Destructive austerity: Poverty and social hardship in the UK

October 26th, 2015

Awake Goy

By Graham Peebles

With Gross Domestic Product (GDP) at USD 2.94 trillion (2014), the UK has the fifth largest economy in the world after the United States, China, Japan and Germany. It also suffers from acute income and wealth inequality and, according to Oxfam, which knows all about poverty, “one in five [or 20 per cent] of the population live below our official poverty line, meaning that they experience life as a daily struggle”,

The Conservative government repeatedly proclaims that the bitter medicine of economic austerity, so badly needed to “balance the nation’s wobbly books”, is the “right thing to do” – yes, it’s painful, but “we’re all in this together”. Our economic plan is working, unemployment and inflation are low, and the economy is growing, faster in fact than any other industrialised nation, it says.

The poor get poorer

Given all this good news, one would expect the people of Britain to be doing rather well. This, however, is far from the case. After extensive investigation, the independent research project, Poverty and Social Exclusion in the United Kingdom (PSE), concluded that poverty in Britain is worse now “than it has been for the past 30 years”. Indeed, the number of people living in poverty “has doubled since 1983”.

The findings of PSE contradict the upbeat rhetoric of Prime Minister David Cameron and his colleagues but echo those of leading charities, including Oxfam and the children’s charity Barnardo’s, which states that: “there are currently 3.7 million children living in poverty in the UK”. That’s over a quarter of all children.

Poverty is a slippery term to define, and severe poverty even more so. Governments around the world use various criteria to determine whether someone is poor or not, criteria which more often than not are shaped to serve the interests of the ruling party.

The UK government employs a simplistic, rather crude method: if a family is earning “60 per cent of median income [currently GBP 26,000 (USD 40,000)] they are in poverty”. This unimaginative, narrow approach, PSE explains, is “an arbitrary definition and has been much criticised”.

PSE defines poverty more broadly, based on the “consensual method”. This includes “multiple deprivation and income”, minimum “acceptable living standards” as well as social exclusion, and is to the objective observer a far more intelligent and just system.

The detailed PSE report is full of depressing details: chief among these are the findings that “a third of people in the UK suffer significant difficulties and about a quarter have an unacceptably low standard of living”; “4 million children and adults are not properly fed by today’s standards; around 1.5 million children live in households that cannot afford to heat their home; and up to 2.5 million children live in homes that are damp”.

The impact of poverty on children is acute and long lasting, perpetuating social injustice and inequality – a major problem in the UK.

Barnado’s studied the education and health effects of child poverty. It found that poor children do worse at school – a mere 5 per cent of the poorest achieve “a good level of development at the end of their reception year [aged 5 to 6 years]”, compared to almost 70 per cent of other pupils. The poorest teenagers pass fewer exams – if any, and consequently cannot go to university, making it extremely unlikely they will get a good, fulfilling and well paid job, one that allows them to move out of the prison of poverty.

Health-wise it’s an even bleaker picture: infant mortality is 10 per cent higher for children in the lowest social groups than the average, and three-year-olds “living in households with incomes below about GPB 10,000 are 2.5 times more likely to suffer chronic illness than children from financially better off families”. These shocking facts reveal some of the consequences of the government’s ideological economic approach.

It is a neo-liberal strategy, set firmly in motion in the 1980s under Prime-minister Margaret Thatcher and characterised, Oxfam explains, by “financial liberalisation, the erosion of social security and deregulation of the labour market”.

These ill-judged reforms were continued by “New Labour” under Tony Blair’s premiership and “led to a dramatic increase in the number of people living in poverty, which almost doubled, from 7.3 million people in 1979 to 13.5 million in 2008”. They fuelled the highest levels of income and wealth inequality of any industrialised country except the USA. It is estimated, the Guardian reports, that the richest 1 per cent in the country “have [now] accumulated as much wealth as the poorest 55 per cent of the population put together” and, under the government’s economic plan, such divisions will only increase.

Inequality is the inevitable consequence of the injustices inherent in neo-liberalism. Thus, the stronger an economy is wedded to neo-liberal principles, the greater the inequality. The idea of “trickle down” wealth is a failed fantasy promulgated by the rich to keep the poor impoverished. Wealth, opportunity and influence flow in one direction only – up.

