How to tackle the poverty crisis

In April, Professor Peter Taylor-Gooby, Research Professor of Social Policy, University of Kent, presented to the monthly  Canterbury Labour Party meeting and submitted the following article, which we are delighted to share with you here. 

Canterbury is a pleasant tourist area, with three universities, a Cathedral, a hospital a commuter train service and pockets of expensive housing. People are often surprised to discover it has the lowest average wage in Kent, according to KCC. Tourism, hospitality, retail, and holiday-making – the main local industries – offer insecure, low-paid work, which is why the Tory levelling-up bid, centred on tourism, is a mistake. It is also why the Canterbury, Whitstable, Herne Bay has high levels of poverty.

The poverty crisis

Poverty in the UK has risen steadily since the 2007-8 recession, as a result of a whole range of benefit cuts (rent, two-child and benefit caps, the bedroom tax, the five-week rule and the extensive use of sanctions) and sky-rocketed during Covid and last year’s cost of living crisis. Now we face a complete restructuring of the disability benefits, designed again to cut costs. One outcome is rapid growth in deep poverty or destitution. Poverty is about having an income below a poverty line – usually 60% of average wages. Deep poverty is about not being able to pay for essentials – food, rent, clothes energy and household bills – for your family.

There are nearly 15 million people in poverty in the UK, nearly a quarter of them (3.8 million people) destitute, in deep poverty. This is a major change. The proportion in deep poverty has risen by two and a half times since 2019, before Covid, and shows no sign of falling. Demand at Canterbury Food Bank continues to grow: 132,000 meals were provided last year.

Benefits often don’t reach the poor

The extent of poverty makes it truly shocking that so much money that should be going to the most vulnerable lies unclaimed. The government stopped publishing statistics on benefit take up in 2014, but the NGO Policy in Practice, calculates how much is not being claimed in income-tested benefits using the official methods. Nationally take up varies between lower that 65 per cent for Council Tax Support to a bit over 77 per cent for Universal Credit. In other words, a third of those who have a right to help with their council take are not getting it, and nearly a quarter of those who Parliament decided have a right to Universal Credit do not receive that right. Overall, nearly £23bn fails to reach those who need it – on average about £2700 each.

Why is this?

There are a number of reasons – people simply don’t know they are entitled, they don’t think they’re the kind of people who get benefits, they’re not confident they can fill in the forms properly, they don’t want to make a mistake in front of officialdom. There is more. DWP operates a hostile, unwelcoming environment for claimers, People feel humiliated, ashamed, and stigmatised to have anything to do with benefits.

What should the new Labour government do?

First restore the cuts. This would cost a lot – the House of Commons Library estimates the amount saved by government as nearly £40bn. This will take time, be politically difficult and require serious taxation of business and of the better-off to finance it. The hardest hit – disabled people and families with children, should come first.

Secondly a simple one-line Act to give DWP and local councils a duty to ensure the highest possible take up of the benefits they offer. Imagine a benefit system that worked as hard as possible to make itself attractive, that tried to help and support people in claiming benefits, that established outreach programmes to help them get their rights: aggressive advertising, use of social media, building local links with community leaders, attending the whole range of events – going into schools and colleges, visiting pensioner’ clubs and day nurseries at pick up time, an official agency that was committed to maximise take up. Cost? Very little.

Third, another Act to prevent companies that did not pay the real living wage to their employees from paying dividends to shareholders. Cost? Nothing.

Fourth, trade union rights – it is only in countries with strong unions that we have decent wages for the lowest paid. Cost? Again nothing.

Five, reforms to the training system to guarantee anyone who wanted it decent training at any stage of their career, delivered through the structure of colleges we already have. We could use the training levy, most of which is not currently spent, to pay for this.

Six, housing reforms including facilitating councils to build social housing, ending the right to buy and a Land Value Tax which would hit developers and raise some money to pay for the benefits. This wouldn’t necessarily cost a lot.

A lot more could be done – for example, a Universal Basic Income to give people some security in their lives. This is good on inclusion, but weak on targeting and would cost a lot. Doing nothing is not an option!