by Owen Jones
Like other experts in the field, MacDonald links unemployment to a lack of jobs-something that might sound obvious, but in the current political climate is anything but. His research focused on 'how relatively well-paid, relatively secure, relatively well-skilled working-class jobs have declined in this economic restructuring and been replaced by low-skilled, low-paid and insecure non-manual (and manual) jobs.' He lives in Teesside, now among the poorest areas in the country. This process was 'exactly matched in time and explained by this process of de-industrialization', he says.
What this has meant for poorer working-class people is an insecure working life, 'made up out of scraps of "poor work" interspersed with time on benefits. This was the reality for those in our studies, across genders and age groups. One doesn't hear much about this-just about "benefit dependency" and so on.' A common misconception is that the number of people on benefits is a static figure. In reality, many claimants are moving in and out of poorly paid insecure work. Take unemployed people claiming [obseeker's Allowance, which, having not kept pace with the rise in earnings, is worth just £65.45 a week. According to the 0 ffice for National Statistics, for example, since 1999 around half of the men and a third of the women making a new claim last did so less than six months previously. This makes the idea of a benefit-addicted underclass even more of a nonsense: an unemployed person is more likely to have moved in and out of work.
The reality is that there are simply not enough jobs to go around. In late 2010, there were nearly 2.5 million people officially without work -and that doesn't include the hundreds of thousands of people the government wants to drive off incapacity benefits. Yet there were less than half a million vacancies in the entire country, according to the gov- ernment's own figures. That did not stop lain Duncan Smith making an example out of Merthyr, a Welsh town particularly badly hit by de- industrialization and suffering from high levels of unemployment. The local population had become 'static', he suggested, and they should get 'on a bus' to Cardiff to look for work. His argument was torpedoed when it was revealed that there were nine job seekers for every job in the welsh capital.
From an employer's perspective, stripping benefits from hundreds of thousands of people living in 'disguised' unemployment would be prof- itable, to say the least. It would mean even more people competing for low-paid jobs, allowing employers to push down wages even further. Unless the number of jobs miraculously increased at the same time, it would mean driving other workers out of employment. Business might prosper, but for benefit claimant and low-paid worker alike, benefits crackdowns risk forcing them further into poverty .
Above all, unemployment is a class issue. It is a fate you are far more likely to face if you are working class than if you are middle class. In May 2009-about a year into the recession-the unemployment rate for people in professional occupations was just 1.3 per cent, and was not much higher for managers and senior officials. But for skilled workers,it was 8.1 per cent; for sales and customer service workers, it was 10.5; and for workers in unskilled, 'elementary' occupations, it was 13.7 per cent, or over ten times higher than for professionals.
Government cuts are inevitably going to drive hundreds of thou-sands more working-class people into the nightmare of unemployment. The old industrial areas were hammered by the recessions of the early 1980s and early 1990s: it is they, again, who will suffer the most. As the factories and mines closed, it was the public sector that, in large part, moved to fill the vacuum.
As the Conservativeled government's ideological war on the state gathers pace, rising numbers of unem- ployed ex-public sector workers will inevitably push demand down, hitting the private sector too. On top of that, significant swathes of the private sector depend on state contracts that are now being ripped up. At the end of 2010, the Chartered Institute of Personnel and Develop- ment estimated that the government's cuts programme would force 1.6 million people into unemployment-and most job losses would be in the private sector.
You don't need to be jobless to be poor in modem Britain. Poverty is generally defined as households with less than 60 per cent of the nation's median income after housing costs are deducted. Less than five million people lived in poverty on the eve of the Thatcher counter-revolution, or less than one in ten of the population. Today, poverty affects 13.5 million people, or more than one in five. If you are a single adult without children, that means living on less than £115 a week after housing costs are deducted. For a couple with two young children, itis less than £279 a week. There are only four EU countries with higher rates of poverty.
Politicians and media commentators argue for work as the route out of poverty, but in low-pay Britain, having a job is no guarantee of living comfortably. The majority of people living in poverty actually have a job. While there are three million families in which no one works living in poverty, there are another 3.5 million working families below the poverty line. Poverty affects huge numbers of people because, like unemployment, it is not a static figure: there is a broader group of people who move in and out ofitover the course of their lifetimes.
When New Labour was in office, it introduced reforms that attempted to tackle the scandal of working poverty. But it did so within the framework of neoliberal economics-that is, allowing the market to run amok. A leading union-backed Labour MP, John McDonnell, sums up the government's approach thus: 'We will introduce tax credits, and we will redistribute wealth, but we'll make sure what we'll do is force you into work where it's low paid, with the lowest minimum wage you could possibly think of. In that way, you then become the guilty person if you can't afford to dig yourself out of poverty. There's a Victorian, patronizing attitude towards working people.'
