The shame of in-work poverty

A major report issued this week shows the extent of the Tories’ big lie that they are making work pay, writes KEN LIVINGSTONE.

This week’s Joseph Rowntree Foundation’s Monitoring of Poverty and Social Exclusion report showed the true scale of the human impact of six years of ideologically-driven austerity, following the Chancellor’s recent Autumn Statement which confirmed the economic difficulties we are now facing.

Perhaps the most shocking revelation in the report is that 7.4 million people in poverty are in working households, showing that despite all their false promises the Tories are not “making work pay.”

This means that more than half of those living in poverty (a total of 13.5 million people) are now in working households — a record high for in-work poverty, with the number of workers in poverty up 1.1 million since 2010/11. This figure includes 2.6 million children.

And one in every eight workers — 3.8 million people — are now living in poverty.

Responding to the report, TUC general secretary Frances O’Grady was spot on to say that: “A fair day’s work should mean a fair day’s pay. But wages are simply too low, and millions are struggling to afford the basics, even when they’re working hard… It’s time for employers to give their staff fair pay and decent hours, while the government should lift the public sector pay cap and invest in our economy.”

And as Helen Barnard, head of analysis at Joseph Rowntree, added: “The economy has been growing since 2010 but during this time high rents, low wages and cuts to working-age benefits mean that many families, including working households, have actually seen their risk of poverty grow.”

One other significant development is that poverty is becoming increasingly linked with disability. If the costs of disability are taken into account, half of all those in poverty either disabled or living with a disabled person.

Attacks on disability benefits have been a feature of austerity, and more widely this report identifies that cuts to benefits are a key factor in poverty, pointing out that “increasingly, the social security system does not cover the full cost of essentials for those on low incomes, such as rent and council tax.”

It is hard to see how this situation cannot get worse. There will be consequences to the reduction in the overall benefit cap, with the report identifying that 112,000 families are expected to experience a reduction in income because of the cap, up from the current 20,000.

The report also rightly identifies the housing crisis as a major driving force behind these developments, particularly in terms of spiralling rents in the private sector, where private rentals have doubled in the last 10 years, from 2.2 million in 2004/5 to 4.5 million.

Now, nearly three quarters of people on low incomes living in the private sector pay over a third of their income on rent and half of children in rented homes are in poverty.

Linked to this, evictions have also shot up since the Tories took office, from 23,000 in 2010/11 to 37,000.

In London — where after years of Boris Johnson’s failure to tackle the housing crisis, these problems are at their worse — the poverty rate was at its highest at 27 per cent.

If this wasn’t bad enough, it is set to get worse. This is the case both in terms of the housing crisis specifically, and a likely cost of living crisis linked to the worsening economic situation to which the government’s “solution” seems to be “business as usual,” namely yet more austerity.

As shadow work and pensions secretary Debbie Abrahams put it: “This government has no plan to tackle stagnant wages and rising insecurity, choosing instead to make the poorest pay for their economic mismanagement.”

We need to make it clear to the millions of people in Britain being made worse off by austerity — and those who will be in the turbulent economic times ahead — that there is an alternative.

The Jeremy Corbyn-led Labour Party has outlined how a Labour government will put an end to in-work poverty, by introducing a real living wage based on what people need and ensuring that work will always pay under universal credit.

Abrahams is right to say that: “Only Labour can be trusted to transform the social security system, based on principles of dignity, security and inclusion.” Nowhere is this better shown than in Labour’s pledge to end the punitive sanctions regime.

But it is not just the individual policies Labour has that can improve the lives of the majority and stop punishing the poorest. It is the only British-wide political force with a serious economic programme to keep the economy moving in the difficult times ahead so that we can have decent public services, the welfare state we need and secure, well-paid work.

As Wolfgang Munchau in the Financial Times, of all places, recently commented: “From an economic point of view there is nothing extreme in the argument for large investment programmes, especially after years of fiscal consolidation. Yet the only established political party that offers this choice in Europe is Mr Corbyn’s, which is promising £500 billion.”

Increasingly economists agree that investment is not just the most important factor in economic growth but outweighs all others put together. Given the low level of interest rates this is a good time to borrow in order to invest, especially with economic predictions looking gloomy for the years ahead.

For millions of people, including children, this week’s Joseph Rowntree report makes the future look bleak. In contrast, despite all the problems we faced, when I left school every boy got a job and within a few years that paid them enough to keep a family.

If our politicians stop being in awe of the bankers and create a better, balanced economy, our children and grandchildren can grow up in a world where things get better.

Let’s work together to make it happen.

First published in the Morning Star