‘Money makes the world go round’ as the song goes.  But seemingly more so for some than for others… 

Not only do we now live in one of the most unequal societies in the ‘developed’ world – in terms of the distribution of money between rich and poor – but far too many experience the double injustice: Those with the least money frequently pay the most.

As my good friend, John Taylor, CEO of the US Community Reinvestment Coalition memorably said a few years ago, ‘we need to make capitalism work for the poor.’  But sadly, at present, capitalism (or ‘free markets’ more precisely) simply aren’t working for the poor.  Left to their own devices, ‘free markets’ frequently offer those with little money inferior products (or no products at all), at much increased prices. 

Increased prices for their gas or electricity (for those required to pay via pre-payment meters); increased prices for their food (corner shops charging inflated prices for poor quality products); increased prices for insurance (if they can get any at all), and worst of all – inflated prices for accessing money in the first place.  In recent years we have witnessed an explosion of payday lending in the UK, mirroring what happened in the US: Companies aggressively marketing instant loans at APRs in excess of 2,000, with predictable consequences in terms of increased levels of debt

Last year Save the Children put a figure on the ‘Poverty Premium’ of nearly £1,300 a year for the average family on low incomes.  £1,300 a year (or £22 a week) is a huge extra bill to shell out when you haven’t got much to start with. 

So is it time to make capitalism work for the poor.  But what would this look like?

Firstly, fair access.  Whatever the arguments are about the ‘right use of money’, in a modern western economy, it is hard to argue the case that it is possible to function as a citizen (or consumer) without any access to money.  And yet, there is still no universal service obligation on the financial services industry (as there is, for example, for the water industry). And I’m not meaning here second rate ‘Basic Bank Accounts’, but a universal obligation to provide access to the full range of financial services – insurance, and yes, credit.   Banks may be under pressure to strengthen their balance sheets, but surely not at the expense of refusing to serve 10 or 20 percent of the UK population?

And secondly, fair prices.  Much of the ‘logic’ of the way markets have developed in recent years is to move towards ‘risk (or cost) pricing’ and away from shared risk.  Some of the assumptions behind this are extremely dodgy:  The majority of high cost lenders claim that their premium prices are based on the ‘risk’ of lending to low income customers… any yet, when customers pay week after week, year after year, the cost doesn’t go down.  But fundamentally, is it socially (or morally) acceptable to operate ‘cost’ pricing models which force the poorest to pay most?  How can companies square all their talk in recent years of corporate social responsibility, with charging their poorest customers the most?

And if individual businesses are unwilling to offer products to low income consumers at fair prices (not least by claiming they can’t do so if their competitors don’t), then is there not a role for market intervention?

Yet, in spite of all the heroic efforts of Stella Creasy MP, the Centre for Responsible Credit (and a host of others), the Government appears to remain steadfast in opposed to any form of price cap or regulation – which interferes with the ‘free’ operation of markets – whatever the social costs of failing to do so.

2012 marks the thirtieth anniversary of the founding of Church Action on Poverty, and the need has never been greater.  May 2012 be the year in which society starts to be run again for the benefit of all its members and not just for the benefit of the rich.

It was the best of times,
it was the worst of times …
it was the Season of Light,
it was the season of Darkness,
it was the spring of hope,
it was the winter of despair.

Dicken’s classic novel A Tale of Two Cities, may be a story of the French revolution, but never more relevant than to our current age.  As we enter 2012, the prospects for society at large, and for those struggling on its margins in particular, are bleak.  We face an economic crisis, unprecedented in any of our lifetimes:  For many it will indeed be a season of darkness and a winter of despair.

The economic crisis is unprecedented

Make no mistake.  The economic crisis we all face as we enter 2012 is unprecedented.  But those who are already struggling to make ends meet will suffer most.  For them, there is no belt left to tighten.

A simple but harsh choice: To heat or to eat?

