There's an economic crisis on – but you can still choose to fight poverty

Posted by Moussa Haddad Economic Justice Policy Officer, UK Poverty Programme

13th Jun 2012

Times are tough. The economy's back in recession. It's an age of austerity. So far, so familiar.

But Oxfam's new report on UK poverty tells us two important things that we hope will shift a few perceptions. First, people in poverty are being hit hardest. Indeed, the number of things hitting at the same time are why we're describing it as a 'perfect storm'.

Second - and no less important - is that this is not inevitable. There are clear political choices being made. And a choice is something that could be done differently - for example, to protect people in poverty.

There's a lot going on, but to take one example: incomes as a whole are falling faster than any time since the 1970s. But, while earnings of waiters and cleaners staff are going down (by 11% and 3% respectively last year), the directors of FTSE 100 companies got 50% richer last year.

One trend that's been accelerating is that, increasingly, for millions of people, work doesn't pay. 6 in every 10 working-age adults living in poverty are in working households. Since the recession started, 830,000 full-time jobs have been lost, with half a million new part time jobs failing to fill the gap. The UK has more zero-hours contracts than anywhere in Europe, and weaker employment rights than Mexico.

And that element of choice? Public service cuts hit the poorest tenth 13 times harder than the richest. Whilst the rich can afford private schools and private healthcare, ordinary people are bearing the brunt of cuts to vital services. Yet the government is cutting £4 of spending for every £1 it is raising in taxes - and most of that comes from VAT, which hits the poorest twice as hard as the richest.

There are alternatives. The £35 billion tax gap - avoided mostly by those rich enough to pay for specialist advice - would pay for every nursery, primary, secondary and special school in England. A Robin Hood Tax on financial transactions would raise as much as VAT, but from those who did so much to cause this crisis, not from the poorest.

In turn, by clamping down on tax avoidance and introducing a Robin Hood Tax, the government could prevent further cuts in benefits and protect the safety net; it could reduce cuts to public services; and it could invest in affordable housing and universal childcare. Gandhi said that a nation's greatness is measured by how it treats its weakest. There's a choice the UK government could make.

Blog post written by Moussa Haddad

Economic Justice Policy Officer, UK Poverty Programme

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