Mind the Gap

Mind The Gap

Battle-scarred Britain must look after its own to narrow the gap of inequality.

As the COVID-19 outbreak took hold, it quickly became a global pandemic in March 2020, and governments around the world imposed various forms of 'lockdown'. Comparisons and contrasts between the different experiences of quarantine and self-isolation were highlighted on social media. Much of which suggested the unevenness of the pandemic's consequences. Aside from the destructive effects COVID-19 has inflicted on people worldwide, here in the UK, it has done more.  The result has put a spotlight on the widening gap in quality of life between the affluent areas and the deprived, often sitting side by side. This adjacency further magnifies the inequality, particularly in income and wealth.  Despite the apparent fact that the virus does not discriminate between rich and poor, nevertheless, a disproportionate effect between the poor with least capabilities to protect themselves and those privileged fluent areas well protected from the devastating impact of this killer virus continue to exist. I will attempt to analyse the reasons for such disparities, their long-term effects, and what the government can do to close the widening gap, level up the economies, and create opportunities towards a fairer Britain.  

Even the altruistic spirit generated during the peak of Covid-19 infections, seeing key workers carrying on with their duties in defiance of the dangers, is exposing them. Also, the solidarity exhibited: an appreciative public, daily clapping across the country, grateful for the effort these people are putting in to save lives.  A touching moment that we may yet see more of the same in going forward.  Similar bonding occurred immediately post WWII, and government responses were no less affirmative. Significant steps are taken to restructure social institutions and moderate Capitalism to care for as many people as possible.

The measures taken by the government to alleviate the pain of income loss for individuals and companies alike are similar in this regard.  Those compensated by being furloughed, and companies that received grants covering up to 80% of salaries, as well as other protective measures, are taken to insulate individuals against rent, eviction, rates, and so forth.  Western governments alike endeavoured in efforts, that had to show that the liberal democratic system works and democracy can indeed fit in with Capitalism.

Unfortunately, many, especially young and angry people, disagree. The uncertainty and the security the government tries to establish have lost it, its popularity and trust.  It is a bitter cry caused long before the advent of Coronavirus, but dissatisfaction and rage have been brewing for some time.  The youth of today carry heavy baggage, their disadvantages are numerous; opportunities, housing, education, to name a few.  Those who fail to make the grade, to gain a foothold on any of those, find it a hard struggle to break the chain of such an ongoing burden.  Especially those who are uneducated and miss out on life's opportunities because they remain unaware of how to seize seemingly opaque opportunities. Not realising that any one of them may likely be an open door.

Many factors can perpetuate this never-ending struggle to make ends meet.  Well-paid manufacturing jobs that once paid just about enough to put bread on the table have been replaced by low-paying service jobs.  The uneducated and the unskilled have no chance to escape; they end up in the life of crime, drugs and idleness or increasingly dependent on the state for a handout.  Especially those coming from broken homes can suffer the most.    Even the young university-educated are savvy enough to grab life's opportunities, but find it hard to make ends meet when having to tackle the high cost of housing, especially in London. 

A scene in Tower Hamlet, one of the most deprived areas of London.

On average, households in London spend 18% of their net income on meeting housing costs.  Job insecurity, coupled with most of the income earned going on rent, is a heavy load to carry.  Without occasional parents' handouts, even on special occasions, is seen as placing an unwarranted burden on their parents, and many of them do not have generous parents or are not rich enough to help.  For many, coming to terms with their lot is a hard act; realising they are on the poor side of a divided society can only fuel the anger and frustration.  Even though continued, almost full employment would have mitigated the effects of inequality or pulled in the divide. This situation fares even worse with Black and some Asian mainly Bangladeshi, people who face prejudice and discrimination almost at all levels, whether institutionalised or systemic as they go through life.

