POLICIES TO FIGHT POVERTY
Officially, the level at which one is considered to be
living "in poverty" is 60% of the median income -- even though many
people living at this level do not consider themselves to be "in
poverty". After all, one can have little money but be living in relatively
For some elements in politics, the cause of poverty is
obvious: "The poor are poor because the rich are rich" and the answer
is "soak the rich!"
But it's not that simple.
This is a mistaken way of understanding the complex issue of
poverty, based on a false understanding of the nature of both money and people.
They believe, wrongly, that money is finite. They imagine
there is only so much of it to go around and "the rich" have
confiscated most of it for themselves.
However, in reality, money is infinite and banks create it
out of nothing every time you take a loan!
Furthermore, it is a "reductionist" view, in the
sense that it reduces poverty to one cause alone -- a matter of finance.
Of course, money is at the centre of all things, but a
programme to tackle poverty needs to see it within a framework encompassing all
the major issues in society, including in some instances, matters of personal
responsibility for one's plight.
STRENGTHENING THE SOCIAL FABRIC
Solutions are bound in with stable families, good
education, pleasant environments, including the intrinsic ability of the
inhabitants to maintain these good environments, and a law and order system in
which everyone has confidence, and where those whose behaviour drags society
down are dealt with appropriately.
When this social fabric is strong then the chances of
people and communities falling into poverty are reduced.
Therefore, attacking poverty isn't just about ensuring welfare
policies which help the poor, but about attacking the viruses which
damage the social fabric in the first place: the tax policies which break
up families or prevent families being formed, the education methods which don't
work, the laws which allow drug dealers and criminals to walk free, and the
architecture which isolates people and encourages criminality and environmental
Here are some policies which address specifically financial
aspects of poverty:
POLICIES TO HELP LOW-INCOME COMMUNITIES
- Increase Tax on
Banking and Speculation Profits with
the money ring-fenced for public projects in specific areas of poverty.
- Develop Concept of Citizens Income
Encourage a study into the
feasibility of a Citizen's Income as a right to all, which would replace many
of the existing benefits and potentially simplify the system. This would be for
British citizens only. Proponents say it would offer true freedom of choice via
a lifetime's entitlement, which would not be means-tested and which would be
the same for every citizen.
- A Local Income
Tax to replace Council Tax,
with people on incomes of less than £15,000 a year exempt.
- Investigate the Abolition of Credit
We have to be careful about "banning" things we don't like for
two reasons. One, it encourages a lack of personal responsibility. After all,
one doesn't need to act on the credit advert, just because one has seen it,
anymore than one has to smoke or drink as a result of advertising. However, we
also acknowledge that there are vulnerable people who do not have the ability
to be "personally responsible" and, to an extent, require to be
protected from exploitation. The second point to note is that when you ban
something, it can reappear in another form, which can be just as harmful.
Clarification of Loan Terms
What we really need is clear, enforced clarification of what the loans
mean. The aim should be to give people all the information they need in order
to allow them to take proper responsibility for their own lives. Indeed the
"free market" requires the consumer to be informed! At the moment,
people are being deceived. For example, instead of "6% per month", it
should be clearly stated what this amounts to each year. We need to show the
annual interest rate with a proper explanation, in all credit advertising and
credit statements, in large bold text.
Legal Cap on Interest Rates
The poorest households are increasingly turning to doorstep lenders charging high levels of
interest. The campaign group Debt on
our Doorstep has said that rates can be as high as 177% and that
almost anyone is able to set up as a lender provided they have an easily
obtainable consumer credit licence. Amazingly, the UK is virtually alone
amongst developed economies in not having any form of legal cap on extortionate
interest rates. We need tough new laws against extortionate and irresponsible
credit lending. An interest rate cap would be gradually introduced to prevent
complete market disruption and would be based on interest, loan duration and
repayment method, to allow for different product options. See the report Profiting from Poverty: Why debt is big business in Britain.
- Support Credit Unions
These can help prevent
people drifting into the hands of illegal money lenders and getting trapped by
mountains of debt. We need a £250m boost
to promote low-interest credit unions and other community finance initiativesin order to provide affordable alternative sources of credit. There is a concern that the £3 billion
Home Credit market is dominated by 4 companies who between them control 79% of
the market. Yet, if the government helped credit unions become more actively
involved in this market place then the companies who presently dominate would
be forced to reform their practices and cut their charges.
- Curb Automatic
Teller Machine (ATM) Charges
We need the promotion of socially responsible service provision by the
banks. Charging people to take out their own money is immoral, but the trend
towards fee-charging ATMs increases as local banks close. The poorest
communities are often the hardest hit by such bank and amenity closures, at the
same time as they are encouraged by the government to have their benefits paid
into bank accounts.