What is the ‘economic reality’?

An interesting blog post from Shaun Rafferty at JRF last week suggested, in the byline to the post, that ‘Economic reality means the Living Wage can’t be compulsory’ and then went on to argue that lobbying to make the Living Wage compulsory was ‘self-defeating’ because ‘It’s an economic reality that in the current operating environment there are many employers who genuinely couldn’t afford to pay their staff the Living Wage.’

This got me thinking about what the economic ‘reality’ is and I guess my reality is slightly different from Shaun’s (more post-modernism later). My view of the economic situation is that many people in this country ‘have never had it so good’, so to speak, but that this affluence sits quite uncomfortably alongside poverty. There are huge inequalities in wealth, but still ots of wealth in the UK as the figures below help to demonstrate.

The ONS suggested last year that household wealth in the UK had hit £10.3 trillion in 2008/10. The ONS website states that

Mean household total wealth grew from £373,000 in 2006/08 to £418,000 in 2008/10; the region with the highest mean value in 2008/10 was the South East at £562,000; the lowest was the North East where mean household total wealth was £322,000

Ruth Levitas used the table recently to highlight how the top 10% of earners received 10% more of total net income in 2009/10 than they did in 1979 whereas the bottom 10% saw their proportion drop from 4% of total net income down to 1% over the same period. So, the put it quite bluntly, the rich have got richer and the poor have got poorer over the last 30 years.

More recently, the Sunday Time published its Rich List for this year which showed that ‘The wealth of the richest 1,000 has reached a record high – £450bn. The increase in wealth is significant, with 11 new billionaires being added to the list between 2012 and 2013.’

However, not all employers are in the top 10% of earners and Shaun’s point was about the operating environment, but last year it was reported in The Telegraph that business investment in the UK was slow ‘despite a corporate cash pile now worth more than £754bn’. The figure, taken from an Ernst & Young ITEM Club report, equates to 50% of gross domestic product and the report was expected to say that say that ‘while businesses are in a strong position, British households remain under intense pressure.’ (my emphasis)

And, of course, there is the issue of tax avoidance and evasion. HMRC conservatively estimate the tax gap as around £32 billion. Richard Murphy at Tax Justice UK has estimated it at potentially in excess of £120 billion. Put simply, if everyone paid the tax they were supposed and paid it on time, there would be more than enough for poverty to be eradicated in the UK and, if distributed differently, there is more than enough money to ensure that all employers could afford to pay the Living Wage to their staff.

There is almost blanket acceptance of the ‘need’ for austerity and the tough ‘operating environment’ that this creates, not least in social policy areas such as poverty and low-pay, where policy solutions have to ‘fiscally credible’. However, the figures above – from diverse sources – suggest that the economic reality might not be all it seems. Indeed, if we were to get all post-modern about it (and I said I would return to this) we might begin to think that the ‘economic reality’ was in fact a ‘hyperreality’ – a simulation or representation of reality that is difficult to distinguish from reality.

 

 

Responsible business has to start with responsible employment

This week is Business in the Community’s ‘Responsible Business Week’ and we’re very pleased to be able to help report that one large employer in the North East shares our view that responsible business practice has to start with the treatment of employees, including their pay.

Fabrick Housing Group, which manages 14,000 properties and is based in the Tees Valley but covers an area from North Tyneside to York, have recently decided to become a Living Wage employer and are pursuing accreditation for this as well. They have also been keen to promote this decision and managed to get an article in Inside Housing magazine, highlighting that other housing providers could also make the pledge. A press release from Fabrick states that they are now encouraging their suppliers to join up and sign up to become Living Wage employers

Heather Ashton, Group Director of Finance and Corporate Services for Fabrick, who recently led a BitC ‘Seeing is Believing’ visit on in-work poverty in the North East said: “This is really important to us as an employer and we want the living wage to become a real consideration for businesses that become our suppliers too. We work very closely with local suppliers and when we award a contract, we will offer them a fair price to make sure they can provide the living wage” and “Offering the living wage helps tackle poverty and reduce the massive inequalities in our society.”

The decision to become a Living Wage employer has meant that 29 people received a pay increase of around ten per cent, but the decision to apply for accreditation and to encourage suppliers to sign up as well will bring benefits to a far larger number of low paid workers.

And, we also found out that Aquila Way, another housing provider in the North East have also just become accredited Living Wage employers and we’re sure that others are about to follow as well. This means that we now have more housing providers than local authorities in the North East paying the Living Wage…

For more information about Fabrick Housing Group, contact Helen Sturdy, Communications and Media Officer, on 01642 773616.

