Heroes: ‘Heaven Knows I’m Miserable Now’ 

 

‘Oh, why do I give valuable time 

To people who don’t care if I live or die?’ 

 

Regular readers of this column will know that inequality has always been a key part focus in my writing. 

Post the GFC, we have seen a progressive unbalancing in the relationship between workers, capital and owners. The shared economic benefits of stronger, wealthier nations no longer accrue equally across the economy. Workers are relatively poorer and under greater pressure today than at point since the post-war economic boom that gave rise to ‘BabyBoomers’.  Our children, are millennials and Gen-Z, whose expectations and hopes are very different from those I enjoyed 40-yrs ago. 

Post the GFC, central banks policies if  zero-interest rates and quantitative easing (‘QE’) policy, and government inflicted austerity, have created a wealth gap; rentiers become richer, while the earnings workers  has stalled. 

Low interest rates did nothing for growth, there was little, or no, investment aimed at fuelling the productivity gains necessary to raise worker wages. Productivity has stalled across the west – yet the owners of capital have seen their wealth explode. 

Instead, QE and zero-interest rates inflated a massive and speculative asset bubble in financial assets, which accrued directly to the owners of capital, the tiny 1% at the very apex of society. As an example, they didn’t borrow money to develop their businesses, creating the growth necessary to pay their employees more – they raised debt to fund stock-buybacks pushing up their wealth while wages flatlined. 

Today’s capitalism is no longer fit for purpose, as it benefits rentiers at the expense of workers. 

The inequality between workers and capital will, inevitably, lead to a massive economic crisis, one which we are walking into blindly. 
 

.This inequality can be summed-up, thus: Britain is the sixth-richest economy in the world, with 12 million people living in absolute poverty’

 

This inequality can be summed-up, thus: Britain is the sixth-richest economy in the world, with 12 million people living in absolute poverty. 

This represent an increase of 600,000 year-on-year. Half of these are children, , meaning that 3.6m children now live in absolute poverty, when households have less than 60% of the median income in 2010-11 after adjusting for inflation, grew for a second year in a row. 

The figures show prevalence of more extreme forms of hardship such as destitution, where individuals are unable to afford basic living essentials such as food, energy, bedding and clothing. Nearly 4 million people experienced destitution in 2022. 

The latest households below average income statistics, published by the Department for Work and Pensions, also showed that in 2022-23: 
 

• 69% of UK children in poverty lived in families where at least one parent works, while 44% of children in lone-parent families were in poverty. 
• C. 2.9 million children were in deep poverty, meaning their income was at least 50% below the poverty line. 46% of all families with three or more children were in poverty. 
• 8% of pensioners struggled to eat regularly, pay essential bills or keep their home warm, up 2 percentage points year on year, and the first increase in material hardship measures among the over-65s since 2014. 

 

Alison Garnham, the chief executive of the Child Poverty Action Group, said: ‘In a general election year, nothing should be more important to our political leaders than making things better for the country’s poorest kids. But child poverty has reached a record high, with 4.3 million kids now facing cold homes and empty tummies.’ 
 

‘child poverty has reached a record high, with 4.3 million kids now facing cold homes and empty tummies’

 

Charities said the second successive annual rise in absolute poverty figures showed it had failed to do enough. ‘The government’s short-term interventions to date haven’t stopped the incomes of poorer households from being swallowed up by the soaring cost of essentials,’ said Peter Matejic, the chief analyst at the Joseph Rowntree Foundation. 

The three council areas of England with the largest rises in child poverty over the past decade (2014-15 to 2022-23), according to the New Economics Foundation (‘NEF’), were Nottingham (up 16 percentage points, with 40% of children in poverty), Birmingham (up 14 points, 41%) and Leicester (up 13 points, 41%). 

Sam Tims, a senior economist at the NEF, said: ‘What we are seeing is a deepening of poverty in the very places that the government was supposed to lift up. The government could take millions of children out of poverty and help those in the most-deprived places by scrapping the two-child limit and increasing universal credit.’ 

One of the legacies of this parliament is that it is on course to be among the worst in modern history in terms of growth in living standards. 

In fairness to the government, they have provided support of >£100bn over the past 2-yrs, curbing the rise in poverty through £3,400 worth of help for the average household over that period. Ministers argue the measures prevented 1.3 million people from falling into poverty. 
 

‘One of the legacies of this parliament is that it is on course to be among the worst in modern history in terms of growth in living standards’

 

However, charities have repeatedly said the help has been insufficiently targeted at the poorest in society, who bore the brunt of the inflation shock because they spend disproportionately more of their incomes on energy, food and basic essentials, the prices of which have increased most. 

Research from the NEF shows the sharpest rise in poverty levels has come in the poorest areas of the country. Child poverty has risen 6x faster in the most deprived areas compared with the richest, while 19 out of the 20 local authorities with the highest increases in child poverty were in the NW and Midlands. 

