Poverty, inequality and unemployment

FRFI 172 April / May 2003

Last year the Mayor of London Ken Livingstone commissioned a special report on poverty in the city. The results, which came out in November show that while inner London has the highest per capita income in the European Union together with the most millionaires and the most expensive properties, the flipside of this typical capitalist coin is that inequalities are so great that London is also the child poverty capital of Britain.

Child poverty is defined as children in households living on less than 50% of the national mean average income before housing costs. In 2001/2002 the threshold weekly income was £280.50 for a couple with two children and £205.50 for a lone parent with two children; for a single person the poverty line was £117 and for a couple with no children it was £192.

The number of children living in poverty in inner London was the highest of any of Britain’s sub-regions at 49% or 600,000. It was also the worst area for the number of adults of working age in poverty at 30% and for pensioners living in poverty at 36%. Poverty also has a significant racial component as nationally 29% of white children, 43% of black Caribbean and 71% of Bangladeshi/
Pakistani children lived in poverty. After London the North West and Merseyside was the region with the second highest number of children in poverty at 35%, the national average was 32%, while the relatively prosperous south east outside London recorded 26%. Alongside poverty the diseases of poverty that had virtually disappeared in the post-war boom are returning. Tuberculosis, which is associated with poverty, has increased rapidly and the number of notified cases has reached three to eight times that of other areas.

Clearly part of the reason for the extremely high level of poverty in inner London is the high cost of housing which has been driven up by market speculation as homes become another commodity for those with money to buy and sell with the aim of extracting a share of the profit without creating any value themselves. Extortionate housing costs take up a large part of income and so increase the number of people living on less than 50% of the national average disposable income.

Another important factor is unemployment. Inner London now has the highest unemployment rate of any sub-region of Britain. While employment by no means guarantees a lack of poverty as 40% of poor children live in households where at least one person is working, the difference between the child poverty rates in London and the national average reflects the high percentage of children in the capital in workless households.

In 2002 there were 3.75 million people who wanted to be in paid work but were not. However, government unemployment statistics are based on the number of people claiming benefits and the figure for the number of people claiming Jobseeker’s Allowance was only 928,300 in December 2002. The Jobseeker’s Allowance is a particularly vicious scheme as it forces the unemployed to accept low paid jobs or have their miserable benefits cut off and so fulfills the task of on the one hand reducing social security benefits and on the other supplying a well regulated reserve army of labour to feed the economy’s demand for low paid and casualised workers.

FRFI has argued that Labour’s election success depends on its ability to hold together a coalition of the middle class whose votes decide the outcome of elections, the upper, better-off layer of the working class together with finance and banking capital. The government is only interested in the poor as providers of cheap and flexible labour to stoke up profits when employed, as a nuisance and drain on the profits and taxes of its supporters when unemployed and as an enemy when they inevitably resist.

Unemployment and poverty are bound to increase as the economy deteriorates, as it is always the lowest paid who are first to lose their jobs as the economy stagnates. It is clear from what happened in Bradford and other towns in northern England in 2001, as well as from other past examples of uprisings against poverty and racism in the inner cities, that there will be resistance.

Ed Scrivens


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