By Dr George Venturini  

The reality of poverty in the United Kingdom would lead to the following observations:

“The UK is the sixth richest country on earth, yet one in five of its people lives in poverty. Before the financial crisis and the economic recession, prosperity was not shared. The UK is one of the most unequal rich countries in the world, with the poorest tenth of people receiving only 1 per cent of total income, while the richest tenth take home 31 per cent. The risk of poverty is not one that is shared equally across society. Twice as many people from ethnic minorities live in poor households compared with white people; women are more likely than men to live in poverty; and, geographically, there are substantial inequalities both between and within the regions and nations of the UK. Poverty in the UK is about material deprivation: for example, more than a fifth of UK households (5.5 million or 22 per cent) are affected by fuel poverty, and inadequate heating results in thousands of unnecessary deaths each year. But it is also about life and death: premature deaths caused by health inequalities in England each year lead to the loss of between 1.3 million and 2.5 million extra years of life. And people living in poverty have to face stigma and prejudice, and a lack of recognition for the positive, non-financial contributions they make to society.”

The impact of the ‘perfect storm’ on poverty was next considered:

“Since the economic crisis of 2008, those already in poverty have seen their poverty deepen, and millions more have become increasingly vulnerable. A combination of economic stagnation, the rising cost of living, benefit cuts, falling incomes, rising unemployment, and public service cuts add up to a Perfect Storm for the millions already struggling to make ends meet. The Perfect Storm is already affecting partners with whom Oxfam works in the UK, with increased demand on their services, just as the resources to provide that support are being withdrawn. The coping mechanisms of people living in poverty have included increasing debt, more people relying on food parcels, and women acting as ‘shock absorbers’, managing budgets and debt and going without in order to ensure that their families have what they need.”

There were rising unemployment and declining incomes:

“Average earnings shrank by 4.4 per cent last year. Incomes of the directors of [the Financial Times Stock Exchange] 100 companies rose by 49 per cent. Incomes are decreasing across most of society due to a combination of rising unemployment (particularly youth unemployment), involuntary part-time working, pay freezes and cuts, and cuts in benefit levels. This is causing the biggest real terms fall in incomes since the mid1970s. While real wages are falling for the majority and the National Minimum Wage has fallen over the past four years, rewards at the top have raced away: last year, earnings of directors and chief executives went up by 15 per cent, and those of directors of FTSE 100 companies soared by 49 per cent. Falling incomes and rising inequality are part of a longer-term trend. In the decade to 2008/09, 40 per cent of total income growth in society went to the richest tenth of people, and a decreasing proportion of gross domestic product (GDP) has gone to wages. It is predicted that, on current trends, the UK will rapidly return to levels of inequality not seen since Victorian times.”

The cost of living was increasing daily:

“Food prices have risen by 30.5 per cent in five years. The National Minimum Wage has risen by 12.1 per cent in the same period. Prices have risen rapidly, particularly in 2008 and 2011, even as the economy has stagnated. This inflation has been driven by food and fuel prices, both of which account for a high proportion of the spending of people living in poverty. In addition, people living in poverty have to pay more than rich people for basic necessities such as gas, electricity, and banking. This ‘poverty premium’ is estimated to cost them an additional 1,170 pounds [(AU$1,748 – in 2012)] a year. Finally, tax rises under the coalition government, such as VAT [Value Added Tax], have been regressive, thus affecting people living in poverty more. The poorest 10 per cent pay twice as much of their income in VAT as the richest 10 per cent. The Institute for Fiscal Studies (IFS) has calculated that, between 2008 and 2010, the poorest fifth of households experienced an inflation rate of 4.3 per cent, against 2.7 per cent for the richest fifth. The Joseph Rowntree Foundation estimates that the cost of achieving a Minimum Income Standard – a minimum standard of living, based on a broad survey of what members of the public think constitutes the basic requirements of life – has risen by 43 per cent over the past decade, compared with 27 per cent for general prices.”

