The problems caused by neoliberalism cannot be addressed by bigger doses of neoliberal policies which prioritise profits and corporate interests over people’s welfare

Prem Sikka is an Emeritus Professor of Accounting at the University of Essex and the University of Sheffield, a Labour member of the House of Lords, and Contributing Editor at Left Foot Forward.

Geopolitical storms are raging in Europe, the Middle East, Asia, Africa and elsewhere. Conflicts have become more complex with misinformation and disinformation, cyber-attacks, terrorism, blockades, missiles, drones, lasers, and nuclear weapons. Building peace and improving lives of people is being eclipsed by higher military spending. US President Donald Trump wants NATO member states to support US-led wars to grab resources of other countries. He wants to hike the annual US military budget by $445bn to $1.45trn, which will ensure bumper profits for the arms industry.

The UK had defence budget to £62.2bn in 2025/26 (about 2.4% of GDP), increasing to £73.5bn in 2028/29. Following the strategic defence review, the government is committed to increasing defence spending to  3.5% of GDP by 2035 though hawks want it to accelerate faster. They want additional spending to be financed by cuts to welfare spending. In 2025/26 the UK spent 10.6% of GDP on social welfare. The National Institute of Economic and Social Research states that “the UK has some of the least generous welfare across the OECD: the UK ranks in the middle of OECD countries for welfare spending (as a per cent of GDP) and third lowest for welfare value (per cent of average wages).” The hawks are silent on cutting corporate welfare, taxing the super-rich, doing quantitative easing for defence or government borrowing. They just want to hit the old, sick, poor, disabled and the unfortunate to establish a new social order.

The government acknowledges that security of the country depends on resilience of the economy, households and society generally. However, delivering is another matter altogether. It can’t be done without declaring war on poverty, inequities and building an economy that works for everyone.

Here is a glimpse of some of the challenges that the UK faces. Years of austerity, real wage and benefit cuts have eroded household resilience. Some 13.4 million people, including 4m children, live in relative poverty. 25.3m people, including 14.9 working age adults and 7.7m children live in households below the minimum income standard. Work is seen as a way out of poverty, but it does not pay enough. 4.4m people earn less than the real living wage. 1.3m Britons are in insecure zero-hour contracts. The real average wage has hardly changed since 2008. 32% of Universal Credit claimants are in work. The full post-2016 state pension (received by about 35% of retirees) is less than 50% of the minimum wage. Millions rely on food banks and charity to survive. 100,000 people a year die in poverty and over 120,000 die in fuel poverty. 

Unchecked profiteering has created insecurity and anxiety. Around 3.8m people have experienced destitution i.e. they cannot afford to stay warm, dry, clean, clothed and fed. One in every two hundred households in the UK is experiencing homelessness, and the homelessness rate is the highest in OECD countries. Affordable council housing has been sold and not replenished. In the city of Liverpool has 12,764 households on its social housing waiting list. It has just five “additional social rent dwellings,” as local authorities have been starved of resources. Successive governments have promised to build more houses, but none have hit the targets as the UK lacks building materials and skilled labour. Deregulation is the vogue, and it is hard to see plans for dealing with effects of new homes on local infrastructure such as provision of gas, water electricity, road, rail, transport, schools, GPs, dentists, schools, nurseries, jobs, parks, shops and more.

Just 56 people hold more than the combined wealth of 27m Britons. The richest 1% owns 456 times more wealth than a person in the poorest 50%. The poorest half holds just 4.6% of the wealth. Yet the poorest 20% of the population pay a higher proportion of their income in direct and indirect taxes compared to the richest 20%. Some 16% of UK adults have no savings and 39% have less than £1,000 to negotiate emergencies. It is hard to see any sustained government policies for equitable distribution of income and wealth to underpin resilience of households to wars and economic shocks.