If you’d like to know more about how to become a Living Wage employer, please click here

“People where I live want to work….”

A couple of weeks ago we highlighted the discussions that had taken place in the House of Lords concerning the benefits up-rating bill and the strength of feeling around it. Yesterday, in discussions about the Jobseekers (Back to work schemes) Bill – more commonly understood as being about the ‘Poundland case’ - it was the turn of the MPs. The discussion based around the government’s proposal to introduce emergency legislation which would mean that they would not have to re-pay £130,000,000 that had been withheld  from people whose benefits had been sanctioned illegally.

Two of the strongest interventions came from MPs from the North East – Ian Lavery of Wansbeck and Grahame Morris from Easington. Below are some of the comments that they made in opposing the bill, which went against the wishes and official position of the Labour leadership. Politicians often get a hard time in our country at the present time and are often accused of being ‘out of touch’ with what is happening in ‘real life’. The comments below suggest that this might well be an unfair accusation in some cases. I appreciate that I could be accused of regional – or indeed political – bias in highlighting these contributions to the debate. I fully accept the regional bias charge and would also remind readers that the official Labour position was to abstain from the bill. (For info, 6 North East MPs voted against the bill – the two below, Ian Mearns, Dave Anderson, Mary Glindon & Nick Brown, three voted for the Bill – Guy Opperman, James Wharton and Ian Swales – but I couldn’t find contributions form them. The rest didn’t vote, from what I can gather). However, in order to redress the potential political bias somewhat, I have given the final word to Iain Duncan Smith, and have emphasised some of his comments  as they may be of particular interest….

Ian Lavery

The Bill is being introduced to save the taxpayer up to £130 million, yet it deprives the most vulnerable people who have been on workfare and are looking to better themselves in employment. It has been introduced to deny £130 million compensation to 300,000 people who would like decent employment with decent wages, terms and conditions. The Government have introduced emergency legislation to prevent those people from getting only what the Court of Appeal says they deserve. That is an absolute outrage.

I am certain that the 300,000 people the Court says have a claim because of the illegal actions of the Minister’s Department should receive it—there is no doubt about it. The Bill is being introduced by the DWP and the Government to deprive many hard-working people, and many people who want to be hard-working, of any finance whatever. Is that in the best interests of the economy? It is an absolute disgrace. Those people will spend money in the economy. They might get £50, £100 or £72 a week, but they will spend it, because it is the only money they have. The Minister should not seek to deprive those people and leave them with no finances whatever.

The Bill turns my stomach. The impact assessment states: “A retrospective transfer of public money to this group of claimants would represent poor value to the taxpayer”.

What a disgrace to say such a thing in Government documents with reference to the people I have mentioned 10, 15 or 20 times previously. That will not give them self-esteem. They are doing their very best.

Members of Parliament discuss with constituents, and often people away from the constituency, the merits and otherwise of policies. I often meet people with a very different view from the people the hon. Gentleman has met. That is not to say that that has not been said, but the people I meet want decent jobs. They want the opportunity to get up in the morning and  go to work for a decent wage. They would accept the minimum wage even though, at this point in time, it is not high enough. Where I live, 25 people are after every single job in the jobcentre. That means that 24 are not getting employment for every single opportunity. People want to work for the best intentions and the right reasons. They want self-esteem and finances. People where I live want to work—I am sure that extends throughout the country.

Saying that paying claimants the money that the Court says they should be paid—the result of the ruling means that the £130 million can be paid—does not represent good value for the taxpayer is an absolute disgrace. It is not the type of language we would expect from any Government. It is not right to talk about people as, “This group of claimants.” They are ordinary people with feelings, and many of them want to get on in life.

The impact assessment states: “If the Department cannot make these retrospective changes, then further reductions in benefits might be required in order to find the money to repay the sanctions.”

That is blackmail of the highest order—I make no apology for the strength of my feeling on that. If people are due finances, they should get them, particularly following a court ruling, but the Government are saying, “If we pay these people, we might have to cut benefits for other people as a result because that is where we have to find the money.” That is emotional blackmail. It is totally and utterly bang out of order. They are trying to set people who are looking for work and on benefits against each other. That is absolutely unacceptable.

Some 300,000 people will be denied their legal rights if the Bill is passed. This is just another ideological attack on the unemployed and the less well-off, despite a High Court judgment. Why does the Minister not just accept the court of law? Give these people what they are entitled to. It is the Minister’s mess. Why should they suffer?