The minimum wage is a case in point. When it was introduced in 1999-in the teeth of Tory and business opposition-it made a genuine difference to hundreds of thousands of low-paid workers. After all, it was perfectly legal, not so long ago, topay a worker £1.50 an hour. But the rate was set at the lowest possible level. In 2010, it was just £5.80 an hour if you were aged twenty-two or above. Even worse, it was discriminatory against the young. Workers aged between eighteen and twenty-one were stuck on £4.83, up from £3.57 for the undereighteens.
Clearly, these are not wages that anyone could live on comfortably. According to the Joseph Rowntree Foundation, a salary of £14,400 is the minimum a single person needs for an acceptable standard ofliving (never mind if you have kids). If you work a thirty-five-hour week, that works out as £7.93 an hour, or over £2 an hour more than the minimum wage. Yet as the recession hit, the already low minimum wage was held back to below-inflation rises.
Tax credits were the second pillar of New Labour's approach to low pay. Workers on low incomes were given the right to have their pay packet topped up with the Working Tax Credit and, if applicable, the child Tax Credit. But as a means-tested system, itis bureaucratic and many eligible people do not claim for money they are entitled to. According to Citizens Advice, around £6.2 billion of tax credits go unpaid every year-with up to £10.5 billion of means-tested benefits in total unclaimed. This includes four out of every five low-paid workers without children, who are missing out on tax credits worth at least £38 a week. This 'benefit evasion' dwarfs the amount lost through benefit fraud-a fact that is completely absent in the debate around cracking down on so-called welfare scroungers.
Another major flaw with the tax credits system is that it is prone to overpaying people. That might not sound too bad: after all, so what if the state puts a bit too much into the bank accounts of low-paid workers? The problem is that the state catches up and demands the money back. 'The income goes up and down, and tax credits are annualized so people can have very big lumps of money, and then suddenly they get a letter saying they owe £7,000,' says Labour's Clare Short. Fiona Weir, chief executive of single parent charity Gingerbread, says that the fear of debt among the people she represents can be so strong that 'we come across people who won't apply for a Working Tax Credit, which could give them a lot more
money, because they are so scared of an overpayment and then not being able to pay the debt once they get into it.'
Tax credits are a lifeline for many low-paid workers. But, perversely, they make low pay economically viable and create disincentives for employers to do anything about it. After all, why pay your workers more if the state will top up their wages? As the Guardian's Larry Elliott puts it, tax credits are' essentially the state subsidizing poverty wages' .
'of course it's all about making work pay, even rotten work, low-paid work,' argues Clare Short, 'but that was their instrument of redistribu- tion, and it's totally defective if you're trying in the long term to build a more equal society, because it props up inequality.' Inequality did not grow under New Labour as fast as it did under Thatcher: but the huge gap between rich and poor that had opened in the 1980s was not reduced. After thirteen years of New Labour government, Britain remained one of the most unequal societies in the Western world-andtax credits and the minimum wage did not change this. Indeed, two- thirds of all the increase in income in the noughties went into the bank accounts of the top 10 per cent of the population.
One of many snide accusations against the poor is that they ruin themselves by spending their money on frivolous and luxury items. The reality could not be further from the truth. Chris Tapp, debt expert and director of Credit Action, reveals that his organization rarely has to educate low-paid people when it comes to budgeting. 'People at the bottom end of the income spectrum are better at managing their money day-to-day than people at the top end, because they absolutely need to be,' he explains. 'If you've got only a very limited amount of money coming in every week, and you've got to pay your bills, buy the food and feed the kids off that, then you have to be dam good at managing that.' Poorer people are much more concerned with spending wisely than wealthy ones are, he says.
We have seen how prejudices about poverty and unemployment converge in the image of the council estate. After all, not for nothing is it often suggested that 'chav' is an acronym for 'Council Housed And Violent'. 'Play word association with the term "council estate",' wrote Lynsey Hanley, who grew up on one in Birmingham, in her groundbreaking book Estates. 'Estates mean alcoholism, drug addiction, relentless petty stupidity, a kind of stir-craziness induced by chronic poverty and the human mind caged by the rigid bars of class and learned curiosity
That is not to say that after three decades of social engineering, only one social type lives in council estates. 'I think it's quite difficult to generalize about social tenants, or indeed council housing, because there is a big variety,' says housing charity Shelter's Mark Thomas.
What you see in one area of the country is not the same as what you see in another area, and I think a lot of the media debate tends to be around quite crude stereotypes of council estates. Someone goes off and they find a photo of a council estate, normally it looks fairly grotty, and people conjure up a mental image in their minds. Actually, partly because of the right-to-buy, often a lot of what people might call 'council estates' are quite mixed in terms of tenure, in any case.
