Subsidise jobs to protect households from poverty cliff edgePosted: February 5, 2012
Households’ income and spending are way out of balance. The poorest third of households in the UK have huge difficulty matching income and spending and many struggle with debt. Only in the top half of the income distribution do typical households have a good chance of consistently staying in the black.*
Supporting evidence is flowing in, and is summarised in Credit Action’s February 2012 report.** Citizens’ Advice reckons that 43% of people are worried that they will not be able to afford their next fuel bill; the Money Advice Trust says that 20% of the adult population experience a constant struggle to repay their debts. Moneysupermarket.com reports that 40% of credit-card holders are not paying their bills in full every month. The bank First Direct says that 21% of households have no savings, and another 7% have between £1 and £250.
The protection insurance specialists Bright Grey discovered that 23% of adults just about break even financially, and another 10% regularly spend more than their income.
The situation could be called “on the edge” for a quarter of households, while another tenth have already fallen over the cliff.
At the other end of the income scale, there is still plenty of cash to splash around, but it is not ‘trickling down’ significantly to improve jobs and incomes further down the distribution. The trickle down hypothesis made more sense when economies were mainly local, but globalisation means that money goes anywhere — to factory owners in China, to steel magnates in India, to corporate shareholders in the USA, Russia, Qatar, Saudi Arabia and all other states with wealthy investors. More than ever, the money we spend is circulated among a network of super-wealthy individuals all over the globe.
The deliberate, subsided stimulation of local employment may be our best way ahead. It is no good government ministers telling benefit recipients to get a job if there are no jobs. Subsidising jobs would help communities to feel positive and useful, and I think would be a beneficial use of taxpayers’ money. The World Trade Organisation is a barrier because it is all about the abolition of national tariffs and subsidies, but what sort of world is the WTO helping to create? We are in a world of widening gaps between those with too many resources and the vast majority with very little. Let’s encourage local economies, in which local spending benefits local people first.
* See Family Spending 2011 from National Statistics, for 2010 data on households’ incomes and spending.
** Credit Action, http://www.creditaction.org.uk. This is a very good resource, with statistics compiled by John Davies.