Much of such hardship was caused by the public service cuts:

“Spending cuts hit the poorest tenth of the population 13 times harder than the richest tenth. The government plans to achieve the majority of its deficit reduction programme through public spending cuts. Poorer people rely most on public services, and spending cuts are estimated to hit the poorest tenth of the UK population 13 times harder than the richest tenth – with planned reductions to public services being equivalent to more than a fifth of their income being taken away. These cuts mean less health care, reductions in social care, and the loss of hundreds of smaller services such as counselling support, care homes, school crossing patrols, and youth clubs. Cutting public spending has a particularly strong impact on gender equality, with women more likely to be reliant on public services than men. Cuts to the Sure Start programme in England (while the equivalent in Wales, Flying Start, is being protected by the Welsh government), and the thinner spreading of cash support for childcare support under Universal Credit, will particularly affect women. Public service cuts also have an impact on unemployment. Public sector employment levels are in steep decline, and women form the majority of public sector employees.”

As for welfare reform and benefit cuts, Oxfam said:

“Seventy-two per cent of the benefit cuts announced in 2010 will be paid by poor women. One of the largest contributions to spending cuts has come from reductions in benefits for working-age people, accounting for 18 billion pounds [AU$26.8 billion – in 2012] per year by 2014–15. According to the House of Commons Library, 72 per cent of cuts announced in the 2010 Emergency Budget will be met from women’s incomes, against 28 per cent from men’s. The introduction of Universal Credit will simplify the benefits system, making it easier for people currently on benefits to transition between unemployment and work. Yet, just as the system is simplified, so eligibility is being tightened for many claimants.

These changes are increasing the demands on support services, including those of Oxfam partners. They also create severe hardship: the Trussell Trust food bank network reports that two people out of every five receiving food parcels do so as a result of benefit changes or delays.”

There was a dramatic housing crisis:

“The number of Housing Benefit claimants in work more than doubled between November 2008 and February 2012. Before the recession hit, there was an acute housing shortage. There were 1.77 million households in England on social housing waiting lists in 2008, and 489,400 households living in officially overcrowded homes. Government targets for the building of new homes have been missed, with construction slowing to a crawl since the recession. The cost of housing has continued to rise in spite of the recession in both the private and social rented sectors, with average rents at record highs and homes unaffordable in more than half of English local authorities. Newly homeless households increased by 18 per cent in England between 2010 and 2011. Reforms to social housing are not only increasing rents, but also reducing security of tenure. Above-inflation increases in private rents have been compounded by cuts to housing support, even as the need for that help spreads. The number of Housing Benefit claimants in work more than doubled between November 2008 and February 2012, whereas the number of claimants out of work rose by only 9.3 per cent. The human cost of scarce and expensive housing is stark. Family life is affected, with people forced to delay having children, or to live away from the support of grandparents, while the cost of housing is forcing millions to cut back on other essential spending, including food and heating, and pushing many into debt.”

Finally, labour rights had been enfeebled:

“Since the recession started, 830,000 permanent full-time jobs have been lost, and half a million new part-time jobs created. The number of people in temporary work because they cannot find a permanent job has risen by 73 per cent. The UK has weaker protection for those in work than Mexico.

For a substantial minority in the UK, work is characterised by insecurity, uncertainty over hours, underpayment, a succession of short-term jobs, or a combination of these. There are estimated to be two million ‘vulnerable workers’ in the UK; decades of deregulation for employers mean that the UK now has the third lowest level of employment  protection legislation in the OECD – below Greece, Turkey, and Mexico – and the highest number of zero-hours contracts in Europe (contracts in which a person is required to be on call for work, but has no guaranteed hours of work and is only paid for the hours they do work); and women are in the most precarious and vulnerable work. Right now, the loose labour market and the shortage of jobs mean that more power rests with employers, and more people are being forced to turn to insecure work, with few rights – or to waive the rights they do have – just to survive. The number of ‘frustrated part-timers’ – those who want and need full-time work – is at a record high, which is particularly significant as such work is generally low-paid and less secure. A very high proportion of jobs created since the first recession have been part-time, and one in three is a temporary job.”