Grahame Morris

Members on both sides of the House by saying that, if the funds are not recovered from those who were incorrectly sanctioned, they will have to be recovered from elsewhere in the welfare budget. That is outrageous blackmail; I am sorry if that is not parliamentary language, but I find that deeply offensive. It goes against every grain of fairness in Members on both sides of the House. The view I am expressing is the view that has been unanimously expressed to me. I have received numerous e-mails and messages from my constituents over the past 48 hours, all of them asking me to vote against this Bill as it is unfair and unjust.

The Government, and especially Government Back Benchers, have characterised jobseekers who have been sanctioned as workshy and feckless—the sentiment expressed was “Are you really suggesting these people shouldn’t be sanctioned?” Let us have a look at the Work programme, however. It has gone from chaos to farce. We talk about “workshy”, but what about wage-shy employers who exploit the unemployed, with the connivance, approval and funding of the Government?

I oppose the concept of two nations, as does my party, but what will the consequences of these measures be? The Government are creating two nations. They are seeking to penalise and punish the poor for the mistakes of the rich and powerful, in part of a continuing series of policies that are badged as “austerity”. Those policies are pushing the poorest in society further into poverty.

We need to look at the situation we are in now. This is the wrong thing to do: it is unjust and unfair to give millionaires a £2,000 a week tax cut, at the same time as the right hon. Gentleman’s Government propose to deprive some of the poorest people, who have been illegally sanctioned, of large chunks of their income. It is outrageous, and it is rank hypocrisy for anyone to talk about rights with the emphasis on responsibility when it comes to workfare. If they are willing to undermine the judiciary and the rule of law, and vote for retrospective legislation to cover up the mistakes and failings of the Minister, who is asking that we legislate to place him above the law, that is a dangerous precedent to establish.

I cannot, in all conscience, support this desperate Bill, put forward by a desperate Government who have broken their own laws and now wish to forgo their legal obligations and withhold social security payments of £130 million to some of the poorest people in the country. Why do we not apply that method across the board? If the national emergency is such that it is right to deny access to social security to those who are entitled to it in order to safeguard the national economy, why do we not chase the tax exiles—those powerful individuals who own newspapers and luxury hotels, who pay no corporation tax and who have laid siege to a small Channel Island?

We are in the sorry situation of the Minister blackmailing hon. Members by threatening a collective punishment for all those in receipt of social security and welfare benefits if these changes do not go through, because the Department might have to find the money through further reductions elsewhere in its budget. I thought that it was the Secretary of State for Education and his advisers who were the bullies. It is now obvious that the Department for Work and Pensions has decided to sink to those standards by threatening Members of the House in this way, which is below what we would expect of a responsible Government and a responsible Minister.

 I did not come into Parliament to penalise and punish the vulnerable and the poor for the mistakes of the Government. The Department for Work and Pensions seems to be in a state of chaos. It is trying to save money by issuing unlawful sanctions for a Work programme that is not fit for purpose. It is making arbitrary cuts to disability living allowance and employment and support allowance, and is seeking to reduce the case load by 20%. Through the bedroom tax, it is cutting the incomes of disabled people and families with children. The welfare state under this coalition Government in 2013 is failing at every turn.

What we are seeing today is an abuse of power. This is an appalling Bill. I urge the Minister to take responsibility for his actions, even at this late stage, to put a stop to the Bill and to pay those who were unlawfully sanctioned because of his failings. I will vote against the Bill and I urge other hon. Members to do the same.

Iain Duncan Smith

I am listening carefully to what my right hon. Friend has to say. As the Minister of State, Department for Work and Pensions, my hon. Friend the Member for Fareham (Mr Hoban), has made clear and my hon. Friend the Under-Secretary of State will make clear, all of these things are kept constantly under review. We want to improve them and that is what jobcentre staff do. They are brilliant at that, by the way, and they get better and better. My point on mandatory work activity is that it is not just work experience. It is also about changing culture: finding out whether someone is working and not declaring it; and getting people used to the idea of getting out of bed in the morning and attending somewhere where they do what they have been asked to do, because they have so got out of the habit of doing that, that even attending an interview has become a problem for them. This is not just about training; it is about getting people culturally back in line so that they can then be dealt with by advisers.

Westenders

Last week, John Harris from The Guardian visited Newcastle to discuss the impact of the cuts with local people. The video is well worth a watch for anyone with an interest in what is happening in the city – and the region more generally – and some of the interviews with residents take place in Scotswood, in the West End of the city.

Coincidentally, last Saturday I visited the Discovery Museum in Newcastle and stumbled upon an exhibition called West End Stories which chronicles the fortunes of this part of the city over the last 100 years or so. My eye was caught by a number of reports from the Benwell Community Development Project which operated in the 1970′s and early 1980′s. Photographs of/from some of the reports are below

And the thought I was left with, like Edmund Burke, is that if we don’t know history, we’ll be destined to repeat it.

