"In short, to fundamentally change the status quo when it comes to work in Britain. A Labour government has the power to do this. But it will take time, political capital and a measure of luck."
In 2016, the Citizens Advice Bureau revealed that every year it helps an average of 700,000 people in the UK who are ‘just about managing’. Families and individuals who are in work but find themselves permanently in difficult circumstances. Half of these people have children and a fifth of them are from a minority ethnic background. In the same year, research from Shelter found that a third of families in Britain were only a single paycheque away from losing their home, a staggering statistic linked to the then 16.5 million working age adults with no substantial savings. This cohort of the ‘just about managing’ - or to put it less euphemistically, the working poor - were once publicly highlighted by Theresa May as the group in British society she wanted her government to help the most. As with almost everything the current Conservative government has said, this turned out to be a fantasy.
Living paycheque to paycheque is precarious and stressful. Planning for the future is impossible. Financial security is a pipe dream. An illness, redundancy or other change in circumstances can plunge a family or individual into crisis. As Shelter’s statistics show, a poorly timed redundancy - as if there is any other kind - has the potential to cost a third of families the roof over their head. Unexpected costs, from a broken down car to a faulty boiler, can throw careful budgets into disarray. Perversely, just being in employment is, for many, no guarantee against poverty.
The most complete answer to this problem is to pay people more, keep the cost of living low and build a new consensus on the relationship between workers and their employers. In short, to fundamentally change the status quo when it comes to work in Britain. A Labour government has the power to do this. But it will take time, political capital and a measure of luck. If the experiences of people living for payday proves anything, it is that the slow pace of institutional change is something that many do not have the time for. As well as working towards long term structural changes Labour needs to think about how short term support can be provided to those in need. Labour MPs have been at the forefront of the battle against predatory pay day loan providers, whose business model revolves around exploiting the difficulties of people in precarious situations. This work has been vital. But we must recognise that people become vulnerable to this exploitation because they often have little choice but to seek out finance from unscrupulous loan providers. Instead of allowing companies to profit from misfortune, the state must play a role in providing assistance to help cover costs during difficult times, in a way that doesn’t carry the risk of long term personal debt.
While the current welfare system does contain provisions for assisting those in work, the process is ungainly. Someone who, for example, finds themselves unable to meet their rent and bills while changing jobs doesn’t have time to wait weeks for a Tax Credit payment to be approved. Indeed, many of the ‘just about managing’ group will already be receiving some form of state aid to help them make ends meet under normal circumstances. As is the case with so many issues, our underfunded welfare system is woefully inadequate.
The provision of short term, emergency loans to cover ‘crisis costs’ should therefore be implemented as part of a reformed welfare system, with repayment linked to income. The timescale for approving and making payments will need to be short. This should be accompanied by even tougher regulation of pay day lenders and providers of high interest credit. As the Citizens Advice Bureau’s work has highlighted utility costs as a major factor in working poverty, Labour’s long standing commitment to tackle soaring energy prices is another example of how the state can alleviate pressure on citizens. Equally, measures such as the provision universal free school meals can help to reduce the cost of living for families. A Labour government should also look to encourage the growth of Credit Unions, which can give communities a co-operative means of providing both financial support and longer term credit. In time, wider reforms may reduce the need for much of the above, but until then it is vital that we recognise the need to support people in working poverty who cannot wait for institutional change.
Patch Thompson is a Young Fabian and contributing writer. Follow him on Twitter at @PatchThompson92