Poverty is at crisis levels. Overall wealth in Britain has doubled over the past three decades, yet the number of poor has been rising alarmingly from just over one in six in 1983 to nearly one in three today. One in 10 households live in a damp home, a 30-year high. Those who cannot afford to heat their home adequately has trebled since the 1990s, rising from three to nine percent. The numbers who skimp on meals from time to time over the previous year so that others in the household – mostly children – had enough to eat, has doubled since 1983 – up from 13 to 28 per cent. Figures 1 and 2 (right and below) illustrate the worsening situation.
The reality for those on low incomes today is one of a constant struggle to get by, of endless worry about how to pay the next bill, of parents cutting back for themselves to prioritise the kids, of young people left with little today and few hopes for the future.
Person after person tells a similar story: “I only tend to eat one meal a day and that does me, ‘cos I like to make sure I’ve got enough for my children”; “I try to keep the heating on for a couple of hours and then turn it off – I’m afraid of the bill coming in, to tell you the God’s truth”; “It’s just in your head…. you have to constantly think about money, constantly think about it”; “By the time the bills have been paid, we’re left with little to nothing, we’re living below the breadline:. These experiences echo those of the poor in 1983.
Starting in that year, we have charted poverty in Britain through four large-scale surveys. These Breadline Britain surveys measure poverty using the public’s views on what is an unacceptable standard in contemporary Britain. Respondents are asked which of a long list of items and social activities, from a basic diet and minimum housing decency to a number of personal and household goods and leisure and social activities, they consider to be essential for living in Britain today.
This method establishes a minimum standard based on what the majority of people think are the necessities of life, which everyone should be able to afford and no-one should have to do without. This is the nearest we have to a democratic definition of poverty. It’s a standard that has support from all groups in society, across different ages, social classes, gender and, significantly, political affiliation.
The debate on whether poverty is absolute or relative, whether it should be based on past or contemporary standards, continues to rage. Absolute measures can provide a measure of progress over short periods of time and, indeed, using an absolute line today, large sections of the population are worse off than a decade and a half ago. But typically absolute measures of poverty, with their emphasis on terms like hunger and homelessness, have been employed as a way of underplaying the extent of poverty.
Relative measures, on the other hand, are based on contemporary norms and social standards, and change over time in relation to changing incomes, needs and social habits. The Breadline Britain surveys conclusively show that the public takes a clear relativist view of poverty. They identify as necessities items that reflect contemporary and not past styles of living. People understand poverty as dependent on the society in which they live and that needs extend beyond the basics of food and shelter.
The public endorse the idea that in contemporary Britain, no child should be prevented from going on a school trip because their parents can’t afford it and that children need access to a computer with internet for homework.
The proportions lacking a large majority of the publicly-defined necessities common to 1999 and 2012 have actually risen. For some, the increase has been huge: those unable to afford to “replace broken electrical goods that have broken down” is up from 12 to 26 per cent over the 13-year period; and those unable to afford clothes for a job interview – a particular problem for the young unemployed – up from 4 to 8 per cent.
This rising deprivation has hit children particularly hard – today one in five children live in a home which is cold or damp; one in 10 miss out on an essential clothing item such as a warm coat; one in 20 households can’t afford to feed their children adequately. Others lack the educational and leisure opportunities that most take for granted. Six hundred thousand children are unable to go on school trips each term because their parents can’t afford to pay. Levels of overcrowding are rising sharply with the numbers of children over the age of 10 having to share a bedroom up from 3 per cent in 1999 to 11 per cent.
The survey findings present a bleak picture of the lives of Britain’s poorest third. Those who are poor materially are also much more likely to suffer a range of other serious disadvantages. Of those who lacked three or more publicly defined necessities, six out of 10 feel their general health has been affected and more than seven out of 10 have at least one key financial problem (such as arrears). More people are losing sleep, feel under stress and worry that they can’t overcome their difficulties, with a half of those lacking three or more necessities suffering mental health problems. The rising tide of poverty in Britain adds up to a serious failure of the economic, political and democratic system. Growing affluence is now, remarkably, associated with rising, rather than falling, poverty. Indeed, a high level of poverty is now endemic to the British economic model, driven by an increasingly hostile jobs market, punitive policies towards the poor themselves and an economic system that allows the richest to colonise a growing share of economic growth.
Since the 2010 general election, the debate on poverty has become increasinglyhighly charged, with evidence displaced by deep-seated prejudice. The coalition Government, along with much of the media, persist in arguing that poverty is largely self-inflicted and a matter of individual failure – or, as ministers like to claim, “a lifestyle choice” promoted by a “something fornothing” benefits system. Intent on minimising the scale of the problem, the coalition has attempted time and again to redefine the nature of poverty downwards, thus absolving government of responsibility for tackling it. This echoes Margaret Thatcher’s attempt, 30 years ago, to bury the issue by banning ministers and civil servants from using the “poverty” word.
