Thursday, 13 June 2013

Choking on the Crumbs: Breadline Britain

Britain's jobless fell by 5,000 this week. In our recession hit country, a mere two and a half million souls are officially out of work. The BBC trumpeted the Coalition spin that, as public sector jobs have fallen to their lowest number in over a decade, new jobs have been created in the private sector. "The Government's prediction that the private sector will compensate for the public cuts is coming true," said the gushing economics correspondent on the News channel.

Is it really? Not likely.

For not only are we not comparing like jobs, we are not comparing like terms either. Most of the public sector jobs cut have been full-time; most of the new private sector are part-time, temporary and often lower paid. Office of National Statistics figures show that at the end of 2012, full-time employment was 378,000 lower than in April to June 2008, the first quarter of the 2008/09 recession. Part-time employment was 572,000 higher comparing the same period.

Factor on top of this the findings published today that, on average, British workers are more than six per cent worse off in real terms than six years ago due to several years of pay freezes and lower than cost-of-living increases and it is little wonder that we remain in recession. This is unprecedented and in the same week that the Chief Executive of RBS, Stephen Hester, has resigned with a package of £5.6 million as a payoff for his failure in post - a situation he admits even his mother finds distasteful, but he's not listening to her never mind the rest of us.

A further squeeze has come from the Government, determined to cut a benefits bill which is constantly misrepresented as having increased because of some mysterious surge of disability and worklessness. In truth, while pensioners continue to cost over 50% of the £160 billions social security costs, less than 15% goes to disabled people and less than 5% is paid to unemployed people. Among non-pensioners, the biggest costs are things like housing benefit and child support for working families, their living costs squeezed between low wages and deregulated rents. In-work poverty has increased significantly since 2008. In a report published yesterday, Department of Work & Pensions' own statistics demonstrated that nearly one million more people fell into poverty in the Coalition's first full year in office - and of the 300,000 children living in families that fell into poverty in that time, all of them - every single one - was a working household.

There are two steps the Government could take tomorrow that would save the taxpayers billions and release money into the economy to get Britain working again.

The first would be to increase the national minimum wage to the living wage level - this is currently £7.45 per hour outside London and £8.55 inside the capital as opposed to the NMW's £6.19 (less if you are under 22 years of age). It is calculated on the basis of what most families need their breadwinners to earn to free them from poverty. It would significantly reduce the need for the State to pay benefits (effectively subsidising greedy employers) and improve the spending power and lives of millions of the poorest in our society. The deficit would be reduced - winners all round. Just as the introduction of the NMW did not lead to the increased unemployment that some right-wingers predicted before its introduction, the living wage would similarly challenge only the scale of currently massive profits and dividends, not employment levels.

Source: Guardian Newspaper
The second step would be to reintroduce controls on rents, which were abolished by the last Conservative regime, and outlaw buy-to-rent mortgages (which only became permissible in the late 1990s). The combination of cheap buy-to-let loans and no controls over the rents charged led to landlords expanding their property portfolios and pushing their rent levels up and up knowing that they would be covered by housing benefit from the state in millions of cases. With fewer people able to afford to buy houses, the numbers renting have increased by over one fifth in the last decade, many of them needing support with their costs as rents increased. Consequently the cost of housing benefit has risen substantially, reaching over £16 billions last year.

However, in response, the current Government, rather than capping rents, has capped the support net of housing benefit, which has simply caused disruption and misery for hundreds of thousands of low paid workers and their families, who have been left with a choice of somehow finding the cash to make up the gap between their housing benefit and rent, or moving to cheaper, inferior accommodation. Many of the poorest in London have been moved out of the city altogether to depressed areas like Newcastle where rents are lower, but jobs are even scarcer. It is a wicked policy that destroys lives and hope, even driving people out of work.

A final step would of course to be to make companies pay their fair share of corporation tax - although the HMRC says it has recouped over £20 billions of unpaid tax by challenging major corporations over the last three years, this makes for an average of £7 billions per annum - on some estimates, as highlighted by Green MP Caroline Lucas, barely one twentieth of the tax that is dodged each year.

But, of course, much of the austerity agenda is not about financial necessity at all - rather it is politically driven, a red herring to provide the excuse the Tories and their allies want to dismantle what is left of the welfare state and entrench the power and privilege of the rich elite which sponsors them and which has in effect bought up our democracy, our country and our planet.

Austerity Britain - still full of wealth, but in fewer and fewer hands. Growth will not solve the economic crisis - as our whole world moves towards increasing resource crises and challenges to economic sustainability, the traditional process of "trickledown" economics, with just enough crumbs falling from the tables of the rich to almost satisfy the less well off, will no longer work. Only a shift in the economic paradigm, a decisive move to a society of communal ownership of resources and a fair distribution of wealth will, in the long run, solve this deepest and most intractable of economic crises for many decades.


  1. It is worth noting that the figures on unemployment do not include those put on the work programme, or those who have been sanctioned(currently running at about 1.5 million since the sanctioning regime commenced)

  2. Anonymous, agree indeed - the reference to a "mere" 2.5 million is intended to be sarcastic. The figures are massaged and cheap/free labour sanctioned in numerous ways. And, of course, the assault on people on disability support is especially vicious given that many of the older claimants were pretty much forced onto it by the Major Government's massaging of the mass unemployment of the early 1990s.

  3. Your figures also do not include the number of public sector jobs which have been re-classified as private sector jobs - e.g. 450,000 or so jobs in Further Education which are exactly the same as they were before, but are now considered to be "private sector" despite being funded almost exclusively by the public sector, and with public sector pensions...

    1. Doug, thanks - so these are not counted in either column? I guess if they were it would exaggerate the supposed effectiveness of the private sector in making up for public sector cuts when in fact it is simply leeching off the State. Privateers Inc.

    2. My numbers are wrong - it's "only" half that the details are here:

  4. Its an incisive article. How do we get it to a wider audience though.I might copy the infographic and post it to the nearest 200 houses.....if we all did that?
    How many people are no longer getting benefits because they haven't jumped through the right hoops, and are being punished and forced into penury are included in that statistic?

    1. Thanks ginjared - and please share any part of the article you like, or all of it. The buttons at the bottom of the post allow you to share it to Facebook pages, Twitter and google if you like.