by Steve Iafrati
Narratives explaining poverty as caused by personal failings and poor decisions are nothing new. The characterisation of the likeable but foolish Mr Micawber in Dickens’ David Copperfield has given way to a politicised narrative of ‘sleeping off a life on benefits’ and welfare dependency. Universal Credit, a new benefits system paid in arrears, has been presented to address such problems by encouraging greater personal budgeting and responsibility. But with initial evidence showing Universal Credit leading to more debt, it seems that the program may be more of a problem than a solution. As welfare slowly returns to Victorian values of changing people’s behaviour, it may be that Mr Micawber’s experience of poverty and debt will become a reality for increasing numbers of people.
Mr Micawber: Poverty and debt in the Victorian era
Charles Dickens’ Mr Micawber was partly right when he recognised that the key to happiness was not spending sixpence more than his annual salary of twenty pounds. For Dickens, debt was a family experience and a problem in Victorian society that he believed warranted change. Nearly 170 years after Dickens wrote David Copperfield, the problem of debt and the poverty premium amongst the low-paid and unemployed is as pervasive as ever. Government policy seems to be returning to Victorian values of personal responsibility and less government intervention.
Significantly, Mr Micawber’s optimism that things will get better belies the reality of inescapable debt denying people choice. But debt, rather than being a problem in its own right or a lifestyle choice, is an outcome of not having enough income to cover outgoings – despite the best efforts of the payday loan industry to introduce a positive spin. The demand for a new generation of ‘payday loans’, credit cards, and companies such as Cash Converters is driven by a need to pay bills, buy school uniforms, cover the cost of shopping and even housing. Popular images and political rhetoric of feckless, welfare-dependent people frittering money on cigarettes, lager and flat screen televisions has no basis in fact.
Mr Duncan Smith: Blame those in debt but not the system that creates it
Amidst these misconceptions of debt and its causes, fuelled by the rise of ‘poverty porn’, politicians such as Iain Duncan Smith identify a lack of personal responsibility leading to debt that demonstrates poor self-control and the need to ‘develop a savings culture once again’. However, years of austerity and welfare reforms are, in fact, the more realistic causes of debt, as wages often fail to keep up with inflation.
In a drive to encourage ‘personal responsibility’, welfare reforms have ultimately made people worse off. With DWP data showing most working-age benefits going to households where at least one person works, welfare reforms are having the biggest impact on working households already experiencing a double whammy of low wage increases and rising food and energy prices.
Mr Carney: Debt is bad for the economy
Recent news and evidence from the Bank of England suggests that the governor, Mark Carney, believes debt, much like damp, has a propensity to spread if left untreated. Increasingly, Theresa May’s much heralded ‘just about managing families’ are finding it harder to make ends meet. It might even be the case that these new ‘just about managing families’ have replaced the old just about managing families. The latter have become the ‘no longer managing families’.
And here, again, lurks the shadow of Iain Duncan Smith as his ‘flagship’ policy of Universal Credit is predicted by many to create even further debt. Recent evidence from Citizens Advice offices in the Black Country now identifies debt as the major cause of people seeking help. On a national level, Citizens Advice and debt charities such as Step Change have called for a delay on Universal Credit because it directly links to debt and rent arrears. They also call for putting a stop to direct deductions.
But Mr Micawber was only half-right. The burden of debt does indeed cause personal misery that many people will find hard to escape. However, debt is also a broader problem that fuels poverty and, as such, will impact on economic demand, skills and health. As governor of the Bank of England, Mark Carney’s concerns of growing unsecured credit and other forms of debt are based not on sentiments of compassion within the Bank of England but instead on recognition that this will have lasting economic impact.
This impact will undoubtedly fall on the poorest and most vulnerable as they are drawn into a whirlpool of debt. However, despite warnings from organisations as diverse as the Bank of England and Citizens Advice, the government appears set on using social policy as a tool to make people poorer and more vulnerable. Many years after Mr Micawber’s eventual emigration and financial security in Australia, the Webbs, Beveridge and others have demonstrated that social policy can be used to improve people’s lives, support a better society and underpin a fairer economy. Currently however, the government is using social policy in a way that creates problems, like increasing levels of debt that fuel growing poverty and inequalities.
Dr Steve Iafrati is Senior Lecturer and Course Leader for Social Policy at the University of Wolverhampton. His main research interests cover poverty, communities and welfare provision. He tweets at @steve_iafrati.