Tag Archives: lending

Iain Duncan Smith’s new plan to prolong child poverty

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Iain Duncan Smith wants to talk about child poverty – but how can we take him seriously when he starts the discussion with a lie?

“Recent analysis reveals that children are three times as likely to be in poverty in a workless family and there are now fewer children living in workless households than at any time since records began, having fallen by 274,000 since 2010,” according to the Department for Work and Pensions’ press release on the new consultation.

Oh really?

According to the Joseph Rowntree Foundation (JRF), child poverty will rise from 2.5 million to 3.2 million during the 2010-2015 Parliament – around 24 per cent of all the children in the UK. By 2020, if the rise is not stopped, it will increase to four million – around 30 per centof all children in the UK.

Under the Coalition government, the number of people in working families who are living in poverty – at 6.7 million – has exceeded the number in workless and retired families who are in poverty – 6.3 million – for the first time.

The Joseph Rowntree Foundation has measured poverty, using several indicators, for more than 15 years; its figures are far more likely to be accurate than those of the government, which is still defining poverty as an income of less than 60 per cent of median (average) earnings. Average earnings are falling, so fewer people are defined as being in poverty – but that doesn’t make the money in their pockets go any further.

“The previous government’s target to halve child poverty by 2010 was not achieved,” states the DWP press release. Then it comes out with more nonsense: “The government is committed to ending child poverty in the UK by 2020 and the draft child poverty strategy sets out the government’s commitment to tackle poverty at its source.” From the JRF figures alone, we know that government policy is worsening the situation – or has everyone forgotten that 80,000 children woke up homeless last Christmas morning?

shame

Let’s look at the government’s plans.

The DWP claims “reforming the welfare system through Universal Credit… will lift up to 300,000 children out of poverty, and cover 70 per cent of childcare costs for every hour worked”. But we know that Universal Credit is effectively a benefit cut for everyone put onto it; they won’t get as much as they do on the current benefits, and the one per cent uprating limit means falling further into poverty every year. Also, we found out this week that the housing element will be subject to sanctions if people in part-time jobs cannot persuade their employers to give them more hours of work. The claim is ridiculous.

The DWP claims the government will will increase investment in the Pupil Premium, provide free school meals for all infant school children from September this year, improve teacher quality, fund 15 hours of free early education places per week for all three- and four-year-old children and extend 15 hours of free education and care per week to two-year-olds from low income families. None of these measures will do anything to “tackle poverty at its source”. Tackling poverty at its source means ending the causes of poverty, not putting crude metaphorical sticking-plasters over the effects – which could be removed at any time in the future.

The DWP claims the government will cut tax for 25 million people by increasing the personal tax allowance, and cut income tax for those on the minimum wage by almost two-thirds. This means people will have more money in their pocket – but will it be enough, when benefit cuts and sanctions are taken into account? Will their pay increase with the rate of inflation? There is no guarantee that it will. And this move means the government will collect less tax, limiting its ability to provide services such as poverty-reduction measures.

The DWP claims the government will reduce water and fuel costs, and attack housing costs by building more homes. The first two measures may be seen as responses to aggressive policy-making by the Labour Party, and the last will only improve matters if the new dwellings are provided as social housing. Much of the extra spending commitment is made for 2015 onwards, when the Conservative-led Coalition may not even be in office.

These are plans to prolong poverty, not end it.

It is notable that the DWP press release repeats many of the proposals in an attempt to pretend it is doing more. Take a look at the list and count for yourself the number of times it mentions fuel/energy bills (three times) and free school meals (twice).

In fact, the only measures that are likely to help reduce the causes of poverty are far down the list: Increasing access to affordable credit by expanding credit unions and cracking down on payday lending (at the very bottom – and we’ll have to see whether this really happens because payday lenders are generous donors to the Conservative party); and reviewing – mark that word, ‘reviewing’ – the national minimum wage, meaning that the government might increase the minimum wage in accordance with Low Pay Commission recommendations.

The DWP press release quotes Iain Duncan Smith, who said the consultation re-states the government’s commitment to tackle poverty at its source, “be it worklessness, family breakdown, educational failure, addiction or debt”.

The measures he has proposed will not improve anybody’s chance of finding a job, nor will they prevent family breakdown, or addiction. The plans for education have yet to be tested and may not work. The plan for debt involves annoying Conservative Party donors.

