faith in politics
poverty and social exclusion
Background
- The gap between rich and poor in the UK is greater now than at any time in the past 40 years.
- Inequality in the UK has reached a shocking level. The poorest and most vulnerable people in our society are left behind, while a minority benefit hugely from our prosperity. This is not only unjust - research shows that the growing gap between rich and poor also has a corrosive effect on society as a whole. Inequality is linked to crime, health problems and a host of other social ills.
Issues
- Child Poverty - 30% of children live in poverty, according to the End Child Poverty Campaign. There is widespread political consensus in support of the target of eradicating child poverty by 2020. If this is to be achieved, urgent action is needed to prioritise targeted interventions that make the difference in breaking the cycles of deprivation. In Scotland, Wales and Northern Ireland the government needs to develop a joint strategy to tackle child poverty with the devolved governments/assemblies.
- The poverty premium - Fuel poverty is a growing problem. Upwards of 20,000 people die of cold-related factors each winter in the UK, often because they cannot afford to heat their homes properly. Many people on low incomes have to use prepayment meters for their gas and electricity. Yet, whilst customers who pay by direct debit receive discounts, those who use prepayment meters are charged a premium for their energy. Essentially, the richer customers are being subsidised by the poorer ones. According to the National Housing Federation, energy companies make £50,000,000 a year from the excess cost of prepayment meters - even though these customers have an average household income of just £13,500.
- Legal loan sharks - People on low incomes frequently cannot borrow money from mainstream banks. Instead, they are forced to borrow from doorstep lenders or companies offering ‘payday' loans. Unlike elsewhere in Europe, there is no limit in the UK to the interest rates that companies can charge. Rates range from 180% to over 1,000% APR. People therefore become trapped in a cycle of debt, borrowing more and more. In 2006, the Competition Commission found that the doorstep lending industry was making excess profits of £75,000,000 a year - but no action has been taken as yet to restrict the cost of doorstep loans.
- A minimum income standard - Research by the Joseph Rowntree Foundation, based on views of members of the public, suggests a single person in the UK needs to earn at least £13,900 a year before tax in 2009, in order to afford a basic but acceptable standard of living. Working-age people on benefits remain well below the minimum income standard. In spite of the national minimum wage, almost half of children in poverty are in a family where someone is in full time work.
- A fair society and a fair tax system - Over the past 30 years the UK has got richer - but 40% of the total extra income since 1979 has gone to the richest 10% of the population. Because they are hit harder by everyday taxes like VAT, people on low incomes actually pay a higher proportion of their incomes in tax than the highest earners. Many of the wealthiest people are also able to evade much of the tax they should be paying.
Questions
- What can be done to reduce socio-economic inequality?
- What practical support do people living in poverty need most?
- How does the current tax and benefits system contribute to wealth redistribution or greater inequality? What changes should be made?
Further information
Niall Cooper, National Coordinator, Church Action on Poverty
Contact: email 
Website 
Please note: the views and analysis outlined in this paper are those of the author alone and do not constitute a statement of policy on the part of the organisation the author belongs to.
Faith in Politics: Acknowledgement and thanks