A new approach, said Oxfam, was necessary:

“The government’s rapid deficit reduction measures are hitting the livelihoods of almost everyone in the UK, but the particular approach taken is hurting people living in poverty the most. The focus on cutting public spending rather than raising taxes is deeply regressive, and the blend of tax increases chosen is itself regressive. In addition, both public spending cuts and the tax and benefit changes introduced by this government will have a significantly more negative impact on women than on men. At the same time, we are seeing a synergy of economic and social needs. Protecting the incomes of the poorest people is crucial for both social and economic reasons. It is people on low incomes who are being hurt the most by the Perfect Storm, and increasing the incomes of the poorest will have the strongest multiplier effect on aggregate demand in the economy. By prioritising and targeting social and economic investment, the government can ensure that it protects the services upon which those in poverty most rely, while helping to boost demand and provide investment in the long-term productive capacity of the economy.”

There should have been no return to ‘business as usual’.

“The UK’s economy and society, as currently constituted, are unsustainable – economically, socially, and environmentally. We need a people’s bail-out to protect the millions in poverty and the millions more who are increasingly vulnerable. But we also need to ensure that there is no return to business as usual.” [Emphasis added]

The organisation called:

1) to protect the incomes of the low paid, reducing the withdrawal rate of Universal Credit from 65 per cent to 55 per cent to ensure that work pays, and increasing the National Minimum Wage at least in line with inflation or average earnings, whichever is the higher;

2) to protect people in poverty from the increasing cost of living, by giving new powers to Ofgem to cap fuel prices; introducing a maximum level of interest; and protecting the Social Fund and expanding its resources, to protect people from exploitation and to guard against problem debt;

3) to protect public services, by using progressive taxation to slow the speed and depth of cuts; ring-fencing the Sure Start grant to local authorities in England; and exploring investing in a national system of universal child care, to make work pay for women and to build the social infrastructure of the country;

4) to protect the social safety-net, by giving local authorities in England and Wales sufficient resources to maintain existing levels of Council Tax Benefit; monitoring the effect of the Housing Benefit and overall benefit caps; reversing the switch from RPI to CPI inflation for benefit up-rating; maintaining real Child Benefit levels; and reversing cuts to child-care support;

5) to provide secure, affordable, decent housing for all, by investing in affordable homes to boost the economy and to help solve the housing crisis; and increasing maximum penalties for rogue landlords;

6) to protect rights at work: the weak labour market is adding to the power that employers have over workers, and so it is essential to maintain and enforce the vital protections that do exist for vulnerable workers;

7) to move towards a fairer tax system by clamping down on tax avoidance; introducing a Robin Hood Tax [of 0.05 per cent] on financial transactions [which would raise 20 billion pounds (AU$ 30 billion)], to help protect public services and benefits and ensure that everyone pays their fair share; and exploring options for a land value tax; and

8) to rethink how we measure value: the social damage caused by inequality, high unemployment, and environmental degradation all tell us that it is not growth that matters, but the type and distribution of growth; measuring true social value through a measure of well-being such as Oxfam Scotland’s Humankind Index will help us to measure whether what we are doing to fix the economy is really, sustainably benefiting society.

Oxfam put the long-term case for a fairer society:

“There is a strong relationship in the UK between poverty and inequality. The UK is a rich society, but one in which income, wealth, and opportunity are unequally distributed. Inequality harms those who are shut out from wealth and left in poverty, but there is also substantial evidence that it leads to worse outcomes across society as a whole. Meanwhile, the economic crisis has to a large extent been caused by unsustainable personal debt and a bloated financial sector, both of which were driven by inequality. Finally, as a whole, the UK economy is environmentally unsustainable.” Oxfam strongly exposed the impact of inequality on individuals and society.

“Inequality has the harshest impacts on those forced to remain at the lower end of the income spectrum, breeding a sense of hopelessness and status anxiety. More broadly, inequality has negative impacts across society as a whole, causing lower life expectancy, less social mobility, and poorer health outcomes, and worsening a range of other social problems. Within rich societies, the way in which resources are distributed is the key determinant of overall well-being.”

The organisation strongly put the economic case for greater equality.

