New Labour, child poverty and class warfare

This was delivered as the introduction to a discussion at a Labour Party ward meeting in 2015.

First, a comment on my general political approach. On Friday I attended a debate at the constituency general meeting about academies, in which several members insisted that the discussion should take place on the basis of facts rather than ideology. I don’t accept that distinction. There is no such thing as a neutral, technocratic view of the world: those who claim there is are invariably attempting to hide the ideological, and often also material, interests involved in their case.

For the left, what you might call dogmatism should be avoided, and ideology should be developed, reviewed and amended on the basis of assessing and reassessing changing facts. Nonetheless, we need to generalise politically, or we will not be able to make sense of reality. Argument must in part be argument about political analysis and world view; it can never just be about factual details, or it will not be fruitful.

On that basis, I should state in advance that I am analysing from a socialist viewpoint. My preparation for this presentation has reinforced that viewpoint. Obviously I’m aware that not everyone taking part in the discussion will share my framework, and I will attempt to provide material for a wider conversation too.

Compared to poverty in general, child poverty has a particular emotive buzz – and rightly so, since it shows this society’s iniquities and injustices in dramatic, stark terms. Nonetheless, child poverty is very much part of a wider issue of poverty, so I will look at both together.

Through the welter of statistics, I think two things emerge very clearly. The first is that the Tories have and are actively and deliberately making poverty, including child poverty, worse. The second is that since 2010 our party’s program to fight this has gone from highly inadequate to virtually non-existent. I became more active in the party recently partly because I wanted to change this.

As soon as it came to office in 2010, the Tory-led coalition initiated a determined program to transfer wealth upwards – from most employees, worse and better off, and in particular from people not in work, to the rich and in particular to the very rich. This took place through holding down real wages (and in some cases actual wage cuts); attacks on workers’ terms and conditions; cutting relatively well-paid and secure jobs in both public and private sectors and creating more low-paid, insecure jobs; stepping up privatisation and outsourcing in part for the same purpose; slashing public services of all sorts; cutting benefits; and forcing many people off benefits altogether.

I can’t see any serious case not to call this “class warfare”.

Anyone who doubts this should be confronted with two figures, picked out of many similar ones. In April the Guardian reported that between 2009 and 2015 the thousand richest individuals and families in Britain, the so-called Sunday Times Rich List, more than doubled their wealth, from £258 to £547 billion. That figure, by the way, does not include what’s in their bank accounts! They now have more wealth than the poorest 40 percent of British households combined – that’s 25 million people. Meanwhile real median income was still slightly below where it was in 2009.

Back in the slightly less insane world of the only very rich, the average CEO now gets 184 times what the average worker in their company earns. The figure was 160 times in 2010, and only 47 times when Labour had just come to power in 1998 – which I’ll return to. All this is if you exclude outsourced workers, who of course tend to be the lowest paid. It’s also distorted by being based on mean-earnings, so high and super-high salaries at the top mean the average wage in the company appears much higher than it actually is and the degree of inequality lower

In other words, the rich have got richer by making in particular the poor but in fact the majority of people poorer – by employers exploiting their workers more and by public spending on social goods being reduced in order to allow the bringing down of costs levied on the wealthy as well as frightening and disciplining people to work harder and take more crap at work and in our lives.

Naturally all this has had major negative consequences for poverty, including child poverty. With the Tories first coming to office, progress towards reducing child poverty was halted. Child poverty rose from 2.3 million in 2013 to 2.6 million in 2014. The increase was bigger for families with a disabled person in, due to cuts in benefits. Almost 30 percent of children now live in poverty after housing costs are taken into account. Many analyses suggest that on current trends child poverty will be 4 million by 2020, well above the 3.4 million when John Major left office.

Last year food banks supported almost 1,100,000 people, of whom almost 400,000 were children. Trussell, who run 43 percent of food banks in the UK, had only 2 in 2004; now they have over 400. Meanwhile the press runs stories about mothers regularly going without food in order to feed their children.

As a London Labour Party, we should note that London is also the “food poverty capital of Britain”. About 600,000 children in our vastly wealthy city live below the poverty line, 37 percent. Unsurprisingly, serious signs of malnutrition are on the increase; most medical experts believe that poor diet due to poverty is the main driving factor. Of course this has huge knock-on effects for children’s long term health, development, educational achievement and life changes in many respects.