Even before the cost of living crisis, poverty levels were already high due to the Conservatives’ post-2010 austerity. Studies have shown a clear link between Tory welfare changes and rising poverty, orchestrated in the name of cracking down on ‘shirkers’ on the dole to encourage people to work.  A policy they continue to embrace. 

Meanwhile, a decade of flatlining wage growth has left 1.6 million more people in relative poverty in a working household than in 2010, amid a worrying breakdown in the traditional routes out of destitution through employment. 

One of the legacies of the Blair years, was, his promise in 1999 to eradicate child poverty within 20-yrs. These horrifying figures show what a difficult task a future Labour government will inherit, although critics doubt their ability to reverse this trend.  For example, Starmer plans to keep the Tories’ controversial two-child benefits cap – a policy academics describe as ‘poverty producing‘. 

Both main parties are obsessed with growth, presuming that it will be the be all and end all. Perhaps, GDP is a flawed measure, and we should think more esoterically, and consider poverty levels. This might to some sound like the ideas of third-world country, but that is what we are becoming. 

As I wrote earlier, Birmingham has one of the worst increases in child poverty, which, is perhaps not surprising, given that the city council  is effectively bankrupt due to  massive cuts in funding from Whitehall, the cost of the belated resolution of the council’s gender pay gap, and the mishandling of a new IT system.  

As a result the council is cutting spending wherever it can as it strives to save C. £300m over two years, probably the deepest programme of local cuts ever put through by a UK council. 

Many of these cuts will impact  children, whose provision will be cut by £52m in 2024-25 and £63m in 2025-26. Among other savings, the council is ending its annual £8.4m contribution to an ‘early help’ service that provides families in crisis with everything from emergency financial assistance to advice on breastfeeding, and thereby threatening its survival. Children aged over 16 who have special educational needs, will have no more taxis or minibuses to schools and colleges as part of a proposed saving of £7m a year from transport costs, they are being offered such grim consolations as ‘personal travel budgets’ and something called ‘independent travel training’. 

Other cuts include: 
 

• £4.8m youth services budget is being cut by almost half.  
• The council’s spend on the arts will now be zero.  
• Eleven community centres are being sold off.  
• There are also cuts to highway maintenance, street lighting, recycling, bin collection and street cleaning.  

 

With a proposed increase in council tax of 21% by 2026, people will be paying more, but getting less and less. 

Birmingham may be the worst, but other councils such as Nottingham, Somerset, Hampshire, Leicester, Bradford, and Southampton and facing similar problems.  The House of Commons levelling up, housing and communities select committee puts English councils’ current financial gap at about £4bn a year, or half of  Jeremy Hunt’s meaningless cut in NIC. Tories see the councils as profligate, and needing to be taught a lesson, and their adoring media trots out the usual old line of millions supposedly being wasted on ‘consultants’ and ‘diversity schemes’. 

Labour don’t seek to offer anymore. When the shadow chancellor, Rachel Reeves, was repeatedly asked by the Sky News presenter Trevor Phillips if she would fix councils’ crises once Labour was in power, she offered little more than vague claims that changes to the planning system and increased business investment may eventually feed through to money for local services.  
 

‘Squalor, mess and festering social problems have become the norm, as has scepticism about people’s need for help, which is endlessly encouraged by politicians and people in the media’

 

Austerity has become a political football, used by politicians as an example of what we should expect from the state. Squalor, mess and festering social problems have become the norm, as has scepticism about people’s need for help, which is endlessly encouraged by politicians and people in the media.  Lee Anderson claimed that food banks were ‘abused‘ by people who didn’t need them. Now, the Times columnist Matthew Parris claims to ‘not believe in ADHD at all‘ and says that autism is ‘a much abused diagnosis‘, while other voices insist that parents whose disabled children get some dependable help from their local councils are the possessors of ‘a golden ticket‘. 

Referring back to millennials and Gen-Z, something is going wrong for young people in the UK, across Europe, the US and Australia. 

The latest World Happiness Report shows that while not all teenagers and young adults are suffering, a large and growing number cannot cope with being left adrift with few qualifications on an economic sea that is more testing with each passing year. 

Not surprisingly, it is the older generations who are the most satisfied, buoyed no doubt by rising stock markets and a global property boom have given the over-55s a level of wealth unknown in human history. 

In addition, state-sponsored retirement schemes have been largely protected from the ravages of inflation, meaning that average poverty levels have declined among the over-65s. 
 

‘The situation was more exaggerated in Britain, which dropped from 19th to the 20th happiest country overall, but was ranked 30th when only the views of people under 30 were taken into account’

 

In the UK it is noticeable that the state pension has escaped means-testing, which has become a fixture for in-work benefits, denying many young people with incomes just above the poverty line a lifeline of state support. 

Where the young and old previously had a positive outlook and those middle-aged less so, this has been flattening out with time. The situation was more exaggerated in Britain, which dropped from 19th to the 20th happiest country overall, but was ranked 30th when only the views of people under 30 were taken into account. 