Last year there were an estimated 25,700 excess winter deaths in England in Wales.  As a result of the massively increases in food and fuel prices, matters are likely to be much worse this winter.  Over 6 million households are now facing fuel poverty. For many thousands this winter, it will – quite literally – be a matter of life and death.

A lost decade

We are in the middle of the most prolonged squeeze on household incomes in modern times. Average household incomes – already stagnant for the past decade – will fall by more than 7% over the next three years.  For many this will mean an exercise in belt tightening and cutting discretionary spending – but for those who are already struggling to make ends meet, there is no discretionary spending to cut.

Goodbye Woolworths, hello Moneyshop

Consumer spending – a key driver of the UK economy – is now a busted flush.   For the past decade, we have all been living beyond our means.  [i]Some may say that this is no bad thing.  But as consumer spending goes west, so will many of the businesses that are reliant on it.  As Mary Portas revealed, it spells the end of many a High Street.  For communities already on the edge, it spells a descent into even deeper financial exclusion.  Only the Pound shops, Charity shops and Payday Lenders remain.

And then there are the spending cuts…

We are not all in this together: The cuts hit the poorest hardest

We are now facing an unprecedented six years of cuts in public spending, as a consequence of dramatically lower growth forecasts announced by the Office of Budget Responsibility at the end of November.   In spite of the Coalition’s commitment to protect the poorest and most vulnerable, the Institute for Fiscal Studies has demonstrated that the impact of these cuts will clearly fall disproportionately on the poorest.

An analysis by Church Urban Fund, shows that the impact of tax/benefit and spending measures announced up to March 2011 (ie not including the impact of the latest Spending Review) will fall more than twice as hard as on the poorest as on the richest 10%.

The 1% and the 99%: For whose benefit is the economy being run?

The Occupy movement’s focus on the 99% and the 1% is no mere rhetorical flourish.  The UK is now more unequal  – in terms of the gap between rich and poor – than at any time for at least the past 50 years[ii].  And, as the OECD reported in early December, the income gap is rising faster in UK than any other developed nation.

Inequality and the Common Good

As the Catholic Bishops Conference said as far back as 1997: “There may come a point at which the scale of the gap between the very wealthy and those at the bottom of the range of income begins to undermine the common good. This is the point at which society starts to be run for the benefit of the rich not for all its members.”

May 2012 be the year in which society starts to be run again, for the benefit of the Common Good.

Building a Just Society: Church Action on Poverty’s vision for 2012 and beyond

Church Action on Poverty will not be sitting on our laurels in our thirtieth year.  The need has never been greater to ‘go upstream’:  To challenge the structures and systems which throw so many into the stream of poverty – whilst allowing others to enjoy untold wealth.

In 2012, Church Action on Poverty will be launching an ambitious programme for the next 10 years: We will be seeking to secure the resources to build a movement rooted in local churches and communities across the UK, to challenge injustice, tackle inequality and bring about positive change on issues which affect them most, locally and nationally.

• Narrowing the gap between rich and poor:  Giving a voice to those not heard and holding those in power to account
• Developing socially and financially resilient communities.
• Mobilising the power of faith groups to challenge inequalities in income, power and life chances, and to contrast this with our understanding of what a ‘Good Society’ should be.
• Seeing the organisation’s role within a broader movement for change, by forming partnerships and alliances with a range of organisations
• Developing a sustainable financial model, including achieving greater engagement with individuals and Churches during our 30^th year, and through diversifying our income sources.

I hope you will join us!

Niall Cooper
National Coordinator
December 2011

The latest British Social Attitudes survey, released today, is not all as gloomy as the media coverage merits.. Large majorities continue to be in favour of tackling child poverty and closing the gap between rich and poor…

If you read only the headlines about the latest British Social Attitudes report, you might be forgiven for being gloomy indeed:  ‘Britons lose sympathy for unemployed’ (Telegraph); ‘Britain gets a little more selfish’ (New Statesman); ‘Britons less willing to pay taxes to help others’ (BBC).  But reading further into the report, the picture is a little more mixed:

• 82% consider it ‘very important’ to reduce child poverty in Britain.
  79% say central government should be reponsible for reducing child poverty.
  75% agree that teh income gap between rich and poor is too large.