A flourishing and happy society?

I have been really impressed by the coverage that Living Wage Week has received and by some of the commitments and comments that have been made by some politicians. The Living Wage Foundation noted that at a No 10 lobby briefing on the 5th November, it was reported that a spokesman for the Prime Minister said ‘We back the idea of a Living Wage and we encourage businesses to take it up’ and Boris Johnson and the Miliband brothers, amongst others, have also spoken powerfully during the last seven days.

However, not everyone thinks it’s such a great idea. A piece in the Daily Mail called it ‘economic illiteracy’ and a very strange piece on the Spectator website claimed that a living wage was the ’latest fad in this area of simplistic marketing slogans’ and ‘misses the point of poverty’. I wasn’t aware that poverty had a point, but I suppose, from a certain perspective, there are benefits to some people from others living in poverty.

Both articles were interesting in relation to how they framed the potential role of governments. The Spectator article, written by Ruth Porter from the IEA, suggested that the government should look at ways to reduce the cost of living in different areas of the UK and the Mail article suggested that the Minimum Wage was legislation enough and that:

The idea that somehow the minimum wage in  Britain falls short and needs to be replaced with something better is a piece of  nonsensical sophistry.
Aside from the totally false premise of its  name, which suggests the existing minimum wage does not provide a living income,  (the Living Wage) is a direct assault on the concept of free wage bargaining in a competitive  economy.

Interestingly, the Adam Smith Institute proposed raising the tax free allowance to provide a Living Wage for all, shifting the responsibility for increasing the take home pay of employees from the employer to the state, noting that the lowest paid often pay proportionately more tax than those wealthier than them.

There are, of course, lots of very good business and economic reasons why employers should pay a Living Wage, not least the reputational benefits they might enjoy but surely we shouldn’t aspire to be a society that knows the price of everything and the value of nothing, one that is guilty of ‘tearing up the flowers to get at the worms’ in the words of Robert Tressell. Adam Smith himself, considered by some as the founder of free market economics, put it very well in The Wealth of Nations, when he wrote:

“Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconvenience to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable. It is but equity, besides, that they who feed, clothe and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed and lodged.”

The Wealth of Nations was published in 1776. Thirty years later, Robert Owen said that:

“What ideas individuals may attach to the term  “Millennium” I know not; but I know that society may be formed so as  to exist without crime, without poverty, with health greatly improved, with  little, if any misery, and with intelligence and happiness increased a hundredfold; and no obstacle whatsoever intervenes at this moment except  ignorance to prevent such a state of society from becoming universal.”

Now, nearly 200 years on from this comment, it could be argued that there hasn’t been much progress in some of the areas highlighted by Owen, at least for some people. When there are five million workers paid less than a Living Wage, millions more unemployed and yet more castigated as scroungers for being unable to work or unwilling to do because they prioritise caring for others, large inequalities in health and eduational attainment and poverty looking likely to increase, can we call ourselves a happy and flourishing society?

regards,

Steve

An idea whose time has come….

We, in the North East, are often accused of ‘lagging behind’ other regions in various ways, although I’m not entirely sure how many sleepless nights this causes in the region. One area where it would have been nice to have been leaders rather than followers, however, is in recognising the importance of paying employees a Living Wage. In case you’ve missed it, this week is Living Wage Week in the UK and the new rate of £7.45 per hour was announced by Julia Unwin, the Chief Exec of JRF, on Monday.

The Living Wage Foundation also released a list of accredited Living Wage employers which, unfortunately, did not contain any local or regionally based organisations. However, it is not all bad news (in fact there’s some very good news and reasons to be optimistic about the future pay for the lowest paid employees in the region. Here, then, are some reasons to be cheerful:

