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Long Read: Poverty Is Creating Another Kind Of Banking Crisis

Posted by Mark Cantrell on July 11, 2017 at 1:35 PM

A symbol of a fractured and failing society

Food banks are emergency lifelines for a growing number of people and they have no place in a supposedly civilised society, writes Mark Cantrell – their existence ought to shame us all


FOOD banks doubtless speak volumes about the willingness of people to donate goods or time to help others less fortunate, and in that respect they are something of a ‘good’ news story, but this mustn’t be allowed to sugar coat what ought to be a source of immense outrage.


Food banks, it must be noted, are not ‘drop-in centres’; recipients must be referred for emergency aid, so their usage is controlled. Even so, like the soup kitchens of yesteryear, offering morsels of subsistence to those caught at the sharpest end of the Great Depression, they are symbolic of a profound crisis eating away the flesh of our society’s cohesion. But they offer no solution to the underlying problems that brought them into being; it’s not their purpose, after all.


The bittersweet truth is that food banks should not exist; not in a society that considers itself modern, humane and progressive. They are something that belongs to the past, to the soot-stained, monochrome world that existed before the creation of the Welfare State.


And therein lies the cruel link. As the Welfare State has been whittled away by ‘reform’ (read cuts), the safety net has been severed from its moorings, and so food banks have risen from a rare curiosity to a horrible reality. To present them as a ‘good’ thing, rather than a source of dismay, is to normalise an emergency response to a gathering crisis.


Collateral cast-offs

EARLIER this year, the Trussell Trust, which runs a network of over 420 food banks in the UK, revealed it had seen a staggering rise in demand for its emergency assistance in the space of a year. Between April 2016 and the end of March this year, the anti-poverty charity provided 1.2 million three-day food packages, compared to 1.1 million in 2015-16. Almost half a million of the recipients – 436,938 – were children.


Last month, the trust followed this up with the findings of what is said to be the biggest nationwide study on food bank use to date, looking at the experiences of more than 400 households referred to food banks. The report, produced by researchers from the University of Oxford, doesn’t just look at the numbers – it delves into the circumstances that brought participants to a food bank’s door in the first place.


So, what did this research reveal? The story of food bank usage is one of low incomes but also insecure incomes, fluctuating from one week to the next, with households struggling with rising prices and high housing costs. Delays in welfare benefit payments – or indeed a capricious sanctions regime implemented by the Department of Work & Pensions (DWP) – don’t help either. Many households have come to live on the razor’s edge of destitution; it doesn’t take much to push them over.




“Last year, Trussell Trust food bank volunteers provided 1.2 million emergency food supplies to people in crisis,” said David McAuley, the trust’s chief executive. “This pioneering research confirms to us what those volunteers have been telling us: every day they are meeting people trying to cope with low, insecure incomes and rising prices that mean even the smallest unexpected expanse can leave them destitute and hungry – be that an unexpected bill, bereavement or the loss of income caused by a benefit delay. Particularly concerning are the very high numbers of disabled people or people with mental health problems needing food banks.”


The report’s key findings on the circumstances such households face broke down into the following areas:


  • Financial and food insecurity: Almost half of households reported their incomes were unsteady from week-to-week and month-to-month. Severe food insecurity (meaning they had skipped meals and gone without eating sometimes for days at a time in the past 12 months) accounted for 78% of those referred to food banks, while over half could not afford heating or toiletries.


  • Price rises: Three in five households had recently experienced rising or unexpected expenses, with 25% of these saying higher food expenses were to blame, “confirming the impact of food inflation on squeezed budgets”.


  • Housing: 28% of those who had experienced rising expenses said this was due to housing costs, such as rent or energy, going up. Private rented tenants were more likely to find it difficult to keep up with rents than those who lived in social rented housing.


  • Disability and mental health: Over 50% of households included a disabled person while 75% experience ill health in their household. Mental health affected people in a third of households.


  • Debt: One in three households were finding it difficult to make minimum monthly repayments of outstanding loans, and nearly one in five of those in debt owed money to payday lenders.


Beyond these circumstances, the report also found a number of factors that are key to driving up demand for food banks. These are:


  • Benefit delays: Nearly two in five people were waiting for a benefit payment, with most of these waiting up to six weeks, though a fifth were waiting for seven weeks or more. A third of these delays were for Employment Support Allowance payments, with people assessed as capable of taking steps to move into work in the future found to be at particular risk of needing a food bank.


  • Income shocks: Two in three people had been hit by a recent ‘income shock’, with most experiencing a sharp rise in housing costs or food expenses.


  • Low income: The average income of the households in the month before being referred to a food bank was reported to be around £320, with 20% of households still needing to pay housing costs. This, the report says, is “well below” low income thresholds, before and after housing costs, and is a fraction of the national average. Furthermore, 16% had no income at all in the last month.


“The stories emerging from food banks across the country have surprised and shocked many people but until now we have not been able to put them in a numerical context,” said the report’s lead author, Dr Rachel Loopstra, who is a lecturer in nutrition at King’s College London and associate member of the Department of Sociology at Oxford University.


“Our survey data show how people using food banks are unable to ensure they always have enough food to eat because their incomes are too low and too insecure,” she added. “We observed how commonly income or expenditure shocks, whether arising from a delay in receiving a benefit payment, from a benefit sanction, or from rising energy costs, tipped households into food bank use.