Given the constant tirade of tabloid headlines demonising the poor and those on benefits as lazy, cheats and chavs, it is hardly surprising that attitudes to unemployment benefits are hardening.  As Owen Jones eloquently explains, this is all par for the course with the demonization of the working class.

And given the constant cacaphony of distorted claims that it is somehow ‘big government’ which has caused our current economic crisis (rather than, say, the banks) – and the growing cynicism about the political process per se, it is hardly surprising either, that the public are less inclined to look to government for solutions to the big issues of the day – be they climate change, inequality or poverty.

The question for politicians, faith leaders and anyone else who might wish to be called a ‘leader’ in today’s society is however – is your role simply to follow public opinion – or to lead it?

As Richard Murphy would put it, now is the time for Courageous politicians, a Courageous State and (I would add) Courageous Church leadership.

The Cost of Inequality, Three decades of the super-rich and the economy.
Stuart Lansley, £17.99
Essential reading for anyone who wants to understand the reasons behind the astonishing growth in inequality in the UK and US over the past 30 years – and why it helped to bring about the unprecedented economic crisis we are all now facing.   Readable, well-argued and a devastating critique of neo-liberal laissez-faire economics that has allowed the growth of a new generation of super-rich ‘Robber Barrons’ by economist and financial journalist Stuart Lansley.

Crisis and Recovery: Ethics, economics and justice
Rowan Williams and Larry Elliot (eds), £12.84
The financial crisis is about more than money: it is also about morality, casting an uncomfortable light on the links bewteen the activities of bankers and the wellbing of society as a whole.  A series of fascinating contributions from a range of perspectives, including Robert Skidelsky, Jon Cruddas, Phillip Blond, Zac Goldsmith and Will Hutton.  Note to authors: Do no women have anything to say about ethics and economics?

Chavs: The demonization of the working class
Owen Jones, £14.99
The stereotyping and hatred of the working class in Britain, documented so clearly by Owen Jones in this important book, should cause all to flinch. Chavs is a damning indictment of the media and political establishment, and an illuminating, disturbing portrait of inequality and class hatred in modern Britain. According to Polly Toynbee it is ‘Superb and angry’: One guaranteed to get you going over your Christmas crackers.

Treasure Islands: Tax Havens and the Men who Stole the World
Nicholas Shaxson, £14.99
Shaxson brilliantly exposes the growing role of Tax Havens in the global economy, as key to the tax dodging activities of multi-million (or billion) dollar/pound corporations.  A great introduction for anyone interested in the subject – and why we recently launched our new Tax Gap campaign.  According to Richard Murphy, Director of Tax Research UK (and no mean expert on these matters himself): ‘Treasure Islands is the best book on tax havens, ever. It shines a light in some very dark places. It reads like a thriller. The shocking thing is, it’s all true. The world’s suppliers of corruption services – the bankers, lawyers and accountants working from tax havens – won’t want you to read this book. Which is exactly why you should’

Please note:  Copies of all books can frequently be found cheaper on-line – but beware buying them from shameful on-line retailers who ship orders via Jersey to avoid paying VAT. A tax loophole our Tax Gap campaign has helped to close – but not till April 2012… You have been warned!

Happy reading!

Today’s announcements from the Chancellor and Office of Budget Responsibility show yet again the real cost of the economic crisis is being born by those who are already struggling to make ends meet.

Unprecedented collapse in living standards

Even before today’s announcements, the Institute for Fiscal Studies has been forecasting that real average household incomes would be 7% lower in 2012-13 than it was in 2009-10, and to remain below its 2009-10 level until at least 2015-16. This “unprecedented collapse in living standards” is chiefly due to high inflation and weak earnings growth over this period.

