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Poverty in the UK
For working-class people, the link between the
policies pursued by a series of governments, Tory and Labour, and rising
poverty and inequality has long been clear. Now two authoritative
reports, reviewed here by HANNAH SELL, starkly reveal the effects of 30
years of neo-liberal onslaught in Britain.
Poverty, wealth and place in Britain 1968 to 2005
Joseph Rowntree Foundation
The Policy Press, 2007, £15-95
Identity in Britain, a cradle-to-grave atlas
By Bethan Thomas and Daniel Dorling
The Policy Press (University of Bristol) £29-99
SINCE MARGARET THATCHER was elected in 1979 every
British prime minister has treated certain policies as absolute truths
which must be obeyed without question. Privatisation of public services,
cutting back the role of the welfare state, cutting back taxation and
regulation of big business and the elites of society: these
‘neo-liberal’ policies have become a kind of unbreakable mantra.
It was the 1945 Labour government, under mass
pressure from the working class, which established the modern welfare
state. It aimed to combat what were described as the five ‘giant evils’:
want, disease, ignorance, squalor and idleness. All three establishment
parties would argue that the 1945 model is now antiquated, and that a
‘new approach’ must be found. In fact, the ‘new approaches’ proposed
amount to a regression in the direction of the days before the welfare
state – with private business, charities and the church providing a
highly inadequate replacement for public services in the areas and in
the manner that they see fit to do so.
The results are graphically outlined in both of
these reports. They entirely refute the idea that neo-liberal policies
have improved the lives of the majority of the population. The Joseph
Rowntree report concludes that the ‘giant evils’ are not only still
present, but increasing. The statistics given in Identity in Britain
paint the same picture. Increased poverty combined with a vast and
growing gulf between the top and bottom of society is the image that
clearly emerges. Broadly, the Rowntree report demonstrates that while
‘want’ – poverty, the central ‘evil’ from which the others flow – fell
throughout the 1970s, it has been rising ever since, reaching a similar
level to 1970 by 1990. In 1983, 14% of households could not afford three
or more necessities compared to 21% in 1990 and over 24% in 1999. The
share of disposal income held by the poorest 10% has fallen by over a
third since 1979.
The crimes of Thatcherism
THE ROWNTREE REPORT also shows that it was in the
late 1970s when the previous steady decrease in inequality was sharply
reversed and started its climb to today’s chasm between rich and poor.
Both reports vividly portray, albeit in dry statistical language, the
brutal destruction that Thatcherism wreaked on British society, in
particular on the working class.
A minor aside in Identity in Britain reveals in one
dismal fact what Thatcherism meant. It points out that there are almost
a quarter of a million more women in their 30s than there are men. By
far the biggest imbalances are in the working-class areas where
Thatcherism destroyed manufacturing first and most brutally – Glasgow
and Merseyside have the biggest discrepancies. Deaths of young men are
far higher than for women in these areas, but they still account for a
fraction of the difference. Official estimates have assumed that these
men are ‘hiding’, and just ‘made up’ men to even out the figures!
Undoubtedly, some ‘disappeared’ in order to evade
paying the poll tax. However, Identity in Britain points out that cannot
account for the vast majority, who do not appear in any official
statistics. They are not registered with the NHS or with an employer.
Instead, it suggests that, as in the last two decades of the 19th
century when millions left to try and build a new life in the ‘New
World’, most of these young men - facing a future on the dole - slipped
away from these shores in the style of the television comedy, Auf
Wiedersehen Pet, to work as labourers in foreign countries. What many
Polish workers are doing in Britain today was done 15 years ago by a
quarter of a million young British men.