 

Richard Layard, a professor at the London School of Economics and one of the report’s authors, is clear that the findings show more effort is needed to support the education, training and mental health of younger people. Even if young people are only considered to be economic units of production, the evidence shows the whole economy benefits from them have a better sense of wellbeing. 

Another study by Layard for the LSE and the Resolution Foundation 2030 Inquiry found that the UK was the only country among the 38 members of the Organisation for Economic Co-operation and Development where the literacy and numeracy of 16- to 24-year-olds is no higher than that of 55- to 65-year-olds. And almost a third of people aged 18 in the UK are not in education or training, about double the average in France and Germany. 

It showed that not much had changed since 2007 when Unicef published a table of 21 economically advanced countries, comparing 40 indicators – including poverty, family relationships, health and safety, education and children’s own sense of happiness – that might affect the wellbeing of children. 

At the bottom of the Unicef study, in 21st place, was the UK, just below the US. As with the World Happiness Report, the Nordic countries filled the top places. 

Unicef concluded that children growing up in the UK were the unhappiest in the industrialised world, and blamed the lack of collaboration and cooperation with other children at school and parents who spent little time ‘just talking‘ to them. That was 17 years ago. 

At the bottom, a position that very neatly sums up 14-yrs of Tory mis-rule. 
 

‘I’m riding high upon a deep depression 

I’m only happy when it rains’ 

 

Aside from the usual mess, this week’s big story was the fall in inflation, and the governments preening as a result. I would love to know what they actually did, as far as I can see it was nothing!

The problem with “averages” of that sort, is that they are fundamentally misleading. For example, UK rents are rising at 9% per annum. The average monthly rent in London is now £2035. The average London Salary (Statista) is £44,370, or £2,880 per month after tax.

I was interested in an article in the Guardian, which showed the lengths people are prepared to go to, to get rid of the Tories. Whilst this started in South Devon, it is now spreading to other constituencies.

Basically, the idea has allowed voters to reclaim the initiative from centralised and self-interested political parties, whilst directly confronting our unfair electoral system.

South Devon is a constituency where most people vote for parties to the left of the Tories but which, thanks to our iniquitous first-past-the-post system, end up with Tory representatives. The Conservatives have ruled there since 1924, often without majority support.

Looking back at the 11 general elections since 1979, “eight were won by the Conservative party and only three by Labour. But cooperation among progressive parties could have averted all eight Conservative majority governments bar 2015.”

As a result of this, a group of people in the South Devon constituency decided to take these decisions out of the hands of the parties and return them to the people. The UK’s first “people’s primary” involved seven meetings held around the constituency. Candidates for progressive or vaguely progressive parties were invited to explain to voters why they would be best placed to evict the Conservative. After each meeting, constituents voted by secret ballot to choose their champion. When the aggregate result was announced, everyone in the constituency could see who other people believed was the most promising challenger.

The decision the constituents make doesn’t prevent the other parties from standing. But, by selecting a common champion, it reduces the chances of letting the Tory back in.

The LibDem candidate, Caroline Voaden, won decisively. So now voters know that their best chance of helping to eject the dismal Tory MP is to vote for her.

Now the process has begun in five other constituencies, including those represented by Kemi Badenoch and Danny Kruger. The South Devon pioneers have identified 57 constituencies that the Conservatives are still predicted to win and there is some uncertainty about who the most effective challenger is likely to be. They’ve offered to share their model with these constituencies, but not with those where one progressive contender is clearly ahead of the others.

However, yes, there is always a however; in this case you would have thought that the “winner”, the LibDems would be delighted. They weren’t; after the South Devon process had begun, a letter to candidates from the Lib Dem chair in England instructed them: “Under no circumstances are you to take part … any candidate who ignores this instruction, and participates in a primary, risks having their approved status rescinded and the withdrawal of party support and resources.”

 The basis for their concern it appears was their misunderstanding of the primary and the fact that it could put candidates in breach of election law on both process and expenses. In reality, the process has been closely scrutinised by the Electoral Commission, and applies a long list of safeguarding rules. The spending (which is very small, as the primaries are created and run by volunteers) takes place before the champion is chosen, so, as the Electoral Commission has confirmed, doesn’t eat into the candidates’ capped election budgets.

Perhaps, this time, the Tories will really meet their match. If so, as the column predicted in its very first article, what will happen to the party?

Lyrically, we start with the “Heavan Knows I’m Miserable Now” by the Smiths. Probably today’s teenage anthem! To finish we have the thinking persons’ band, Garbage, and “Only happy when it rains”. Enjoy!

@coldwarsteve
 

Philip Gilbert is a city-based corporate financier, and former investment banker.

Philip is a great believer in meritocracy, and in the belief that if you want something enough you can make it happen. These beliefs were formed in his formative years, of the late 1970s and 80s