The consequence of this, according to the IFS, was predicted to be an increase of 300,000 in child poverty by 2015, with a further 700,000 adults also slipping below the poverty line.

A price worth paying? Two more years of pain; more cuts, more unemployment and more child poverty…

Today’s announcements from the Chancellor and the Office of Budget Responsibility make for grim reading, and serve only to matters far worse:

• Unemployment will rise from 8.1% this year, to 8.7% next year:  The ‘Claimant count’ (the narrowest definition of unemployment) will go up by 300,000 to 1.8 million.
• 710,000 public-sector jobs lost by 2017 – over 300,000 more than previously forecast
• Public sector pay rises will be capped at 1% for a further two years, on top of the current two year pay freeze:  Public sector workers – whose wages for the most part are already very low – are now facing real terms cuts in their incomes for four years in a row.
• A further £2.3 billion is to be cut from child and working tax credits and from public sector pay by 2015.  More than three quarters of the cuts to tax credits will fall on those in the poorest half of the population.
• In addition, the Chancellor has reversed a £110 above inflation rise in the child element of the child tax credit which he announced last year, explicitly in order to stop child poverty rising for at least two years. The clear message: Rising child poverty is a price worth paying for fiscal rectitude.
• Overall £30billion further cuts in public spending, with the pain extended by at least a further two years, until after the next election (2015).

According to James Plunkett of the Resolution Foundation, we are now well on our way to ‘two lost decades: The new OBR forecasts mean typical wages will be no higher in real terms in 2016 than they were in 2001.

On the plus side (if there is a plus side):

If there is a ‘postive side’ to today’s announcements, it is largely that threatened cuts to benefits and pensions have failed to materialise:  Benefits and pensions will not fall in real terms next year

• Working age benefits will be uprated by 5.2% in line with September’s inflation rate
• The basic state pension to rise in line with inflation by £5.30 a week

In recognition of the damaging impact of escalating unemployment amongst the more than 1 million young people now not in work, education or training – and of the fact that childcare costs are a real barrier to work , two welcome (and well trailed) measures were also included in the Chancellor’s package:

• A £1bn scheme to subsidise work placements for the young unemployed (as well trailed in the press over the past few days)
• The doubling of free childcare places for two-year-olds in low income families to 260,000 in England.

The landscape is fundamentally transformed.

Welcome as these measures are, they cannot conceal the overall message. As James Landale, BBC Deputy Political Editor: “The landscape is fundamentally transformed. A government that promised to eliminate the budget deficit by the next election has admitted that it will fail. It now says it needs another two years to meet its deficit target. And what’s more, to do that, it needs to inflict yet more pain – a squeeze on tax credits and further pay restraint for the public sector. There will be more spending cuts in the years after the election.”

Or as Sally Copley, Save the Children’s Head of Poverty, commented: “Today’s announcements are dire news for the poorest families – both in and out of work – who have seen core benefits they depend on cut in real terms. For many families the scrapped £110 increase in Child Tax Credit could mean the difference between putting food on the table for their children or having them go hungry. Children from low income families, whose parents rely on working tax credits to make work pay will be worse off as a result of the Chancellor’s announcements. Child poverty in the UK is predicted to escalate in the coming years and the Chancellor ‘s decisions today will only exacerbate the situation.”

Which Jesus are we looking forward to this Advent: Little Jesus meek and mild or revolutionary Jesus, turning over the moneylenders tables in the temple?

Each Christmas Royal Mail processes 2 billion items of post; many sent this year will feature the classic depiction of Madonna and Child.  Apparently a re-run of the ‘popular’ image first issued in 2007, this is gentle Jesus, meek and mild indeed, as followers of John Wesley will sing the world over this Christmastide.

Lamb of God, I look to Thee;
Thou shalt my Example be;
Thou art gentle, meek, and mild;
Thou wast once a little child.

Is this what Jesus we are really looking forward to this Advent?

I’m not.

This is not the Jesus I read of in the Gospels.

