Poverty in the United KingdomPoverty in the United Kingdom and the cost of living has increased steadily since early 2021. After Russia’s full-scale invasion of Ukraine, wholesale natural gas and oil prices soared, leading to more expensive bills for domestic consumers. The price of gas surged by 96% in a year and electricity has increased by 54% as it relies on gas for generation. Energy prices greatly impact the cost of living in the U.K., along with increasing prices of consumer goods such as food. The war in Ukraine has disrupted the country’s glass manufacturers, causing bottles for common products such as Coca-Cola to halt. According to the House of Commons Library inflation reached an astonishing 10.01% in July 2022, only dropping to 9.9% in August.

The U.K. remains at the high end of the worldwide inflation scale, ahead of the U.S. at 8.8% in April 2021, and 8.6% in the Eurozone from June. Low-income households spend more on housing, transport and food causing the high cost of living to disproportionately impact them, increasing poverty in the United Kingdom.

Movement in Geopolitics

Recent explosions of pipelines Nord Stream 1 which carried natural gas to Germany from Russia add pressure to the energy crisis. Although the pipelines have been inactive since early September, the accusations of sabotage of energy supply connections sparked anxiety in the U.K. and Europe. The fear has spread quickly as Norway, Europe’s largest natural gas supplier, has announced increased security on all of its gas and oil infrastructure. Panic could occur as millions are dealing with the mounting debt of rising food prices pitted against the high cost of energy bills.

Soaring costs of food and energy impact the most marginalized people the hardest. Bloomberg reports a peak inflation rate of 8.7% in June for low-income households. Whereas high-income households stood at 7.8% that same month. The data shows lived experience: if one earns more, one will likely have more to supplement rising prices; however, if one does not, one will likely fall short in purchasing power.

Confronting Crisis

Liz Truss’ tax cuts stunned economists and sent the pound into a free fall. On September 23, 2022, the British government announced a 45 billion pound tax cut ($48 billion USD) which caused the pound to drop to a record low of $1.03. In an unprecedented ‘mini-budget’ announced Friday, the government abolished the top 45% rate of income tax paid by the highest earners. As a result, YouGov polling shows that the Labour party has a 33-point lead over the Tories.

Only a year ago, Boris Johnson’s government made a decision to raise taxes to avoid public spending in the wake of the pandemic. Now the new government Truss has assembled caused markets to crash and investments in British industry to be withdrawn. In mid-September, the Bank of England announced that England might already be in a recession, as many are already feeling the sting of autumn without adequate heating.

Politico has quoted Truss in transit to New York this week saying, “Lower taxes lead to economic growth, there is no doubt in my mind about that,” although, with the value of the pound diminishing and the cost of goods, energy and transport already on a high the immediate effect is a negative one. The markets are one metric that helps weigh the viability of a Prime Minister. Currently, her reputation is not strong, even in her constituency. Truss has only two years to prove herself to voters with an election waiting around the corner in 2024.

Although Truss introduced the Energy Price Guarantee on September 8, 2022, which caps energy bills at 2,500 pounds ($2,788 USD) and went into effect on October 1, 2022. Even though this program will keep bills significantly lower than predicted, at least until January, many are skeptical of the Conservative government’s attempts to help people and businesses.

Charities Lending a Hand

Organizations such as Independent Age, Groundwork and the Smallwood Trust have stepped in offering grants for a range of people and communities affected by poverty in the United Kingdom. These grants will provide financial relief for material goods and basic essentials, as well as specialized needs.

Independent Age will give 25 grants of 45,000 pounds each to charities and community organizations helping older people through the crisis. Groundwork is partnering with One Stop Stores in awarding 1,000-pound grants to successful applicants. Smallwood Trust is focused on getting relief to women who need grants in the wake of the cost of living crisis. Women are especially important because they are underpaid and often overworked in society, on top of being the main caretakers in most households. As autumn begins, people are mobilizing to help each other through any difficult day, and that is always something to be thankful for.

During the period of volatility in the United Kingdom, the various organizations providing aid are extremely beneficial. Hopefully, with these charities’ continued efforts, poverty in the United Kingdom will reduce.

– Shane Chase
Photo: Flickr

inclusive capitalism

Inclusive capitalism is becoming a frequently used phrase to describe a large number of economies around the world. However, in both developing and developed countries, the capitalist system in these places seem to be showing more holes. These economies that claim to support the entire people in a fair way are seeing greater inequalities than ever before.