Meanwhile, Victorian era diseases like rickets have reappeared. All this is the very sharp end of the process by which the rich have got richer at the majority’s expense.

That was before the general election. Now they have been re-elected and freed from whatever minimal restraint the Lib Dems provided, the Tories are stepping up their offensive on behalf of the rich. £12 billion a year will be cut from welfare spending, hundreds of thousands of the poorest individuals and families are losing a big chunk of their weekly income, and tens of thousands of children are immediately being pushed into poverty by measures like the Benefit Cap. A four year freeze on most working age benefits and tax credits will cost 13 million families an average of £260 a year.

The Tories have tried to justify themselves by various statistical tricks. For instance, the appalling fact that median income actually fell after 2010 means that initially poverty, when defined as below 60 percent of median income, didn’t grow. This is a reminder that no definition of poverty is entirely adequate, and that we need to use a variety and look at an overall, wider picture. Of course such tricks cannot work consistently or forever. There is some speculation that the government may junk relative definitions of poverty altogether and rely on very crude absolute definitions such as not being able to afford certain basic necessities – though in fact even some of those indicators are getting worse.

One impact of Tory policies since 2010 has been to make those already in poverty even poorer – which of course does not increase the official poverty rate either.

Command of the facts and figures is very important, but in another sense they don’t matter. What it is crucial to understand is that the majority, and in particular the poorest and most vulnerable, are losing out so that the rich can get richer and more powerful.

I want to argue that Labour’s record here was mediocre at best, and is now terrible. We have let down the people we are supposed to represent, working people and the poor, which of course includes many if not most of our own members.

The party under Tony Blair and Gordon Brown did reduce child poverty, and made quite a bit more progress than other comparable countries in the same period. Labour reduced poverty where the Tories, if they had won in 1997, would almost certainly have increased it. However, we did so slowly, setting a target of ending child poverty only by 2020. Compare the much more dramatic changes made in a few years by the 1945 Labour government, despite presiding over a country devastated by the World War. The Blair government stuck to Tory spending plans for two years and actually cut some benefits, for instance axing single parent child benefit as soon as it came to office. In terms of poverty it also faltered towards the end of its third term, as growing casualisation of work, an offensive by employers against workers and public sector cuts undercut progress made after 1999.

Moreover, the Blair government reduced poverty in the context of a substantial growth of inequality. Between 1997 and 2010 the real-terms gap between the highest and lowest earners increased by £237 a week. Of all income deciles, it was the richest 10 percent who saw their income increase most; their share of national income grew substantially. I’ve already cited the fact that the disparity between the average CEO and their workers grew from 47 times higher in 1998 to 160 times higher in 2010. Isn’t that slightly shocking?

In 2010, after 13 years of Labour government, the richest 1 percent had 295 times the household wealth of the poorest 10 percent. The very best you could say of New Labour was that they maintained the staggering levels of inequality put in place by Thatcher and Major.

As far as it goes, I agree with the argument made by Richard Wilkinson and Kate Pickett in their book The Spirit Level that not just poverty, even relatively defined, but society’s levels of inequality have a massive impact on a range of social outcomes. That runs from age of readiness to enter education to life expectancy after 50, from levels of imprisonment to mental health. Inequality even impacts on that Blairite holy grail, “social mobility”. Inequality matters a great deal, but the New Labour governments made or allowed it to become worse.

We may doubt how much it was a question of trying but failing to take on the problem when Tony Blair slapped down Peter Hain for suggesting the rich should pay a little bit more tax and Peter Mandelson said that New Labour was “intensely relaxed about people becoming filthy rich”. Of course Mandelson and Blair themselves are now multi-millionaires and advocate roughly the same approach to these questions as the vast majority of people in their socio-economic position.

The growing wealth and power of the rich in the Blair years set them up perfectly to move to an offensive stance once the crisis hit and the Tories were in office. The flip side was the continuing relative weakness of the labour movement, trade unions and so on, which in my view the Blairites also encouraged.

