“Before Thatcher came to power, the number of people living in relative poverty had been broadly steady at 14%. Today, relative poverty is around 50% higher than it was then.”
Jon Trickett MP
By Jon Trickett MP
Recently released figures reveal that deep poverty is proliferating in modern Britain. We must recognise that we cannot deliver social justice whilst our current economic model remains intact.
Poverty scars our society. It limits opportunity, causes physical and mental health issues, and leads to social breakdown. The cause of social justice for which the labour movement has always fought, aspires to the abolition of poverty.
Poverty is often measured in terms of relative poverty and absolute poverty. It is calculated by looking at different levels of income after housing costs.
Relative poverty is the number of people whose income is sixty per cent below the median income in that year.
Absolute poverty is the number of people who cannot afford a set standard of living, defined as forty per cent below what an average income could buy in 2010-2011, after it is adjusted for inflation.
Before Thatcher came to power in 1979, the number of people living in relative poverty had been broadly steady at fourteen per cent. Today, relative poverty is around 50% higher than it was then. The most recent statistics show that over fourteen million people – more than one in five – are now living in relative poverty.
This is an astounding statistic. There is more wealth in our society than ever before. Since the 1970s our economy has undergone huge technological transformations that many hoped would lead to higher living standards across the board. But the benefits of increased wealth and new technology have not been shared throughout the country. Alongside great riches lies stultifying deprivation.
This should come as no surprise. It is exactly what critics of Thatcherism, or what has been termed ‘neoliberal economics’, have been warning about since the 1970s.
How has it happened?
After the Second World War a new governning consensus emerged, spearheaded by the workers’ movement and Attlee’s Labour government. This ‘post-war consensus’ included support for strong trade unions and workers’ rights, public ownership of key industries, comprehensive public services and social security, and progressive taxation. In this period, the share of national wealth that went to workers over capital increased and living standards rose across the board.
It was this consensus that Thatcher set out to dismantle, with her assault on trade union rights, cuts to public services, tax cuts and privatisations. It was claimed that these neoliberal policies would unlock entrepreneurship and generate wealth that would trickle down. In reality, they led to an unprecedented rise in higher incomes but a rapid rise in poverty at the same time.
Her policies laid the groundwork that future government’s built upon. Many of her economic reforms have been maintained. Unfortunately, higher levels of poverty have endured too.
It’s important to point out that relative poverty fell for a sustained period under the last Labour government, between 1999 and 2005. The UK’s economy grew off the back of a finance-led boom, which Chancellor Gordon Brown harnessed to deliver a degree of economic redistribution. However, this came crashing to a halt with the global financial crisis. In fact, this was the last time relative poverty fell for a sustained period in the UK.
Under Conservative led governments since 2010 the level of relative poverty remained fairly steady, then increased in recent years with the cost of living crisis.
However, figures published last month by the Department for Work and Pensions (DWP) show that in 2022-2023 the UK suffered the sharpest increase in absolute poverty in 30 years.
In one year the number of people living in absolute poverty increased by six hundred thousand to a total of twelve million. Eighteen per cent of the UK population now live in absolute poverty. These families have fallen into a state of destitution where they cannot afford the basic necessities of life.
Rather than countenance the possibility that this is an outcome of their policies, Conservative politicians prefer to blame somebody else.
They claim the cost of living crisis was caused by the war in Ukraine, as if it was not within their powers to limit price rises or support families through that difficult period.
They also like to blame poor people for their own poverty. Just a few weeks ago the Deputy Chair of the Conservative party, William Wragg, said of his own constituents: ‘Most of the kids who struggle in Bury are the products of crap parents.’
They blame the poor in hope that the public do not realise that the poverty crisis in Britain is a man-made disaster for which politicians are at fault. The British public is starting to see through their nonsense. Voters are ready for real change.
What will it take to seriously reduce poverty in the UK? I believe we need a new economic settlement that breaks with forty years of neoliberalism. This will require a mass movement for change propelling a government to implement a bold policy programme that redistributes wealth and power from the richest in society to working people.
First, we need a real living wage that ensures every worker can live a comfortable life, combined with strengthened employment rights so that trade unions and workers have more power. Labour has committed to a ‘New Deal for Working People’ but it is vital that this is not watered down in the face of corporate lobbying pressures.
Second, we need reform to the housing market so that houses are more affordable for first time buyers and new rights for renters, including banning no fault evictions and implementing rent controls to stop landlords pricing working class people out of their own communities.
Third, we need investment in public services, including social security, and in infrastructure, especially in held back regions in the North of England and Midlands. The NHS is on life support and urgently needs resources so that it can deliver for patients who cannot afford to go private. Social security benefits must be increased, starting with the removal of the two-child limit. Areas like mine in the former coalfields have suffered economic stagnation since the destruction of the mining industry and therefore need large-scale public investment to revive economic activity. All this can be paid for through progressive tax reforms such as a wealth tax and by clamping down on corporate tax avoidance.
This is not an exhaustive list, but just a few policies that would begin to address the poverty crisis in Britain. Taken together they would forge a new economic settlement that takes us closer towards social justice.
- Jon Trickett is the MP for Hemsworth and a regular contributor to Labour Outlook. You can follow him on Facebook, Instagram and Twitter/X.
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