In its most basic form, capitalism aims to uphold all citizens to the same standards, same opportunities and same rewards.

“[The capitalist system consists of] relative equality outcomes; equality of opportunity; and fairness across generations,” said Mark Carney, the Bank of England’s new governor.

The U.N. Development Programme found that income inequality in developing countries has risen by 11 percent over the past 20 years.

Undeveloped countries using a flawed capitalist system are caught in a bad cycle. The inequality seen in the economy creates a barrier for further development. However, a system that supports all citizens is far more likely to improve than one that focuses solely on the elite. Especially in countries that face severe poverty, if the low-end jobs are not supported by the government or provided substantial pay rates, then people will be less inclined to work in these positions. This deters the people in poverty from attempting to change their situation.

When a country emphasizes the importance of all workers, it provides an investment in its people and their labor.

Problems with capitalism are not contained to developing countries, however. Because 80 percent of countries around the world operate on a capitalist economy, it makes sense that ensuring the principles upon which the ideology is based should be a priority.

At the core of the problem, the effects on society that a person’s occupation has should be taken into consideration when determining pay rates. Often times, those who contribute to society most, such as teachers, nurses and farmers, are the people who are greatly underpaid.

“We should be rewarding those who grow our food and make our stuff, or teach the next generation of children, an amount that reflects the work they have put in, and the value we get out of it,” said writer Deborah Doane of The Guardian.

To achieve true inclusive capitalism, the salary gap between the CEOs and the average worker must decrease. The opportunities for both groups must be equivalent, and the current system does not allow for this equality.

“Inclusive capitalism needs to deconstruct and shed its attachment to the old-style competitive labour theory,”  Doane continued, “which suggests that if labour is in abundance, it should be paid cheaply.”

– Hannah Cleveland

Sources: The Guardian, The Vancouver Sun
Photo: Revive a Sunnah

In Kenya, a community currency called the Bangla-Pesa used in a twenty acre slum called Bangladesh was created in order to help reduce poverty. Now, however, the six initial creators of the currency, who are local small business owners and activists, face up to seven years in prison for forgery. Steep penalties for similar practices are not uncommon. In the mid 1700’s in Britain, counterfeiting a Bank of England note was a crime punishable by death. But many are arguing that the Bangla-Pesa cannot be counted as forgery because it in no way resembles Kenya’s currency, the shilling. Today, the Bank of England is still in existence and acknowledges the benefits of complementary currency, but it appears that the Central Bank of Kenya has much to learn.

According to a sociologist at the University of South Maine, printed currencies encourage consumers to shop locally. The website states that when money stays local for longer, less money needs to be externally funneled back into the community. Complementary currencies also allow for previously undervalued services to be rewarded. The Eco-Pesa, also used for time in Kenya, allowed youths to be paid for collecting trash and resulted in twenty tons of waste being removed from a small town.

Furthermore, because GDP is measured not by goods produced, but by goods and services sold, a nation’s GDP will only increase its people have access to currency. When national financial institutions actively try to keep currency scarce (to flight inflation, for instance) consumer activity often drops, taking the country’s gross domestic product down with it. National tax revenue can also be boosted by community currency, because users of the currency typically still pay whatever taxes apply to their purchase. Thus, by creating a sale where there was no opportunity before, the government’s coffers also benefit.

Despite these new opinions from scholars, the idea of a community creating its own currency to combat poverty is not a new one. Even during the Great Depression, communities across the US printed their own money, and after the recession in 2008, many communities in the United States began printing their own currency at discounted rates to assist those who had been laid off or received reduced wages. Local US currencies include Detroit Cheers, Plenty in New York, and the BerkShare in Massachusetts.

In Brazil, a local currency called the Palmas was also fiercely combated by the Brazilian Central Bank. Its creator was arrested under suspicion of money laundering at an unregistered bank, but a judge later ruled in his favor, arguing that it was a constitutional right for citizens to have access to finance.

William Ruddick, one of the six arrested for the creation of the Bangla-Pesa, said: “These currencies are a solution for alleviating endemic poverty in informal settlements and ensuring that aid money remains in target communities.”

– Samantha Mauney

Sources: Truth Dig, Complementary Currency, Petition, Standard Digital
Photo: Koru Kenya