Thu, Dec 23, 2010 - Page 9 News List

Britain’s fiscal squeeze set to squash the poor

For all its talk of tackling the causes of poverty, the British government threatens to leave more children and their working parents slipping further into deprivation

By Larry Elliott  /  The Guardian, LONDON

In many other countries it would be a recipe for civil unrest, perhaps even revolution. Britain, though, is a placid place and it takes quite a lot to get the country’s dander up. Sure, there have been protests from students recently, but the latest forecasts of expected trends in poverty were greeted with a resigned shrug of the shoulders.

Make no mistake, the findings from the Institute for Fiscal Studies (IFS) make depressing reading. Child poverty? Going up over the next three years. Poverty among working-age adults with children? Going up. Poverty for working adults without children? Going up also.

And these — lest you get the wrong end of the stick — are not increases in relative poverty. They are increases in absolute poverty: The number of people living on less than 60 percent of the national income adjusted for inflation. And they are not nugatory increases either: By 2013 to 2014 an additional 900,000 people will have slipped below the breadline.

There is a stock response to findings of this sort. The first line of defense is to say that there is something wrong with the methodology — this has indeed been the default setting for British Prime Minister David Cameron and Deputy Prime Minister Nick Clegg. Funnily enough, they found little to complain about when the IFS was using the same approach to question the Labour party’s record on poverty.

A second line of defense is to say that even if the figures are right, an income of 60 percent of the national median is not real poverty in the sense that it is for someone living on less than US$2 a day in sub-Saharan Africa. This, it has to be said, tends to be trotted out by those with little experience of rubbing along on benefits or the minimum wage topped up with tax credits.

Finally, it is argued that the UK needs a complete rethink of its approach towards poverty because the approach of the governments of former British prime ministers Tony Blair and Gordon Brown between 1997 and this year failed by concentrating on state handouts rather than tackling the root causes of the problem: joblessness and dysfunctional families.

This is a more serious critique, though it ignores a few inconvenient truths. The first is that Labour did try to get the poor into work: Employment reached record levels of more than 30 million during the boom years. The second is that poverty did come down, if not by nearly as much as Blair and Brown hoped.

If the IFS is right — and, frankly, its record of sticking it to governments on both left and right gives it credibility — the encouraging progress made by Labour in its last couple of years in office is now about to go into reverse. After 2014, poverty will need to fall by 1.5 percentage points each year until 2020 to 2021 to meet the legally binding goals in the Child Poverty Act. The IFS notes drily that this has not been accomplished in any period since comparable records began in 1961.

Tackling poverty is tough, but it has been done before. The chronicles of Britain between the wars show that deprivation was deep and widespread, prompting the social reformer William Beveridge to identify the giants barring the way to progress: want, disease, ignorance, squalor and idleness.

The subsequent sharp fall in poverty after World War II was the result of five interlocking policies. Expansionary macro-economic policies and a commitment to full employment meant there was plenty of work. Strong trade unions and a relatively protected economy meant that real wages rose in line with productivity, allowing workers to enjoy rising living standards. High levels of growth allowed governments to increase public spending on the National Health Service, schools and housing; an investment in the so-called social wage that particularly helped those on lower incomes. Fiscal policy redistributed higher taxes on the rich to the poor. These four distinct policies combined to create greater social mobility: Working families could see that they were better off than their parents and had higher aspirations for their children.

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