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The Weekly paper of the New Communist Party of Britain


Shock Discoveries: The Poor Are Getting Poorer

by New Worker correspondent

MONDAY was a very busy day for issuing reports which demonstrated that there is a great deal of poverty in Britain and that something should be done about it. First off the mark was the trendy New Economics Foundation (NEF), who helpfully informed us that the rich are getting richer and the poor are getting poorer.

The NEF is not a particularly Bolshevik inclined think-tank, but one deemed suitable for funding by the National Lottery and the liberal Joseph Rowntree Foundation. Equally telling, it is chaired by Lord Kerslake who was briefly Head of the Home Civil Service between 2012–2014.

Their announcement of this important discovery began with the observation that: “Half of UK families are £110 worse off a year since general election, while richest five per cent are better off by £3,300.” This means that 300,000 more families (not people) are in poverty now since December 2019, a state which it defines as incomes below 60 per cent of the UK median before housing costs.

It also notes growing regional inequalities, with the very areas that Boris Johnson’s “levelling-up” agenda claims to help being amongst the worse off. It notes that in the “red wall” area of the North East incomes grew by less than £20 or 0.1 per cent a year, in the north-west and Merseyside by £80 or 0.2 per cent, whilst Yorkshire and the Humber gained £90 or 0.3 percent, this largess was nothing compared with London whose incomes rose by more than 1.3 per cent or £600.

Needless to say, these regional variations are comparatively insignificant. Those who have less lose the most whilst those with the most gain the most.

The report noted that families with the top 50 per cent of disposable incomes across the country saw a rise in their living standards, although fastest in London and the south-east. In contrast, families in the poorest half seen incomes fall everywhere except for London and eastern England. Of course this does not mean that the wealth gained by profiteering suppliers of PPE benefits the working class in London. It is an interesting feature of the NEF that it cannot bring itself to use the words “working class”, which would seem to have them choking on their organic muesli.

Unemployed families were particularly badly hit, with average losses of more than £200 per year in Yorkshire and the Humber, the north-west and Merseyside. Single-parent families were worst affected, especially in Humber, the north-west and Merseyside where incomes fell by around 15 times as much as in London.

blamed

The NEF blamed this this increase in inequality on the government’s pandemic response, which has more left poorer families exposed to global price rises and inflation. An earlier lockdown would have prevented many deaths and would done away with the need for others say NEF, noting that: “Despite faster overall growth in 2021, by the end of summer the UK remained one of only two G7 nations where economic activity remained more than 2 per cent behind pre-pandemic levels.”

It also blames the Government’s measures for failing the poor. Whilst furlough protected millions of jobs it was next to useless for those in precarious jobs. The temporary increase in the new Universal Credit was far less than top-ups in other in other countries, whilst legacy benefits such as job seeker’s allowance (JSA) and employment support allowance (ESA) in the UK saw no increase at all.

It notes that before the pandemic the UK’s social security system offered one the lowest percentage of benefits compared with wages amongst 38 advanced economies. It also notes that in addition to a low baseline level of social security support, the process for ‘uprating’ them in response to inflation is very slow because benefits for the forthcoming year are fixed in April based on the previous September’s inflation rate. This time round present benefits were adjusted on the basis for September 2020’s relatively low 0.5 per cent inflation rate, compared with the 4.2 rate last October. As this inflation is largely due to fuel and energy, which are essentials, it hits people on low incomes hardest.

Alfie Stirling, the NEF’s chief economist, said: “In the long run, any agenda to tackle these issues needs to grasp the fundamental drivers of regional inequalities for places, people, and industry. But in the short term, more should be done to help families through the social security system. NEF’s proposal for a Living Income would ensure an income floor that reflects the true cost of living for families.”

fallen

At the same time Dominic Caddick, an assistant researcher for NEF, said: “Far from ‘levelling up’, on this prime minister’s watch the families and places that were already poorest have fallen even further behind the rest of the country.

“This would be an indictment on any government, let alone one where the promise to ‘level up’ sits at the heart of its political and policy agenda”.

He added that: “This analysis exposes the vulnerability of the UK’s current safety net in responding to real world change.”

dodgy business

The NEF also noted that the pandemic, whilst being particularly good for dodgy businessmen, for better-off workers and those in stable employment, which used to be the norm, have survived but not thrived. That may change in future as there is no sign of another round of furlough scheme after tighter COVID‑19 rules have been announced.

The NEF made the vague suggestion that there is a need to “diversify company ownership models and distributing the spread of wealth, including via a more progressive tax system”, and even daringly mentions the fact that: “With windfall gains for some of the richest families over the past two years, it’s also clear who can and should be helping to pay for such reform.”

Curiously neither of these two spokespersons nor the Foundation said anything about the urgency of improving trade union membership and their members taking industrial action in order to fight for higher wages – but that might frighten senior civil servants past and present who naturally want the workers to be grateful for what crumbs the philanthropic great and the good say are acceptable.