• Scotswood Natural Community Garden in the West End of Newcastle are an accredited Living Wage employer (we believe they are the first and only organisation based in the region – although they don’t appear on the list) and, as a small charity reliant on grant funding for most of their income, they deserve praise for taking the step towards being a Living Wage employer. They have chosen to become a Living Wage employer, I understand, because it fits with their aim of promoting sustainable living.
• Newcastle City Council have become the first public sector organisation in the region to commit to being a Living Wage employer, although they have decided not to pursue accreditation at this stage. They are also encouraging other employers in the city to also become Living age employers and one large property development company responsible for the regeneration of a large area of the city centre is exploring the financial implications of paying the Living Wage to staff in a new hotel that is planned.
• Durham University Labour Club have started campaigning on the issue of a Living Wage to get Durham University to become a Living Wage employer. They have written an excellent blog on the subject which highlights that one of a PVC for Durham wrote in a JRF report exploring how universities could help disadvantaged communities that they can ‘also set an example to other employers by promoting good practice, such as ensuring that all employees are paid at least the Living Wage’. They have also set up a petition which will be delivered to the University and I would encourage people to sign it.
• The Northern TUC (who have been quite busy recently with work around regional pay in the public sector) are continuing to work with a number of public sector organisations in the region to encourage them to become Living Wage employers. They are holding what is likely to be an excellent and packed event in Middlesbrough tomorrow (Friday 9th November) to discuss the reality of austerity and what poverty pay means for millions of workers across the UK.
• This post is part of a Blog Action Day, organised in conjunction with VONNE, the umbrella body for the voluntary sector in the North East. Jo Curry, their Chief Exec, recently spoke in favour of the Living Wage at an event where the role of the institutional behaviour of organisations in producing and reproducing poverty was discussed. Carrie Brookes has written an excellent blog summarising some of the issues facing voluntary sector staff here and the issue was also discussed at the Newcastle CVS AGM earlier this week. Jeremy Cripps, the Chief Exec of Children North East is also due to publish a blog about the subject here. In other words, the voluntary sector in the region are now talking about the Living Wage and what it means for them….

So, it is rare that David Cameron and I are in agreement, but on this we are. He said that the Living Wage was ‘an idea whose time has come’ and it appears that us folk in the North East are beginning to think he may just be right.

Unfortunately, the Prime Minister has not felt it unnecessary to act in support of his statement since becoming Prime Minister. We, however, will extend an offer to any representatives from employers in the North East reading this blog. We, the North East Child Poverty Commission, will work with you to provide you with as much information and support as we can possibly can to demonstrate that paying a Living Wage can be a very good, sound business decision. I’m sure the Northern TUC and the Living Wage Foundation will make similar offers, if appropriate.

Kind regards,

Steve

An excellent summary of Living Wage week coverage can be found here and also using the hashtag #Livingwage on Twitter

Elbow room…

“All too easily the social scientist can be the unwitting servant of contemporary social values, and in the study of poverty, this can have disastrous practical consequences. He may side with the dominant or majority view of the poor. If, by contrast, he feels obliged or is encouraged from the start to make a formal distinction between scientific and conventional perspectives, he is more likely to enlarge knowledge by bringing to light information which has been neglected and create more elbow room for alternative forms of action”

Peter Townsend (1979)

Last week saw the launch of the Commission’s report exploring the approaches of the 12 North East Local Authorities in fulfilling their local duties under the Child Poverty Act. The Act requires local authorities and their partners to prepare and publish a Child Poverty Needs Assessment and a joint Child Poverty Strategy for their area.

The report can be accessed by clicking on the image below.

The report, which is primarily aimed at policy makers and practitioners, explores the priorities identified by local authority Strategies and Needs Assessments and challenges the focus of some of these documents using available evidence. The report concludes with 20 potential policy options for local authorities and regional bodies to consider when refreshing and updating their Needs Assesmments and Strategies.

The report was launched at an event at Durham University on Friday 19th October and during the presentation that I delivered, I suggested, with the aid of the Peter Townsend quote at the top of this blog, that we, in the region, had some ‘elbow room’ to develop alternative forms of action from those currentlyy being pursued. I argued that central government narratives around the causes of poverty were too narrow and focused primarily on the perceived behavioural shortcomings of a separate and distinct group of ‘poor people’. Using quotes from local authority strategies, I attempted to demonstrate that in a number of cases, local authority priorities adhered too closely to this narrative, even when the research evidence suggested they might not be the most fruitful avenues to pursue. The presentation can be accessed by clicking on the image below

I suggested that 3 small steps could be taken by local authorities when they came to update their Needs Assessments and Strategies, which would represent giant leaps from the existing position. These smalle steps were:

1. Use – and add to – the evidence base
2. Examine instituional behaviour – ‘do no harm’
3. Give people living in poverty a voice

It could be argued that these steps are ‘essentially minimalist’, to use a phrase that Ruth Levitas has levied at national governmental efforts to tackle poverty, but I would also argue that they are practical steps which could result in a very different narrative around poverty being developedin the North East.

Kind regards,

Steve

If anyone has problems accessing or downloading the report or presentation, please contact me and we will send you an electronic copy of either or both. The presentation is quite large though…..

Lacking the necessaries of life…..