The last Labour Government did make tackling poverty a priority – although by allowing inequality to continue to rise, it did so with one hand tied firmly behind its back. These efforts reached their peak in 2010 when, just before the general election, the Government passed the Child Poverty Act enshrining in law ambitious targets for the reduction of poverty by 2020. The Act was an unambiguous statement, perhaps the most significant of the post-war era, of the societal obligation to tackle poverty. Significantly, it was passed with all-party support – apparently showing that a new bipartisan approach to poverty had finally emerged.
However, within weeks of coming to office in 2010, the coalition Government moved to distance itself from the Act, effectively abandoning its targets and disowning the principles on which it was based. Ministers wanted to shift the emphasis in tackling poverty away from income and living standards to criteria such as parenting skills, drug and alcohol dependency, and family stability. The approach proposed bore no relation to any previous method of measuring poverty in this country or worldwide, historically or present day. What it did do is shift the blame to individuals as a way of justifying the Government’s ongoing war on the benefits system, while moving Britain’s poverty count further away from the Act’s targets.
But the rise in poverty cannot be explained by a sudden explosion of individual failings or a growth of “welfare dependency”. Indeed, the most striking feature of the past 30 years is the rise in poverty among those in work – around 60 per cent of households in poverty have at least one person in work, double the figure in the early 1980s.
The surge in poverty can be traced directly to the sharp increase in inequality over the period. From the late 1970s, the steady march towards greater equality that had taken place since the 1930s went into reverse. This earlier shift to greater equality had helped transform the lives of those on low and middle incomes, while millions of families at the bottom were lifted nearer to contemporary standards.
As the “great levelling”, as it is known, gave way to the “great widening”, the income gap between top and bottom has returned closer to the level last seen in the pre-war era. The share of total net income (after taxes and benefits) taken by those in the bottom fifth of households fell from 10 percent in 1979 to 8 per cent in 2010/11. In contrast, the share received by the top fifth rose from 35 per cent in 1979 to 42 per cent in 2010/11.
Widening inequality has left those at the bottom increasingly falling behind the rest. Between the early 1980s and the turn of the millennium, the living standards of the poorest groups in society did rise in most respects. Few today lack essential consumer goods – from a washing machine and a fridge to a telephone. These are significant improvements. However, overall material gains have not kept pace with the wider growth of prosperity. Moreover, as the economy has grown, the socially determined minimum standard – an essentially relative measure – has also been rising. As a result, the living standards of the poor have failed to improve at a sufficient rate to enable them to keep up with the public’s minimum standards, so the gap between these publicly determined norms and the living conditions of those at the bottom has been steadily widening. While the poor today are in many respects (though far from all) better off than those in the early 1980s, and certainly those of the 1930s or the 1960s, they are less a part of the society in which they live.
Moreover, since the millennium, while top income groups have continued to get richer, low and middle-income households have, on average, faced a fall in living standards. Incomes for this group began to stagnate from around 2004 and then started to fall from 2008 as the recession and wider austerity began to bite. The incomes of those in the bottom quarter were nine percent lower in 2012-13 than in 2004-05, and overall, were no higher in 2013 than in 2000.
This income squeeze has been further tightened by differential changes in the cost of living. Not only have low incomes been contracting, with rent and the price of food, electricity and gas rising more steeply than general prices, they buy fewer things. As low-income households spend a higher proportion of their income on these basics than others, these price hikes have hit them particularly hard, forcing more families to cut back on necessities, including on food or heating or, increasingly, both.
These trends have been compounded by other deep-seated changes – from an increasingly bleak jobs market to more uncertainty about pay and income. Work has become more and more insecure while Britain is now a leading low paid economy, with the proportion of the workforce on low wages almost doubling over the past 30 years. It now stands at 21 per cent, up from 12 per cent in the early 1980s, taking the United Kingdom to second place – behind the United States – in the global low-paid league table for rich nations. The poorest fifth in Britain are now 40 per cent poorer than the equivalent group in Germany, a third poorer than in France and a fifth poorer than in Denmark, for example.
This rise in low pay and insecurity has made it more difficult for families to build the reserves and resilience necessary to cope with harder times, making even those above the poverty threshold more vulnerable to slipping below it. The Breadline Britain research finds that a third of households cannot afford to put aside even a small sum for savings for a rainy day, with sharply rising proportions unable to cope, with emergencies. Levels of personal debt and arrears on household bills have also been rising. The numbers having to borrow just to get by also rose sharply, with, in particular, a growing dependence on help from the family.
Those forced to borrow are heavily concentrated among those who lack three or more necessities with virtually no one who has all the necessities borrowing from pawnbrokers, moneylenders or friends.
