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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Appreciate the full horror of Nigel Farage's pro-Trump speech

The former Ukip leader has appeared at a Donald Trump rally. It went exactly as you would expect.

It is with a heavy heart that I must announce Nigel Farage is at it again.

The on-again, off-again Ukip leader and current Member of the European Parliament has appeared at a Donald Trump rally to lend his support to the presidential candidate.

It was, predictably, distressing.

Farage started by telling his American audience why they, like he, should be positive.

"I come to you from the United Kingdom"

Okay, good start. Undeniably true.

"– with a message of hope –

Again, probably quite true.

Image: Clearly hopeful (Wikipedia Screenshot)

– and optimism.”

Ah.

Image: Nigel Farage in front of a poster showing immigrants who are definitely not European (Getty)

He continues: “If the little people, if the real people–”

Wait, what?

Why is Trump nodding sagely at this?

The little people?

Image: It's a plane with the name Trump on it (Wikimedia Commons)

THE LITTLE PEOPLE?

Image: It's the word Trump on the side of a skyscraper I can't cope with this (Pixel)

THE ONLY LITTLE PERSON CLOSE TO TRUMP IS RIDING A MASSIVE STUFFED LION

Image: I don't even know what to tell you. It's Trump and his wife and a child riding a stuffed lion. 

IN A PENTHOUSE

A PENTHOUSE WHICH LOOKS LIKE LIBERACE WAS LET LOOSE WITH THE GILT ON DAY FIVE OF A PARTICULARLY BAD BENDER

Image: So much gold. Just gold, everywhere.

HIS WIFE HAS SO MANY BAGS SHE HAS TO EMPLOY A BAG MAN TO CARRY THEM

Image: I did not even know there were so many styles of Louis Vuitton, and my dentists has a lot of old copies of Vogue.

Anyway. Back to Farage, who is telling the little people that they can win "against the forces of global corporatism".

 

Image: Aaaaarggghhhh (Wikipedia Screenshot)

Ugh. Okay. What next? Oh god, he's telling them they can have a Brexit moment.

“... you can beat Washington...”

“... if enough decent people...”

“...are prepared to stand up against the establishment”

Image: A screenshot from Donald Trump's Wikipedia page.

I think I need a lie down.

Watch the full clip here:

Stephanie Boland is digital assistant at the New Statesman. She tweets at @stephanieboland