“Economic growth over the past three decades has been unequally shared and incomes for low earners have been stagnant, even as incomes at the top have raced away. With those at the bottom trying to keep up, personal debt increased by three-and-a-half times between 1981 and 2007, from 45 per cent to 160 per cent of GDP. Bridging the widening gap in incomes with borrowing cannot be maintained indefinitely. The World Bank and the IMF have both recently produced evidence showing that reducing income inequality is likely to be important in reducing the likelihood of future crises. Inequality is also bad for growth and, according to the IMF, reduces the length of growth spells. For example, closing half of the inequality gap between Latin America and emerging Asian economies would more than double the expected duration of a ‘growth spell’.

As a recent Oxfam International report on the G20 puts it, “If we factor in the impact on growth, the double dividend of tackling inequality becomes a triple dividend: it directly reduces poverty, enhances the ability of future growth to reduce poverty, and, finally, it improves prospects for growth itself. In order to effect a lasting solution to the crisis, steps taken to fight economic stagnation and to protect people living in poverty must seek to build a fairer, more sustainable society.”

To achieve all that, Britons should have rethought what they value as a society.

“It is not growth that matters, but the type and distribution of growth. Oxfam in Scotland has led the development of a Humankind Index, which is based on asking people in Scotland what matters to them and then measuring those things, to see how well Scotland is doing as a society. The UK government should adopt a similarly wide-ranging approach to measuring well-being, to help ensure that steps taken now will build a post-crisis economy and society that sustainably serve the interests of the British people.”

Oxfam then concluded:

“The aftermath of recession is seeing economic stagnation, falling real incomes, and public service cuts all hitting people living in poverty the hardest. The combined impact of all of these factors adds up to a Perfect Storm that is pushing people’s livelihoods to breaking point.

The crisis we are in could be an opportunity to change thinking about what a fair society looks like, and to build the foundations for overcoming poverty once and for all. We need urgent action right now to reinvigorate both the economy and the social safety-net on which most of us ultimately rely. But we also need to do so in a way that sets us on the road to a fair, productive, and sustainable society.”

But who cares? Who reads books anymore? Who is watching serious, informative television? Where is the public debate and where is the parliamentary debate of the relevant issues?

While in 2012 the United Kingdom was facing a set of serious, interlocking challenges, with the economy stagnating; unemployment is increasing; prices rising; incomes falling; and spending on public services being cut back rapidly, Her Majesty Queen Elizabeth II was having a Diamond Jubilee!

In Britain as in Australia an interminable sport madness has invaded the life of most. Nothing else matters – certainly not ideas, arguments, intellectual activity, which more often than not become a source of abuse. All they want is, really, bread and circuses, and the Diamond Jubilee was going to give it to them!

That people might be called to pay, sooner rather than later, did not matter in June 2012. Then, subjects by the thousand would sing Rule Britannia, while the privileged ones would go from Palace to Palace following an ageing Queen Elizabeth and her escort of sycophants, colonial lickspittles and servile hangers-on.

On 19 June 2012 almost 600 teachers spoke out about how hungry children were in their classes. … Breadline Britain: 83 per cent of teachers see evidence of hungry children in their class. (Breadline Britain: 83% of teachers see evidence of hungry children in their class, theguardian.com, June 19 2012).

On the other side of the scale, more than 1 in 5 British pensioners were at risk of poverty.

At mid-2012 British pensioners were among Europe’s poorest, with more than two million older people at risk of poverty, official figures revealed. The United Kingdom was ranked fourth out of 27 European countries in data from the Office for National Statistics, behind only Cyprus, Bulgaria and Spain. Already in 2010 more than one in five – 21.4 per cent – of older British people had been classed as being at risk of poverty, and that was “significantly higher” than the European Union average of 15.9 per cent, the O.N.S. said. A person is classed as being at risk of poverty if her/his disposable income is 60 per cent  below the United Kingdom average.

Charities said that the figures should be a “wake-up call” to the plight of millions of older people and called for a radical shake-up of the pension system. (S. Cassidy, More than 1 in 5 British pensioners at risk of poverty, independent.co.uk, June 8 2012).

Continued Wednesday – A cast of characters: The Monarchy (part 11)

Previous instalment – A cast of characters: The Monarchy (part 9)