Ignoring persistent poverty is no way to build a thriving economy

Enduring poverty is becoming a permanent feature of the UK economy – and that’s dangerous for us all, says Julia Unwin.

The human stories that explain why Greece has voted for a radical alternative to austerity sound unimaginable in the UK today: 25 per cent unemployment; middle classes reliant on food banks and soup kitchens to survive. Despite undeniable hardship, the UK has seen nothing like the scale of cutbacks that the Greeks and the worst-affected Eurozone nations have endured in the last few years.

But as the Treasury searches for tangible signs that the economy is finally back on its feet, and its austerity programme is endorsed by the International Monetary Fund, a more troubling reality threatens the stability of our economy and society. Recent data shows that persistent high levels of poverty and insecurity are now becoming permanent features of the UK economy, not just in recession. It is increasingly obvious that we have not just failed to understand and tackle the underlying causes behind the global financial crisis, but risk repeating the same mistakes over again.

Our labour market is now split in two: there are good and rewarding roles for many, but a proportion of workers, particularly in the care, retail and hospitality sectors on which we all rely, remain permanently in poorly paid roles. Our research has also shown how, despite people being in work, many are failing to reach an adequate standard of living. This week JRF will welcome the prominent economist Ha Joon Chang to deliver our second annual lecture, on Growth for everyone? – a vision for an equitable economy. An equitable economy – in which everyone has the ability to prosper – is becoming a democratic and economic necessity. A recovery that is too dependent on the capital, and does not fully draw on the strengths and aspirations of business and communities across the four nations of the UK, is worryingly fragile.

JRF focuses on solutions that help to reduce poverty because it matters to all of us. A persistent high level of poverty costs the country in wasted skills and talents, in welfare and remedial interventions, and it jeopardises our return to long-term, sustainable economic growth. A society in which people feel trapped, and in which routes out of poverty are blocked, is a profoundly unequal one. It creates and reinforces insecurity. And it breeds resentment and discontent, which can only pit poor people against very poor people.

Poverty can affect almost anyone, at one time or another. When poverty does take hold, it can be enduring. That is no way to build either a strong society, or a thriving economy. That’s bad for people in poverty today. It is also dangerous for us all.