OPINION – Poverty in the UK

Below are some troubling facts:

  • Over any ten-year period, there have only been two periods of worse wage growth (compared to the last ten years), and that was during the wars;
  • Currently, in the UK people persistently in poverty is equivalent to about 4.6 million;
  • The trussell trust has identified over 1 million people who are given three-day emergency food supplies;
  • The average FTSE chief executive earns 386 times more than a worker on the national living wage (UK living wage is £7.83 per hour);
  • More than 20 per cent of the UK’s working population earn a salary below the living wage;
  • The austerity program has reduced welfare spending, school building programs, spending in local government and increase VAT.

Furthermore, there are many people trapped in the “gig economy” and are working very hard for little reward. As unemployment goes down in the UK, the actual wage earned is also falling. The usual justification for CEO’s earning so much is that only such entrepreneurs create wealth. I believe that they are many who can do and this is not as unique as it is stated (I can think of more examples where CEO’s have raided or destroyed a company that created a world-class enterprise). I do agree that CEO’s should be paid and paid well but for FTSE companies 386 times more than a worker on the national living wage is irresponsible.

Joseph Rowntree Foundation believes that the cost of poverty in the UK is around £78bn a year. There are a number of organisations who have looked at how we can reduce poverty. Some of the common points raised are:

  • Build more affordable homes;
  • Better education should be provided mainly for children. Five million adults require further training and development of technical skills. It’s also estimated that 12.6 million adults have poor digital skills and this hinders them from applying for better-paid roles;
  • Issues in home life can facilitate a fall into poverty, for example, domestic violence, substance abuse, underemployment and inadequate support for those who have mental health issues;
  • Because of the poor wage increase, living costs have increased three times faster than the average wage increase between 2008 and 2014. This has put a strain on the family’s finances;
  • FTSE companies should all as a minimum give their workers the national living wage.

It’s refreshing that as a party we have tried to tackle these issues: mental health, through apprenticeships, pupil premium to name a few, but I feel that it needs a greater focus. Poverty (for me) is as important an issue as Brexit as it affects people now and unless effort is made to start to address this, it will only make lives more difficult. The number of people who are affected by poverty is staggering, and for me, the solution lies, to some extent, in increased taxation and borrowing to stimulate the economy and provided better services for the people.

This is an opinion piece borne out of the frustration that enough is not being done for those who need it. I understand the importance of Brexit and its likely impact on poverty but that aside as a party I would like to see us discuss poverty a lot more.

 

 

* Tahir Maher is the Wednesday editor and a member of the LDV editorial team

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21 Comments

  • I think you are right, Tahir to highlight education as key. Tax and borrow for education: To double the pupil premium. Free school meals for all. Real terms increase in schools budgets. Increased salaries and status for teachers – an inspiring teacher is crucial to life chances. Free university tuition fees – send 75% of young people to university. A lifelong adult learning fund.

    As someone once said: “Children don’t see barriers. When you’re a child – everything is possible. So how can you not feel angry when you see what has been done to that hope and innocence.

    “One in three children growing up in poverty. A million in cramped and unsafe homes where they don’t get space to play. More children in prison than any other country in Western Europe. Our children are some of the most unhappy in the world. We have to change this.

    “The journey starts in our schools. We need to draw out the potential in every child, from every background. Children who are struggling, or falling behind – we must help them with extra support…”

  • Graham Evans 29th Aug '18 - 10:49pm

    @ Michael 1 The concept of sending 75% of young people to university would not only devalues the concept of what a university education should entail, but once again reinforces the notion that vocational education is only for those without the ability to get onto a university course. For too long the emphasis on tertiary education spending has been on higher education at the expense of the 50% or more of the age cohort who should be directed to further education.

  • @Graham Evans

    “75% going to university” compresses my views into 4 words. In general I would like a great deal more flexibility post-18 and indeed post-16 and post-14.

    I have argued in the comments in LDV for equality of funding between university and non-university routes. Everyone would be given a lifelong fund of 3*£9k – £27k. People can then spend it how they want.