Unfortunately, since the crisis began, the party’s record on poverty and inequality has in important respects become worse. How can we say we want to reduce child poverty while not opposing and in some cases supporting measures that increase it?

The PLP vote on the Welfare Reform and Work Bill was utterly shameful. Jeremy Corbyn and the other MPs who voted against should be congratulated. But the PLP majority’s failure comes after five years of, at best, equivocating on the attempt by trade unions, community groups, poverty campaigners and so on to resist what the Tories have been doing.

The problem, I think, is that the party leadership decided to accept the Tories’ arguments about the cause of the crisis being too much public spending and the necessity of deficit reduction by making cuts, despite the absolutely obvious fact that the Tory leaders themselves do not believe them. Once that was accepted, everything else followed.

The crisis was caused, in the first instance, by banks and financial institutions. It had nothing to do with spending on public services, on wages, pensions or whatever being too high, on over-generous benefits or on migrants. The Tories’ narrative was a cover for their regressive redistribution of wealth and power, and a way of getting people to accept it. Instead of helping them with this, Labour should have exposed, denounced and fought it.

I’d like to finish with some suggestions of measures the party should campaign for to tackle poverty and inequality.

As I said at the start, I’m a socialist. I’d like to see society run on the basis of a co-operative economic system where private profit ceases to be the motivating factor. Until that happens, I think the kind of problems we’re looking at will continue to come up in one form or another. I don’t know how many of you would agree with that, and perhaps it’s something we could discuss. Meanwhile, we should also discuss more immediate proposals for making things better. These five proposals are things I think a Labour government should do and things the party should campaign for now.

1. Firstly, and this is the beginning of wisdom, we should stop accepting that the Tories have a point about public spending, the deficit, and so on, and expose their cynical project for what it is. We should drop any notion of blaming migrants or welfare claimants for the problems society faces, and promote an alternative narrative about social justice, solidarity, equality and mutual aid and support between working people.

2. Secondly, on that basis, we should fight for public services to be expanded so that every child has a decent standard of living, decent housing, decent education and a decent life in every respect, including care from adults who are not in poverty themselves. Immediately that means sharply opposing all the cuts the government and employers are making to jobs, wages, benefits and services. As a minimum we should say that the next Labour government will reverse all the cuts since 2009. We should work as closely as we can with campaigns against cuts and encourage campaigners to see Labour as their party. The wider goal should be to expand the public sector as much as possible to provide decent jobs, benefits, homes, services and so on for everyone. The privatisation and dismantling of the NHS should be reversed. Benefits should be enough to live on. The push to exclude migrants from public services should be stopped. There should not be a single foodbank operating in Britain. To help there are also some bad things we should advocate cutting: Trident, military spending more generally, high salaries and privileges for people at the top of the public sector, wasteful consultants and so on.

3. Thirdly, we should support trade unions, which are the most important mechanism for workers to help themselves as well as the wider community. We should campaign to get rid of all the laws which make unionising and industrial action difficult and say unambiguously that workers fighting for better pay, conditions and rights, including by striking, is a good thing. We should work with unions to oppose wages and conditions being reduced, and seek to improve them. We should try to get more workers organised and active in unions, particularly young workers, taking inspiration from campaigns like workers at Picturehouse cinemas demanding the London Living Wage and the cleaners fighting for pensions, sick pay and holidays at University of London. We should advocate a real legal Living Wage for all, at a decent level, and without exemptions. We should ban things like Zero Hours contracts, and fight to reverse outsourcing of work and privatisation generally.

4. Fourthly, we should be bothered by inequality as well as poverty. We should call for much heavier taxes on the rich and corporations, both to provide the funds necessary to do the good things we want to do, and as a good thing in itself, to reduce their wealth and power while increasing the wealth and power in the hands of so-called “ordinary people”. We should also slash taxes for everyone except the rich, particularly people at the bottom.

5. Last but not least, we should tackle the damage caused to economy and society by the banking and finance sector. Even the OECD has now published material suggesting that the activity and growth of high finance is bad for economic growth and fuels inequality. A Labour government should take banking and high finance into a unified, democratic system of public ownership to create a public banking, pensions and mortgage service, and allow the vast wealth of the sector to be used for social good instead of social vandalism.

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