Almost a third of Birmingham children are officially classed as living in poverty, while the city has the highest proportion of the working population in the UK without qualifications.

A damning new report has revealed that few families in the city on the breadline stand much chance of dragging themselves out of poverty.

Britain risks become a “permanently divided nation” unless drastic steps are taken to close the gap between the haves and have-nots, the Government’s independent adviser on poverty has warned.

The report by Alan Milburn, the former MP who held a series of cabinet jobs in Tony Blair’s Government, highlighted the challenges facing the West Midlands, where more than one in five children are growing up in poverty.

Once housing costs are taken into account, 32.4 per cent of Birmingham children, , are living in low-income households.

The report also points out that 13.6 per cent of the working population, around one in seven, have no qualifications – the highest proportion of any region or nation in the UK. This means that prospects of seeking better employment are poor.

But there were also positive signs. While 60.4 per cent of poor children failed to achieve five good GCSEs including English and mathematics, the proportion who do get the grades is actually higher than anywhere outside London.

And the study praises an innovative scheme backed by Warwick University which sends PhD students to act as mentors in schools which have traditionally sent low numbers of pupils to university.

Called the Brilliant Club, it delivers programmes of university-style learning to 2,687 pupils in 100 non-selective state schools across London, the South East and the West Midlands.

The study said: “Results are promising: three-quarters (75 per cent) of sixth-form pupils applied to a highly selective university, with 45 per cent now studying at a highly selective university.”

Mr Milburn, a former Health Secretary, chairs the Social Mobility and Child Poverty Commission, which was set up in 2010. In its latest annual report, the Commission warned that the UK economy is indeed improving – but some parts of society are missing out on the benefits.

And the old idea that economic growth eventually benefits everyone might be lost forever unless radical action is taken, the report warns.

Britain is “on track to become a permanently divided nation” because economic recovery is not creating a “social recovery” which would raise living standards across society, the report said.

And it warned: “2020 could mark a watershed between an era in which for decades there have been rising living standards shared by all and a future era where rising living standards by-pass the poorest in society.”

But proposals set out in the study are likely to be controversial.

They include:

* Means-testing pensioner benefits such as the Winter Fuel Allowance and free TV licences, so that spending is targeted on children in poverty and people on low wages.

* Asking schools to identify bad parents so they can be offered training on how to help their children succeed.

* Leading universities to accept more children from poorer backgrounds even if they get lower grades than applicants from wealthier families.

* A push to make the “living wage” – currently £7.65 an hour outside London – the national standard rather than the statutory minimum wage, currently £6.50 an hour.

* Abolishing long-term unpaid internships, by legislation if needed.

The economy is picking up, the study said. Employment rates are close to record levels and unemployment has “fallen rapidly”. There have also been big falls in the proportion of young adults who are not in full-time education or employment.

But five million workers are “trapped in low pay” and average weekly wages, excluding bonuses, have fallen 8.2 per cent since their peak of April 2009 once inflation is taken into account, the report warned.

Around one in five of all workers, five million people, are considered to be “low paid” because they earn below £7.50 an hour, or two-thirds of the UK median wage.

And the number of children in working households in poverty is up by 600,000 since 2009-10.

The Government’s plan to cut benefits in real terms – including for working people – will make existing problems worse, the report warned.

It said: “Benefit cuts pencilled in by the current Chancellor imply total cuts to benefit and tax credit spending on children and working-age adults between 2010/11 and 2018/19 of up to one third if pensioner benefits continue to be protected.

“It is inconceivable, in a context where low-income workers’ wages are stagnating, that this will not increase already high in-work poverty rates, even if proposals to increase the personal income tax allowance are implemented.

“It is hard to avoid the conclusion that the working poor of Britain will pay a very heavy price for such an approach. It will not help to make Britain a unified society. It will hasten the development of a divided Britain.”

However, the hard-hitting report also criticised Labour, warning that low pay was a problem under the last Government even before the banking crisis.