A couple of weeks ago Jeremy Cripps, the Chief Executive of Children North East wrote a powerful blog about how funding cuts passed from central government to the local authority and then to his charity meant that they were unable to afford to provide a meal for some children in temporary accommodation over the summer holidays that they work with. Jeremy wrote:

here we have a Government without the humanity to care for very vulnerable people until they are deported by giving them even a minimal amount of money to feed their children; a local authority providing shelter for those families but forced to cut back on its spending by the Government; passing that cut on to a  charity which too has to economise; the buck passes to the charity’s staff who cannot stand by and do nothing while in daily contact with children in basic  need of food; so they take it upon themselves to make sure children do not go hungry. This is the reality of the so-called ‘Big Society’ in ‘austerity  Britain’.

This story was picked up by the Guardian Cuts Blog which ran it under the headline ‘who pays for lunch when the state does a runner?’ and another similar story was posted earlier today

Earlier this year, as part of a blogging day during Volunteers Week, Carrie Brookes of VONNE asked readers to ‘imagine if we all stopped volunteering tomorrow’, noting that the value of unpaid care in the UK had been calculated at around £87bn. She finished her blog thus:

The fact is that much of the work undertaken by volunteers and charities saves the state a huge amount of money.  Prevention of problems such as poor health, teenage pregnancies, helping people get back into the workplace, support for homeless people, advice and guidance, drug rehabilitation, they all save the state an awful lot of money.  A lot more than the £87bn mentioned above. We cannot afford to deal with the consequences to society if that support for volunteers and activity they support is stopped. (my emphasis)

The last line of Carrie’s blog provides a flip side to a couple of polemic paragraphs from one of my favourite books, The Ragged Trousered Philanthropists. Robert Tressell, writing in the early 1900′s suggested it would be better if we all did stop volunteering tomorrow in a section which touches on a number of issues relevant to the situation above:

Meanwhile, in spite of this and kindred (charitable) organisations, the condition of the under-paid poverty stricken and unemployed workers remained the same. Although the people who got the grocery and coal orders, the ‘Nourishment’, and the cast-off clothes and boots, were glad to have them, yet these things did far more harm than good. They humiliated, degraded and pauperized those who received them, and the existence of the societies prevented the problem being grappled with in a sane and practical manner. The people lacked the necessaries of life: necessaries of life are produced by work: these people were willing to work, but were prevented from doing so by the idiotic system of society which these ‘charitable’ people are determined to do their best to perpetuate.

If the people who expect to be praised and glorified for being charitable were never to give another farthing it would be far better for the industrious poor, because then the community as a whole would be compelled to deal with the absurd and unnecessary state of affairs that exists today – millions of people living and dying in wretchedness and poverty in an age when science and machinery have made it possible to produce such an abundance of everything that everyone might enjoy plenty and comfort. If it were not for all this so called charity the starving unemployed men all over the country would demand to be allowed to work and produce the things they are perishing for want of, instead of being – as they are now – content to wear their masters’ cast-off clothing and to eat the crumbs that fall from his table’ (my emphases)

It is, of course, very obvious that the state can afford to provide funding for these families. Central government can also afford not to cut funding to local authorities. Local authorities can also afford not to cut their grant to charities by 10%. The fact is they choose not to do these things, choosing instead to spend money on other things or choosing not to increase the amount of money at their disposal, leaving Jeremy and his staff with little choice but to dip into their own pockets. John Veit-Wilson, in his ‘Horses for Discourses’ paper makes this point better than anyone:

Ensuring that all the members of society, residents in or citizens of a nation state, have enough money is a clear role which governments can adopt or reject, but they cannot deny they have the ultimate power over net income distribution.

I don’t necessarily agree with Tressell’s proposal or his representation of charitable organisations (which were very different when he was writing), but I do agree with his analysis of the system of society. How can we call ourselves civilized when we deliberately and knowingly let families live without, as Tressell puts it, ‘the necessaries of life’ when the world has never been richer? At what point will we stop and realise that we have accumulated enough ‘stuff’ and wealth’ and sit down and work out how to divide it up better?

Thoughts, as ever, are welcome……

Steve

ps – in the interest of full disclosure, I’m running the Great North Run this year and am raising money for Children North East. Feel free to donate here

What we’re up to…..

We’ve added some new information on the About Us page of this blog which provides a bit more detail on the range of projects that the North East Child Poverty Commission is involved with in the region.

The Commission first met on 8th June 2011 and since then we’ve been involved with a variety of different pieces of work including helping local authorities prepare their Child Poverty Needs Assessments and Strategies, supporting Children North East with their photography project and conference, working with a local councillor to prepare a report on child poverty for the EU Committee of the Regions and securing funding to continue the project beyond March 2012.