Thatcher’s policies were no aberration. In fact, the
turn to ‘neo-liberalism’ had been begun by the previous Labour
government. At root, her policies stemmed from capitalism’s economic
crisis and its need to restore profits by driving down the living
conditions of the working class. Britain, the world’s oldest and one of
the most decrepit capitalist powers, led the way in adopting
neo-liberalism, but the rest of the world followed. Britain is still
leading the way. It is second in the advanced capitalist world’s
inequality index, beaten only by the US. The ratio between the top 10%
and the bottom 10% in Britain is 13.5 to one, compared to 9.1 in France
and 6.9 in Germany.
And New Labour continues…
NEW LABOUR WAS elected because of an overwhelming
desire for something different to Thatcherism. It has distanced itself
from some of her most brutal statements, such as her denial of the
existence of society, but it nonetheless accepts its fundamental
precepts. This is as true of Gordon Brown as it was of Tony Blair. Brown
invited Thatcher to tea at Downing Street in order to demonstrate to
Tory voters the continuity between Thatcher, Blair and now himself. For
millions of working-class people, however, who still have Thatcher’s
crimes seared into their memories, it was like a kick in the teeth.
In reality, New Labour has gone further than
Thatcher ever dared to in privatising public services, and has not
reversed the Tories’ cuts in public spending. When New Labour was
elected in 1997 total public spending had fallen to 37.7% of gross
domestic product (GDP), its lowest level since the 1960s. New Labour
kept it at the same level for its first two years in power. Since then
it has increased marginally to around 41%, although this is extremely
low when compared with other major European countries such as Germany,
and particularly France, where it is still 53%.
Brown consciously increased public spending in the
wake of the 2001 dotcom crash in order to try and prevent recession.
However, this minor Keynesian measure did not represent a change in New
Labour’s approach. On the contrary, it was linked to a major
acceleration of privatisation, which meant that many workers did not
notice any improvement in public services. In addition, the funding for
increased public spending has not been done on the basis of increasing
corporation tax, or taxes on the wealthy – they have been slashed.
Instead, increased borrowing has funded the marginal increase in public
expenditure. New Labour is therefore now trying to balance the books by
once again tightening the screws on public spending, particularly on
public-sector pay.
Under New Labour the increase in the number of the
very poorest, which the Rowntree report describes as ‘core poor’, has
reversed, albeit marginally from 14% to 11.5% of society. This is
probably in part due to giving away ‘a few crumbs’, minor reforms such
as the minimum wage and the working families tax credit. However, the
overwhelming reason is the continued growth in the economy – at least,
up until now. This has taken place on an extremely unhealthy and uneven
basis.
Nonetheless, the increase in numbers in work – on a
more and more insecure and low-paid basis – has had an effect on the
living standards of some of the very poorest. When a recession does take
place, as is inevitable at a certain stage, it will have a devastating
effect precisely because the levels of poverty have remained amazingly
high given the 15 years of uninterrupted growth of which Brown is so
fond of boasting.
While the numbers of core poor have shrunk, the
overall numbers in poverty have grown. The number of ‘breadline poor’,
that is, those who are financially "excluded from participating in the
norms of society", has increased markedly from 21% in 1990 to 27% in
2000. The Rowntree report could not give full figures but indicates that
the level may well have increased, and certainly has not decreased,
since 2000. It points out that the proportion of the working-age
population claiming incapacity benefit increased in most areas of
Britain between 2000 and 2005, and connects this to the destruction of
manufacturing industry. Even during this period of economic growth the
real unemployment rate is far higher than the government admits. If all
those who are claiming incapacity benefit and want to work were included
in the unemployment statistics this alone would increase the official
unemployment rate by around 3% to over 8%.
Statistics from other sources back up the Rowntree
report’s suggestion that poverty has continued to increase throughout
New Labour’s time in office. The total number of working-age adults who
are defined as being in relative poverty because they earn less than 60%
of the median income has actually marginally increased to 7.1 million,
from 6.8 million ten years ago (Institute of Fiscal Studies, 2007).
There are now half a million 18- to 24-year-olds out of work, 70,000
more than in 1998 (Office for National Statistics).
