Don’t joke about poverty, unless someone is poorer than you: Myths, poverty and asset-based welfare after the referendum

Stephan Köppe, Research Fellow, University of Dundee.

You cannot joke about poverty in Scotland. Shortly after the independence referendum I performed at the Bright Club Dundee which is, believe it or not, a stand-up comedy club of academics. Just in the opening line I made joke that I came from Germany to Scotland to study real poverty. It did not go down well. Only when I continued to make jokes about how poor Ireland and the North of England are, the Scottish audience cheered up. What does this tells us about poverty in Scotland and in particular in Dundee? And what can we learn from international research about how a Scotland with more devolved powers could reduce its poverty?

The first lesson I learned is you cannot make jokes about your own deprived situation, unless you find people who are in a worse situation. And it is difficult to find a country in Europe that has a lower poverty rate than the UK, but is on a similar economic development. The UK as a whole has one of the highest relative poverty rates in Europe, considering how affluent the UK is (EU-SILC 2012, OECD 2011). And my reference to Ireland just referred to a stereotype that is not valid anymore. Modern Ireland has a higher GDP per capita and a lower relative poverty rate even after the severe effects of the global economic crisis. So perceptions about poverty and wealth lag behind reality and my audience still sees Ireland as the poor house of the British Isles. However, for comical purposes this widely held belief still worked pretty well.

I received even more laughs, when I continued to claim it can only be worse in the North of England. But this stereotype is also dated. Scotland has actually a lower poverty rate than England as a whole. When you compare all four nations of the UK, Scotland has the lowest income poverty rate after housing costs according to the latest Household Below Average Income statistics. Only when income before housing costs is considered, do Scotland and England have a similar share of the population living on low incomes. But the higher housing costs and prices for everyday goods in the affluent parts in South England make life hard for people on low incomes. Scots seem only to recognise the wealth down South, while the stark inequalities are obfuscated. Still the Yes Campaign managed to challenge this perception among 45 per cent of the Scottish electorate, while 55 per cent were still worried that Scotland would not be affluent enough on its own. And it is true, Scotland is not as affluent as the South of England, but it is more affluent than the rest of UK as a whole and, more importantly, more equal. However, compared to our closest neighbouring country, Ireland and the rest of wealthy European nations, Scotland – and the UK as a whole –  performs poorly in terms of poverty reduction and distributing wealth equally.

My biggest mistake might have been that I made the joke in Dundee. Dundee City is among the top five Scottish councils with the highest income deprivation (Scottish Index of Multiple Deprivation 2012). The independence referendum has shown that in particular people in poor areas have tended to vote yes (FT 2014). Though the Bright Club audience tends to have a higher middle class background, they see poverty and deprivation everyday with their own eyes. About 57 per cent of Dundonians voted for independence and not all of these are poor, but among other things they seem to have hoped that an independent Scotland would have the powers to change the economic outlook and inequality of their city.

What can we learn from these observations and what are the options for a Scotland continuing to be part of the United Kingdom, but potentially with more powers? In a recent report for the Joseph Rowntree Foundation, Beverley Searle and I have reviewed the evidence of how personal savings, housing wealth and assets have a potential to reduce poverty (see also the summary findings and further information). We have highlighted that Britain is trapped in the ‘poverty paradox’. The more policies are targeted at the poor and demand individual responsibility to save and invest, the more poverty we will observe. Comparative evidence shows that universalistic welfare states with generous basic income protection schemes and high quality services linked with mandatory social insurances have the lowest poverty rates in Europe.

Last month, the majority of Scots expressed their wish to share their future with the rest of the UK, but a significant minority would have preferred more powers in Scotland to potentially alter the British ‘poverty paradox’. A devolved Scotland will have only limited powers on tax and welfare to universalise eligibility criteria, alter benefit formulas and raise taxes to change income poverty, but it can mitigate some of the effects on multiple deprivation through better social services. In our review we have shown that assets are not a way out of poverty, though they can serve as a cushion against temporary income shocks. With the new Scotland Act 2012 the Scottish Government will gain more powers to tax land transactions. We know that wealth is distributed more unevenly than income and has strong effects on transferring poverty between generations. These new powers to tax wealth could be used more progressively than currently and revenues raised channelled into more universal programmes and services to the benefit of all Scottish people.

I would love to look forward to be able to make a joke on poverty in Scotland in 2024 and get laughs for it, because my audience would laugh about their deprived past and not about their present situation. However, considering the limited fiscal powers Scotland has on welfare issues, I doubt that ten years down the line a devolved Scotland will have broken through the British ‘poverty paradox’ alone. A cohesive poverty reduction and prevention programme remains a UK-wide task. Only a nation state can achieve that efficiently and successfully. It is in the hand of the British people to seize the post-referendum opportunity to reduce poverty together and reunite people North and South of the border through shared values and solidarity.

 

As of Jan 2015 Dr Stephan Köppe will be a lecturer in Social Policy at University College Dublin, Ireland. Until then you can contact him at s.koeppe@dundee.ac.uk

The Challenge of Poverty and Inequality in Post-Independent Referendum Scotland!

Gerry MooneyFaculty of Social Sciences, The Open University in Scotland, Edinburgh

The 2014 Scottish Independence Referendum reminded us – as if we needed reminding – that poverty, disadvantage and inequality are significant factors shaping contemporary Scotland and much of Scottish society. In the early hours of Friday, September 19, as the results from across the country began to flood in, it was already evident that poverty and affluence were key factors that influenced the vote. It is now widely recognised that the poorer and more disadvantaged the locality – the more likely it was to vote YES – and of course the converse is the same for those areas that are more affluent.