Currently, and despite the resources available to the Commission being reduced from last year, we are still involved with numerous different projects that we hope will help to improve the lives of children in the North East and help to end child poverty in the region. Below are some of these projects:

Working for North East Families – Around 60% of children growing up in poverty live in a household where at least one adult works. Work does not always offer a route out of poverty and, when it does, it is often on an insecure and precarious basis. Employment practices and ‘Terms and Conditions’ can all have a bearing on whether or not wrok really does offer a genuine, lasting route out of poverty. Together with partners, the Commission is developing a 3 year project looking to engage with employers in the region to make them aware of the role that they can play in ending child poverty as well as the benefits that it can bring to them, both in the short term and the long term. For more information on this project, please visit the Working for North East families page on this blog.

Poverty proofing the school day – Children North East are working with the Commission to develop a toolkit to help schools to ‘poverty proof’ the school day, from a child’s perspective. This work will include working with children, staff and governors from four schools in the North East to explore how policy and practice within these schools can inadvertently add to the marginalisation and stigmatisation of children living in poverty. This work has developed as a result of the Children North East photography project and exhibition last year and is funded by the Policy and Representation Partnership at VONNE. A copy of the project proposal can be found here

Child Poverty and Education – the Commission are developing a training session for school governors in the region on the links between child poverty and educational attainment and how the Pupil Premium and other resources might be used to help raise the attainment of children living in poverty. This work has developed following discussions with teachers and child poverty leads and governor services within local authorities. Nine authorities in the North East are taking part in the pilot programme.

Regional Seminar Series – the Commission organises and hosts seminars on topics related to child poverty on a regular basis. The aim of these events is to share research findings with policy makers and practitioners in the region. Topics explored so far have included low income families use of brands, maternal deprivation, potential uses of the Pupil Premium and how government discovered early childhood. Future topics include Understanding welfare differently (with Paul Spicker), Poverty & Ethnicity (with JRF and Gary Craig) and the Living Wage (with the Living Wage Foundation). You can be kept up to date with these events by joining our mailing list here

North East Child Poverty Policy Network -as well as supporting the work of the Commission, the regional child poverty co-ordinator also supports a child poverty policy network for local authority leads and voluntary sector officers working on child poverty. This group meets bi-monthly and discusses issues of common concern and policy developments. Officers from Child Poverty Action Group and the Child Poverty Unit regularly attend the network as well. As well as meeting formally as a group, the co-ordinator also supports local authorities with individual requests and advice and support. We have also developed strong links with CPAG and JRF which ensures that the work of these organisations-  and others – are shared with a wide audience in the NorthEast.

‘Local authorities, lcoal duties & local action’ – a report has just been completed that explores how local authorities in the North East have fulfilled their ‘local duties’ under the Child Poverty Act which requires them, along with their partners, to publish a Child Poverty Needs Assessment and a Child Poverty Strategy. The report looks at emerging themes within the region from these documents and highlights some potential policy options that local authorities could pursue. The report will be posted on our blog when it is published.

Awareness raising – the Commission also raise awareness of the issue of child poverty in the region through our own communications (the blog, the e-newsletter, Twitter, regional events etc) and those of other partner organisations such as VONNE, the Regional Youth Work Unit and the regional Children England network. The co-ordinator often responds to requests for comment and information on local media stories relating to child poverty.

If you’d like any further information on any of these projects, please feel free to get in touch with us.

Best wishes,

Steve

Can employers afford not to pay a Living Wage?

Two weeks ago, cleaners for government departments left letters on Minister’s desks asking to be paid the London Living Wage. The man who cleans Nick Clegg’s office was involved as was the lady who cleans George Osborne’s office. A Cabinet Office spokesman responded to the press coverage by stating that the government ‘are not convinced employers should be required to pay a higher living wage’

The release of the official HBAI stats recently showed yet another increase in working poverty (Chris Goulden from JRF called it ‘a relentless rise’ whilst the Director of the CSJ admitted they had ‘missed in-work poverty’) and this post will explore the idea that, contrary to being unable to afford to implement a Living Wage policy in the current climate, employers may consider that they can’t afford not to.

All in this together

The Coalition government has made great play of a private sector led recovery from the economic crisis but, for many people, businesses (especially large, multi-national ones) are still part of the problem. Recent concerns over private sector organisations such as G4S, A4E, Barclays (a Living Wage employer it should be noted) and Southern Cross suggest that ‘the market’ is often not best placed to deliver the kind of society many people would like. Polly Toynbee suggested that outsourcing of public services contracts ‘create moral hazard on a grand scale, where profits are private but losses are ours’.