“But these shocks, and resulting food bank usage, occur among people who live with extremely low incomes and chronic food insecurity, where meeting basic needs is an ongoing struggle. The severity and chronicity of food insecurity and other forms of destitution we observed amongst people using food banks are serious public health concerns.”


The report makes it clear that some of society’s poorest – and most vulnerable – are being left to fall into destitution; for such people the notion that a Welfare State will offer them security and support in their time of need has become something of a cruel joke.


McAuley added: “These findings reaffirm how vital the work of food banks and generosity of donors is, but are also a clear challenge to the new government to do more to stop people ending up in crisis in the first place… Making work more secure and tackling the high cost of living would also have a significant impact on the lives of people in extreme poverty.”


Tight squeeze

EXTREME poverty doesn’t exist in a vacuum. The problems are rooted in society’s economic realities and the ways in which policymakers choose to address them. It’s a by-product of political choices and policy decisions, as much as ‘acts of God’ or, more aptly, the market’s ‘invisible hand’.


The most recent figures from the Office of National Statistics (ONS) revealed that 7.3% of the UK population were experiencing persistent poverty. This is equivalent to around 4.6 million people. The ONS defines persistent poverty as experiencing relative low income in the current year, as well as at least two out of the three preceding years. That’s a lot of people feeling the pinch – and learning the hard way that work doesn’t automatically pay.


People referred to food banks may face the most precarious circumstances, but they are not alone in facing squeezed incomes and insecurity. This month, the Joseph Rowntree Foundation (JRF) published its latest annual report on living standards, revealing how working families are struggling to make ends meet.


Despite a rise in the National Living Wage and tax cuts intended to help ease the pressure on their budgets, the JRF’s report found that a return of inflation and a freeze in working benefits has in fact left working families on low incomes worse off than before.


A single person now needs to earn £17,900; a couple with two children needs to be earning £40,800; while a lone parent with a pre-school child needs to earn £25,900 a year if they are to reach the so-called Minimum Income Standard (MIS).


This is a ‘barometer’ of living standards for households on low incomes, carried out by the Centre for Research in Social Policy at Loughborough University. It is based on what members of the public think people need if they are to achieve a decent living standard, and it is updated according to economic and policy changes.


“This year we have seen a return to inflation for the first time since the freeze in benefits and tax credits was introduced,” said Donald Hirsch, author of the JRF’s report. “It is clear from these results that this freeze if preventing better minimum wages from feeding through to improved family living standards.


“A particularly important feature of this is that for every extra pound earned, about 75p is typically lost by low earning families in additional tax and reduced tax credits or Universal Credit. Unless the amount that you can earn before these credits are withdrawn rises along with prices and earnings, it will be very difficult to deliver the improved living standards for struggling families that have been promised.”


A family with two children (aged three and seven) working full-time for the National Living Wage and using childcare would face some significant shortfalls in their households budgets, according to this latest research:


  • A family where only one of the parents works is £120 a week shy of achieving MIS in 2017; up from £103 a week in 2016.


  • A lone parent is £67 a week below MIS compared to £55 in 2016


  • A working couple are £59 a week beneath the MIS threshold, compared to £50 in 2015.


“Working families are facing bigger holes in their budgets worth hundreds of pounds, despite a higher National Living Wage and tax cuts,” said Campbell Robb, the JRF’s chief executive. “It means millions of families are facing a struggle to make ends meet as the cost of getting by in modern Britain rises even higher. Struggling families tell us as well as juggling the bills, it’s things like after school clubs and swimming lessons that must be sacrificed to cover the essentials.


“With the Bank of England forecasting inflation will increase even higher this year, families are facing no respite. We need Government to take action and ensure living standards do not fall backwards. Lifting the freeze on working age benefits and tax credits must be a start along with allowing people to keep more of their earnings.”


Frances O’Grady, general secretary of the Trades Union Congress (TUC), echoed Robb’s call for Government action. “Working families are facing a hard time, with prices rising faster than wages. And government cuts to tax credits are making a bad situation worse,” she said.


“The Government needs a proper plan to get wages rising. Ministers must stop holding down the pay of public sector workers, and give them their first proper pay rise in seven years. The minimum wage needs to rise faster, to reach £10 an hour as soon as possible. And more public investment must be targeted to communities that do not have enough decent jobs.”


End game

WITH such mounting pressure on living standards, it ought to come as little surprise then that those at the bottom of the pile can find themselves squeezed out. Like the JRF and the TUC, the Trussell Trust is calling for intervention to help reduce poverty, extreme or otherwise.


Poverty is a deep-rooted and age-old problem, but it’s not beyond human capacity to resolve. Ultimately, it’s a matter of will. Until we decide to act, then extreme hardship – and food bank use – will continue to rise: a measure of our inhumanity and our failure.


For now, food banks exist – a lifeline for those who need them – and we must accept that cold fact, but it doesn’t mean that we have to let them settle into permanence. With the need for food banks rising, it is in fact all the more vital that we find ways to challenge the conditions and the circumstance that gave rise to them in the first place.


MC



Soup kitchen in Montreal, Canada, circa 1931


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