Relative poverty
DEFENDERS OF NEO-LIBERALISM argue that growing
inequality and ‘relative poverty’ are not significant because those at
the bottom of society are still better off than their parents and
grandparents were. The Rowntree report does point out that what people
consider a ‘necessity’ changes over time: "For example, when Seebohm
Rowntree wrote in 1901 that the poor should be able to afford a stamp to
post a letter once a week there were some who thought this frivolous.
None would do so today". No-one today could seriously argue that someone
is not poor because they can afford to post two letters a week.
Nonetheless, there are those who argue that being
unable to afford technology that many take for granted – iPods, access
to the internet and the like – does not make you poor. This is not the
case. Needs are conditioned by the society people live in. In the modern
world, lack of access to a phone or the internet clearly excludes people
from the ‘norms of society’, making many practical tasks, such as
applying for jobs, extremely difficult.
One of the many interesting facts that the Rowntree
report reveals is that it is not ‘modern technology’ which people have
to do without in the main. Indeed, there are many who can manage the
one-off purchase of a TV, DVD player, iPod and so on, but who cannot
afford the daily necessities of life such as a decent home, regularly
eating meat or fish, heating their homes or adequately carpeting them.
Another Thatcherite myth which the report blows
apart is that the route out of poverty is home ownership. On the
contrary, one fifth of ‘income poor’ pensioners had housing equity in
excess of £100,000. Identity in Britain points out that a century ago
nine out of ten families rented property but that now mortgaging
predominates in 94% of neighbourhoods. The report makes the point that a
house is by far the biggest asset that the working and middle classes
possess. In the US, for example, only 6% of the wealth of the richest 1%
is in housing assets. For the bottom 80% it is almost two thirds. Most
see buying as the only means to obtain secure accommodation. However,
many are stretched miles beyond their means in order to get a toehold on
the property ladder. First-time buyers have to spend an average of 20%
of their income just to cover the interest payments on their mortgage,
never mind paying off the capital.
It is not uncommon for families to have to do
without basic necessities, including adequate food, just to try and
secure that most basic necessity of all, a roof over their heads.
However, as the current crisis in the US housing market shows, where one
million have so far lost their homes, a mortgage is no security at all
if you lose your job, if interest rates go up, or the value of your
house falls dramatically. Again what is striking about both reports is
that they show how far people are stretched beyond their means now. They
raise a terrifying prospect of how bad things could become when a
recession takes place. The increase in poverty has been partially
disguised by the huge expansion of credit, with British consumers’
personal debts now exceeding the country’s GDP. However, this huge
indebtedness will make the effects of a recession far more painful.
The only positive conclusion that the Rowntree
report points to is the increase in the number of young people attending
university. In 1968, when the first survey was done, only 200,000
students attended university in England and Wales. By 2000, it was over
two million.
Identity in Britain, however, breaks down how class
difference still affects whether young people attend university and, if
they do, which ones they attend. It points out that 37% of 16- to
24-year-olds work full time, 26% study and do not work, 20% both study
and work, and 6% are unemployed. In inner-city working-class areas the
numbers attending universities are still very low. For example, only 6%
of 18-year-olds go to university in Hunslet in Leeds. By contrast, over
70% of 18-year-olds in Kensington, London, attend university.
Even more interesting however, are the differences
in which university students attend. Only in select parts of West
London, the Home Counties, and the equivalent areas of Scotland, do a
majority of university attendees go to ‘elite’ institutions. By
contrast, the majority in the cities of the West Midlands, the North
West, the North East, go to the ‘least favoured’ and ‘under average’
universities, which are more like education factories than universities
in the traditional sense. Identity in Britain makes the point that the
basis for the future major social divide could be "not if you go, but
where you go". On average, students currently finish university £22,000
in debt. As the Rowntree report explains, they face a very uncertain
future with an enormous millstone around their necks.
