Questions and Answers

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What is the Resolution Foundation?

The Resolution Foundation is an independent research and policy organisation dedicated to improving the well-being of low earners in today’s mixed economy.

What are the Foundation's aims?

We aim to improve the lives of low earners – those who are not benefit dependent but have below average (median) incomes and can be left struggling to make ends meet.

We want to bring about change in areas where this income group is currently disadvantaged by producing new research and economic analysis and actively engaging in the policy making process.

Who are low earners?

‘Low earners’ is the term the Foundation uses for the group of people who are 'too rich’ to qualify for state support yet often ‘too poor’ to access the benefits of private markets. At its simplest, we consider the group to be made up of households in income deciles 3, 4 and 5: that is, with gross annual income between £11,650 and £27,150. Around 7.6 million households fall into this category in the UK, equivalent to around 13.4 million adults.

The Foundation published Squeezed: the Low Earners’ Audit in March which puts low earners’ precarious position under the spotlight – please see our website for further information.

Why low earners?

This is one of the most overlooked groups in today’s society as they are not the poorest but are only the next step up on the income ladder.

In social policy terms, researchers, policy makers and the voluntary sector tend to focus on the poorest in society. Low earners also deserve attention as they tend to be in poor financial health, and are particularly vulnerable to falling out of work especially in the current economic environment. They also often fare poorly in private markets.

But surely the poorest are the most deserving?

You’re right low earners are not the most vulnerable in society, nor does the Foundation argue that they are the most deserving. We do however, believe that they are squeezed by the workings of the mixed economy, exposed to unique pressures and frequently overlooked by public policy. This is what we are trying to achieve – greater focus on their particular position and needs.

What do you mean by the mixed economy?

The mixed economy is where the private, state and third sector all have a role in delivery and/or funding.

A mixed economy approach combines the benefits associated with well-functioning private markets with targeted state intervention. However, it inevitably results in a group which operates at the margin: too poor to benefit from the full range of opportunities provided by private markets but too rich to qualify for substantial state support. These are our low earners.

What is the Foundation’s approach?

We focus on a small number of projects, combining economic and social policy analysis to develop practical policy proposals. We take a non-partisan approach and we share our analysis with a range of stakeholders to influence decision making and encourage take up by policy makers.

We also continue to monitor and influence those issues we have previously worked on to see projects through to completion and ensure that reforms are successfully implemented.

What is the Foundation focusing on in 2009?

The Foundation is focusing on three projects in 2009:

Low Earners in Recession and Recovery: this project is examining what more needs to be done to protect low earners exposed to the recession (particularly in the areas of work and skills, housing and household finances) and how we avoid low earners bearing the brunt of the spending squeeze in the recovery period.
Social Care and Older People: we are continuing our work on improving the social care market. The Green Paper on Social Care has recently been published and we will be responding.
Financial Health and Money Guidance: we are continuing our work on improving the financial health of low earners through the Financial Health Forum and supporting the national roll out of Money Guidance planned in 2010.

What is the Foundation doing on financial advice?

Our first research project explored low earners access to financial services and identified that there was an ‘advice gap’ for low earners. This work culminated in the announcement by the Treasury of the Thoresen Review which recommended a pathfinder for a new Money Guidance service. We are engaged with the development of the Money Guidance pathfinders, and were delighted to welcome the announcement in the Budget of a proposed national roll out in 2010.

To support this work and to continue to engage in the wider issues of financial inclusion and financial capability we launched the Financial Health Forum in 2008. The Forum is an independent body of experts which aims to progress thinking and practice on issues relating to the population’s financial health.

What is the Foundation doing on social care for older people?

Last year we found that long-term care wasn’t working for older low earners, who often have over the threshold of assets in their house (£23,000) which can make them ineligible for subsidised care. However, they also have relatively low-incomes which makes paying for care a struggle. Many low earners therefore rely on informal care which might not always meet their needs or go without.

The Foundation published three reports last year and developed policy solutions on how to improve the current care system. Our most recent report found that the system needed substantial reform to be ‘investment ready’ as well as needing a new funding settlement. In 2009, we have worked on three areas that will help low earners access the care they need now:

Work with the LGA on developing deferred payment schemes to assist low earners in safely accessing the equity in their house to pay for care

Work with ADASS to define a new role for local authorities as market shapers. Our previous work revealed that the market for social care is both inefficient and unfair, and that local authorities could play a key strategic role in creating the right conditions for the market to develop. This would mean better outcomes for everyone, especially low earners who currently tend to be excluded from local authority help.

We are continuing to develop our policy proposals and will be feeding into the Green Paper consultation process.

What has the Foundation achieved?

Money Guidance – from obscurity to a national roll out from 2010

The Financial Health Forum – the Forum’s chairman wrote to the Chancellor urging a social charter be attached to the bank bail-out agreements. A ‘financial capability clause’ has now been adopted and is being taken forward.

Comparison websites – the Foundation called for a voluntary code of practice for the comparison website industry. The Comparison Consortium has now been launched with an industry code of practice.

Long-term care:

The market for social care – the Social Care Green Paper and the Putting People First agenda both recognise that market development is key to improving how social care functions.

Information and Advice – the Social Care Green Paper empathises the role that information and advice plays in helping people get the right social care for them.

Housing wealth – the Social Care Green Paper examines how people could better use their housing wealth and suggests a universal deferred payment scheme.

The profile of low earners – whilst still often overlooked, low earners and the challenges they face are being more widely acknowledged in public debate.

How is the Foundation funded and governed?

The Foundation is privately funded via the Resolution Trust. It has a Board of Trustees, an Advisory Board and a Steering Group.