This series on the book ‘Breadline Britain: The Rise of Mass Poverty’ will look at how poverty in the UK is measured, how Government policies are addressing poverty and the report’s suggestions for tackling the poverty epidemic. To refer to the research on which the book was based, you can go to www.poverty.ac.uk.
Given the conditions and effects of poverty and inequality described by the study, what proposals do the authors of Breadline Britain make? What steps can be taken to make our society fairer and more financially secure for ordinary people?
The Poverty and Social Exclusion research project, on which ‘Breadline Britain’ is based, conducted several case studies with families living in different parts of the UK who are in some way vulnerable to poverty. The studies included interviews with single parents on benefits, unemployed young people, disabled adults and old-age pensioners. Renée is a low paid working mother who looks after three children and her elderly mother in a damp, overcrowded flat in London. Her dreams for her children are modest: “... for them to be happy, to be comfortable, see that they have a good job… that’s my dream.”
But according to predictions by the Institute for Fiscal Studies, child poverty will continue to increase into 2020 and targets in child poverty reduction set by the Child Poverty Act will be missed by a wide margin. According to the Social Mobility and Child Poverty Commission, 2020 is set to be the first decade since records began where absolute poverty does not fall. This doesn’t bode well for the modest dreams of families working hard to make ends meet already. The conclusion of the Breadline Britain study is that in order for mass poverty in the UK to be reduced, radical political and economic changes need to be made.
From an economic perspective, poverty needs to be addressed in two ways: through the distribution of incomes and through the social security system. The government can use the social security system to redistribute wealth to the poorest, or it can tackle the more fundamental causes of poverty by intervening in and regulating the market economy to intervene in wages and jobs, or both. The UK government has taken both steps, through the minimum wage and through the welfare system. However, these initiatives have suffered from limitations. The 1997 Labour government, while introducing the minimum wage, relied on distribution through a means-tested tax credit system. Means-tested benefits are, arguably, costly and, lacking inclusivity, are divisive. The cut off point for means-tested benefits puts people who are neither rich nor poor in the uncomfortable situation of needing support which they don’t receive. This leads to the benefits system being perceived as unfair, to people on benefits being villainised particularly in the press and weakens public support for benefits. Universal systems of support on the other hand, such as the NHS, create solidarity between people and ensure people who might not otherwise know they are entitled to benefits receive them.
The book argues for universal benefits but also goes a step further, considering an idea which has been championed throughout history: universal basic income. UBI, which has been argued for by Bertrand Russell and Thomas Paine, is the idea of giving everyone an unconditional income to cover basic costs of living including food and shelter. It is argued this would remove the fear and uncertainty people have of not making enough money to live on, wipe out poverty and guarantee workers get fairer wages, as they would have greater bargaining power over their wage levels. Systems approximating basic incomes have been tried out in many places, notably Alaska where a dividend is given to every Alaskan citizen. The dividend fluctuates with market forces and is not high enough to be a basic income, but the ‘free money’ solution in Alaska has reduced poverty and is highly popular.
A more progressive system of taxation is also argued for, as well as a crackdown on tax avoidance and evasion by corporations. A system of taxation which goes further than a flat rate of tax based on proportion of revenue, one which is based on an ‘ability to pay’ principle, will by necessity be progressive and will create greater wealth equality, narrowing the gap between the richest and poorest.
A more interventionist economic policy which regulates markets, such as in Scandinavia, would take much of the pressure off of a universal benefits system payed for through progressive taxation. This would allow for more jobs with better working conditions and higher wages to be given greater priority in the UK. Some would argue that “free markets” which are profit driven and where there is a maximum of competition for wages and the price of goods and services are more efficient than markets overseen by governments. While this is far from clear the fact is, as the economist Ha Joon-Chang says, there is no such thing as a completely free market. All markets are regulated by governments in many different ways, from child labour laws to the minimum wage. The only choice is the extent to which the government intervenes in markets, which is determined by the health of markets in terms of rates of employment, wages and so on. The gap between high and low wages need to be tackled, through the introduction of a truly living wage, more opportunities for training and apprenticeships, greater bargaining power in the workforce and an investment in infrastructure and industrial jobs.
These changes will not be made easily or quickly. It will require broad public support for progressive reforms to economic policies. In the UK, grassroots movements such as UK Uncut and 38 degrees have arisen to challenge the policies surrounding poverty and inequality, such as austerity. It’s easy to imagine the way things are now has always been this way and will always be this way. But by looking clearly at the state of poverty more than a third of people in the UK are in, we can find ways out of this situation of entrenched privilege for a small minority. This will require opening up the debate to ideas which have become unfashionable: of the government taking a more active role in the economy and ensuring people can achieve at least a decent standard of living. Then the modest dreams of Renée and many others, for their children and for the future, stand a chance of being realised.