Tuesday, June 19, 2007
Now, the government understands the basic causes of child poverty, and poverty in the population as a whole, and why it has been increasing, despite falls in the earlier years of this government. The government claims, quite often, to have a policy of full employment. In fact, it does not: it abandoned this after the 1987 election. Thus, despite the grand claims made about having reduced unemployment to under a million (based on benefit claimant counts), the reality is that the underlying rates of unemployment have remained strong, and the government doesn't intend to alter that. Unemployment is deliberately maintained in order to reduce the bargaining power of labour, supposedly an anti-inflation device. The highest rates of poverty, obviously enough, are among the unemployed. Thus, the lowest quintile of households by income, according to this report, relies mainly on benefits for income.
Even if the government doesn't have the imagination or political courage to pursue a full employment agenda, it does have other options. As the report also indicates, for example, while the benefits system redistributes wealth from the rich to the poor, the tax system is highly regressive: this is entirely because of indirect forms of taxation. The direct taxation system is moderately progressive. VAT is the worst form of taxation in this respect (not booze and fags as some people imagine). In terms of gross income, the lowest quintile pays over 10% of its income on VAT, with 1.4% on alcohol, 2.9% on tobacco, 2.9% on fuel, and 9.2% on other indirect taxes. A moderate policy such as cutting VAT altogether would have a sizeable effect on low income families, and thus on the well-being of their children. Of course, one has to raise taxes somehow, but why cut taxes on corporations and profits while freezing upper income tax and allowing the poor to shoulder a disproportionate share of the burden? That is practically the definition of social injustice. One could save a great deal of money at any rate by scrapping military investments that are useless for ordinary people, but very good at threatening planetary obliteration. Money could be raised by increasing direct taxation on the highest earners, by restoring taxes on corporations and by abolishing the ceiling for National Insurance contributions (which as it presently stands, cuts a bigger proportion of wages for those on lower incomes than for those on higher incomes). Having saved money and brought in extra cash, one could even invest in the amenities and infrastructure that the poorest children need. All of these would be a start, at least.
But who on earth would actually propose such policies and carry them out?