After all, it was not long ago that the banks, partly responsible for the 2008 global financial crisis, got billions, while a pittance went to homeowners and victims of the same banks' predatory lending practices. The angry crowd feels that financial help was misplaced; instead, it should have gone directly to homeowners affected, which would not only have helped them but also have helped the economy achieve a robust recovery from the 2008/2009 depression. For added pain, the system was implemented during severe austerity, further restricting their income.   On the other side of the scale are the investment bankers, on Wall Street and Main Street. Like the city of London's executives, they built a wall of lawyers to shield them from blame and ensure they are not held accountable for other people's misfortune. The banks went on to abuse the UK legal system to foreclose on mortgages and evict people. It is no exaggeration to say that one of the reasons the youth are angry at governments for allowing such immoral Capitalism to corrupt democracy.  The rules are designed by those who stand to benefit from them.  They can take advantage of the poverty trap.  Also, many of those young people who are antiauthority, they perceive the UK government as overseeing corporate welfare, allowing within the system enough critical features in terms of profits, taxes and social limitations to curtail welfare for the poor.  The system so conceived mainly by the rich and powerful pressurising the government.    At all levels, such detachments by two sides of the socio-economic divide, the outcome of which is increasing inequality and poverty, can lead to social unrest and segregation.  Choice, for the poor, is not an option. Neither is it an option for Black and Asian people to avoid the chequered effect.

London City Skyline a couple of miles away from Aldwych High Street.

It is natural for many Londoners, or those aware enough to recognise, how private capital sits side by side with run-down public housing occupied by those of low income.  The best example is the dividing line of the M40, which separates the two Kensingtons, where the horrible events of Grenfell Tower come to mind.  The blackened shell of which is visible from the immaculate Georgian terraces of Notting Hill and Holland Park. The mean household income across the borough of Kensington and Chelsea was £116,000 a year, the highest in London. Yet research found the district was the capital's most polarised borough, with more than half of benefit recipients living in the most deprived quarter of neighbourhoods. In this borough, as well as Camden, Islington, Westminster and elsewhere, wealth and deprivation rubbing shoulder to shoulder.  Especially since during the lockdown and the spread of COVID, the spotlight has shone a brighter light on the densely packed areas such as Brixton, Tower Hamlets, etc., to realise that  Wealth is very unequally distributed between Londoners. Those in the bottom half of London's wealth distribution hold just 6.8% of the capital's total wealth, compared with those in the top 10%, who hold 42.5%.

To explore ways in which the quality of life, therefore, is a priority for any government to tackle to make cities a "fairer" place to live and work. Central to that task is tackling inequality, particularly of income and wealth.  Poor and rich people are increasingly living separately, with an ever-widening gap in between, can threaten the social dynamics of cities.  London, in particular, where segregation and clustering, primarily driven by affordability, especially when social mobility is not by choice, is a growing problem.  The measure of the number of people in poverty is best made by those family whos children are in need of free school meals (FSM). 

Every child born is a new generation.  Living in poverty-concentration neighbourhoods is transmitted between generations. Neighbourhood poverty can be contagious, spreading over time through households' residential mobility. This is mainly caused by the misguided urban policy of demolishing houses in deprived areas only to replace them with housing for the middle class. A malicious attempt at desegregation that can only redistribute poverty to other areas. Such harmful forced social mobility made to reduce inequality can only add to it.  Instead, attempts must be made to reduce inequality by creating opportunities for people and investing in education. To focus on both people and housing for an inclusive growth strategy.

Inequality in London is far greater than in the rest of England. When combined with housing costs are much higher than in other parts of England.  Given current housing costs, it is no surprise that poverty is more prevalent in London than in any other part of the UK. In fact, based on the relative low-income measure of poverty (after housing costs), 28% of Londoners (2.5 million people) are in poverty, compared with 22% in England overall. Inner London has poverty rates that are 10 percentage points higher than in many parts of the North of England.  Over half of Londoners living in single-parent families are living in poverty, four in ten children in London live in households in poverty, 25% of working-age adults in London are living in poverty.  Pensioners and the disabled make up the rest.

Housing is often the single most significant expense for any household and is a significant driver of poverty in London. It also plays a crucial role in well-being by fostering a secure sense of place. Many Londoners suffer from this shortfall of good-quality housing. At the extreme end of the scale are those living at the mercy of slumlords, living in a caravan or the 'Vanlifers'.  Their problem of homelessness also extends from rough sleeping to sofa surfing. On average, households in London spend 18% of their net income on meeting housing costs. This compares with 11% in the rest of England.  For those in poverty, they face housing costs that, on average, amount to 56% of their net income. As well as affordability, Londoners also face real issues with the nature of housing in London, such as property condition, tenancy security, and overcrowding. While the fall in the proportion of households below the Decent Homes Standard has been a little faster in London than the rest of England, there are still over half a million homes that fall short of what is considered decent. Another issue is overcrowding. Nearly one in four children (22%) in London live in overcrowded accommodation, twice the proportion in the rest of England (11%). The issue is most prevalent among those living in the social rented sector, where four in ten children (40%) live in overcrowded accommodation.