Inequality fuels all manner of social ills, from teenage pregnancies to homicide, depression and distrust, drug and alcohol dependency, obesity and illiteracy. With the chief executives of major corporations earning up to 100 times the average UK wage (GBP 12, USD 18 per hour), it’s a miracle there aren’t violent mass protests taking place all the time. But then most people are far too exhausted from excessive working hours and the stress of economic hardship to have the strength for righteous rebellion and, of course, TV, poor diet, alcohol and associated distractions ensure that social conformity, material discontent and emotional passivity are pretty much maintained.

The fact that a chief executive earns 100 times more than anyone is totally immoral, unjust and unnecessary. Income within organisations and companies, large and small, should be shared much more equitably among the people who work there. Reducing high earners’ wages and redistributing funds among lower earners would be a positive step in this direction. To a degree, this takes place in some Scandinavian countries, where there are greater levels of equality, public services are excellent and the social problems flowing from inequality are greatly reduced.

Suffering by ideological design

After the financial calamity of 2008-09 a number of countries across Europe (e.g. Spain, Portugal and Greece – all now in recession) introduced austerity policies, and since 2010 austerity has been the UK government’s strategy for tackling the impact of the economic crash. The stated aim of the Conservatives’ programme is “to reduce the deficit… give confidence to the markets and therefore deliver growth to the economy”.

Their one sided methodology involves extreme public sector cutbacks, including scrapping over 1 million jobs by 2018 and freezing wages; making severe reductions in welfare; and introducing nominal tax increases (“for every GBP 100 of deficit reduction, GBP 85 comes through spending cuts, while GBP 15 is achieved through increased taxes”, Oxfam states”). As administered by the Conservatives, austerity amounts to a war on the poor, and is the principal cause of the dramatic increase in poverty, including child poverty and homelessness.

The government proposes to cut GBP 12 billion (US USD 18.4 billion) from welfare spending by 2017/18, and has already made a devastating start. Tax credits have been slashed, all benefits will be frozen for four years, despite inflation, and the total amount of welfare someone can claim has been reduced. The most vulnerable members of society are taking the full hit of their aggressive, regressive policies, with women and children being affected most acutely – directly and indirectly. Despite having a statutory duty to end poverty by 2020, according to Oxfam an additional “one million children will be pushed into poverty as a result” of there socially divisive, unjust policies, and an extra “1.5 million working-age adults are expected to fall into poverty”.

We are constantly told that austerity is the uncomfortable route to sustained economic growth and the promised land of zero deficit. This is an ideological paradise which the Conservatives claim will more than make up for the hardships, destruction of public services and the personal pain caused along the way.

This is the kind of social suffering which the prime minister and his millionaire cabinet chums know nothing about, and it is set to get worse. Meanwhile, the mythical land of zero deficit is no nearer: in fact the UK budget deficit is estimated to be 4.9 per cent of GDP, or GBP 88 billion (USD 134 billion) this year – an all time high – and government debt, at around GBP 1.5 trillion (USD 2.4 trillion), is almost double what it was in 2010, when the Conservative-led coalition came to power.

Austerity, according to Nobel Prize-Winner Joseph Stieglitz, “has failed”, and “is contributing to inequality that will make economic weakness longer-lived, and needlessly contributes to the suffering of the jobless and the poor for many years”. He goes on to say that “there is no instance of a large economy getting to growth through austerity”. If policies based on austerity are allowed to continue in Britain and elsewhere across Europe, Oxfam warns, inequality will rise, the continent’s hard fought social gains will be undermined and a generation will be consigned to a life of hopeless poverty.

The need for real alternatives

The devotees of neo-liberalism are often heard chanting that there is no alternative to their peculiar economic belief system. It is a model that has served them well, and to which, perhaps understandably, they are deeply attached. Austerity, it appears, is being used to increase the concentration of wealth and further disempower the majority. A well rehearsed party rhetoric is constantly churned out: “it’s either increased debt or austerity”, they sing, and we must, “live within our means” – easy when you’re means run into the millions, difficult when your benefit is cut and you can’t afford to buy any food, or heat your home.

If we are to create a just society throughout the world, we need a totally new approach to the way the economy is managed. What we need is an approach that transcends ideologies and places the principle of sharing at its heart, an approach which meets the needs and rights of the many – not just the basic needs of food and shelter, but the right to grow as a human being.

As Oxfam states, “the economic, ethical and financial argument for change could not be stronger”. It is not simply policy change that is needed – urgent as this is – but systemic change that allows a shift away from the divisive materialistic values that encourage selfishness and feed desire, to a just new way that promotes more humane values, unites people and engenders trust.