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We need a new economic model to end destitution in Britain.
Nearly 240 years ago moral philosopher Adam Smith wrote: “No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable.” Yet that dictum has been unheeded by the right.
Prime
Minister Boris Johnson once said that ‘destitution on a Victorian scale’
might be a good way of disciplining the working class. The government imposed
austerity and wages freezes are taking the UK towards that target.
The new destitution
According
to the Office for National
Statistics
the average wage in May 2019 was £498 per week compared to £525 in February
2008. Workers’ share of gross
domestic product
(GDP), effectively the wealth created in the UK, has shrunk to around 49.2%, almost
the lowest since records began.
Over 14 million people, a fifth of the
population, live in poverty. Four million of these are more than 50% below the
poverty line, and 1.5 million are destitute, unable to afford basic essentials.
4.6 million children live in poverty. Millions
rely on foodbanks to make ends meet.
The household debt has soared to record £1,661 billion. Around 8.3 million people are unable to pay off debts or household bills.
Rather
than using taxation to alleviate poverty and redistribute wealth, government
has used tax cuts for the rich and corporations to concentrate wealth in fewer
hands. The Equality Trust reported that over the
last ten years the number of billionaires in the UK has almost doubled. The
wealth of the UK’s billionaires has more than doubled. With a combined wealth of £39.4bn, five UK billionaires have more wealth than the
bottom 13.2 million people. The richest 1% of people in the UK owns the same
wealth as 80% of the population, or 53 million people.
A decade of neoliberal policies
has produced near zero productivity growth. Corporate investment has stagnated
as people’s capacity to buy goods/services is severely eroded. The logjam can
only be broken by a serious injection of public investment and policies to
alleviate poverty.
Conservative manifesto
Despite
the usual spin, the Tory manifesto says little about
addressing poverty and inequalities. It promises to raise the minimum wage to around £10.39 per hour by 2024. Income tax cuts, which
have already funnelled wealth upwards, have been mooted. That will do nothing
for 42% of adults who pay no income tax
because their annual income is below the tax-free personal allowance of
£12,500.
Tories
are promising to reduce (from April 2020) the employee’s National Insurance
Contributions
by raising the annual threshold from £8,628 to £9,500. That would save workers
about 23p day. For the princely sum of
23p a day people are expected to join foodbanks, longer queues at hospitals,
send their children to crumbling schools and exorbitant energy, water and train
bills.
Labour manifesto
Labour has produced a costed programme of £82.9bn, over the
lifetime of next parliament, to address poverty, end austerity and use
progressive taxation to redistribute income/wealth.
Examples
include a 5% rise in the wages of public sector workers and attract people to a
career in teaching, nursing, policing, medicine and other public services. Tories
froze public sector pay for two years in 2010, and annual from 2012 to 2018 were
limited to 1%.
Labour is offering an immediate minimum wage of £10 an hour. Free school meals would be available to all primary pupils to ensure that no child goes hungry. The abolition of prescription charges and free dentistry services would mean that the less well-off do not have to make the choice between health and next meal.
End profiteering
Despite
privatisation, last year the rail industry received public subsidy of £7.1bn. Much of this is used
to pay dividends and exorbitant executive pay. Train fares are almost the
highest per mile in Europe. Labour’s nationalisation of train companies can
eliminate profiteering, duplication and waste and reduce household bills. The
same logic would also apply to the nationalisation of Royal Mail, water and
energy companies.
Funds would be available to all adults to facilitate lifelong learning and reskilling. Free broadband connections would reduce social exclusion and save each household around £360 a year. The abolition of university fees would reduce debt for students and their families. Train fare reductions would reduce transport costs which can be an impediment to employment, especially for the less well-off.
A new economy
Labour
has earmarked £250bn for green investment, over the next 10 years, to generate
a million new jobs and stimulate the economy. It has earmarked another £150bn
for social infrastructure investment to build homes, schools and hospitals.
This will have a knock-on effect on the private sector which would provide many
of the goods and services.
People will soon have to choose between deepening social squalor or the possibilities of renewal which can enable many to live a fulfilling life.
It’s time to end poverty in Britain.
Prem Sikka is professor of accounting at the University of Sheffield and emeritus professor of accounting at the University of Essex. He is a contributing editor to LFF and tweets here.
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