Michael Bloomberg, Mayor of New York, owner of 11 homes and the 20th richest man in the world recently vetoed the Living Wage in New York whilst Lord Griffiths, the Vice Chairman of Goldman Sachs famously suggested that ‘we have to accept that inequality is a way of achieving greater opportunity and prosperity’. So employers potentially have a choice to make. Do they risk aligning themselves with ‘the orthodox market approach: that workers should be paid what the market deems they are worth’, and where ‘the interests of workers are relegated compared to the needs of capital’, or should the wage level ‘be based on what people need to live on and not what business can afford’? (Grover 2005, p13).

Many employers are already demonstrating that paying a Living Wage does not necessarily mean higher costs or reduced profits and can be entirely compatible with an effective business model. Guy Stallard from KPMG, says that paying a Living Wage ‘isn’t just about altruism … a really motivated workforce is in many ways even more important when businesses are facing really challenging times’ and ‘It is possible to behave ethically, and pay the Living Wage, while working to earn a profit.’ UNISON have also produced a summary of responses from Living Wage employers which highlight the ‘business case for the Living Wage’, something we are working on in the North East. Employers report higher retention rates, reduced absenteeism and a more motivated workforce.

A report by GLA Economic in 2009 on the ‘business benefits of implementing a Living Wage policy in London’ concluded that:

Our findings indicate that there is some evidence of significant financial and nonfinancial benefits achieved by those employers that have implemented the London Living Wage. Although some organisations indicated that there were non-trivial implementation costs, the absence of any evidence of substantial negative impacts on business performance on an on-going basis suggests that there is a likely positive net benefit of London Living Wage implementation for a typical firm. (my emphases)

Affordability

IPPR and the Resolution Foundation recently launched a report asking ‘What price a Living Wage?‘ exploring the impact of a living wage on firm level wage bills across 7 industrial sub-sectors. They calculated that the highest average wage bill increase would be in ‘bars & restaurants’ which would see an increase of around 6.2% whilst other sectors such as banking and construction would see an increase of around 0.1 – 0.2%. The report did not take account of any wage ‘spillover’ effects and nor did it analyse how employers might ‘bear the cost’ of implementing a Living Wage.

However, there is no reason why implementing a Living Wage should cost anything. As Hilary Metcalf pointed out at a meeting I attended recently, many other countries seem to do just fine by paying their lowest paid workers a little bit more and their highest paid workers a little bit less. The 28th British Social Attitudes Survey highlighted that a large majority of people (74%) thought that the gaps between those with high incomes and those with low incomes was too large and a smaller majority (55%) thought that ‘ordinary working people do not get their fair share of the nation’s wealth’. However, a minority (34%) felt that government should redistribute income from the better off to those who are less well off, which suggests that employer efforts at ‘pre-distribution’ would be well received by the public.

The London Borough of Islington have stated that they are able to implement the Living Wage without it increasing costs substantially and they have done this ‘by in-sourcing services and trimming the pay of the Chief Executive‘. Newcastle City Council have announced that they will be Living Wage employers and there are many other examples across the country. In Scotland, over 50% of local authorities have committed to paying the Living Wage, so it can be done by the public sector, even in times of austerity.

In the words of Thorstein Veblen “Ideally, and in the popular apprehension, the university is, as it has always been, a corporation for the cultivation and care of the community’s highest aspirations and ideals” and a number of universities, particularly in London, have committed to paying a Living Wage. Labour Students have highlighted the Living Wage as a major campaign for them nationally and a recent motion passed by DSU requires ‘the student’s union to campaign for the (Durham) University to pay all staff a Living Wage’.

Reputational benefits and risks……

The reputational benefits of being a Living Wage employer provide some of the strongest reasons why employers may choose to implement a Living Wage. Being seen as a ‘good’ employer will be important not only to potential employees but also to potential consumers in an era where ‘fairness’ is a concept that many people identify with. Sainsbury’s, generally seen as one of the more ethically minded supermarkets (it’s the world’s largest fairtrade retailer) have recently been targeted by the direct action Pay Up campaign as a result of them not paying their staff a Living Wage.

A note of caution…

Of course, the Living Wage is not a silver bullet for working poverty and I’ll post another blog looking at some of the assumptions and problems with it in the next couple of weeks. You can also pay staff a Living Wage and still be a pretty poor employer as well. However, as a symbolic gesture that you are serious about tackling in-work poverty amongst your workforce, I’d argue that it takes some beating. And it needn’t be ‘bad for business’ either.

Regards,

Steve

If you are an employer who is interested in becoming an accredited Living Wage employer, you can find out more about how to do this by contacting the Living Wage Foundation here