An overview of poverty and austerity

The word austerity has loomed large over Westminster ever since Liam Byrne left the now infamous note to his successor.

“Dear Chief Secretary,” he wrote, “I’m afraid that there is no money. Kind regards and good luck.”

From that moment on, the focus for the incoming Conservative Lib Dem Coalition, at times relentlessly so, has been on tightening belts, controlling the costs, and reducing the deficit.

In his first major act as Chancellor in 2010, George Osborne laid out “unavoidable” hard choices for the British people in an emergency budget as he attempted to get the economy back on track.
In his Autumn Statement this November, Osborne continued the story of a government which had, against the odds, put the nation back on an even keel, turning an “economy in crisis” into “the fastest growing of any major advanced economy in the world”.

The deficit has halved and inflation and unemployment are down. As a General Election approaches, it provided the ideal platform to set out the way the Coalition Government would want to be remembered. As Osborne put it, this was a government that did not “shy away from unresolved problems”. 

But, this may not be the version that gets retold.

Because in that time another far more compelling and tragic story has become the focus and it threatens forever to be the legacy of the coalition years: the ever-increasing gap between rich and poor.

Inequality in Britain has a legacy that long predates 2010. It remained a critical facet of society under 13 years of Labour and before that. But since the worldwide financial crisis, the sheer numbers of people living in poverty has been increasingly under the spotlight.

Earlier this year, the United Nations Development Programme released a damning report that showed the UK had an “exceptionally high degree of inequality”.

The Human Development Report showed that the poorest 40 per cent of people living in the UK shared a lower proportion of national wealth than any other Western country. At 14.6 per cent, the only other industrialised country to have a worse record was Russia.

In comparison, the richest 20 per cent had incomes on average 10 times that of the poorest 20 per cent.

A new lexicon has emerged with a string of new accepted buzzwords to define poverty in modern 21st century Britain.

The previous UK Labour Government received plaudits for introducing the minimum wage. Now, however, the level of pay set by the state is not enough, with a whole new class of poor emerging: the “working poor”. Instead, the focus has been on a ‘living wage’ and a clamour among left-leaning political parties over who is calling for the greater action.

While once unemployment statistics would be used to demonstrate how successful the country was doing, a new far more stark measure has been used – how many people are going hungry.
Foodbanks, the modern equivalent of a soup kitchen, have sprung up across the UK, run by charities to help distribute food to people in need. While the organisations running them, and the people who have donated or volunteered, have been praised, the rising need for them has been widely condemned as proof of how changes are needed in society.

As reported in Holyrood, entrepreneur and philanthropist Sir Tom Hunter told an audience of business leaders and councillors celebrating the birthday of Andrew Carnegie that politicians needed to change their mindset to reduce the levels of poverty, while charities and NGOs needed to share the goal of his own Hunter Foundation and make themselves redundant.

He said: “We were approached by a well-known charity whose aim was to expand the foodbank network across Scotland and make it more efficient, while dramatically increasing their own headcount. Our response was quite simple: come back with a plan of how to eradicate food banks and we’ll listen.”

According to the Trussell Trust, one of the main providers of foodbanks in Britain, 913,138 people were given three days emergency support in 2013/14 across the UK. The previous year this had been just over a third at 346,992, though in 2008/09, it was only 25,899.

In Scotland the figures are no less dramatic. In 2013, foodbanks supported 49,041 adults and 22,387 children.

Of the many reasons why people were referred to foodbanks, which were reportedly opening up in Scotland at the rate of two per week, such as the piling up of debts, homelessness and low incomes, just over one third of people attending were referred after changes had been made to their benefits; that is, they were directly affected by the changes to the welfare state.

From assessing the fitness of claimants to go back to work to the introduction of the so-called bedroom tax, the UK Government has faced considerable criticism over how it has handled welfare reform.

An overhaul of the welfare system was certainly needed, and the introduction of Universal Credit was a simplification which Westminster said would make three million households better off. But to many, the changes have become a symbol of a government that does not appear to care.

In 2013, Holyrood re-interviewed the man who showed Iain Duncan Smith around Easterhouse, which formed the basis of the then Tory party leader - now Work and Pensions Secretary’s - views on welfare reform.

