The UK is a rich country built on mass poverty
Record levels of very deep poverty expose the true cost of austerity, inflation and the concentration of power at the top.
The Joseph Rowntree Foundation (JRF) recently released a report showing that a record number of people in the UK now live in “very deep” poverty. The incomes of those in this category are 40% below the poverty line, after housing costs. So, a family with two young children would be classed as living in very deep poverty if their household income was around £16,400.
From poverty to destitution
Today, there are 6.8 million people in the UK living in very deep poverty – nearly half of all those living below the poverty line. These families are barely able to make ends meet. Many will be forced to use food banks, as they’re unable to afford food and other essentials after paying their rent and bills. Others will be placing essential purchases on credit cards, while they desperately seek out better paid work.
Some, especially the nearly 2 million people who have been stuck in very deep poverty for years, will simply have to go without. Many will have to skip meals if they’re unable to access support provided by food banks. Others will be unable to heat their homes, instead spending their free time in the UK’s growing number of ‘warm banks’ – charity-run public spaces where people can go to keep warm.
Of these 7 million people, nearly 4 million are classed as destitute. They are unable to afford the very basics required for survival. Many are at serious risk of homelessness – and some already are. Last year, a record number of children in the UK were living in temporary accommodation – being shunted from one hotel room to another as they’re told there’s no space for them in social housing.
This is a national crisis – and our politicians could not care less. They’ll frequently point to the fact that headline poverty rates have remained unchanged for years, at around 21% of the population. Given that the headline rate is calculated as a percentage of the median income, this isn’t surprising. This way of measuring poverty gives the appearance of continuity, when the lived reality for those living in poverty has deteriorated sharply.
The cost of greed crisis
So, what explains the increase in the number of people living in very deep poverty? The proximate cause has been the cost-of-living crisis. The effects of the cost-of-living crisis were not evenly distributed. As I’ve argued before, inflation is political – the powerful are shielded from its effects, while the least powerful have to bear the burden of rising prices.
Historically, labour unions have organised workers to defend themselves from the impacts of rising prices. Organised workers would fight demands that workers pay for rising prices in the form of lower real wages. But unions have been beaten back by decades of anti-union policy, reducing workers’ relative power. So, notwithstanding some significant victories for the labour movement in recent years, workers have been forced to pay for inflation – not bosses.
Meanwhile, some large corporations have actually been profiteering from the crisis. As Isabella Weber powerfully argued in 2021, large corporations with lots of market power were able to use the inflationary climate as an excuse to raise prices more than they needed to. This phenomenon of ‘greedflation’ explains the higher price increases seen across more monopolistic sectors of the economy – from energy, to transport, to financial services.
The crimes of austerity
But the UK’s poverty crisis can be traced back to before the cost-of-living crisis and the pandemic that preceded it. The UK’s brutal austerity regime, which started in 2010 under David Cameron’s Conservative government, laid the foundations for the current poverty crisis by destroying the country’s social safety net.
Cameron and his chancellor George Osborne claimed the UK had ‘run out of money’ after the financial crisis, and they had no choice but to cut public spending. This was, of course, a blatant lie. But the narrative was powerful – and necessary for a political elite shaken by a financial crisis that had strengthened the voices of those seeking to upend the UK’s irrational and corrupt economic model.
Much like the corporations using inflation as an excuse to gouge consumers, politicians used the financial crisis as an excuse to shift the balance of power in society away from workers and towards capital. Destroying public services while cutting social security would increase the fear of unemployment. Further attacks on the labour movement would make it harder for workers to organise. The climate of fear created during the austerity years made workers much more likely to sit down, shut up, and accept what they were given.
As is now well-documented, the decade following the financial crisis was the longest period of wage stagnation since the Napoleonic wars. During the austerity years, the number of children living in poverty increased sharply as working age households came to bear the brunt of the poverty crisis, thanks to wage stagnation and the collapse of public services.
Fixing the crisis
This strategy was helped along by the extraordinary monetary policy being pursued at the same time. Capitalist states all over the world cut interest rates to near zero, created vast sums of new money and pumped it into their financial systems, placing a floor beneath falling asset prices.
The uber-wealthy benefitted most from low interest rates and QE – they were able to borrow very cheaply to invest, and the assets in which they did invest soared in value. But plenty more households also benefitted from lower mortgage repayments. Low rates also catalysed a credit boom, as people were able to pay for anything – from cars, to phones, to groceries – using cheap debt.
The cost-of-living crisis put an end to the post-crisis era of easy money and exposed the profound weakness of an economy built on exploitation and extraction. Interest rates soared, and all that cheap debt suddenly became a lot more expensive. Rent and bills increased with rising food and fuel prices, exacerbated by ‘greedflation’. And without the salve of easy money, old sores – from low wages, to the housing crisis, to the collapse of public services – began to fester.
Bosses and politicians have spent the last several decades telling us that poverty isn’t a problem. They’ve told us they can fix it with economic growth, or labour market reforms, or easy money. But all of these ‘fixes’ simply served to obscure a very obvious truth: the poverty of those at the bottom is a direct consequence of the wealth of those at the top. We will not solve poverty until we take on the power of the rich.
Great post- thanks! And really, I'm guessing we can trace so much of this back to the days of Thatcher (and her good friend Reagan), when our current form of neoliberalism was in its infancy. That was the start of it all- the move to marketize everything and the creep of market logic and private money into all spheres of life.
Those in power want to squeeze every last drop out of the working class.
They are quickly turning the UK into a third world country, with ordinary people struggling to pay rent while the billionaires and their politician buddies ride private jets.
The whole 'We'll cut government spending and save money.' thing was nonsense. After one decade of 'Austerity' programs the UK's debt levels are at the highest since the early 1960s.
The purpose of the 'Austerity' programs was not to save money. It was to make everyday people pay the costs of the greed of the ruling class.
Here's a piece of advice to our politicians.
If you need money so badly, get it from the billionaires who have it.