This week, a member of the Tory-voting audience in the BBC leadership debate said the following: “I’m really happy the government have basically contributed towards universal credit and people on benefits, but I’m a single parent, I work full-time and I travel and I’m struggling.” It’s true that all but the richest people are struggling with soaring inflation. But the question implied something else: that those on universal credit are managing, that the state looks after them, while those who earn their living have to struggle.
The facts, according to the Resolution Foundation, are these: “The basic level of benefits is now just £77 per week – only 13% of average pay and its lowest level on record.” Inflation, meanwhile, has hit the poorest people hardest because those with least spend the highest proportion of their income on energy and food and these prices have rocketed. And people who are low-earners earn too little to pay much or any income tax, so Liz Truss’s vaunted cuts barely touch them. Here’s the truly staggering tax cut fact that she hasn’t been challenged on. Of Truss’s colossal £30bn cut, £19bn would go to business through the cancelling of the corporation tax rise. And 85% of the £8bn cost of scrapping the national insurance rise would go to the top half of all earners, with the top 5% getting 28% of it; the bottom half of earners would get just 15%.
Yet here’s what Truss had the nerve to say in the TalkTV debate: “I do think it’s morally wrong at this moment when families are struggling to pay for food, that we have put up taxes on ordinary people.” Her notion of “morally” and “ordinary people” is enough to make any presenter faint.
Have those people on benefits been especially cushioned, as that audience member suggested? Far from it. There was some easing for those in work with a softening of the universal credit taper – the rate at which they lose benefits for every extra pound they earn: they used to lose 63p in the pound, now it’s 55p – still a mighty high penalty.
Earlier in the pandemic, a crucial emergency £20 was added to universal credit. Withdrawing it plunged millions into deeper poverty. The story of benefits since 2010 has been miserable cuts. A four-year freeze, an overall cap, the two-child limit, the bedroom tax and other acts of spite ensured benefits fell even further below inflation. While pensioners – overwhelmingly Tory voters – were pork-barrelled with a £510-a-year real pension rise, families with children lost £375.
Anyone out of work was hit hardest, with a growing number of people sick and disabled post-pandemic, including some of the 2 million long Covid sufferers and those languishing on NHS waiting lists. Unemployment pay is a pitiful 13% of average pay, while in Sweden it’s 80% of a worker’s previous earnings.
To be poor in Britain is far worse than across the Channel. As this country falls behind in GDP growth (worst bar Russia) and inequality (worst bar Bulgaria), our decline is reflected too in making us the worst place to be poor. But remember this: poverty is measured internationally, as relative to the rest of a nation’s wealth, as anyone living on an income below 60% of a country’s median rate. So despite declining, Britain needn’t consign those with the lowest incomes to such grinding poverty. The Resolution Foundation puts it clearly: “Low-income households in the UK are now 22% poorer than their counterparts in France, and 21% poorer than low-income households in Germany.”
Taking the pulse of the world, Ipsos Mori finds us exceptionally mean-minded. Across the world, poverty and inequality come a close second in global public concerns, after inflation. How about the UK? Here we really don’t care much. We rank inflation as our top worry, but poverty and inequality are in a lowly joint fifth place in our concerns.
That’s who we are. Until a hero like Marcus Rashford forces people to confront the reality of hungry children – who will go very hungry these holidays – the myth that British benefits are generous comforts the complacent or causes ill-founded resentment among others who feel they are struggling. And, of course, most people do struggle under wages that fell back in the past 15 years, which is why there should be general support for strikers who speak for almost everyone.
Meanwhile, Thursday’s HMRC figures may embarrass Rishi Sunak, revealing how more than 68,000 people escape their fair share of taxes through non-dom status; economists’ estimates vary wildly, but it’s billions lost. Hannah Tarrant, research officer at the LSE’s International Inequalities Institute, says despite non-doms owning substantial wealth in the UK, “One in seven of the billionaires lives in a tax haven.” With lists of lucrative tax loopholes in her sights, Labour’s Rachel Reeves says she will shut down the non-dom scam. Don’t expect to hear a word about these shameless tax reliefs for rich people from either Tory leadership contestant.
• This article was amended on 1 August 2022. An earlier version said that of Liz Truss’s £30bn of tax cuts, only 15% would go to the bottom half of all earners. The Resolution Foundation article quoted makes clear that this percentage relates to the proposed cancellation of the national insurance rise, which would account for just £8bn of the proposed cuts. The writer meant to refer to the cancellation of the corporation tax rise. This has been clarified.
Polly Toynbee is a Guardian columnist