This is not the Jesus who was thrown out of his home Synagogue in Nazareth for preaching good news to the poor, recovery of sight to the blind and to set the oppressed free.

This is not the Jesus who turned the tables of the moneychangers in the temple, and who confounded and confronted the political and religious authorities of his day.

As it the iconic Jesus/Che poster used by the Churches Advertising Network for Easter 1999 put it:

Meek, mild. As If.

So which Jesus you are looking forward to this Adventtide? As we contemplate the challenges of being a disciple of Christ in 2012, which Jesus are we going to follow?

Are we to go out into the world, as little children, gentle, meek, simple, pitiful and obedient, as Wesley would have us believe?   Are we going to meekly put up with the status quo?  Are we going to be simple and obedient to the consumer culture of the day?  Are we going to say that, as followers of Jesus, our role is to keep our heads down, and allow others to shape our communities, our society, the future of our children and of our planet?  Are we going to allow ‘our betters’ (whoever they may be) to define of public morality?

Or are we going to follow the real Jesus of the Gospels?

As Walter Wink has so ably demonstrated in his trilogy on The Powers (and elsewhere), Jesus’ way is the way of active non-violence.  The well known parables of going the second mile; turning the other cheek or giving the second cloak do not involve passivity in the face of injustice, but active non-violent resistance.  Wink characterizes this approach in terms of refuse to accept the inferior position; expose the injustice of the system; stand your ground; be willing to undergo the penalty of breaking unjust laws and seek the oppressor’s transformation.

It seems to me that this would constitute a fairly good description of the Occupy London protestors, still encamped in the shadow of St Pauls.  A tented encampment in the heart of the City threatens no one, but at the same time it calls into question everything. Its very presence is a challenge to the unaccountable power exercised that the financial institutions of the City of London exercise over all our lives.

When I visited a couple of weeks ago, what struck me was the incongruity of the situation:  Inside St Paul’s a beautiful but otherworldy sung eucharist to celebrate All Souls Day; Outside on the steps, huddles of folk – protestors, city-types, passers by – holding impromptu but impassioned debates on the issues of the day. And above all, the ever present banner, demanding ‘What would Jesus do?’

So, what would Jesus do, amidst the economic crisis of today?

Pray meek and mild in the safe confines and safe certainties of religious splendor? Or seek to unmask the inhumanity of today’s economic systems and their pretentions to justice?

Which Jesus are you readying yourself for this Advent?

Yesterday’s publication of the High Pay Commission report finally blew the gaff on top pay:  It is out of control; out of any relation to performance; unjust and unsustainable. Its message was clear: It is time for Fair Pay – at all levels in business and society more generally. As the BBC reported it “The high salaries of UK executives are ‘corrosive’ to the economy.”

Deborah Hargreaves, chair of the Commission writes in the foreword: “As Britain enters times of unparalleled austerity, one tiny section of society has been insulated from the downturn. That is the top 0.1% of earners, with company directors in particular continuing to enjoy a huge annual uplift in rewards.”

Even the Daily Telegraph conceded the case that, on average, the chief executive of a FTSE 100 company is paid 145 times the salary of the average worker; and within 10 years, on current trends, that multiple will rise to 215.

Most of us probably feel that the world of high finance and executive remuneration packages are a world apart from us.  In many ways they are.  But for those of us with savings or pensions, they are less far away than we might imagine.  Its time for us to ask how those of us charged with investing our money on our behalf are using their muscle as major shareholders in many of Britain’s biggest companies to call for Fair Pay.

High Pay: It’s a hard life if you can get it…

Its hard work if you can get it, being a director of one of Britain’s top 100 companies. The average Chief Executive of a FTSE 100 company is estimated to take home around £4.2 million.  And many of them are, indeed, pretty average.

Yet, despite the less than average performance of the British economy over the past couple of years, executive pay in the FTSE 100 rose on average by 49% (compared with just 2.7% for the average worker).   In fact, the High Pay Commission found no evidence that there is any connection between executive pay and the performance of the companies they run.

