Poverty is a structural economic problem that any future government must address

Politicians need to accept the fact that like the state pension, benefits and tax credits are a central part of the economy


Over 100 years on from the Royal Commission on the Poor Law, the political debate on poverty is stuck in a time warp – and the view of poverty as a structural economic problem, not an issue of individual circumstances and behaviour, is no nearer to prevailing.

Indeed Beatrice Webb’s argument in the commission’s 1909 Minority Report, that poverty is an economic failure, seems to be losing ground. Compared to a decade ago, debates dwell much more on social than financial dimensions of poverty, and the welfare reform agenda fixates on creating new nudges, incentives and sanctions to cajole individuals to change.

Except in retirement. For when it comes to pensioner poverty, the policies of both Labour and Coalition governments have had the same ‘structural’ take. Both administrations recognised that poverty in later life can and should be prevented, first by reviving a tri-partite private pension system that works for low income groups; and second by creating a strong state pension which distributes money across generations, with payments rising in line with national prosperity.

As a result, pensioner poverty has declined very sharply and may fall further in coming years. By contrast poverty for children and non-pensioner adults is set to rise significantly in the next decade, according to projections in a new Fabian report Inequality 2030. We fear there could be 3.6 million more people in poverty in 15 years’ time.

The disparity in the long-term prospects for pensioners and everyone else arises largely because of the different ways we view their poverty. When it comes to working life, politicians ignore the plain truth that decent living standards depend on the structure of our economy – on both good market outcomes and support from the state. Benefits and tax credits are not a temporary safety-net to fend off personal misfortune, they are a central part of the economy, just like the state pension.

Even on the left it is often implied that, for people in work, tax credits and housing support are somehow illegitimate, rather than inevitable and essential tools for preventing poverty. And people out of work on benefits are derided and stigmatised, even though most are disabled, caring or looking after young children.

The Fabian research shows that by far the largest influence on the extent of poverty is the structure of the tax and benefit system. In particular, we show that if politicians chose to redistribute an ever smaller share of our national prosperity to low income families, then more people will live in poverty: it is a simple question of maths. However, this is the intent and effect of current government policy and the Labour Party has not said it will alter course.

Our report presents an alternative. We propose a major programme of labour market reforms to boost employment and increase low wages. Alone this is nowhere near enough to crack poverty; the critical step is to recycle the government revenues generated by these market reforms back to low income families.

We propose a new Prosperity Fund to do just that, in a way that places no extra burdens on the public finances. Poverty before retirement can be solved in a full employment economy, but only if the structure of the tax and benefit system is designed to ensure that low income families, just like pensioners, can share in rising national prosperity.
Andrew Harrop is general secretary of the Fabian Society and a speaker at today’s Fabian Society/Bright Blue conference ‘A Future without Poverty’ #NoPoverty

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12 Responses to “Poverty is a structural economic problem that any future government must address”

  1. littleoddsandpieces

    If Labour want to not just be neck and neck with the Tories in the biggest nation of the UK, England, then their electioneering, now that parliament is dissolving should be this.

    Labour has the money, from all the trade union campaign donations, to buy food direct and wholesale from farms of local produce.

    Labour then does a pop up campaign shop in the many vacant shops on the high streets of all towns and cities in England.

    These charity cum daily free cafes providing one free hot cooked meal and cup of tea a day to those with these letters:

    – Sanctioned off Jobseekers Allowance and Employment and Support Allowance (WRAG and support components)

    – Loss of disability benefit – Disability Living Allowance – delays in granting Personal Independent Payments.

    – Loss of Housing Benefit (usually due to sanctioning)

    – Loss of Council Tax Benefit

    – Rent arrears to social housing

    – Imposition of Bedroom Tax

    – Imposition of work programmes / workfare so money wasted on daily bus fares of food money

    The best time for these are between 11am and 3pm.

    Tell the Jobcentres to not have interviews during these times so that the daily sign ons do not get int he way of babes in wombs to grannies denied state pension payout since 2013 from raised retirement age being fed.

    How you tell the Jobcentres when they go digital this month and are unstaffed is up to Labour politicians’ knowledge as opposition in parliament.

    Will Labour not just talk but feed the 5000 today and til 7 May?

    Wil Labour provide these free daily 7 day a week free cafes, that do have EU funding in Europe after the general election?

    This will get Labour far more than being merely neck and neck with the Tories in the biggest nation, England, of all the UK nations.

