An election year is the time to confront the paralysing gloom and declinist thinking besetting our country and, by rediscovering our moral compass, inaugurate a new age of hope.
The British people long to feel part of a shared national endeavour. But instead, near-zero growth is giving birth to a zero-sum mentality, a belief that you can only do better if at someone else’s expense. Young people – historically the most optimistic about the future – yearn to believe in something bigger than themselves, yet this generation is fast losing faith in the very idea of progress. But the most devastating twist in this doom loop is the one created by rising poverty, the despair and divisions it causes, and the mounting public concern about its impact on our social cohesion. To break out of this downward spiral, Britain needs a reason for optimism – and a good starting point is a new partnership to end destitution and poverty that, by bringing charities, companies, communities and government together in a common national project, shows the United Kingdom can be united in more than just name.
For these are desperate times for today’s poor children. That 4.3 million children – a number equivalent to four cities the size of Birmingham – were last week declared to be below the official poverty line is shameful enough, but on the ground we are now witnessing types of penury we once imagined we had consigned to history. Children now form 1.5 million of the 6 million people enduring ‘very deep’ poverty, living not only below the standard breadline, drawn at 60% of the typical income, but below 40%. One million children are thought to have had a recent brush with ‘destitution’, defined as being without the absolute basics: keeping warm, dry, clean, housed and fed.
Last night, 140,000 children were homeless, and 1.1 million youngsters tried to go to sleep without a bed of their own; it is estimated that 2.6 million children are missing out on meals. No society can or should be at ease when children are being brought up in houses without heating, kitchens without cookers, bedrooms without beds, floors without floor covering, or toilets without toilet roll or soap. And all the evidence is that, unless we act, things will get even worse.
But how to fix it? Three seismic shifts have unfolded over the last decade. First, the welfare safety net has been systematically shredded, with the government abandoning responsibilities taken for granted since 1945. Second, charities and food banks, which have taken over from universal credit as the last line of defence, are exhausted and justifiably angry about having to pick up the pieces with insufficient resources. They even fear their desperate relief efforts could provide cover for the government walking further away. Third, unsure how they fit into a poverty-free, pollution-free future, the corporate sector has in the last decade donated less, not more. Yet the many business leaders who are now championing a greater sense of environmental and social responsibility know they can, and should, play a bigger role.
With Jeremy Hunt now hinting at an autumn mini-budget, this government has a last chance to break with the past decade and offer hope to millions by setting out a firm timetable for abolishing destitution and ending extreme poverty.
There can be no ducking the changing nature of the poverty we are addressing. A generation ago, worklessness was the overwhelming cause. Today, nearly three poor children in four live in a working household and no government can perpetuate the myth any more that the majority of our poor people are workshy or part of a dependency culture. Alongside a root-and-branch review of universal credit to reflect this, we should be raising the pay floor, creating new opportunities to climb the career ladder including through better skills (today only one in six on low pay ever escape low pay), and rewiring the various markets – for utilities, travel, rented housing and childcare – that are currently skewed against poorer families. We should offer NHS help to those who are sick and economically inactive to restore their fitness before delivering any lectures on laziness.
But action cannot await reviews and phased reforms, however necessary. Were the government to declare the end of poverty to be a national goal and set clear deadlines, there would be a way out of the current emergency. Then it could credibly invite charities, corporations and community and civil society groups to join a time-limited partnership to alleviate poverty now. Only then will it be understood that the shared goal is not to for ever fall back on food banks in place of the necessary long-term solutions, but to create immediate breathing space as government transitions us away from mass poverty.
Within the bounds of the fiscal envelope, government can build on the £1bn a year that has until now been allocated to the household support fund. A start could be made with between £1.3bn and £3.3bn found by imposing a similar reserve requirement on banks that the European Central Bank, the Swiss and others currently do (and we once did), thus hypothecating for poverty eradication a small fraction of what banks currently receive in interest payments on their balances at the Bank of England.
By simplifying the Gift Aid system, £700m of ancillary relief, which currently can end up being back with higher-earning donors, can go straight to good causes. And the Chancellor’s autumn statement could also offer additional time-limited tax incentives to encourage more giving. The top 1% donate overall just 0.2% of their income – that’s just £538 a year from average incomes of £271,000. But if that top 1% were incentivised to donate just 1%, £1.4 billion a year could be raised for good causes.
Some companies take corporate philanthropy seriously, but overall their donations represent just 0.8% of the pretax profits of FTSE 100 companies. But even if the real value of their donations had remained at its level of ten years ago, good causes would now be at least £5bn better off.
For the period of this current emergency, companies should consider donating more of their surplus products – and so reduce pollution as well as poverty. But if they cannot give free of charge, they should offer to sell to charities essential goods – toothpaste, nappies, toilet rolls, soap and shampoo, as well as food – at production cost or less.
If we share the discounted cost, and if families are referred through social workers, teachers, health visitors and GPs as well as food banks, we would be getting vital goods to those too impoverished to buy, and doing so in the most cost-effective way. Indeed, in the pilot phase of the new Multibanks – which sit alongside food banks and are food, clothes, bedding, toiletries, furnishings, and baby banks rolled into one – every £1 donated has procured supplies worth £5 in value.
This partnership is not a permanent or comprehensive solution. It would be a one- or two-year transitional arrangement, which would only succeed if the government offers benefit improvements that exceed the value of what others provide in kind. It would not be the end of poverty, but it is the signal the whole country needs: the beginning of the end. It would address the costs crippling families now, and create the headroom in which to fix our welfare safety net. With communities, charities, companies and government working together to deliver a shared national goal, we can rapidly banish destitution, and support the 2,600 food banks in their ambition to make themselves redundant – and a divided country can find unity, and hope, again.