It criticised Labour leader Ed Miliband’s proposal to increase the minimum wage to £8 an hour by 2020, pointing out that this would actually mean slowing down the rate of increase in the minimum wage, which is set to reach £8.23 an hour by 2020 on current trends.

And the report called on Governments to means-test pensioner benefits so that more funding is available to alleviate child poverty and help the working poor, saying: “Without radical changes to the tax and benefit system to boost the incomes of poor families, there is no realistic hope of the statutory child poverty targets being met in 2020.

“None of the main political parties have been willing to embrace such a change nor to speak this uncomfortable truth. They are all guilty in our view of being less than frank with the public.”

Means-testing the Winter Fuel Allowance and free TV licences could save up to £2 billion per year, the report said.

The study also highlighted the role of unpaid internships in providing access to jobs in professions such as consulting, IT, banking and the media.

These are increasingly “the first rung on the professional career ladder” – but they are only available to young people who can afford to work for free, which effectively means those with wealthy parents.

The commission called for these to be axed, with interns paid at least the minimum wage, saying: “We want to see employers ending the practice of unpaid internships. We hope that this can be achieved without the need for new legislation.”

And it called for action to improve the private rented sector on the grounds that young people were increasingly forced to rent rather than buy a home, although this problem is particularly acute in the south east.

Mr Milburn said: “The circumstances are so different, the challenges are so great that the old ways of thinking and acting that have dominated public-policy making for decades will simply not pass muster.

“What worked in the past will not serve as an adequate guide for the future.

“A new agenda is needed.”


* The West Midlands has the (joint) third highest rate of child poverty and the highest proportion of working-age adults with no qualifications of anywhere in England;

* Educational outcomes for poorer children are relatively good, with more getting good GCSEs and progressing to higher education than anywhere except London;

* Labour market outcomes are below average, with the third lowest employment rate and third highest unemployment rate in England.

Child poverty

* 21 per cent of children are in poverty before housing costs and 29 per cent after housing costs;

* The proportion of children in low-income varies from 9.5 per cent in Bromsgrove to 32.4 per cent in Birmingham.

* 64 per cent of poor children do not achieve a good level of development at the age of four: this varies from 58 per cent in Coventry to 74 per cent in Warwickshire;

* 31 per cent of early years providers in the most deprived areas require improvement.

Educating the next generation

* 41 per cent of poor children fail to achieve the expected level in reading, writing and mathematics at age 11: this varies from 33 per cent in Solihull to 51 per cent in Worcestershire;

* 60.4 per cent of poor children fail to achieve five good GCSEs including English and mathematics: varies from 52.7 per cent in Birmingham to 70.4 per cent in Stoke-on-Trent;

* 32 per cent of the primary schools and 39 per cent of the secondary schools in deprived areas require improvement.

Moving from school to work

* 6 per cent of 16–18-year-olds are NEET: this varies from 5.1 per cent in Staffordshire to 8.8 per cent in Telford and Wrekin;

* 18 per cent of poor 16–year-olds do not go on to a positive destination: this varies from 13 per cent in Wolverhampton to 27 per cent in Walsall.

Employment, pay and progression

* 15.3 per cent of children live in workless households;

* 70.3 per cent of adults are in employment and the unemployment rate is 7.1 per cent;

* Median hourly pay is £10.88, six per cent lower than the UK average;

* 13.6 per cent of the working-age population have no qualifications.

Higher education and the professions

* 19 per cent of poor children progress to higher education: this varies from ten per cent in Herefordshire to 26 per cent in Birmingham;

* 157 poor children progressed to Russell Group universities in 2011/12 – 1.6 per cent of children eligible for FSM taking GCSEs in 2008/09;

* 40.5 per cent of people in employment are in managerial, professional or associate professional occupations this varies from 27.6 per cent in Sandwell to 56.6 per cent in Bromsgrove.