    It is up to Plaid Cymru in Wales and the Scottish National Party in Scotland to do the same for their people.

  2. Leon Wolfeson

    “Alone this is nowhere near enough to crack poverty”

    It’s also complex, bureaucratic and expensive.
    A Basic Income should be considered as an more effective and cheaper alternative.

    As you note, your solution also requires full employment which isn’t going to happen. Moreover, there is no “rising” prosperity – we have a bubble in the City, and we’re at major risk of another depression.

  3. Guest

    So waste their cash on helping a few people rather than actual leftist policies to help most.

  4. Mike Stallard

    The State is not the right agency to deliver an attack on poverty.
    It is too big and remote. It costs a lot to administer and we are already broke, not rich at all. The State cannot possibly know if someone is bludging and whinging and not making the effort, or if they are a genuine case. So it blindly hands out money all round.
    That is why we and the Americans are heavily in debt. People find it no longer worthwhile to get down to very hard or courageous work because they know that any money they make will be taken from them. So the rich ones dodge and the poor ones give up. Policing becomes necessary and the paperwork builds as people flood into the flowering bureaucracy.
    Meanwhile a new class (Milovan Djilas) grows up of politicians who get the goods, the power and the nice cars. They are completely out of touch and eventually go under.
    Meanwhile people from the rest of the world where they are often (not always) dirt poor flood in to get the full benefit of the State Provisions.
    We have the fate of European Communism to go by, the various South American and African experiments to study. Or perhaps the Fabian Society doesn’t notice all that.
    I am a Catholic, by the way, and I really do spend a lot of my life trying to live with the poor, the unshaven, the immigrants and to enjoy their company.

  5. Guest

    Ah yes, it’s evil that there are economies of scale, and it can reach everyone, not just the Right people. That it’s very cheap compared to private companies. That you demand the poor become poorer, ignoring the fact we have a fiat currency so you can skim more.

    You then fail to understand fiat currency at all – as you spew nonsense, you’re simply living on the back of people who understand that you’ll be taking any gains and they’ll be taking any losses. You want hopeless poor, while not paying any tax.

    You then spout nonsense about pensions, whining that we allow trade and the 99% to cross the border, you’re all for the state enforcing travel restrictions, controls and borders. You’re a vlgar libertairan, makijng up nonsense about invisible communists when talking about the strongly capitalist Fabians!

    And of course you want to live grinding the poor’s noses into your White Rich Christian Male sipremacy. To enjoy lording it over them, the people you ensure can’t rise about their station, as yiu fight against the entire welfare system – the peons you laugh at so much who should just go and die off if they can’t work for a pittance.

  6. Tom

    I just don’t understand this point of view. Where is your evidence that people *choose* not to work hard because of taxation? A lot of the people who don’t work would like to, but can’t find a job. It doesn’t even make logical sense – we have very few tax bands, and so the only people who could possible be deterred are those who decide it is not worth earning more beyond a particular threshold – i.e. those who already have jobs with a large degree of flexibility in their hours.

    Even aside from that – can you think of any historical reduction in poverty *not* brought about by a welfare state? It’s clearly most effective agency out there.

  7. Leon Wolfeson

    Evidence? Why, a fine jest.

  8. Mike Stallard

    Human nature is what it is and nothing is going to change that. People want what they call the good life – good food, a nice house, a happy family – and they will work hard and move house to get at that. Where there is rewarding work – London for instance – people flock and cluster, putting up with the pain and grief in the hope of better. The American Dream filled a continent with people. When the people want this dream and work together to get it, then they really do become prosperous. Ask the Germans who were alive in the 1950s.
    Can anyone dispute that?
    Notice that up to now I have not considered or even mentioned the State or any word with the suffix -ism. It actually has little or nothing to do with it – except to provide a safe environment for people to build their lives in.

  9. Lesmond Nyjacks

    Sadly Mike, for all too many here, the people exist to serve the state, and NOT as it should be, the state exists to serve the people.

  10. Guest

    Yes, you’re really sad about all your perks, as you live it up.

  11. Guest

    You’re talking about the free market.
    Which is distorted by capitalism.

    And you’re a defender of capitalism. And of course what happens without the state structure you oppose is Warlordism – as we can see in the Middle East.

    The reality is that far fewer people can afford the basics because of capitalism, today, than five years ago. There’s less of a free market. And yet you want to double down.

  12. Lesmond Nyjacks

    Leon, NO more killing fields, you vile leftist.

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