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15 May 2000

At the hard end, poverty lives

Could you keep yourself and three children on £130.95 a week? Bob Holman looks at poor people's budg

By Bob Holman

How is it that poverty is still rampant after three years of new Labour? I live in Easterhouse, Glasgow, and work with a locally run project there. Here I know a couple with three children who, during 1999-2000, were receiving income support of £130.95 (plus housing benefit). The mother kept an account of every penny they spent in one week.

A sum of £48.95 went on food, £9.15 on household items, £4.98 on socks, £12.50 on school bus fares, £2.25 on adult fares, £7.50 on cigarettes, £3.75 on TV rental, £25 on paying for furniture, £10 on clothes from a catalogue, £5 towards the TV licence. The total was £129.08, leaving them with £1.87 – and this in a week in which they had no heating or lighting bills. This family’s plight is typical and illustrates that income support levels are insufficient. Yet the government still refuses to increase them in line with earnings.

What new Labour has increased is child benefit. On 6 April, it went up by 40p to £15 for the first child (£780 a year), and £10 (£520) for others. But the cost of a child is far more than £780. The Centre for Research in Social Policy at Loughborough University shows that child benefit is about one fifth of average spending on a child. To affluent parents, child benefit is a perk that contributes to another holiday abroad for their child. To low-income parents, it is not enough for basic needs. Our project runs holidays for over a hundred children at £95 a week: few parents can afford this and so have to be subsidised.

The Chancellor’s insistence that the way out of poverty is through work has meant that social security benefits have been neglected. Accordingly, the government introduced minimum wage levels of £3.60 an hour (£3 for 18- to 21-year-olds). A friend of mine, after two years of searching, has obtained a job. His wage – under the new legislation – is £126 a week, that is £6,552 a year. He lives with relatives, including one drug-user, and is anxious to rent and furnish his own accommodation. He simply cannot afford to do so.

Gordon Brown would no doubt argue that working families are taken out of poverty by his innovatory working families tax credit. True enough, it will ensure that, as from June, they will have a minimum of £207 a week. He fails to mention that the families who move from benefits to employment lose free school meals and, if they live in peripheral estates, have to fork out high fares to get to their work places. They may well have to make complicated childcare arrangements before and after school and in school holidays – for, unlike the Blairs, they cannot hire nannies. Is £207 sufficient?

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Income support, the minimum wage and the WFTC remain low because the government refuses to ask the most basic question: what is poverty? New Labour takes as its poverty line half of the average household income. When Brown and Tony Blair proclaim that they are abolishing child poverty, they mean that they are taking families above this line. Even so, at the present rate of progress, child poverty will not be abolished until 2019.

But half average household income is not based on any investigation as to how much money is required for an adequate standard of living. According to the government’s own statistics, the weekly half average income for all family types in 1998 was £134. The leading expert on adequacy standards, Professor John Veit-Wilson, states: “Research from a number of studies suggests that half the average household income is too little to get people out of deprivations and social exclusions.” (Poverty, Winter 2000).

It must be acknowledged that new Labour has improved the lot of some with low incomes. But moderate increases in the incomes of the poorest without reducing those of the richest are not sufficient. Socialists want a more equal society because it expresses a more just distribution of resources. This is not all. Studies now reveal that being at the bottom of a wealthy society induces a host of social handicaps. Professor Richard Wilkinson explains that many in this position suffer feelings of failure, helplessness and loss of self-esteem which, when internalised, result in behaviour marked by withdrawal, apathy and aggression. Indeed, he identifies links between inequality and ill-health, child abuse and family break-ups.

Consider Anita. When her unemployed husband killed himself, she retreated into depression. She struggled on with five kids in a damp flat and extreme poverty. I encouraged her to write and she jotted down: “My children don’t stand a chance. There are hundreds of millionaires, but thousands living in poverty. When I pray at night, I ask: why are some persons better off than others?” She wanted to give up and took an overdose. She recovered, but wishes that the hospital hadn’t bothered.

Consider four young men I chatted with in a barely furnished flat. I can remember them as lively youngsters in our clubs and football team. Now they sit miserable and without hope. Three are unemployed and feel that job schemes have given them irrelevant training that leads nowhere. One is employed to deliver parcels, and has to sit beside a phone waiting to be told if there is work to be done. They talk about jobs in affluent London, but cannot afford to travel let alone live there. They lack money and purpose.

The outcomes of inequality are devastating. Brown readily condemned the Conservatives for intensifying inequality and, in company with Robin Cook, called for a “programme of reform that ends the current situation where the top 10 per cent own 80 per cent of our wealth, and 30 per cent of income, even after tax”.

Yet, on taking power, new Labour has refused to reduce substantially the incomes and wealth of those at the top. Brown will not increase tax on those with earnings of over £80,000. Figures recently announced by the Office of National Statistics for 1998-99 reveal that the gap between the rich and the poor is widening.

New Labour insists that it is combating poverty. It has initiated a vast number of programmes and, beyond doubt, the poor are gaining more than under the previous, Tory regimes. Yet out in the peripheral estates and inner cities, residents are badly clothed, ill-fed and crushed by stress and anxiety. What explains this huge gap between what the spin-doctors say is happening and the experiences of people at the hard end?

The answers are that welfare benefits are still far too low; that the social fund takes thousands of citizens even below these levels; that the WFTC and the minimum wage are not geared to a decent level of adequacy; and that inequality is being ignored. So what can be done?

In the short term, new Labour should upgrade social security benefits in line with earnings; fix child benefit rates at 5.5 per cent of average gross male earnings; and replace social-fund loans by entitlements.

In the longer term, it should establish a Poverty Unit made up of those who have had recent experiences of low incomes. This unit should determine both what is an adequate income and also the higher level of income that is acceptable in a socialist society. The government is then responsible for policies to promote these ends.

It is clear that, with the exchequer in record surplus and the auction of mobile phone licences bringing in £20bn, our economy can afford such reforms.

It is now time for those who genuinely oppose poverty and inequality to spread the appropriate values by refusing to take incomes above the average wage and by declining to live in affluent ghettos that cut them off from the needy. If our principles are worth anything, they are worth putting into practice.

Bob Holman is the author of Kids at the Door Revisited (Russell House Publishing)

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