    The argument against education at an increasing age has been used over time. Why stuff them full of facts and learning when we are going to shove them up chimneys, down mines or into factories? It is as misguided now as it was then.

    As I say I want post-18 education other than at university. But I believe 75% of young people will be going to university in most major industrial economies just as happens in South Korea today – certainly within 70 years – just as the school leaving age has risen essentially from 14 to 18 in 70 years but probably within 30 years. We should get there faster and reap the reward.

    There are a number of arguments used against this

    1.It isn’t needed – it most certainly is! Intellectual property is about a third of most developed countries. These jobs are the most value added, most profitable of all and will be most jobs will need a university degree within 30/50/70 years.

    2. Intelligence etc. is genetic and some people aren’t capable of this. People vary in their abilities and enthusiasms but I don’t believe it. We virtually all accomplish the most amazing intellectual challenge. Imagine going to an alien planet and learning the language with no-one speaking yours and how things work there and how difficult that would be. Yet virtually all children manage this. The fact that we have gone from few reading and writing to all, from few passing 5 good GSCEs to a lot, from few going to university to 50% – feats at each stage thought only to be the preserve of a tiny intellectual minority shows this – we are genetically the same. Look up the Flynn effect at how we have got more intelligent or at least at doing well on IQ tests over the past 50 years and yet we are the same.

  • continued…

    We all know in subjects such as maths – when we have suddenly “got” it when we didn’t before – thanks to an inspiring teacher – or when literature came alive or science exciting. But that is particularly why I want to invest in education. The pupil premium is already having an outstanding effect on closing the achievement gap among poorer children. We should double it and invest in inspiring teachers and schools generally as that is the ONLY thing that is holding children back – not their brains.

    3. It puts pressure on children and young people. South Korea has a very high suicide rate among the young – it is said due to the pressure on kids to make it to university. This is absolute rubbish as an argument. South Korea happens to have a high suicide level generally. There is no correlation between a country’s academic achievement level and rates of suicide among the young.

    4. There are too many “mickey mouse” degrees such as the study of stand up comedy. Any language or human activity is capable of rigorous of academic study – classical languages, modern languages, history, literature etc. etc.

    5. It is not practical. Art, music, engineering have always been thought of as good solid degrees but are highly practical.

    As it happens I was educated both privately and in the state system. I am eternally grateful for my parents in sacrificing to give me a good education. As it happens I had an excellent state education as well and I don’t defend private education. But in a way, materially my life as a child might be considered below average as we only had two short foreign holidays during the whole of my childhood, my parents didn’t have any other holidays and entertainment was Basil Brush on a black and white TV! OK – we did get a colour TV later but never a video! And I am sure many here would say that was luxury compared to them. We can’t perhaps take millions of children out of poverty at a stroke. We can though give them the education that I was so lucky my parents were able to afford for me. And I want that for all children and to build an economically prosperous Britain.

  • Peter Martin 30th Aug '18 - 8:22am

    @ Tahir,

    Yes, you can possibly pass laws along the lines of “FTSE companies should all as a minimum give their workers the national living wage”. But what happens if a company drops out of the FTSE? Do their workers have a pay cut? And why should smaller but more profitable companies be excused?

    These kinds of details are probably resolvable, and they won’t do any harm, but the real key is in your earlier comment.

    “The austerity program has reduced welfare spending, school building programs, spending in local government and increase VAT”

    So just get rid of the austerity program! Cuts to spending also result in cuts to the Government’s income so they don’t even do what they are supposed to do which is reduce the deficit.

    Just get away from austerity economics. Get the economy moving again properly, increase the demand for labour, and you’ll be on the right track. Rogue employers will find that their workforce will vote with their feet and they’ll be forced to mend their ways. Laws are OK up to a point but you can’t beat being able to tell your boss where to stuff his job if you are being mistreated. 🙂

  • Poverty is dehumanising our society. A few years ago the sight of someone sleeping, in winter, in a cardboard box in a doorway would’ve shocked; now it doesn’t warrant a second glance.
    Not only do we* ignore those in absolute poverty but we, encouraged by the right wing media, sometimes actively try and prevent them getting help.