In important ways, the Independence debate was not just about conflicting constitutional futures but was more about the kind of society Scotland could become. Here issues of disadvantage, poverty, inequality and equality were central and the overall campaign by supporters of Scottish Independence was fought on a terrain that was not nationalist in any real sense – but revolved around what might be termed, very broadly, questions of ‘social justice’.

That the entire independence debate was repeatedly drawn to issues of social justice and injustice, and to the impacts of Tory austerity and neoliberalism, allowed those who are interested in challenging these policies and addressing poverty to debate the way forward. New organisations and movements were formed, new ideas developed and a new commitment to rebuilding Scottish society energised and politicised large sections of the population as never before.

The degree of poverty and disadvantage in Scotland today shows the extent to which our society is scarred by the impact of the policy approaches of successive governments and rising levels of inequality. Poverty in Scotland 2014: The Independence Referendum and Beyond, shows in very clear terms the ‘headline’ poverty statistics that:

  • 870,000 people in Scotland still live in poverty (17% of the population).
  • 200,000 children in Scotland still live in poverty (20% of all children).
  • Poverty in Scotland is significantly higher than in many other European countries
  • Poverty exists across Scotland. Nearly all local authorities in Scotland have council wards where over 20% of their children live in poverty.

The picture for the period ahead points to an increase in poverty with austerity measures already in place beginning to bite. By 2020 it is estimated that an additional 100,000 children in Scotland will be living in poverty.

There are several reasons for this bleak picture. The Prime Minister’s claim that a ‘new age of austerity’ was required, meaning large scale cuts in public expenditure, was accompanied by a new phase of what is euphemistically termed  ‘welfare reform’.  Austerity was never going to be ‘fair’ in its impact – nor was it intended to be. It was a political project, a class project to redistribute wealth and income to those who are privileged. It was a clear strategy to reduce fiscal deficit by slashing public spending and services, and to cut pensions and other welfare benefits. These cuts impact most adversely on those who are already among the most disadvantaged in society. But it also an assault on the very social contract that was held by successive generations of people to be a core part of UK citizenship. Such cuts are also about restoring conditions for profit and wealth accumulation, which is nothing other than the transfer of wealth and power into ever fewer hands.

UK Government welfare reforms have been criticised by the Scottish Government as out of step not only with the wishes of voters in Scotland but also as seriously at odds with ‘Scottish values’. Much of this is related to other claims that Scottish voters and the wider public in Scotland is in some way less hostile to people in receipt of benefit, that negative attitudes to welfare are more diluted in Scotland. Throughout the past 2 years, leading Scottish Ministers have repeatedly made forays into the welfare debate.  The SNP have seized on UK Government welfare reforms to advance the case that only an Independent Scotland with a distinctive Scottish welfare state is true to the foundations of the post-war UK welfare state. This has also opened-up the terrain for a more progressive debate around poverty and how it should be tackled.

As was highlighted at the outset, the debate that emerged around Scottish Independence was a debate around the kind of society Scotland could be. That as part of this there was discussion over the future of Scotland’s welfare system brings into sharp focus the question of poverty and of inequality – but also wider issues of the kind of economy and society that would be necessary for the eradication of poverty. That this is leading to new thinking around new forms of welfare system is positive. However, the challenge is also to advance the issue of poverty in a way that is free of stigma and disrespect now. We cannot afford to wait for future constitutional arrangements – devolution more, devolution max or some form of federalism – to be rolled out before addressing poverty and inequality.

In the Independence debate the notion of ‘Common Weal’ as the basis of a distinctively Scottish welfare system rose to some prominence. In a series of papers published by the Jimmy Reid Foundation, proponents of the Common Weal have advocated a far reaching vision of Scotland as a fairer, progressive and more sustainable society. Looking to some of the fairest economic and social policies in the Nordic countries, it places an attack on entrenched inequality and wealth by a completely revamped taxation system that would enable better quality, well-funded public services. Social goals would drive economic development, not the pursuit of private profit. A new set of principles would underpin a Scottish welfare state, in the form of contract between people in Scotland delivered through the state. The Radical Independence Campaign further drew our attention to the sharp realities of a class divided Scotland, highlighting the huge inequalities in income and wealth that are also a feature of Scottish society and which are often overlooked. A major redistribution of income and wealth and an assault on vested interests and entrenched privilege it is argued is central to an effective anti-poverty policy.

Scotland is, despite myths of collectiveness and a Scottish ‘national interest’, a society marked by class divisions and inequalities. Not only does this manifest itself in the huge and wider levels of poverty but in the huge advantages that Scotland’s rich enjoy today and, in the SNP vision of an Independent but low tax and competitive Scotland, would continue to enjoy. The Independence Referendum debates have thrown-up the possibility of building a new Scotland, a socialist Scotland in which the vested interests, privilege and advantages of the affluent will be seriously challenged. A massive programme of redistribution and investment in social welfare, care and sustainable employment are crucial. Only through this will poverty and disadvantage be addressed once and for all.

 

Dr Gerry Mooney is co-editor of Poverty in Scotland 2014: The Independence Referendum and Beyond, is published by the Child Poverty Action Group, 2014) and is available (together with a sample chapter) from: http://onlineservices.cpag.org.uk/shop/PSP14.

You can also follow Gerry’s work on Openlearn and on The Conversation