Bob Holman, a lifelong Labour activist, who had been described by Duncan Smith as a “living saint”, said the Conservative Secretary of State was trying to balance his loyalty to the party with his commitment to the poor.

“In my view they can’t be balanced,” he said. “You’ve got to come down on the side of the poor.”

The language of austerity has been criticised for typifying people who receive benefits as “scroungers” set against the good “strivers” who have been held back. In Osborne’s Autumn Statement, the word welfare was mentioned six times, every occasion emphasising the “disastrous” situation the system had been allowed to get into, with no spending controls whatsoever, but stressing that it was now costing the taxpayer less.

Osborne claimed a £4bn saving from more people being in work and lower inflation and said the total welfare spend would be £1bn less than was forecast in the Budget earlier this year. He has also said a further freeze should be made on working-age benefits for two years to make extra savings.

He added: “Decisions to control public spending are never easy. But the impact on people’s lives when economic stability is lost is far, far greater. And I’ve always believed we should be straight about what’s required to restore stability and what’s then required to stay on course.”

Just as it did with the Poll Tax under Margaret Thatcher’s government and the Iraq War under Tony Blair, the anger at austerity has taken to the streets.

In July this year, 50,000 people marched in London under the banner of the People’s Assembly, set up in response to a letter to The Guardian with signatories including filmmaker Ken Loach and the late Tony Benn. The letter said it was “a call to all those millions of people in Britain who face an impoverished and uncertain year as their wages, jobs, conditions and welfare provision come under renewed attack by the Government”.

The march was just one high-profile example of demonstrations against the policies that opponents claim is damaging both public services and people’s lives.

Perhaps one of the most striking ways poverty has come to the fore this year has been in the context of the independence referendum.

While Yes lost the argument, many of the issues raised during the campaign struck a chord with the general population and have continued to resonate as discussions have moved on to what further devolution could look like in Scotland.

A key moment in the debate was the televised spat between Nicola Sturgeon and Alistair Carmichael. While the themes up until this point had been on grand issues, like what currency an independent Scotland would use and whether it would remain part of the European Union, Sturgeon chose a different tack when the two cross-examined each other.

The subject was not coins, passports, flags or border patrols, it was poverty, specifically, child poverty and her claim that staying in the Union would make it worse.

From that point, the Yes campaign used this to good effect. The slogan of ‘Bairns not Bombs’ reinforcing a message that was difficult to argue against: spending billions of pounds on the Trident nuclear deterrent, or on the youngest citizens in Scotland. 

As the vote on independence approached, the Scottish Parliament’s Economy, Energy and Tourism Committee conducted its own wide-ranging inquiry into the economic future of Scotland post-2014.

As well as both UK and Scottish Governments, representatives of both Yes and No campaigns and business leaders from major industries such as oil and gas, it also took a detailed look at poverty.

Groups such as the Poverty Alliance, Joseph Rowntree Foundation and Oxfam gave their views.

Oxfam had released its own research showing that five families in the UK owned as much wealth as the entire bottom 20 per cent of the population and has pushed for its Humankind Index - that measures success as more than just GDP - to be adopted by governments.

Policy and research adviser at Oxfam GB, Dr Katherine Trebeck, told the committee: “I think that there are too many myths swirling around on welfare reform and poverty. The false dichotomy between ‘strivers and skivers’ is a case in point. Sometimes, what we hear is blatant propaganda, so it is crucial that we stick to facts.”

She added: “We are in no doubt that we need a radical change in our approach to Scotland’s economy. What is exciting about the referendum is that it has opened up a discussion across Scotland about the sort of country that we want it to be.

“Our Humankind Index has quite fortuitously fallen into that space and has contributed to the discussion on whether we want this country to continue to have the extremes of inequality and whether we want a country where the wealthiest households are 273 times better off than the poorest, where health inequalities are growing, where in-work poverty and the number of zero-hours contracts are on the rise, and where we are seeing the dire rise of food banks. There is no greater indictment of the broken nature of our economy and social safety net than the increase in foodbanks. Regardless of the outcome that one seeks, the debate that the referendum has spawned has been a really important and positive development and I hope that we will be able to capitalise on that, whatever scenario we find ourselves in.”