In an article for The Lancet in early December that was critical of the government’s continuing austerity policy, my colleagues and I argued that contrary to accepted wisdom, history shows that a universal social security system enhances economic growth.
Queen Elizabeth I’s highly innovative, universal Poor Law of 1601, which offered support to people unable to work, facilitated the country’s rise from economic obscurity to European and then global pre-eminence. We also pointed out that the best growth rates during the last 100 years were those achieved following the introduction of the new welfare state in the three decades after World War II.
Our reforms are incentivising work and restoring fairness to the system, while supporting people from all backgrounds. Employment is at a record high and we continue to spend over £90 billion a year on working age people who are out of work, disabled or a carer.
The government believes that its welfare reforms can take credit for “incentivising work” – but what kind of work? The DWP proclaims “a record high” in employment, but in its new annual report monitoring poverty in the UK, the Joseph Rowntree Foundation found that such panglossian statements fail to mention another record high: in-work poverty. It reports that 7.4m people – that is 55% of all people in poverty – are now in working households.
The DWP also cites the single large figure of £90 billion out of context. This evades talking about trends over time. Independent analysis by the Institute for Fiscal Studies (IFS) has shown that the combination of the cuts made by the former chancellor, George Osborne, the failure of his successor Philip Hammond to reverse them, and the freezing of benefits as inflation rises means that the poorest 30% of the population are having their incomes reduced by far more than everybody else in society – both now and into the future.
This is not a restoration of “fairness” by any understanding of the phrase. The financial services sector of the economy has been supported by the state – meaning all taxpayers – at a rate which runs into millions of pounds for each and every individual employed in that sector. At its peak, the government provided support of £1,162 billion to help the banking sector, including bailing out banks such as RBS and Lloyds, according to the National Audit Office. At the end of March 2016, continuing support for the banking sector stood at £85 billion.
But the IFS analysis shows it is not the 10% of highest earners – or indeed any of the top 30% – who are having their incomes inconvenienced by austerity policies. It is only those at the other end of the income distribution, those with very modest margins above subsistence, who are being forced to pay back to the state on behalf of the bankers. The truth is that the City of London should hang its head in shame that the poor and the vulnerable are being asked to pay their bills to society. Morally speaking, the world has been turned upside down.
The DWP claim that the government’s policies are supporting people from all backgrounds is flatly contradicted by the fact that the Trussel Trust today operates over 450 food banks. In 2015-16, they provided over 1.1m emergency three-day food supplies for persons and families in desperate need, up a staggering 27-fold since 2009-10. Are these millions not “people” with “backgrounds”? The fact that such a large number of our fellow citizens are clearly not being supported by the state renders the government’s reaction a “post-truth” statement. It would be dangerous to let it go unchallenged.
Food banks let politicians off the hook
Instead of acute embarrassment at the existence of even a single food bank in one of the world’s wealthiest countries, food banks have become a cynically exploited tool of the austerity state. Just as critics of the Big Society agenda feared when it was trumpeted by David Cameron in 2010, such willing voluntarism by well-meaning citizens permits ministers to make unacceptable cuts and falsely maintain that their policies are doing no harm.
Claimants can be “sanctioned”, penalised and sent to food banks for survival rations, while the state delays their payments and saves itself costs. The single biggest reason for referral to the Trussel Trust’s foodbanks (28% of the 1.1.m) is “benefit delays”. Every one of these 310,000 incidents represents pain and humiliation for our most vulnerable. People don’t want charity, no matter how kindly offered. They want their rights to be protected by their government.
Every citizen should watch the Ken Loach film I, Daniel Blake if they want to understand this, particularly citizens living in the non-metroplitan south where food banks are less common; and most particularly all Conservative MPs, whose government is responsible for the policy. There is not a single Conservative MP representing any of the 99 most impoverished constituencies in the UK, measured by the latest official DWP figures on the percentage of children living in low-income families.
Sadly, those generous citizens staffing food banks are unwittingly complicit in this callous policy and its brutalising administrative processes which are systematically degrading something of extraordinary value, of which citizens of this country should be justifiably proud – a universal welfare system. Without food banks, austerity would never have worked because there would have been multiple and regular deaths from actual starvation on our streets for the media to report.
Food banks cannot, however, halt the despair which this unjust policy breeds. The cruel, cost-cutting logic justified in the name of austerity is in reality a state-imposed policy of playing Russian roulette with the lives of the less fortunate. This can no longer be denied. In August 2015, DWP was finally forced to issue statistics confirming that death rates among those declared fit for work by commercial companies were disproportionate – and a number of them have been suicides.
When Theresa May claimed on the steps of Downing Street that she was about to govern for us all, her number one policy goal should have been the vow that nobody in Britain would need to use a food bank again and that she would achieve this within six months of taking office.
Britain’s universal social security system was an extraordinary innovation in entitlements created over 400 years ago by the first Queen Elizabeth. Cut-back by a utilitarian logic in 1834 when the Poor Law was amended and replaced by the notorious workhouses depicted by Dickens in Oliver Twist, it blossomed once again after 1945. It has been a valuable pro-growth institution as well as one promoting social cohesion, which makes the current government policy of turning the clock back to the stigma of the workhouse profoundly misguided, as well as harmful.