    A friend in the East Midlands (a volunteer in helping the homeless and rough sleepers) was telling me about the actions by some such activists against his local Methodist church where hot food is served, by volunteers, to those in real need. Chains and padlocks have been used to try and prevent the doors being opened in the morning, slogans demanding that they “Stop encouraging the feckless” have been posted, etc.

    Caring society? I often wonder!

    * not all; but enough to make me ashamed.

  • Gordon Lishman 30th Aug '18 - 1:07pm

    Thank you, Tahir. I agree.
    The challenge for us as a party is similar to one which Emmanuel Macron faced: how do you both build a movement based on open, liberal values and address the big issues of poverty, exclusion and powerlessness which are felt most keenly by people who are not instinctively in favour of an open, liberal society. The Macron/Obama answer is by building a consensus across society in favour of hope – and then delivering on economic and social justice as well as on liberal principles of openness and internationalism. That requires a movement across society which is wider than any political party and indeed which replaces the out-dated left-right axis of UK politics. It’s also the vision which Vince Cable is setting out.

  • Peter Hirst 30th Aug '18 - 1:33pm

    To me the solution is better education and skills learning. We need to develop a more continual learning culture and help people to get enough work to earn a decent income. For those for whom university is not the best option, they should be helped to forge a career that works to their talents.

  • Tahir Maher Tahir Maher 30th Aug '18 - 1:59pm

    @Peter – When we started with the austerity programme it had a target and value (to clear the mess Labour left behind) take the pain and move on to build a better more robust society. But the Tories managed this badly – it’s been neither this or that. 8 years on and we are still in austerity and likely to be in it maybe until 2026. The austerity period is not a transition. We as a society are feeling the pain. If it is going to take so long then we need to think of something different and take another approach – that might still be as long but take the interest of the poor into account because at the moment we have an austerity programme and an increase in poverty. This can’t be right for a rich country.
    On the whole I am ok with increased taxes if they are used for the benefit of the public. I am also ok with lowering taxes when the economy requires it. But the check should be what is good for the people.

  • Lorenzo Cherin 30th Aug '18 - 2:30pm

    This is very good from Tahir, his comments increasingly among the best here.

    I think Joe Bourke and others mean well, but job guarantees and tinkering with the working tax credits do not seem to take into account the self employed and struggling enterprising.

    The New Deal also was an excellent scheme in the first and best New Labour government. I was a member of that party then, and worked in fields involved in these areas, advising and delivering to struggling self employed and vulnerable, unemployed.

    We are the party for individuality, not top down in thrall to our paymasters, government or business.

    One of the best aspects of the working and disability tax credits is they are for struggling self employed too, not merely a so called subsidy for bad payer employer types.

    They are the best legacy of PM Brown, and the universal credit continues it.

    The disaster of the universal credit is the governmental organising or funding of it, the power as ever in the hands top down not very bottom up.

    We need a universal basic income, meanwhile a universal credit that puts people, enterprising too, at the forefront.

  • Tahir Maher 30th Aug ’18 – 1:59pm…………………. When we started with the austerity programme it had a target and value (to clear the mess Labour left behind) take the pain and move on to build a better more robust society. But the Tories managed this badly – it’s been neither this or that. 8 years on and we are still in austerity and likely to be in it maybe until 2026…………….

    A good opening theme but, sadly (and predictably) you morphed into the usual LDV, “It wasn’t me; big boys (Labour/Tories) did it and ran away”, mantra.
    We weren’t unwilling accomplices between 2010-15; our leadership enthusiastically embraced the measures targeting the weakest in society; thankfully, as has been pointed out, they are no longer ‘players although their beliefs still linger on!

  • nvelope2003 30th Aug '18 - 3:07pm

    If poverty could be solved by Government policies why is it that Sweden, which has had the sort of Social Democrat educational and economic policies favoured by many here, since about 1930, still has significant numbers of poor alienated people who refuse to vote because they cannot see the point ? There is violence, drug taking etc in some parts but if you listen to the educated people it is nothing to do with them or their policies which they continue to vote for because they are brought up to think like that.

