Labour to keep 500,000 infants in poverty

Incredibly disappointing to see the Labour government fail in its primary responsibility to lift children out of poverty. The idea that we cannot afford to do so is ludicrous. Scrapping the policy would cost £1.3 billion. A 1% tax on those worth over £10 million would raise £10 billion.

Jeremy Corbyn

In 2017, the Conservative government limited the number of children families may claim benefits for to two. Said to hit the poorest in British society hardest, the two-child cap is a source of rancour for many politicians, public figures and antipoverty campaigners.

Hopes had been high that the centre-left Labour Party might reverse the two-child benefit cap on assuming power.

Al-jazeera

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For the second time this month I’ll start with Labour hypocrisy …

… and follow with the dismal detail. Here (abridged) is Tom Rogers, yesterday at Evolve Politics.

Tonight Starmer’s Labour voted against an opposition amendment (to Labour’s King’s Speech) which proposed scrapping the widely-hated two child Benefit Cap.

Abolishing the two child Benefit Cap would lift half a million children from poverty. But Starmer and Chancellor Reeves have argued for months that there is not enough money to account for the estimated £3bn cost of scrapping the cap.

Tonight, in the first test of Starmer’s new government, the Scottish Nationalist Party tabled the motion to test it on the issue. The Prime Minister responded with a three-line whip to force his MPs to vote against the amendment.

Seven Labour MPs – Apsana Begum, Imran Hussain, Rebecca Long Bailey, Ian Byrne, Richard Burgon, Zarah Sultana, and John McDonnell – rebelled against Starmer’s orders, and voted with the SNP to scrap the cap. All have had the party whip suspended for six months.

But 361 Labour MPs voted against it, causing the motion to be defeated by 363-103.

See the full roll of shame at Evolve Politics.

Third, the context. This from the highly respected Joseph Rowntree Foundation, in a report published two days ago on July 24:

Poverty has increased, close to pre-pandemic levels

Fourth and finally, the reason. Pretty simple actually. Here’s what I wrote on July 6 in Starmer, missed steps and misused terms:

Sometimes I miss steps in my arguments, making them non-sequiturial. One example was in my last post but one. Speaking of Starmer’s election victory on July 4th I wrote of:

… the wider context as set out in many a steel city post – this for instance – of a UK ruled by rentiers, its manufacturing base destroyed for the short term gain of the same, in which the neoliberal interests Starmer no less than Sunak stands for are under threat as the waning of 500 years of western ascendance continues apace.

Missing here is the truth that destroyed manufacturing and waning imperialism leave hundreds of millions – in Western capitalist economies premised on most of us having to sell our labour-power in order to eat – in a race-to-the-bottom chase for ever fewer buyers of the stuff. To date this has been ameliorated by a social contract, its terms more grudging and parsimonious with each passing year.

Besides backing America’s forever wars, aimed at bolstering its power to exact global rents, it is the task of Western governments of superficially differing stripe to lower expectations of the state: ¹ – health, social security and other welfare provision – rooted in post-WW2 boom but now unaffordable without denting profits for the few who rule behind a chimera of democracy.

To pull this off without sparking costly unrest requires a softly-softly approach of year on year stealth. Where organised labour has been tamed by legal constraint on the one hand, law of supply and demand on the other, this may be more easily achieved by governments avowedly Left of Centre.

And that  is the step I missed in my haste to set out the context for Sir Keir’s reclaiming of His Majesty’s Loyal Opposition for Britain’s ruling class.

Or as steel city reader bevin put it, when the shortest serving prime minister Britain ever had packed her bags and handed back the keys to 10 Downing Street:

The Tory ‘brand’ is no longer fit for purpose. Blairism serves the ruling class far better and when it is opposed by Toryism it is unbeatable because the only alternative is a clumsier version of itself.

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Here (abridged) is Richard Murphy’s take on his Funding the Future site. The accountant, tax specialist and modern monetary theory advocate – like Joseph Rowntree, a Quaker – writes:

Starmer and Reeves are united in their desire to make sure that the books balance, on a figure set by the Tories. They’ve accepted the Tory fiscal rule to which Reeves says she must work. So she cannot increase government spending, to relieve child poverty by removing a two-child cap that would cost between £1.7 and £3.2 bn, depending on who you talk to. Charities say the lower number, Institute for Fiscal Studies the higher. Reeves chooses the latter, but whatever the true figure, it is small.

The more so given the number of children impacted. 330,000 are in extreme poverty due to that cap; in households with under 60% of median earnings. A further 400,000 are in poverty, still well below median earnings.

Those children are suffering. They have carers, whoever they might be, unable to provide those children with what they need: a meal, a bed, a home worthy of the name. They may be missing other essentials. Sleep, because the house that they live in is unfit. Clothing, including school uniforms, which will put them under peer pressure. ² These things matter and Labour could change them. This is a moral choice.

To pretend it is a financial choice is quite absurd. Governments create money whenever they wish. That’s the way all government spending takes place. The government decides to spend on something and tells the Bank of England to pay it. The BoE doesn’t look in the government’s bank account and say, “Hey, you haven’t got any money in here today, so you can’t spend.”  It extends what is in effect an overdraft, and the government makes the payment. That can happen ad infinitum because, of course, the government owns the BoE. So, it can always make these payments. ³

To pretend there’s some limit on what it can spend is totally untrue.  A lie.

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I still get e-circulars from Momentum, a Left faction within the Labour Party, berating the Labour Right and vowing – see that clenched fist in the header? – to fight back …

I guess I could unsubscribe but don’t because, as with my e-alerts from the ever more ridiculous Economist …

… I like to keep a tab on mainstream currents. All the same, I ask myself more in bemusement than irritation:.

Why on earth would any socialist still be in the Labour Party?

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1. “… it is the task of Western governments of superficially differing stripe to lower expectations of the state …”  This goes far wider than the UK. Witness Emmanuel Macron’s drive last year to cut French pensions.
2. Relative poverty = social exclusion. Simples.
3. I’m no MMT expert, and only a cautious advocate, but Richard (with whom I have serious differences on other matters) is correct. A fiat currency like sterling is indeed created by tapping strings of zeroes on a BoE keyboard, with any consequent inflation manageable not by reduced spending – via high interest rates which ensure recessionary ‘austerity’ – but by increasing taxation. Contrary to popular – tax then spend – wisdom, this does not raise money to pay for government expenditure. Rather, taxation – spend then tax – is the way to cool an overheating economy by removing excess money.

   It seems to me, and to go deeper is above my pay grade, that at root of our fetishising of money – as Margaret “who will pay for all these things?” Thatcher did with her homely but false household budget analogies – is a blindness to what constitutes wealth in an economy; viz,  natural resources, the skills and energies of its workforce, and available technologies. Money is how a modern economy unlocks these things but it has a near mystical way of having us confuse it with wealth itself.