Growing inequality
THE ROWNTREE REPORT states that from the late 1970s
to the mid-1990s income inequality grew at a faster rate in Britain than
in any other advanced capitalist country including the US, and goes on
to say: "Britain is moving back to levels of wealth inequality last
experienced more than 30 years ago". This process has not reversed under
New Labour. Income inequality today is actually higher than it was in
1997 after 18 years of Tory government.
The increase in inequality does not mean that the
number of wealthy has increased. It has, in fact, fallen. But a
decreasing number of wealthy people have unimaginably vast amounts of
wealth. The share of total personal wealth of the top 1% increased from
17% in 1988 to 23% in 2002. This elite lives overwhelmingly in London
and the belt around it. The biggest increase in wealth is among a tiny
handful of ‘super-rich’, the top 1% of the top 1%. Meanwhile, the share
of wealth held by the bottom 50% has fallen from 10% in 1986 to 6% in
2002.
Early 21st century capitalism is characterised by
extreme short-sightedness and unbelievable arrogance. The collapse of
Stalinism and the weakening of the workers’ movement internationally
have left the capitalists imagining that they are truly ‘masters of the
universe’, free to pursue their own short-term profits without fearing
the consequences. More thinking strategists of capital have tried to
warn that they are bound to face a backlash from this orgy of
profiteering. At the Davos summit in January of this year, economist
Nouriel Roubini put it bluntly: "We have to do something or the backlash
is going to be very, very severe". Stephen Roach, chief economist at
Morgan Stanley, added that there were signs that inequality was leading
to a shift left: "Look at the shares of national income in the major
economies of the developed world. The share going to labour is at
historic lows; the share going to capital is at historic highs. The
pendulum is moving left towards politicians more in favour of pro-labour
economic policies. There is potential for a shift in the relationship
between labour and capital".
The very nature of capitalism, a blind, unplanned
system, means that the world’s capitalist classes are incapable of
acting on the warnings given by Roach and co. The Rowntree report
estimates that for the government to reach its target of ending child
poverty by 2020 it would have to add around £28 billion to planned state
expenditure over that time. £28 billion is only £4 billion more than
city financiers received in bonuses last year alone. However, New
Labour, a government wedded to big business, would react with horror at
the very thought of demanding even a fraction the financiers’ profits.
Modern capitalism is not prepared to accept a
welfare state in the way it was forced to in the exceptional period
following the second world war. Capitalism has, in reality, returned to
‘business as usual’ and is determined to reverse what was given in the
past. Only when faced with mass pressure from the working class will the
capitalists be prepared to make concessions, particularly in periods of
economic crisis. Even then, such concessions will not be of a permanent
character. As long as capitalism remains, so too will the drive to
undermine workers’ living conditions.
In Britain, perhaps more than other countries, the
defeats of the 1980s, combined with the ideological effects of the
collapse of Stalinism, have left the working class lacking in confidence
of its ability to struggle effectively. Unfortunately, the majority of
the national trade union leaders, tied to the coat tails of New Labour,
do all they can to encourage that lack of confidence and block effective
struggle. As a result, most of the capitalist class are only dimly aware
of the volcano upon which they are perched. They would be wise to read
these reports and ponder their inevitable political consequences.
Shrinking middle ground
SOCIETY HAS SEEN a marked polarisation between the
top and bottom. The number of households that are neither poor nor
wealthy declined from 66% in 1980 to 56% in 1990 to 50% in 2000. The
three major capitalist parties all rely for their support on what they
describe as ‘Middle England’. The Middle English have always been a
mythical people designed to act as a cover for the fact that the major
parties act not for the majority but in the interests of a tiny elite.
In reality, the vast majority of those who get described as Middle
England – better-off workers and the middle class in the South East –
stand far to the left of all three main parties, overwhelmingly opposing
privatisation and supporting an expansion of public services. This would
not have been the case 20 years ago, but is the result of experiencing
what privatisation and neo-liberalism mean. The severe erosion of the
welfare state means that many ‘comfortable’ middle-class families have
seen their living standards stagnate.