  • It is a good question, Nvelope2003.

    During the 19th century the U.S. and UK witnessed a huge increase in wealth-producing power. People naturally expected labor-saving inventions to lessen toil and improve working conditions for all; that the enormous increase in wealth producing power would wipe out poverty forever.

    Instead, however, squalor, misery, vice and crime increased and are still present everywhere as towns and cities grow and as new technologies bring advantages to improve methods of production and exchange.

    The association of poverty with progress is the great enigma of our times. It is the source of our industrial, social and political difficulties.

    Land, labour, and capital are the three factors of production.

    The term land as used herein, is intended to include all natural resources, such as the earth and all its locations, minerals, oil and waterfalls as untouched by human hands;
    the term labor, all human exertion whether by brain or brawn or both; the term capital, all wealth (such as tools, machinery, investments and goods in process of exchange) used to produce more wealth.
    Landowners get rent; laborers (whether by brain or by brawn, or both) wages, and
    capital profits.
    These terms mutually exclude each other. Any person may derive income from any one, two or all three of these sources; but to understand how the returns to each are exchanged we must keep them separate.

    David Ricardo, an English economist, discovered that the rent, or the cost of land, is determined by the excess of its produce over that which the same application of labor can secure from the least productive land in use. This is proven by the fact that locations in active manufacturing and commercial areas are much more valuable than land (locations) in remote areas.

    The increase of rent (the return to the location owner) in the U.S. explains why wages and profits do not increase with the increase in productive power. Wealth, which must be produced by humans, is divided into two parts by the rent line which is fixed by the return which labor and capital can obtain from the natural resources free to them without the payment of rent. From that part of the produce below this rent line wages and interest must be paid. All production above the rent line goes to the owners of land. Where the value of land is low, there may be low production of wealth, and yet a high rate of wages and iprofits. Where the value of land is high, there may be enormous production of wealth, but with a low rate of wages and interest/profits.

    The increase of rent explains why wages and interest do not increase. The cause which enriches the landowner is the cause which tends to impoverish the laborer and capitalist (investor). The rate of wages and profit is everywhere fixed, not so much by the productivity of labour as by the value of land. Wherever the value of land is relatively low, wages and interest are relatively high. Wherever the value of land is relatively high, wages and profit are relatively low. Hence the increase of productive power does not result in increased wages, but rather results in increases in the value of land. Rent (which goes to the non-producing landowners) swallows up the whole gain, and poverty accompanies progress.

  • Tahir, you seem to have mixed up the Living Wage which is £8.75 nationally and £10.20 in London and the National Living Wage which is £7.83. It is illegal to pay anyone less than the National Living Wage or the Minimum Wage depending on their age.

    I share your frustration and it is a pity that you didn’t feel like this at the meeting of the Federal Conference Committee where you didn’t vote for the Basingstoke and Deane motion on Ending Relative Poverty to be discussed at the forthcoming conference.

    The motion would have ended poverty after 5 years, by replacing the National Living Wage with regional Living Wages at 70% of that regions median earnings and increasing Universal Credit to the amount that the Joseph Rowntree Foundation say is the relative poverty level as well as providing £4 billion a year for a Rebalancing Fund as recommended by the Joseph Rowntree Foundation to fund growth and employment in areas which lag behind the rest of the UK. The benefit increases would cost less than it cost to increase the Personal Allowance from £6475 to £10,660 which was about making £24.6 billion and like that, it would be spread over 5 years. This would be less than half of a percentage point of government spending and less than a fifth of a percentage point of GDP each year.

  • Peter Martin 31st Aug '18 - 6:28pm

    @ Arnold Kiel,

    “All public services are underfunded, but the country still runs a deficit.”

    Yes. I’m just puzzled though why you have a ‘but’ in there? If public services were better funded the Govt would be spending more into the economy which would mean it’s revenue would rise too. The economy would be more buoyant which could well translate into more tax revenues and a reduced deficit.

    It’s possible that the extra spending by Govt would cause the economy to overheat. But it’s a long time since I saw the words overheating, UK, and economy used in the same sentence. It is a risk we can safely take.

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