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The poverty pivot: moving from cure to prevention

Charitable relief is essential but, as with painkillers, we mustn’t get hooked. Here’s a plan to, first, get through our dark hour—and then move on to sustainable solutions
May 14, 2024

You don’t need numbers, but merely open eyes in any British city, to discern that many people who used, presumably, to sleep with a roof over their heads are these days living in tents: not long ago I saw one pitched just outside the Ritz. Still, it’s important to have the facts, but they’re becoming difficult to keep up with—difficult because the sheer torrent of pertinent data. 

Having told us in February, for example, that rough sleeping had risen by nearly two-thirds over two years, the Office for National Statistics added in April that the count of children stuck in (reliably dreadful) “temporary accommodation” had shot up by 15 per cent over 2023. The ONS hardly stops tallying new ways in which such privations are getting under the skin of our society and its members. Only a fortnight ago, it confirmed the astonishing wave of shoplifting, already reported by industry sources who link it to a black market in food, was mirrored in record-breaking police logs of the crime. A few months before, it had confirmed that Britons are no longer enjoying longer lives, but dying earlier. This followed earlier ONS analysis highlighting a “statistically significant” decrease in life expectancy, very specifically, within the “most deprived areas.” 

I would hope, then, that it is plain we are in the grip of an emergency that demands radical treatment. The question of what that treatment should be is, however, fraught. A medical analogy is instructive. Many palliatives that are essential to getting through a crisis soon create new problems—pain relief is addictive; life-support machines weaken the body in all sorts of ways. Any serious plan for nursing a patient back to full health needs to include a strategy for reducing reliance on such unsustainable supports. 

In our social emergency, a whole host of charitable crisis services— foodbanks, “warm hubs,” plus the new “multibanks” that ingeniously source all manner of goods, from toilet rolls to bedclothes, to meet basic needs—have burgeoned to keep bodies and souls together. These citizen-powered efforts also offer an indispensable glimmer of light in the darkness, reminding us that people of Britain never wanted to see their old ideals of decency surrendered. 

And yet they are both an incomplete solution, and not one we should entrench. The charitable impulse can never provide adequate security: indeed, there have recently been chilling signs of foodbank supplies becoming dangerously squeezed. Just as importantly, no-one enjoys being a supplicant when it comes to the means of survival. Nobody is clearer about the toll taken on dignity than the foodbanks themselves. Which is why both the giant Trussell Trust and the Independent Food Aid Network insist that the only sound future is one in which they can safely be abolished. But how on earth to get there, when millions of Britons are relying on charities of different sorts, and the immediate need is for them to do not less, but much, much more? 

To grapple with precisely this dilemma, I have written a pamphlet with former prime minister Gordon Brown (who has had no role in this piece, and bears no responsibility for its content)—Partnership Against Poverty is out this week. We set out a plan to support, in a time-limited way, a ramping up of charitably-led relief. Working within the various public borrowing rules that both parties have committed themselves to, we suggest repurposing the £1bn currently earmarked for the existing household support fund, and topping this up by imposing “reserve requirements” on banks (meaning a proportion of the balances the commercial operators hold at their central bank would be mandatory, and wouldn’t have to be compensated with interest) to match those of either the ECB or Switzerland. Matching their requirements would respectively yield savings of £1.3bn or £3.3bn on the interest payments currently made to commercial banks by the publicly owned Bank of England.

Together, these monies could create a three-year “partnership fund”, which could support charities to bulk-buy essential goods in special—cost-price or better—deals with companies. Many firms are already supporting such endeavours, and the growing financial and reputational cost of dumping surplus goods in landfill provide many others with reason to do so. As indeed will managers’ need to demonstrate to rapidly swelling ESG funds (that is, funds invested according to a set of environment, social or governance criteria) that they are making a positive social “impact”. The partnership fund could also plug dangerous information gaps, which currently stop vulnerable people accessing potentially available support—for example, by supporting charities to train advice ambassadors; and indeed, by creating a public “node” to connect local charities that can pinpoint precisely where help is most needed with the philanthropists and corporates who have resources to contribute, but are uncertain about where to deploy them. 

In parallel, we could get more donations going straight to the charities by redirecting a Gift Aid rebate which is—anomalously—currently handed back to higher-rate taxpayers, but nobody else. Finally, we could directly boost donations and encourage more of them through the crisis, by ramping up the overall generosity of Gift Aid on a time-limited basis. As with the partnership fund, this increased generosity would apply for a time-limited three years.

All this could make an enormous difference, ensuring that more people have the means to keep themselves fed, clothed, clean and dry. But we also need a plan for ensuring that is not just many people, but all people who can be rescued from destitution—for good. This requires the universal reach of the state, and a firm government commitment to develop, in conjunction with partners, a comprehensive timetable—with credible milestones—for abolishing the penury in our midst. 

Renewed growth, revamped skills training and better jobs will all be crucial planks, but as fundamental as anything is fixing the gaping holes torn in the social safety net through such policies as the two-child welfare limit. There is also a need to confront the fundamental inadequacy of the basic level of support on offer. The Joseph Rowntree Foundation and Trussell Trust have documented—on the basis of what the public themselves rank as “essential”—that basic benefits, of around £90 a week for a single person, are way short of the £120 or so needed to cover these costs. 

The obvious problem is that public finances are in a terrible state, and exposed to many competing and pressing priorities, including a creaking health service and outright collapsing councils. So can adequate benefits be achieved? Over time, they certainly can. 

The Resolution Foundation has highlighted how the combination of ageing demographics and the stringent current approach to indexing benefits will—over the next decade and a half—combine to reduce the weight of working-age benefits in the economy, which they project will fall from 4.6 to 3.3 per cent of GDP over the 15 years from 2026. 

That easement of nearly 0.1 percentage points of GDP annually—in today’s terms, roughly an extra £2.5bn each year—means, in principle, that significant and rising extra resources will steadily become available for improving the system. Indeed, the Foundation notes that even if working-age benefits were increased each year in line with rising wages, then their weight in the economy would still be falling. It notes, too, that the real growing giant in the welfare budget—pensions—could be managed if only the peculiar “triple lock” uprating arrangement were replaced with a well-designed earnings link, which could perfectly adequately protect the elderly from falling behind. 

There is, in sum, a plausible path through the current crisis, and then to move on from emergency cures to sustainable prevention. We really can make poverty history—if we want it enough.