Whilst Osborne and the Tories boast of recovery, the Joseph Rowntree Foundation’s report ‘Monitoring Poverty and Social Exclusion 2014’, makes for a lot less positive reading, providing details about how this so-called “recovery” has not benefited the poorest in society.
George Osborne, in his 2014 Autumn Statement speech, argued that he has brought Britain back from the brink and pointed to higher growth, lower unemployment, falling inflation and a falling deficit as evidence. He argued that the economy is on the road to recovery, which showed his plan is working.
The Joseph Rowntree Foundation’s (JRF) report ‘Monitoring Poverty and Social Exclusion 2014’, however, makes for a lot less positive reading, providing details about how the “economic recovery” has not benefited the poorest in society.
Profits up; wages down
The report shows that average incomes have fallen by 9% in the years 2007/08 to 2012/13 after housing costs are taken into account. However, this fall in income has not been felt evenly. The people who find themselves in the bottom 10% of earners have seen their incomes fall by 8%, but the richest 10% have only seen incomes fall by 1%. Whilst there is some positive news in the fact that poverty among pensioners is at a record low, working age poverty is as high as it has ever been. This ‘recovery’ is clearly not an even one.
The fall in wages looks even worse when it is revealed that the cost of essential items has risen more than average prices in recent years. The average basket of shopping now costs 30% more than it did 10 years ago and domestic energy prices have risen by an incredible 150%. Rising costs have led the JRF to say that the Minimum Income Standard (the amount of money required to live what is deemed a socially acceptable quality of life) has risen by 25% for a single adult without children.
The crisis and contradictions in housing
The last decade has also seen all but the wealthiest spend an increasing proportion of their income on housing. The poorest fifth of the country now spend 4% more on housing, while the middle fifth also spend 2% more. Additionally, it is those in the private rented sector that spend the highest proportion of their income on housing.
This essentially means that the poorest in society are giving increasingly large amounts of their income to some of the richest in society, the property owning elites. This suspicion can be confirmed by the fact that the number of people in poverty in the private sector doubled in the last decade.
Not only are the greedy landlords taking money off of hardworking people, but they are also taking money from the state in the form of housing benefit. The number of housing benefit claimants has reduced, but the number of claimants in work has increased. The state is attempting to plug this, and it has spent 20% more on housing benefit in 2013/14, than it did five years earlier.
It can hardly be said that the rising level of housing benefit is due to the generosity of the government. Working people are increasingly unable to afford housing due to rising costs and stagnant wages, and so the state pays instead. What we see, in other words, is that the profits of the capitalists are being subsidised by ordinary taxpayers. Is it not time that the housing was realised as a use-value, and not merely an exchange value for rich capitalists? Should houses be used as homes, rather than as investments and a source of profit for the wealthy?
Rising costs of essentials mean it should be no surprise to find that working-age poverty has risen in the last decade. Moreover, the scapegoating rhetoric of “benefit scroungers” by many right-wing commentators and politicians seem all the more ignorant when it is revealed that half of all people in poverty live in a family where someone is in paid work. Work within capitalism still can’t guarantee an acceptable standard of living, as the bosses drive down wages in the interests of profits.
The sticking plaster of welfare
Employment has been on the rise in the UK, but this masks the whole story. The JRF report that less than 20% of those in low pay in 2002 avoided being in low pay again at any point during the period between 2010 and 2012. Those in low pay seem to be trapped there. Moreover, jobs are often insecure – particularly so among those in industries that pay low average wages. Job insecurity and the spectre of the reserve labour force act as disincentives for working people to fight for higher wages and so allow capitalists to put even more pressure on wages.
Capitalism is an inherently anarchic and contradictory system. The rational desire of individual capitalists is to push the wages of their workers as low as possible in order to maximise profits. This, however, is collectively irrational for the capitalist class as whole, as it means cutting away on the very branch they are sitting on. Workers are unable to buy back the very goods that they themselves produce, leading to what Marx calls “crisis of overproduction”.
The welfare state is an attempt to try and overcome this collective irrationality, acting today like a plaster over a gaping wound, ameliorating the worst excesses of capitalism and providing ordinary people with a basic standard of living. But even this minimal safety net is under threat by a capitalist system in deep crisis.
The JRF reports a rise in the welfare bill over the past five years. This has not, however, led to individual claimants seeing an increase in standards of living, but it is merely an attempt to keep the system running by allowing individuals to purchase essentials such as housing.
The limits of reformism
This system is, however, obviously precarious. The state can’t indefinitely pay capitalists for the goods that workers need unless it raises taxes. But where do those taxes come from? Either from workers themselves, which means returning to the original problem, or by increasing taxes on the rich. This, however, leads to an exercise of power from the ruling class, who engage in what is called ‘capital flight’. Such a “strike of capital” was seen in France recently, under the “Socialist” government of Francois Hollande. As Hollande unveiled tax rises on the rich, there was a sudden rise in outflows of capital, amounting to £43.8 billion.
Instead of taxing the rich, the ruling class in the UK has decided to attack the welfare state, hidden under the label of encouraging ‘personal responsibility’. Such a tactic, however, cannot last forever. If the cost of living continues to rise at a faster pace than wages, it will push people into taking action to defend their living conditions. Only by taking power out of the hand of the bosses and the bankers can we stop them from holding nations to ransom and instead ensure a decent standard of living for all.
An attack on ordinary people – workers and youth must fight back!
This government of the rich continues to attempt to mask social problems as individual ones. For the last two years, the number of Job Seekers Allowance claimants receiving sanctions for non-attendance of the government’s Work Programme remains higher than those who actually find work through it. Moreover, whilst there has been an increase in sanctions for people who supposedly falsely claim benefits, there has also been an increase in successful appeals. Vulnerable people are therefore being denied benefits that they are entitled to.
This trend is made all the more worrying by the government’s recent attack on legal aid. JRF reports that the biggest decreases have been in family law, which is down by 87%, and social welfare advice, which is down by 79%. So, real wages are falling, poverty is increasing, state safety nets are being withdrawn and the means to fight this action through the legal system is being restricted.
What we are seeing is accumulation by dispossession from a ruling class greedily attempting to maintain the social order in its current unjust state. Both the reformist path of Hollande – and of the other leaders of the labour movement – and the neoliberal one of the Tory-led coalition government are doomed to failure. The only solution is for socialist revolution.