A volunteers sorts through donations of food at the Hammersmith and Fulham food bank run by the Trussell Trust. Photograph: Getty Images.
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Leader: The wealth and poverty of our nation

Social ills that were thought to have been eradicated by modern capitalism are returning. But none of this is inevitable. 

By at least one measure, the United Kingdom has never been better off. GDP is 3.4 per cent above its pre-recession peak, owing to statistical revisions and a year in which the economy grew faster than that of any other G7 country. But rarely has the disparity between the wealth of the nation and the wealth of its citizens been greater.

Social ills that were thought to have been eradicated by modern capitalism are recrudescing. The number of people reliant on food banks to avoid hunger has reached more than a million. There are 60,940 households living in temporary accommodation because of homelessness. And, for the first time, the number of working families living in poverty has outstripped the number of workless and retired ones doing so.

In a 1933 radio debate on the austerity that followed the Great Depression, John Maynard Keynes declared: “Look after unemployment and the Budget will look after itself.” By this, the great economist meant that the government would be wiser to stimulate job creation – and reap the tax receipts that result – than to cut spending in an attempt to reduce debt. Unemployment fell faster in 2014 than any major forecaster expected (from 7.6 per cent to 6.0 per cent) and employment rose to a near-record level of 73 per cent. But the Budget has not looked after itself. The deficit so far this financial year is 6 per cent higher than in 2013-14. Borrowing has failed to fall because work is no longer a guarantee of an adequate standard of living and, therefore, of rising tax revenues.

Rather than the mass unemployment of the 1930s, the UK today faces a crisis of mass underemployment. There are over 1.3 million people working part-time because they cannot find full-time work, with many of the 4.52 million classified as self-employed also lacking the hours they need. In his 1930 essay “Economic Possibilities for Our Grandchildren”, Keynes sought to counter the pessimism of the time by predicting that rising living standards and technological advancements would enable individuals to devote ever less time to their labour. “For the first time since his creation,” he wrote, “man will be faced with his real, his permanent problem – how to use his freedom from pressing economic cares, how to occupy the leisure, which science and compound interest will have won for him, to live wisely and agreeably and well.”

Many are indeed working the short hours that Keynes prophesied but are never free from “pressing economic cares”. Others can meet their needs only by working longer than almost any of their western counterparts. Too many have time for leisure but no money for it, while others have money but no time.

These are some of the defining economic problems confronting Britain. For George Osborne, however, it is the deficit that demands attention above all. The Chancellor has made it his mission, if the Conservatives win the general election, to achieve an overall Budget surplus by the end of the next parliament. He has pledged to do so without further tax rises, including on the wealthiest, a commitment that entails what the Institute for Fiscal Studies has described as “colossal” cuts to public spending. Reductions of this size would shrink the state to its lowest level as a share of GDP since the 1930s, resulting in a profound shift in its duties and responsibilities. The safety net for the poorest would be eroded as welfare benefits were frozen in real terms, offering those on low incomes no protection against inflation. Britain would become a less just and an even more unequal society.

However, there is nothing inevitable about this path. The deficit can be reduced over time through a combination of judicious spending cuts, progressive tax rises and economic growth. Rather than ideologically pursuing a Budget surplus, the state should borrow to invest in pro-growth areas that support lasting prosperity, such as infrastructure, skills, job creation and childcare. It should focus on prevention rather than cure, by switching spending from housing benefit to housebuilding and by incentivising the use of the living wage, rather than subsidising poverty wages. If the short-term costs are higher, so are the long-term savings. To end the avoidable misery of poverty and to create the conditions for human flourishing, Britain must follow this alternative path.

We wish all our readers the very best for 2015. 

This article first appeared in the 19 December 2014 issue of the New Statesman, Christmas Issue 2014

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Our union backed Brexit, but that doesn't mean scrapping freedom of movement

We can only improve the lives of our members, like those planning stike action at McDonalds, through solidarity.

The campaign to defend and extend free movement – highlighted by the launch of the Labour Campaign for Free Movement this month – is being seen in some circles as a back door strategy to re-run the EU referendum. If that was truly the case, then I don't think Unions like mine (the BFAWU) would be involved, especially as we campaigned to leave the EU ourselves.

In stark contrast to the rhetoric used by many sections of the Leave campaign, our argument wasn’t driven by fear and paranoia about migrant workers. A good number of the BFAWU’s membership is made up of workers not just from the EU, but from all corners of the world. They make a positive contribution to the industry that we represent. These people make a far larger and important contribution to our society and our communities than the wealthy Brexiteers, who sought to do nothing other than de-humanise them, cheered along by a rabid, right-wing press. 

Those who are calling for end to freedom of movement fail to realise that it’s people, rather than land and borders that makes the world we live in. Division works only in the interest of those that want to hold power, control, influence and wealth. Unfortunately, despite a rich history in terms of where division leads us, a good chunk of the UK population still falls for it. We believe that those who live and work here or in other countries should have their skills recognised and enjoy the same rights as those born in that country, including the democratic right to vote. 

Workers born outside of the UK contribute more than £328 million to the UK economy every day. Our NHS depends on their labour in order to keep it running; the leisure and hospitality industries depend on them in order to function; the food industry (including farming to a degree) is often propped up by their work.

The real architects of our misery and hardship reside in Westminster. It is they who introduced legislation designed to allow bosses to act with impunity and pay poverty wages. The only way we can really improve our lives is not as some would have you believe, by blaming other poor workers from other countries, it is through standing together in solidarity. By organising and combining that we become stronger as our fabulous members are showing through their decision to ballot for strike action in McDonalds.

Our members in McDonalds are both born in the UK and outside the UK, and where the bosses have separated groups of workers by pitting certain nationalities against each other, the workers organised have stood together and fought to win change for all, even organising themed social events to welcome each other in the face of the bosses ‘attempts to create divisions in the workplace.

Our union has held the long term view that we should have a planned economy with an ability to own and control the means of production. Our members saw the EU as a gravy train, working in the interests of wealthy elites and industrial scale tax avoidance. They felt that leaving the EU would give the UK the best opportunity to renationalise our key industries and begin a programme of manufacturing on a scale that would allow us to be self-sufficient and independent while enjoying solid trading relationships with other countries. Obviously, a key component in terms of facilitating this is continued freedom of movement.

Many of our members come from communities that voted to leave the EU. They are a reflection of real life that the movers and shakers in both the Leave and Remain campaigns took for granted. We weren’t surprised by the outcome of the EU referendum; after decades of politicians heaping blame on the EU for everything from the shape of fruit to personal hardship, what else could we possibly expect? However, we cannot allow migrant labour to remain as a political football to give succour to the prejudices of the uninformed. Given the same rights and freedoms as UK citizens, foreign workers have the ability to ensure that the UK actually makes a success of Brexit, one that benefits the many, rather than the few.

Ian Hodon is President of the Bakers and Allied Food Workers Union and founding signatory of the Labour Campaign for Free Movement.