What this has meant is a definite shift in housing redistribution, with people moving out to outer suburbs or into poor areas, adding to the burden of overcrowding and further fueling the effects of Socio-economic segregation.  Studies show that rising inequality is a significant cause of increased disconnection and argue that a high level of isolation can undermine the social stability of cities. The riots in Paris (2005), London (2011) and Stockholm (2013) cannot be seen separately from high concentrations of poverty in these cities, often in combination with high levels of ethnic segregation.

Those with low incomes have fewer choices about where to live than high-income earners.  This demographic inequality began in the wake of the financial crisis in 2008, but has gained momentum since then.  A dire need for affordable housing in London, so the inflow and outflow of those serving the rich and affluent spend less on both time and cost of travel.  Such hard evidence puts pressure on the Greater London Authority to build more affordable housing more quickly. But, as the Grenfell disaster showed, London's housing crisis is one of quality as well as quantity.  This is not socialism but social care.

A time bomb is waiting. Rising income and wealth inequality are a major concern because it also influences variation across other life domains, such as education, health, life expectancy, and employment prospects. Inequality can undermine social stability and erode trust in governments and institutions. It could even put democratic processes at risk as lower-income groups become disengaged from politics. The Liberal viewpoint perhaps has come back to haunt us, as evidenced by the so much anger we see around us.  It is difficult to see a peaceful demonstration without it being peppered by violence directed at the authorities.  The risk of peaceful protests going out of control is ever-present, where passion runs high, mainly from anger and frustration. This was clearly demonstrated by the recent near-riots in support of Black Life Matters in London. The system that lets them express their anger is the very system that is failing them. 

Since 1991, partly due to globalisation and the rise in employment and self-employment, income inequality has continued to rise, but several factors have mitigated the effect of these changes on total income inequality. First, pre-COVID-19, the disparity between those with different employment statuses has fallen, primarily due to a fall in the number of unemployed, albeit mostly in low-pay employment. Second, since 1991, employment taxes have played a more significant role in mitigating the increase in inequality of gross employment income than before 1991. Third, investment income has contributed less to total income inequality since 1991, mainly because of its declining importance as an income source. Finally, a rise in the relative incomes of pensioners and households with children under five – both groups that benefited from reforms to welfare benefits and tax credits during the 1990s and (especially) the 2000s – has pulled down inequality. Overall, since 1991, these four factors have almost entirely offset the impact on income inequality of the inequality-increasing changes in the distribution of earnings and self-employment income.

Post-COVID-19, however, the outlook, at least in the short term, is bleak. Future movements in net earnings inequality are, therefore, likely to become central to the trend in income inequality.  Now it is the turn of the rich, more up to them along with the government to restart the economy and encourage recovery, to help limit the further scarring effect COVID is leaving behind.  Time to help these vulnerable groups of people across London and the country to break the link between poverty and deprivation. Above all, help to narrow the gap to make borrowing more accessible and help change the social infrastructure, for a chance to enjoy the sunlight of opportunity, so they start to chart their own destinies.   In compensation, the rich have to swallow a bitter pill of higher taxes to redistribute their wealth, but this time to desegregate, narrowing the social distance.  Consider it payback for the protection and the service of those key low-paid workers carrying on with their duties of saving lives, aware of the invisible enemy and in defiance of the dangers it poses.  For those spirited nurses' altruistic actions, cleaners, and all those who kept the NHS, the backbone of healthcare, open all hours; for them, working from home was never an option. 

After all, for those at the top to continue to enjoy the best health care, education, and the benefits of wealth, the one per cent's fate is bound up with how the other ninety-nine per cent live.  The Price of Inequality need not be so high; time to create a more dynamic economy and a fairer, more equal society. Social distancing may not always be the answer to salvation.