The JRF has responded to the consultation diplomatically, but there can be no mistaking the impatience behind the words of Chris Goulden, head of poverty research. He said: “Given that it has been over a year since the initial consultation on child poverty measures, we are disappointed that the government is now going to take even longer to agree what those indicators will be.

“With one in four families expected to be in poverty by 2020, a renewed strategy to address child poverty is vital. Any effective strategy should be based on evidence and contain measures to reduce the cost of living and improve family incomes. However, until those measures are agreed, it is difficult to see how the government can move forward.”

Don’t be too concerned about moving forward, Chris.

This government is backsliding.

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The hellish legacy of Thatcher

Martin Rowson's Guardian cartoon of April 13 satirises the spectacle of Baroness Thatcher's funeral, calling it as he sees it: A primitive tribal ritual.

Martin Rowson’s Guardian cartoon of April 13 satirises the spectacle of Baroness Thatcher’s funeral, calling it as he sees it: A primitive tribal ritual.

“This is Hell, nor am I out of it.” – Mephistopheles, Doctor Faustus.

As I write these words, the funeral of Margaret Thatcher is taking place at St Paul’s Cathedral in London.

Unemployment stands at 2.56 million (7.9 per cent of the workforce).

The banks are not lending money.

More small firms are going out of business every day.

The economy is stagnant and the outlook for growth is bleak, according to the International Monetary Fund.

The rich elite prey on the poor – Britain’s highest-earners are billions better-off than in 2010, while wages for the lowest-earners are increased by so little that most of them are on benefit and sliding into debt (0.8 per cent rise in the year to February).

The cost of living has risen by around three per cent.

900,000 people have been out of work for more than a year.

The number of unemployed people aged 16-24 is up to 979,000 (21.6 per cent of all those in that age group).

Politicians lie to us, in order to win our support by deceit.

Assessment for disability benefits is on a model devised by an insurance company to avoid paying money to those who need it most.

Health services are being privatised, to make money for corporate shareholders rather than heal the sick.

Government policies have reinstated the ‘Poll Tax’ principle that everybody must pay taxation, no matter how poor they are.

Government policies mean child poverty will rise by 100,000 this year. It will not achieve the target of ending child poverty in the UK by 2020.

Government policies are ensuring that many thousands of people will soon be homeless, while social housing is being sold into the private sector.

And Legal Aid is being cut back, to ensure that the only people with access to justice are those who can pay for it.

This is Thatcher’s Britain, nor are we out of it.

She died; we went to hell.

The government’s plan to make sure work WON’T pay!

I’ve got to share with you some words by Justine Greening,the Transport Secretary. She said them on the BBC’s Question Time, broadcast July 28, 2012: “The first thing to do is bring in a welfare cap, so we put an upper limit on how much people can get in welfare in the first place, that is fair. Let’s make sure we reform it in terms of Universal Credit, so that work does always pay.”

How does capping benefit ensure that being in work will always pay?

Whether in work or not, people are finding it hard to make ends meet because housing costs – either rented or mortgaged – are very high and nothing is being done (for example) to cap the amount of rent being charged by private landlords; utility bills are high and nothing is being done to encourage the gas, water and electricity companies to pass on any savings that come their way; and the price of groceries is outstripping people’s ability to pay for them – inflation has dropped but remains above the percentage rate of annual wage rises (unless you are a fat-cat company boss and have awarded yourself a huge salary increase).

Capping the amount available to honest people on benefits will not be fair on them, as they will have even less to live on than at the moment!

Worse still, it won’t help people who are in work! It’s ridiculous for the Transport Secretary – who previously worked in the Treasury, so she should know what she’s talking about – to suggest this. Benefit payments and wages are completely separate from each other.

In fact, while the British people continue to subsist in a low-wage economy, the government is in danger of repeating the debt crisis that created the huge deficit it is supposedly trying to pay off at the moment – the one for which it continually and inaccurately blames the previous Labour government.

It was imprudent bank lending that created the deficit. The government had to step in to save the banks, after they got into so much debt the entire western financial system was put in danger of collapse. The money to do this had to come from somewhere, and that is why it has to be paid back.

But what happens when a poor working person cannot make ends meet, because their job doesn’t pay enough? They borrow money to make up the difference – even if they know they can’t pay the money back!

What happens when too many people borrow money they can’t pay back? The banking system overbalances and we get a debt crisis. That’s where the Coalition is taking working Britain.

The only action the government can take to make work pay would be to reach not only adequate, but exemplary pay deals with public sector workers, and then take action to compel private companies to reach similar deals.

A living wage for hard-working employees – that’s what’s needed.