to your local supermarket, but the savings are usually worth it. If you had to buy everything at your corner shop, life would be much more expensive when your main option is walking, or the bus: this is a reality for the rural less well off.
If you can afford to pay your rates bill before June 30, you get a 5% discount for doing so – and those who spread their payments across the year must pay full price. Why?
Pay As You Go phones are more expensive than contracts: Manx Telecom £5 credit for 90 days with 200 minutes or texts is valid for seven days with 4GB data. However, unlimited calls and texts start from £20 per month.
Benefits, however, are often paid weekly or fortnightly. That makes cash flow even more challenging.
Public sector housing tenants have no choice but to accept gas boilers, now the most expensive fuel. They cannot change them. Those in rented accommodation or low incomes are least able to switch to cheaper forms of heating.
People on higher incomes could be paying for less electricity by installing their own wind, or solar energy, and selling the excess for 8.2p/unit. Those paying as they go cannot get the £1.50 quarterly direct debit discount.
This problem is amplified when we realise that those on the lowest incomes, who own their own house, are likely to live in the draughtiest and poorest insulated housing.
When you add in more expensive borrowing costs due to poor credit, and higher insurance costs: you soon find debt spirals, deducting even more from an already burdened household budget.
This underlines the essential need for ‘just transition principles’ in the Climate Change Act 2021, which commits government to reducing emissions in way which ‘contributes to resource-efficient and sustainable economic approaches which help to address inequality and poverty’.
The ‘climate justice principle’ in the same Act is described as reducing emissions and adapting to the effects of climate change in ways which (a) support the people who are most affected by climate change, but who have done the least to cause it and are the least equipped to adapt to its effects; and (b) help to address inequality.
We need a more intelligent and joined-up approach to ensuring the right balance of administrative simplicity, social justice, and environmental friendliness in a way that does not penalise those who can least afford to pay.
Mr Watterson has been the chairman of the Select Committee on Poverty since its formation.
NOTE: This column first appeared in the Isle of Man Examiner of November 8. Since then the price of heating oil has fallen.