Simultaneously, the benefits system, meant to protect people in times of hardship, has become increasingly punitive. The Conservatives have seen clear political gains from presenting themselves as tough and Labour as soft on welfare, as the party that rewards idleness. Presenting the poor themselves as the problem comes with the political bonus that it reduces the responsibility of government, with its role confined to incentivising the poor to help themselves.
During the coalition years, the level of benefits for those of working age were cut, sanctions were intensified and conditions for receipt of benefits made more restrictive. The latter is part of a long-term trend with governments choosing to exercise greater and greater control over the lives of claimants – their approach to work, how many children they have, their lifestyles. The war on social security, justified – falsely – as necessary to tackle a bloated welfare budget (the share of national income spent on benefits in the UK is below the European average), have added greatly to the stigma, ill-health and discomfort of those dependent on benefits. It has also lowered the incomes of some of the most vulnerable in society, and forced growing numbers to turn to the hit and miss help – including food banks – provided by charity, primarily to prevent destitution.
Both major parties plan further cuts in welfare spending, although Labour will do so less deeply. Yet what matters for poverty reduction is the share of national income devoted to social spending. No advanced economy has achieved a low poverty rate with low levels of social support.
With an increasingly polarised labour market, rising housing costs and a continuing squeeze on benefits, poverty figures are set to keep on rising. Yet condemning almost a third – and rising proportion – of the population to poverty is not ordained. Rather it can be traced directly to the political choices taken by successive governments. It is perfectly possible to run an economy in which the cake is more evenly shared, in which the rich pay their fair share of taxes, in which the poor are not made the scapegoat for the manifold failures of economic and social policy.
Britain is a rich nation, historically and internationally. Over the past 30 years, the prevalent view has been not just that poverty is unrelated to what is happening at the top, but that allowing the rich to get richer would benefit everyone, including the poor, as their wealth “trickles down” to those on lower incomes. It is a view that has suited those at the top very well, but has been proved to be fundamentally wrong. Poverty is intimately linked – socially and economically – to what is happening across the income range, and especially to what has been happening at the very top of society. Indeed, in recent decades, a growing proportion of economic activity has involved the extraction of existing, rather than the creation of new, wealth, with a small financial and commercial elite exercising their corporate muscle to get rich at the expense of others, leading not just to a widening gap but a deepening divide in life chances as well.
Britain has created an economic model which is incapable of delivering a decent publicly-determined minimum standard of living to all its citizens. It is the model that is wrong, not the citizens.
Reversing the rising poverty tide requires fundamental change. It means tackling core inequalities, a more progressive tax system bearing more heavily on the rich and a war on exploding personal and corporate tax avoidance. It requires a radical shift in the political mindset, one that stops pinning the blame on the poor themselves, that accepts that poverty is driven by an accumulated reduction in opportunities, pay and life chances.
Achieving this requires much more than tinkering. Desirable as they are, modest rises in the minimum wage and in the top rate of income tax are not enough to prevent poverty continuing to rise. To turn the tide around means the spreading of power as a counter to big business – to town halls, consumers, the workforce and small businesses – and the dispersal of capital ownership more widely through encouraging alternative business models based around partnerships, co-operatives and social enterprise. Such a policy mix would also help boost the share of national income going to wages, narrow the huge pay gap between top and bottom and close the gender pay gap by raising women’s wages, all essential to tackle poverty at source.
Far from being a strength, the boosting of corporate muscle through a sustained decline in workforce bargaining power has been a fundamental economic and democratic weakness. Because of the “wage premium’ associated with collective bargaining, the erosion of labour’s role has played a big part in wage contraction, while encouraging British employers to move down a low pay and productivity road. The social security system would be much more effective and less costly if core inequalities could be reduced and poverty tackled at source, leaving less work for the benefit system to do.
Few of these measures are on the political agenda or even being debated in the run up to the election. The epoch-changing decision of the 1980s to take Britain down the market, union-busting, de-regulation road, with its disinvestment in public housing and rolling privatisation has weakened the productive base of the economy, spread social recession and plunged millions, unnecessarily, into poverty.
Although still very much intact, the post-1980s market model, with its bias to capital and upward transfer of wealth, is under intense scrutiny, with big question marks over its social and economic sustainability. A system which condemns close to 30 per cent of the population to live in deprivation carries clear social, political and economic risks. Depending on charity to pick up the pieces is neither effective nor fair and today’s gaping imbalance between “people and profits” built around poverty wages and huge corporate and private surpluses is unlikely to hold indefinitely. The pressure from below – a precondition for change – is dispersed but growing.
There is nothing inevitable about condemning such a large proportion of the population to a life with few opportunities and low incomes. Levels of deprivation and poverty are, ultimately, down to decisions on the way the economic cake is divided, and how the fruits of economic growth are shared. Other choices are possible.
Breadline Britain – the rise of mass poverty, by Stewart Lansley and Joanna Mack, is published by Oneworld (www. oneworld-publications.com)