On 14 June Coalition Secretary for Work and Pensions Iain Duncan Smith issued a stern warning to the poor: get a job. This millionaire minister ignores the fact that more than 3.6 million children live in poverty in households where at least one adult is working and that on average there are 23 applicants for every job vacancy. This is the reality of poverty and inequality in Britain today.
Redefining poverty
The key political weapon for masking poverty is simply to redefine it. At present, households are defined as in poverty if their post-tax income is less than 60% of the median income. The Coalition plans, however, to create a new definition of poverty which moves away from concrete income-related measurements towards abstractions about ‘welfare dependency’; worklessness, drug addiction, educational failure, debt and family breakdown. These will now be classified as sources of poverty, rather than symptoms. This semantic sleight of hand provides the ruling class with its favourite ideological justification – that poverty is the fault of the poor, and that much less effort (and money) is needed to deal with it.
Poverty by any other name … the reality
Yet no amount of ideological whitewashing can cover up the facts. By 2010/11, the proportion of people living in poverty was 21%, or 13.1 million people.* Worst-hit are single adults with children, 41% of whom live in poverty, and people who live in households where one or more person is unemployed, of whom 72% live in poverty.
In March 2010 the Child Poverty Act imposed a legal requirement to eradicate child poverty by 2020. Between 2008/09 and 2010/11, child poverty in Britain (after hou0sing costs) was 27%, with figures as high as 37% in London and 35% in the West Midlands. An October 2011 report by the Institute for Fiscal Studies (IFS) predicts relative and absolute child poverty rates will be 24% and 23% respectively (before housing costs) by 2021 – the target was 10% and 5%. Since then the Coalition has scrapped its commitment to increase child credits above the rate of inflation in 2012 and 2013 and the IFS now suggests that a further 100,000 children will fall below the relative poverty line.
Inequality
In 2010/11, weekly real income for the poorest 20% of people in Britain was £150; for the richest 20% it was £764. This figure masks the true extent of the polarisation of wealth; for the poorest 10% income was £96, whereas for the richest 10% it was £990 – more than 10 times as much. The richest 20% had a 44% share of the national income in 2010/11, considerably more than the share of the bottom 60% combined.
Racism, sexism and other forms of discrimination continue to severely compound income inequality. Whereas 38% of white people fall into the poorest 40%, the figures for black and Asian people are substantially larger, at 61% and 62% respectively. Disabled people disproportionately occupy the poorest incomes, with 47% of disabled people in the poorest 40%, against 39% of non-disabled people. With cuts to social security set to disproportionately affect these groups, this situation will only get worse.
Labour’s legacy
The increase in poverty and inequality in Britain is not the fruit of Coalition policy alone. Under the last Labour government the number of people living in poverty was 13.1 million by 2008/9, including 30% of children. The numbers of people in the deepest poverty (less than 40% of median income) grew substantially from 1997, reaching 5.8 million by 2008/09, the highest then on record. In 2008/09, real income for the poorest 10% (decile) in Britain was £84 per week – the same as in 1997/98. The next two poorest deciles saw their incomes increase by £29 and £53 per week respectively, far below the average. By contrast, real income for the richest 10% in 2008/09 was £960 per week – more than 11 times that of the poorest 10% – with uninterrupted growth since 1997. While the share in total income of the bottom 20% fell to 7.1% from 1997/98-2008/09, that for the top 20% grew to 43%.
Desperate measures
As the capitalist crisis deepens and austerity begins to bite, working class people are forced to take desperate measures to survive. The payday and short term loan industry is booming – in 2010 the volume of storefront and online payday and short term loans in Britain expanded to £1.7bn, more than triple the £500m in 2007. These lenders work by offering short term unsecured personal loans – usually for up to 30 days – at high interest rates to be repaid by the end of the term. These lenders target the poorest, who are frequently unable to obtain credit at lower interest rates. In many cases, borrowers are trapped into a cycle of debt, having to take out new loans to pay back interest payments on previous loans. Wonga – founded in 2007, and one of the largest short-term loan companies – had already issued nearly 2.5m loans by December 2011, at a representative APR of 4,214%. In the year to 2010 it made £16.6m in profit.
At the same time food banks have begun to reappear. In April 2012, the Trussell Trust, Britain’s largest food bank network, announced that it had doubled its operations in the last year alone, expanding from 100 food banks in 2010/11 to 201 in 2011/12 and feeding 128,000 people. Fastshare, a charity supplying free meals to food banks, charities and breakfast clubs, distributed 8.6m meals in 2011/12, to an average of 36,500 people per day. The Trussell Trust expects that the number fed by food banks will expand to more than 500,000 by 2015/16.
Life at the other end of the income scale is quite different. A 2011 report by the High Pay Commission gave average pay for a FTSE 100 CEO in 2010 at £4.2m – 162 times the national average pay, and 577 times the average pay for a cleaner. The 2012 Sunday Times Rich List suggests that the wealth of Britain’s super-rich has grown by 4.7% to over £414bn – this figure excludes money held in bank accounts, and therefore is likely to be a significant underestimate. Marx’s description that ‘Accumulation of wealth at one pole is, therefore, at the same time accumulation of misery, agony of toil slavery, ignorance, brutality, mental degradation, at the opposite pole’ could not be more fitting.
Jack Edwards
* Poverty statistics are traditionally given as ‘before housing costs’ and ‘after housing costs’. All figures in this article are after housing costs, unless stated otherwise. This is because housing costs can vary greatly for people in similar circumstances and must be met, so the money left after paying rent or mortgages is a more accurate measure of a household’s standard of living; before housing cost figures, by contrast, tend to significantly underestimate the extent of poverty.
Fight Racism! Fight Imperialism 228 August/September 2012
