End poverty for the Common Weal

The debate on independence is a unique opportunity to decide how Scotland can be rid of the scourge of poverty. Poverty has been a political football in the UK for decades: what it is, how to measure it, who is to blame for it and what we should do about it are all strongly debated. Recently, however, mainstream UK politics are showing a growing consensus along neoliberal lines, with debate much more about the detail of managing poverty than principles around reducing or eradicating poverty.

Compared with more equal societies, the high levels of inequality found in countries such as the UK are associated with poorer health and reduced well-being for those affected and high costs to society (as Wilkinson and Picket showed in The Spirit Level). Yet inequality has been much less of a concern than poverty in the UK. Perhaps this is because most of the growth in income, particularly in the last decade, has gone to a few people at the top of the income ladder while, at the same time, poverty has been individualised and stigmatised by the press and politicians. People relying on social security benefits have been cast as ‘skivers’ and ‘scroungers’, responsible themselves for the situations they find themselves in. The fact that the majority of people defined as poor live in households where someone works belies the rhetoric used to justify ever harsher sanctions that are more aligned with a US-style residual welfare regime.

What we need is the collective will to be rid of poverty and, most crucially, recognise the need to build a shared vision that puts people first, agrees to share social risks and denies the acceptability of poverty at any level in a wealthy society.

The UK government’s austerity measures diminish the welfare state, particularly social security which was already inadequate and ineffective. At the same time, those on high incomes have benefited from tax cuts and multinational giants can avoid paying millions of pounds of taxes through apparently legal processes. Inadequate accounting for this, just one element of the ‘corporate welfare’ state, means the relevance, need and appropriateness of such public support through tax reliefs is poorly scrutinised, possibly only rewarding “politically well-connected corporate elites” (as Kevin Farnsworth described it in a paper to the Social Policy Association).

The Scottish Government has expressed opposition to the welfare reforms and tasked an Expert Working Group on Welfare to advise on the transition of social security should Scotland vote for independence. This was not so much a visioning exercise as mapping the detail of a lengthy transition that could, effectively, sustain the status quo, regardless of the growing evidence that it isn’t working.

Many people and organisations share the Scottish Government’s opposition to the welfare reforms, but opposition is not enough. A short consultation period enabled several voluntary and community based organisations to express their views on an alternative vision for a more equal Scotland and reminded us of the possible futures other than a neoliberal vision. In the event of independence or extended powers in Scotland, it will be important that civil servants manage a smooth transition for social security. However, what is crucial is that we take this opportunity to develop a vision for a poverty-free Scotland. As Lynn Williams (a member of the Expert Group) highlighted, now is the time to decide who we are and what we want to be and make a strong and positive case for a more equal and enabling society.

Social security will be a cornerstone in the vision for a poverty-free and more equal Scotland. If that sounds too fanciful, remember that eradicating child poverty is enshrined in legislation in the UK. Yet current social security cuts will ensure that child poverty is more likely to increase to the levels of the 1990s than be eradicated by 2020. More than legislation on poverty, what we need is the collective will to be rid of poverty and, most crucially, recognise the need to build a shared vision that puts people first, agrees to share social risks and denies the acceptability of poverty at any level in a wealthy society.

Then the steps and stages towards the common goal need to be put in place – wishful thinking is not enough. Preventing poverty and tackling its causes mean that, in addition to social security, many areas of public policy need to work together effectively towards the common goal of a poverty-free Scotland, including: the economy, the labour market, taxation and the wider Welfare State, particularly in key areas such as childcare, education and training. There is no shortage of good ideas to fuel the debate – what follows touches on just some of them.

Economy and labour market: Economic policy, training and labour market policy are central to promoting prosperity for people and preventing poverty. Rather than a low corporation tax approach that risks maximising profits for some, but perpetuating the creation of low-paid jobs, Scotland should focus on the quality of work; for example, encouraging industries that generate higher skilled and higher paid jobs, investing in training, ensuring a diverse economy and supporting a more diverse ownership profile.

Pay Policy: More jobs need to pay a living wage. The national minimum wage is set so low that the Scottish Government has joined with others to promote the Scottish Living Wage – the legal minimum needs to move towards this higher level of pay, a task that will be supported by an economic strategy that seeks to generate high quality jobs rather than more low paid work.

Welfare State: A strong welfare state providing universal services is crucial to a strategy to reduce inequality and eradicate poverty. Universal services are generally highly effective at reaching the poorest groups. A wider range of key public services are important, including education, housing and social care. Just a couple of examples of approaches needed to reduce barriers to employment and wider civic participation for groups at particular risk of poverty are:

  • A comprehensive strategy on care to tackle barriers, mainly for women, and make progress on flexible working and occupational segregation. The Equal Opportunities Committee of the Scottish Parliament has called for transformation of the childcare infrastructure and a statutory right to childcare for children up to age 15 and disabled children
  • Services and support that contribute to ensuring disabled people are treated with dignity and are supported to achieve and maintain independent living, including through paid or voluntary work where relevant

Taxation: Taxation has a crucial role in reducing inequality through redistribution and funding a universal welfare state. At present, tax in the UK relies heavily on regressive forms of indirect taxation such as VAT and an income tax structure that is minimally progressive. This means people on the lower incomes contribute a bigger share of their income in taxes overall. National insurance contributions add substantially to national income, yet contributory benefits other than retirement pension have withered, undermining the contributory principle of protection when people need it.

Nordic countries show that a broad tax base is important – not only can higher wages make higher taxes more achievable, but the balance of taxation can change. A strong welfare state does mean higher taxes but they need not all come from personal taxation; for example, a wealth tax could target only substantial accumulated wealth. Direct taxes need to be more progressive – the highest earners should pay more of their income in tax than low earners and the balance with indirect taxes and their burden on the lowest income groups should be kept under review to reduce their regressive impact. If Scotland has control over taxation it has to be better than the UK at managing issues such as corporate welfare, tax fraud, tax evasion and tax reliefs, including those that support the privatisation of benefits (for example occupational pensions).

Social Security: Whilst there seems to be a growing consensus in mainstream UK politics around neoliberal reform of social security, the silver lining on the dark cloud of UK ‘welfare reforms’ is the wealth of thinking already happening on the principles of an alternative social security system that protects people ‘from the cradle to the grave’, extends universal benefits and reduces means-testing. Such a system should aspire to:

  • Provide dignity and respect for human rights, a simplified system that makes it easier for people to get what they are entitled to and benefits rates that leave no one in poverty
  • Reinforce the importance of universal benefits and protect and build on contributory benefits whilst reducing reliance on inefficient means-testing
  • Promote independent living for disabled people and support them to reach their full potential and play a full, active and equal role in Scottish community and economic life

Others argue for a constitutional right to a guaranteed minimum income or a citizens’ basic income. All are in no doubt of the need for simplification and fairness in both taxes and benefits and most argue that any system developed in Scotland needs to be built on a shared vision that includes the views of those groups in or at risk of poverty.

Eradicating poverty in Scotland is a big task and it will take time – it stands a much better chance of success if we can draw on the approach of ‘Folkshemmet’ – the Welfare State in Nordic countries – to have a contract between people, through the state, first and foremost for the common good. For me this has to include principles of universal and comprehensive public provision and an appreciation of the different contributions people make through unpaid and voluntary work, care and community roles as well as paid work.

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