Low incomes and inadequate spending on public services have made lives precarious. The UK has a high rate of infant mortality compared with peer countries. British five-year-olds are up to 7cm shorter than children of the same age in Europe. One in four young people in England have a mental health condition. Victorian illnesses like rickets and scurvy have returned. Around 3 million people in the UK are malnourished or at risk of malnutrition. In 2023, 800,000 patients were admitted to hospital with malnutrition and nutritional deficiencies.

Failures of the healthcare system were exposed by the Covid-19 pandemic. Over 232,000 people died. Currently, 6.11m individuals are waiting for 7.22m hospital appointments in England. Some 300,000 people a year die prematurely whilst awaiting a hospital appointment. Around 100,000 Britons suffer a stroke each year, and between 10,000 and 20,000 die or sustain a serious disability because of treatment delays linked to staff shortages. 16.8m people have a disability.

A combination of poverty, poor housing, food, healthcare and public services has reduced healthy life expectancy (HLE) to average of 60.7 years for males and 60.9 years for females. Death rates for 25–49-year-olds are rising. The gap between the most and least deprived deciles in England is now 19.4 years for males and 20.3 years for females. HLE for males in affluent Richmond-upon-Thames is 69.3 years, and 70.3 years for females. In sharp contrast, average HLE in Blackpool is 50.9 years for males and 51.2 years for females. Males living in the most deprived areas in Scotland have average healthy life expectancy of 44.8 years, females 44.2 years. Yet hawks want to cut social welfare and effectively launch a programme of social euthanasia.

No country can face external challenges without a resilient economy. Yet under the obsession of privatisations, private finance initiative and outsourcing of public services, the UK economy has become less resilient. The state cannot guarantee people supply of usable water, clean rivers, safe wastewater disposal, affordable energy, timely healthcare, good housing, decent roads, and public transport. The economy is sluggish and the country is not self-sufficient in food, energy, medicines, auto, steel, shipping, bricks, cement, semiconductors and more. Reliance on imports has made the UK the most inflation prone G7 nation, especially as there are no effective curbs on profiteering. There is little effective competition to keep prices down. Very few companies dominate sectors such as banking, internet, mobile phones, grocery, medicines, energy, and water.

Infrastructure woes abound. Since privatisation in 1989, water companies have paid  over £85bn in dividends, and neglected investment. The average age of Thames Water infrastructure is 79 years, and 40% of its assets are over 100 years old. The average for the water industry in England is 56 years. At the current rate of renewal, it would take 700 years to replace water networks. The UK has two days of gas reserves, compared to several weeks for mainland Europe. In times of high winds, the government pays companies to turn-off wind turbines as the UK lacks good electricity transmission and storage facilities. This is expected to cost hit £8bn a year by 2030. To cope with a warlike situation, there are no parallel networks to maintain supply of clean water, energy, or internet. Reliance upon foreign suppliers for essential items means that the governments can be held to ransom. Recently, the government agreed to pay additional £64bn for NHS drugs for US corporations for the period to 2036. Yet there is no national programme to address such issues, and markets cannot deliver national planning. 

A resilient economy needs investment and the UK lags major competitors. In 2025, it invested 18.9% of GDP in productive assets, the lowest amongst G7 nations. It is over 40% for China and 33.5% for India where the state plays an active part in the economy. In recent years, the UK has had low rates of interest, inflation, and corporate taxes, but that did not spur investment. For most of the last thirty years, the UK has languished at or near the bottom of the OECD league of investment. Inevitably, productivity is low. A shrinking middle class and low spending power of the masses does not incentivise private investment. At the same time, direct investment by the state in productive assets in frowned upon. 

The City of London has never had the appetite for long-term investment and risks. It prefers short-term returns to satisfy investors. The government could arrest this by reforming corporate governance, payment of dividends and share buybacks, directors’ duties and through democratisation of corporations but despite promises no reform has materialised.

It is easy for governments to talk about preparedness for wars and mobilise people’s patriotic sentiments, but successive governments have undermined household and economic resilience. The problems caused by neoliberalism cannot be addressed by bigger doses of neoliberal policies which prioritise profits and corporate interests over people’s welfare. War on poverty and exploitation is the key requirement of building a resilient economy and society.

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