In addition, one effect of 21st century capitalism
is that Middle England is quite literally shrinking. This is at its most
extreme in London and the South East, ironically, the very areas in
which everyone assumes that Middle England predominates. As the Rowntree
report states, regarding those who are neither poor nor rich: "Over time
it has become clear that there is less and less room in the south for
them; they have either moved elsewhere, or become wealthy or poor".
While a few may have become wealthy, given the fall
in the number of wealthy and increase in the number of poor, it is clear
that the majority have become poor or, in some cases, have been forced
to move in order to try and increase their standard of living.
While the South contains extremes of wealth and
poverty, that does not mean that they are living in the same
communities. Another clear trend is the increased segregation between
classes. The Rowntree report says: "The stratosphere of the boardrooms,
where the likes of Lord Browne of BP now earn £6.5 million a year, has
moved as far from the average citizen as the addict in a blanket under
Waterloo Bridge. They no longer inhabit the same planet as the rest of
us, hermetically sealed in smoke-windowed limo, private jet, private
island, private everything".
At the same time, the report describes "the
clustering of poverty and low wealth in urban areas". In 1980, 5% of
people lived in areas where 40% or more of the population was breadline
poor. By 2000 it was 17.5%.
Victorian levels of inequality
AS TRISTRAM HUNT pointed out in The Guardian (18
July 2007), we are "heading towards Victorian levels of inequality".
Hunt accurately drew a comparison with the situation Friedrich Engels
described in his 1845 classic, The Condition of the Working Class in
England. Hunt quotes Engels: "The members of this money aristocracy want
to take the shortest route through the middle of all the labouring
districts to their places of business, without every seeing that they
are in the midst of the grimy misery that lurks to the right and the
left". Again quoting Engels, Hunt says that the city was designed "to
conceal from the eyes of the wealthy" the human cost of their riches,
"the misery and grime which form the complement of their wealth".
As Hunt goes on to point out, things are not so
different today: "Just as the Victorians spoke of ‘outcast London’ or
the ‘dark continent’ of the East End, so today’s extremities of need and
greed exist autonomously side by side. Hidden from the sterile corporate
village of Canary Wharf – with its speedy tube links and cocooned rail
routes – are the crumbling estates of Bethnal Green. Around the corner
from the millionaire terraces of Clapham Common is the sprawl of
Lambeth. Driven by booming house prices and city excess, the geography
of the capital is being steadily fractured. Where once professionals,
students, working-class communities and migrants mixed – in places like
Notting Hill, Camden or Kilburn – modern wealth extremities are closing
neighbourhoods off. The gated community and dark-windowed 4x4 signify
the new urban contours".
A voice for the working class
THIS DEEPLY-DIVIDED society does not exist as far as
the debating chambers of Westminster are concerned. Class for the
establishment parties is an antiquated irrelevance. Yet beneath their
feet the system that they defend is creating a vast chasm between the
working class, on the one side, and the capitalists and financiers on
the other.
The working class is voiceless, disenfranchised. Yet
the potential, and the need, for a mass party that stands in their
interests is overwhelming. In terms of trade union militancy we are
already seeing the beginnings of an upsurge – of workers finding their
voice. When 2,100 maintenance workers on the underground brought London
to a halt in order to defend their pensions and conditions the City
screamed blue murder. The establishment politicians all joined in,
including Ken Livingstone mayor of London, pouring vitriol on the head
of Bob Crow, general secretary of the RMT union.
Millions of workers, however, watched and cheered on
the Metronet workers, just as they had when the prison officers walked
out the week before. A mass political voice for the working class –
organising and supporting workers in struggle, arguing for a huge
expansion of public services and improvements in workers’ pay and
conditions, linked to the need for the socialist transformation of
society – could very quickly turn the mainly silent, sullen anger of
today, into an active fight against the capitalists’ onslaught on our
living standards.
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