In the sixth largest economy
a fifth of us are in poverty.
James Meadway calls for zero tolerance

New figures this week from the Joseph Rowntree Foundation found that 13.4m people, or one in five of the population, were left in poverty during the first year of the pandemic over 2020 to 2021.

The foundation forecasts that the situation is likely to have worsened since: not only has the additional government support offered during the pandemic been wound down, but the soaring cost of living has eaten up the real value of families’ incomes faster than we have seen in decades. It’s too early to get the full picture for 2022 – but soaring foodbank use, with the Trussell Trust distributing 50 per cent more food parcels than before the pandemic, and rising homelessness, give a good early indicator of what has been happening.

None of this should be acceptable. Britain remains the sixth largest economy on the planet. No one living here should be expected to live without the essentials of a decent, fulfilling life. We have the resources at hand to provide a decent standard of living for everybody.

Yet too often the political debate has pretended otherwise. When David Cameron became prime minister in 2010, he and his chancellor, George Osborne, argued that there was “no money left” and that the “cupboard was bare”. They oversaw the worst cuts to public spending since the Great Depression of the 1930s – cuts on a scale that few people left alive will now remember. Some of the results were completely predictable, and warned about more than a decade ago: rampant poverty, the disintegration of essential public services like social care, and a visible decay of life in Britain over the last decade.

But some of the impacts were initially hidden. The coalition government of 2010, and the Conservative-only government of 2015, were quite sophisticated about how they applied their cuts. “We’re all in it together,” argued Osborne – whilst making sure that we were not. He targeted his spending cuts on particular groups, like those in council houses needing an extra room, or those with large families claiming benefits, and at the same time attempted to “protect” others, like those on state pension. Even with pay either flat or falling, in real terms, for most, this cruel and careful targeting of cuts disguised their true impact. It is only in the last few years, as the impacts became unavoidable, that austerity spending cuts have become unpopular across the wider population.

There is now a large coalition opposing further spending cuts – so much so that, as Stephen Bush of the Financial Times has argued, even the Tories don’t dare return to making them. New chancellor Jeremy Hunt has pushed any further spending cuts until the second half of this decade – after an election, now generally expected in October 2024, and to see the Conservatives lose power.

But not wanting more cuts isn’t enough. The damage done by the last round has been so great that repairing it will require major increases in public spending – on the National Health Service, visibly collapsing under the weight of the pandemic and failures elsewhere in the system, like social care; on local authorities, stretched to breaking point; on schools and education, where a generation of school kids has had to suffer worsening conditions. All of these essentials of modern life are crying out for increased spending, never mind more spending cuts.

And if we want to tackle poverty, the Joseph Rowntree Foundation offer an intriguing idea. Dreadful as the poverty figures are, it estimates that there was an actual decrease in poverty during the first year of Covid. This seems counterintuitive: how could a terrible pandemic actually reduce something like poverty? But the answer, they suggests, is in the additional support government made available at the time. Furlough was the most obvious example of this, with 11.7m people receiving this support at the scheme’s peak. Alongside this, increases in Universal Credit gave some additional payments to those not in receipt of other money. It should be noted that outside of furlough, government support during the pandemic was extremely patchy – around six million people were left without any special support, mostly the self-employed, and forced to rely on the standard benefits system. Even with the increases there, the UK benefits system is miserly inadequate. But because spending had been increased, there was some impact on overall poverty.

So there’s an obvious solution to poverty. There needs to be more money put into our benefits system, and it needs to be broad in its support. I favour a very widespread provision, through basic income – paying a set amount to everyone, regardless of their other earnings, but which is taxable (meaning the higher paid don’t get a special bonus). But even a conservative-leaning think tank, Bright Blue, has last week argued for a “minimum living income”, whereby the government sets a minimum income for households, dependent on their needs, and then adjusts the benefits system to make sure everyone at least gets this much. This would be an improvement on the current patchy and under-resourced system, at least. And can we afford big reforms like this? Of course we can: just properly tax the top 10 per cent, whose wealth, having risen rapidly during the pandemic, is now worth 230 times the poorest 10 per cent. In a rich country, there should be zero tolerance for poverty.

James Meadway is an economist and director of the Progressive Economy Forum, an independent thinktank (progressiveeconomyforum.com)