Our poverty crisis is Dickensian at the top as well as the bottom

The wealthy are disgracefully far from fulfilling their obligations to the poor. By redeeming themselves, they’d make a huge difference

March 29, 2024
Allstar Picture Library Ltd / Alamy Stock Photo
Oliver Twist, 1948. Dickens would have chronicled the penury and skewered the inequality that characterises our times. Allstar Picture Library Ltd / Alamy Stock Photo

It has understandably become a cliché to call today’s poverty crisis “Dickensian.” Hunger is rampant, with recent official data showing that the number experiencing—in the numbing bureaucratic parlance—“very low food security” is up by two-thirds in a single year. Oliver Twist wouldn’t have been surprised by the appalling wave of shoplifting that has accompanied this. Rough sleeping has risen by 60 per cent over the last two years, and with millions unable to afford soap and shampoo, that ghastly Victorian phrase “the great unwashed” achieves a new resonance. 

I haven’t yet heard the word “Dickensian” used when it comes to the response of the affluent to the penury in their midst. Increasingly, though, I find myself thinking that the satirical pen of Charles Dickens would have been inspired by the failure of the more fortunate parts of British society to face up to their duty. 

Consider two facts highlighted by Gordon Brown in his Jonathan Sacks memorial lecture on 27th March, both of which brought Ebenezer Scrooge to mind. (Full disclosure: I have recently been working with the former PM on the issue of poverty but he has had no involvement with this piece, and no responsibility for its content.) 

First, despite some spectacularly generous exceptions, in general the best-off are simply not giving enough to charity to fulfil any reasonable idea of their obligations. Last year, the Law Family Commission on Civil Society, an inquiry chaired by the former Cabinet Secretary Gus O’Donnell, reported that those among the top 1 per cent income bracket—even those who declared a charitable donation on their tax return—mostly gave less than 0.2 per cent of their income. A couple of years ago, Pro-Bono Economics spelled out what this meant in cash terms: just £45 a month, for a group typically bringing in £271,000 a year. Even worse, the trend was heading the wrong way: donations had been falling outright, despite a rise in large incomes. 

Second, Britain’s corporate giants are not—again with some very important exceptions—taking up the slack. Quite the reverse, in fact. The Charities Aid Foundation has tracked donations from FTSE 100 companies, and found they have fallen by 26 per cent over the decade in cash terms. The decline was even sharper when considered alongside rising prices, and especially growing profits. CAF’s detailed working suggests that, in just six years from 2016, donations tanked from 2.4 to 0.8 per cent of pre-tax profits. 

With figures like that, it isn’t necessary to bark “are there no poor houses?” to convey the spirit of Scrooge. I could go on. Even though the Gift Aid tax regime allows the better-off (and only the better-off) to personally claim extra relief on their donations, the declared gifts of a “top 1 per cent” that brings in 14 per cent of all pre-tax income account for a mere 6 per cent of aggregate donations. 

And all this is before we touch on stocks of private wealth, which has roughly doubled relative to national income over the last few decades. Sadly, there is scant sign that this bounty will be widely shared, as nearly seven in 10 of the super-rich say they have no plans to leave a charitable legacy. 

But let’s not forget that the story of Scrooge is ultimately a tale of redemption—and a story of hope. The low baseline level for plutocratic generosity means there is scope for individuals and companies alike to make a massive difference. Merely restoring corporate donations to the real value of 2016 could, CAF reported last year, bring in £1.85bn, and roughly thrice that if the gifts were pegged back to profits. Likewise, persuading that top 1 per cent to give just 1 per cent of income could bring in £1.4bn. 

These are serious numbers in the context of the poverty crisis: one of its increasingly notorious drivers, the two-child welfare limit, is only expected to save the government £2.4bn next year, according to calculations by the Resolution Foundation. 

And the good news is that, by working in partnership, the effects of a new age of giving could be multiplied many times over. Brown has set out in detail how charities, such as the “multibank” initiative that he is involved with, can identify and source the basic goods and services people require. We just need companies to provide, perhaps as an alternative to cash donations, those basic supplies at cost-price or better. When they do that, each £1 that individual donors chip in can secure goods and services worth £5 or more, achieving precisely that “stretch” on the difference they can make that philanthropists rightly want to see.   

This sort of “all hands on deck” emergency relief is not a permanent solution. In the end the welfare state will have to be repaired. But it could make an enormous difference in getting the most vulnerable through this dark hour.

And this will be true in spades if the state underpins such partnerships with extra public resources, which could match private generosity. One way to source these would be to axe a poorly understood implicit subsidy to the commercial banks. This arises from the anomalous way that the Bank of England treats their reserves: the BoE’s former deputy governor, Paul Tucker, has written that it “could—and arguably should—have been avoided.” New Economics Foundation research suggests anything from £1.3bn to £6.6bn could be raised by bringing the Bank of England’s approach into line with that of other central banks around the world.

As for the wealthy, by loosening their purse strings and getting behind this sort of plan, they can help heal a wounded society that we’re all inescapably part of. And, indeed, they might put themselves in a position where they deserve the famous blessing Tiny Tim bestows at the end of Scrooge’s story: “God bless us, every one!”