In other words, what were once solid council estates may today include homeowners, private renters as well as council tenants. Thomas is keen to emphasize the different groups of people that can be found in council estates.
You've got people who are retired, you've got people who are disabled, you've got people who are absolutely working, and doing their level best to support themselves, you've got people living in some very affluent areas, in places that you probably wouldn't call estates at all. Let's remember that some council housing is in fact street properties, it doesn't all consist of the archetypal estate. You've got other people who actually are living in not such nice areas. But the public debate is often conducted in quite a crude way.
It is fashionable among Conservative politicians and right-wing commentators to talk of council housing promoting' dependency' among its tenants, but Thomas fiercely rejects this. 'It's sometimes suggested that social housing is somehow a cause of deprivation, it's actually pushing people into poverty and reinforcing del'endency. We wouldn't seeit like that. We would see it as a vital safety net that actually provides people with an affordable, stable base from which they can actually go on and prosper, and build up other aspects of their life, without which it's going tobe very, very difficult for them to do so.'
On the face of it, the failure of recent governments to build affordable housing looks inexplicable to the point of madness. The number of houses built in 2010 was the lowest since 1922-with the obvious exception of World War II. Before Thatcher came to power, there were never fewer than 75,000 council dwellings built in any year; in 1999, the number was a disgracefully inadequate eighty-four.
For the last thirty years, the dominant mantra has been that 'the market knows best', but the state's retreat from meeting the nation's housing needs in favour of market forces has shown how absurd this quasi-religious belief can be. Aside from the millions who are spending years of their lives on waiting lists, the number of people in temporary accommodation soared by a stunning 135 per cent between 2001 and 2008. And the government might not be spending much on social housing, but instead it spends £21 billion a year on housing benefit, much of which ends up subsidizing private landlords.
With the housing crisis worsening year by year, and with accommn, dation so central to people's lives, why did a Labour government leave the whole policy to go to rot? I asked Hazel Blears, whose fonner department when in the Cabinet included responsibility for housing. She accepted that New Labour had failed to build sufficient capaciry.L but with caveats. 'I think that there needed to be a housing programme. I've never been entirely convinced that it should be a council house building programme. I think we brought into Government quite hig prejudices against local authorities across the field of policy. And in some ways, quite rightly. Because some of them were rubbish. And you wouldn't have trusted them to wash the pots, let alone run a community:
Blears argues that local authorities did improve, but the fundamental distrust that New Labour had towards them meant they did everything possible to bypass them.
I think what the Labour government did was, in its early days, create a series of parallel tracks almost to get around local authorities whether that was in further education, or housing, or the NHS Foundation Trusts-all that kind of thing was kind of like, not quite trusting the local authorities. Not in a political way: but actually the capacity to deliver. So we had housing associations, we had Arms Length Management Organizations [semi-independent housing bodies], we had stock transfers-we did anything to get control out of the local authorities ...
The union-backed Labour MP John McDonnell contested this reasoning. 'Local authorities couldn't "be trusted to wash the pots" because for twenty years they were undermined in terms of the powers that they had and the resources that they had. So who in their right mind would become a councillor when all you were there for was rationing services and saying "no" to everyone?' He argues that Labour could have returned the powers to local government that Thatcher took away. Hit was felt that the process would take too long, then the government could have channelled its energies into reinvigorating co-operative housing.
Blears suggests another reason: there simply was no one in government with enough interest in housing. 'There wasn't a big housing character,' she says. 'Maybe our government needed a kind of housing person whose passion it was to do housing. I don't think that we did, if! think back, in terms of characters.' Blears herself can measure the effects ofN ew Labour's neglect of housing in her own Salford constituency. 'In terms of increasing stock and supply of affordable housing: yes, we should have done a lot, lot more, because it had really quite damaging social effects. I've got 16,000 on the waiting list.'
Under the Conservative-led government, this crisis will get more severe. Just months after coming to power, David Cameron called for the scrapping of lifetime council tenancy agreements. Instead, only the most needy would be eligible for fiv
e-year or, at most, ten-year agree- ments. If it was decided that their conditions had improved sufficiently, they could be turfed out of their homes and made to rent privately. Council estates would become nothing more than transit camps for the deprived. A government whose signature policy was building a 'Big Society' was unveiling plans that would further undermine the cohesion of working-class communities across the country.
As well as leading to social 'cleansing' and unprecedented segregation, some policies will end up throwing people on to the streets. In the first Budget following the 2010 general election, the government announced plans to slash housing benefits. They were right to complain that the amount spent on these benefits had rocketed over the years, but refrained from pointing out that this was because of the evergrowing crisis of affordable social housing. Cutting the level of rent eligible for housing benefits has the effect of reducing the number of properties poorer people can afford to live in, forcing them either to fmd somewhere cheaper or face homelessness,
