Prem Sikka: The Tories don’t care about eradicating poverty

We need a new economic model to end destitution in Britain.

A homeless person sheltering under a concrete wall

Nearly 240 years ago moral philosopher Adam Smith wrote: “No society can surely be flourishing and happy of which by far the greater part of the numbers are poor and miserable.” Yet that dictum has been unheeded by the right.

Prime Minister Boris Johnson once said that ‘destitution on a Victorian scale’ might be a good way of disciplining the working class. The government imposed austerity and wages freezes are taking the UK towards that target.

The new destitution

According to the Office for National Statistics the average wage in May 2019 was £498 per week compared to £525 in February 2008. Workers’ share of gross domestic product (GDP), effectively the wealth created in the UK, has shrunk to around 49.2%, almost the lowest since records began.

Over 14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the poverty line, and 1.5 million are destitute, unable to afford basic essentials. 4.6 million children live in poverty. Millions rely on foodbanks to make ends meet.

The household debt has soared to record £1,661 billion. Around 8.3 million people are unable to pay off debts or household bills. 

Rather than using taxation to alleviate poverty and redistribute wealth, government has used tax cuts for the rich and corporations to concentrate wealth in fewer hands. The Equality Trust reported that over the last ten years the number of billionaires in the UK has almost doubled. The wealth of the UK’s billionaires has more than doubled.  With a combined wealth of £39.4bn, five UK billionaires have more wealth than the bottom 13.2 million people. The richest 1% of people in the UK owns the same wealth as 80% of the population, or 53 million people.

A decade of neoliberal policies has produced near zero productivity growth. Corporate investment has stagnated as people’s capacity to buy goods/services is severely eroded. The logjam can only be broken by a serious injection of public investment and policies to alleviate poverty.

Conservative manifesto

Despite the usual spin, the Tory manifesto says little about addressing poverty and inequalities. It promises to raise the minimum wage to around £10.39 per hour by 2024. Income tax cuts, which have already funnelled wealth upwards, have been mooted. That will do nothing for 42% of adults who pay no income tax because their annual income is below the tax-free personal allowance of £12,500.

Tories are promising to reduce (from April 2020) the employee’s National Insurance Contributions by raising the annual threshold from £8,628 to £9,500. That would save workers about 23p day.  For the princely sum of 23p a day people are expected to join foodbanks, longer queues at hospitals, send their children to crumbling schools and exorbitant energy, water and train bills.

Labour manifesto

Labour has produced a costed programme of £82.9bn, over the lifetime of next parliament, to address poverty, end austerity and use progressive taxation to redistribute income/wealth.

Examples include a 5% rise in the wages of public sector workers and attract people to a career in teaching, nursing, policing, medicine and other public services. Tories froze public sector pay for two years in 2010, and annual from 2012 to 2018 were limited to 1%.

Labour is offering an immediate minimum wage of £10 an hour. Free school meals would be available to all primary pupils to ensure that no child goes hungry. The abolition of prescription charges and free dentistry services would mean that the less well-off do not have to make the choice between health and next meal.

End profiteering

Despite privatisation, last year the rail industry received public subsidy of £7.1bn. Much of this is used to pay dividends and exorbitant executive pay. Train fares are almost the highest per mile in Europe. Labour’s nationalisation of train companies can eliminate profiteering, duplication and waste and reduce household bills. The same logic would also apply to the nationalisation of Royal Mail, water and energy companies.

Funds would be available to all adults to facilitate lifelong learning and reskilling. Free broadband connections would reduce social exclusion and save each household around £360 a year. The abolition of university fees would reduce debt for students and their families. Train fare reductions would reduce transport costs which can be an impediment to employment, especially for the less well-off.

A new economy

Labour has earmarked £250bn for green investment, over the next 10 years, to generate a million new jobs and stimulate the economy. It has earmarked another £150bn for social infrastructure investment to build homes, schools and hospitals. This will have a knock-on effect on the private sector which would provide many of the goods and services.

People will soon have to choose between deepening social squalor or the possibilities of renewal which can enable many to live a fulfilling life.

It’s time to end poverty in Britain.

Prem Sikka is professor of accounting at the University of Sheffield and emeritus professor of accounting at the University of Essex. He is a contributing editor to LFF and tweets here.

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4 Responses to “Prem Sikka: The Tories don’t care about eradicating poverty”

  1. Joe

    There is no real poverty in the UK

  2. nshgp

    Why would you hide 14,000 bn of pension debts off the books in the biggest accounting fraud going?
    Why is 220 bn a year going on the debts?
    Why are taxes 30% higher because of the debts?
    Where is the poor’s wealth?
    Why have you spent all their wealth?
    How will Mr Min Wage pay his £550,000 debt?
    How can you pay the debts when they are increasing at 17.5% per year?
    Why do you only care about the money owed to bankers?
    Why do the poor not have assets when you’ve spent all their money?

  3. Julia Gibb

    A wise Scotsman Mr. Smith.

    The Tories have only ever cared for the elite. However they have no power without winning elections. This GE highlights the core problem that voters respond to the “dog whistle” politics of right wing politics. Why are the Tory Party, The Brexit Party, UKIP, BNP, Tommy’s fan club etc so strong in England and so weak in Scotland? Is it an Empire legacy? Are the English more Right Wing by nature?

    The reality is that Labour only win elections in England when they move towards the centre. It is time to look at WHY the Right are so strong because until that is addressed the poor will continue to suffer.

    Seeing “ex-Labour voters” switching to the Tories chanting “Get Brexit Done” and praising Boris for his drive does not fill me with hope for a fairer society.

  4. Bruno Kwiecien

    Sooner or later, the Tax-Timid TORIES,
    the Party of Privilege, WILL come for YOU.
    Because you’re NOT one of them.
    You’re NOT worth it.
    Back Boris for a Billionaires’ Brexit.
    Break Britain. Blame Brussels.
    #GTTO #ToriesLie #DitchTheTories #DitchJohnson
    #VoteLabour #VoteLabour2019 #VoteLabour12December
    #JC4PM #JC4PM2019 #JC4PMNOW #CorbynOutrider
    #Bernie2020 #BernieSanders2020

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