Over the past thirty years, there has been a dramatic shift in incomes – with pay at the top racing away from the rest of society, and indeed, racing away from the bulk of workers even in their own companies.

• In 1979, the top 0.1% took home 1.3% of national income. By 2007, this had grown sixfold to 6.5%.
• In 1979, Barclays director earned £87,323, around 14 times the average Barclays employee.  By 2009, Barclays director was earning £4.4 million (a 4,900% increase), around 75 times the average Barclays employee.

If this trend continues unchecked it will take us back to Victorian levels of pay inequality in less than 30 years.

As a corporate pension fund manager from Aviva said at the launch event last night, “Every time an executive remuneration package changes, it changes in one directly only.”  Not only that, but most of the ‘performance related’ pay packages are rigged to pay out however the company performs.  As the man from Aviva says “Even mediocrity pays double.” 

Together we can tackle High Pay

But the High Pay Commission was not all doom and gloom in its final report.  It has identified twelve key recommendations for tackling High Pay, and equally importantly (apparently) has the ‘ear’ of Business Secretary, Vince Cable.

But please, don’t leave it all up to nice Mr Cable.

Time for shareholder activism: You too can play your part.

It is our hard earned money in savings, life insurance policies, or pensions, which are being invested in shares in the very companies that are paying scandalous salaries to the greedy few.  It is time we started to exercise the power this gives us as investors and shareholders.  Pension Fund managers, invest huge sums in companies on our behalf, and carry considerable clout as a result.  Some chose to use this power to vote against excessive high pay at company AGMs.  Others do not.

So which way does your pension company vote?  For scandalously high pay, or against it?

Have you asked recently how your Pension Fund manager is voting on your behalf?  As the man from Aviva said, “the most effective pressure on Pension Fund managers is contact from customers.”

So give it a go.  Dig out the details of who manages your pension (if you’re lucky enough to have one) – and write to them – or better still, give them a ring!  Tell them to read and take on board the report of the High Pay Commission.  And tell them that, in future, you’ll be expecting them to vote for Fair Pay.

Fairness is a concept close to the heart of the British people and it is essential that we now redress the balance.

Together we can!

They’ve produced a natty little graphic (left) to show it:

The biggest reductions in government support as a share
of revenue spending are in urban areas in the north, the midlands and inner London.

Within local authorities, cuts are not uniform (see below).

In Single tier councils (ie most of them):

• adult social care is being protected, but still facing a 2.5 per cent spending cut (even taking into account an extra £650 million from the NHS to fund social care and health)
• planning and development; housing and cultural services are worst affected.

Impacts on services

The Audit Commission lays bare the impact on services for local people:

• over 80 per cent planned to reduce the quantity or frequency of some services within education, highways and transport, cultural services and environmental services;
• over 70 per cent planned to increase charges within adult social care and environmental services;
• 40 per cent planned to tighten eligibility criteria in adult social care; and
• 40 per cent planned to reduce some service standards in environmental services, and in highways and transport.

Cheery times ahead, folks.

Not if you are poor.
Not if you are elderly,
Not if you need social care,
Not if you are reliant on public transport.

• Almost a fifth in 1908
• Down more or less consistently for the next seventy years to 1978, when it was just 6%.
• Up more or less consistently for the last thirty years, to around 15%…

And just in case you thought there was some iron law that economic success requires ever greater levels of inequality, here is the German 1% for comparison…  Admittedly the figures only go to 1998, but there is no evidence that the success of Europe’s powerhouse economy over the past two decades has been based on an ever increasing share of income being scooped up by the top 1%.

No, indeed… so who do you think you are kidding Mr Osborne?

If you want to see more, including international comparisions – and to generate your own fancy graphs for different time periods and income ranges visit the World Top Incomes database, courtesy of the Paris School of Economics.

Hours of (depressing) fun!