I don’t understand how ‘growth’ will help the 4.5m children in poverty

[Decisionsdecisions1]

I’m no economist and would welcome being educated, it’s a genuine question.

There is so much emphasis on ‘growth’, ‘growing the economy’ etc. I don’t understand how that translates into more affordable rents (as housing costs are a prime factor underlying poverty in the UK) or wages keeping up with the rising cost of food, utilities etc or more stable employment (rather than insecure zero hours contracts etc) or more affordable and available childcare (as again this is a key factor in poverty in the UK).

Statistically we know that wealth at the top end (multi millionaires) has increased while the number in poverty has also increased. This suggests only one end of the spectrum is benefiting from growth.

I’d like to hear more about how rents will be controlled, how employment rights can be improved etc. But no one seems to be interested in that. It’s all ‘the UK is open for business’. For what purpose? For whose benefit?

There’s poverty, relative poverty, and poverty inflicted on children no matter how much money we give the parents as sadly many of them make repeated terrible decisions and do not learn.

I think we should be spending public money on things that directly benefit children - meal clubs, dentistry, speech and language therapy, things like that. Not yet more cash for parents to spend on UPFs and vapes.

You are right in that growth in itself is not enough - there needs to be focused effort to direct that growth and to ensure the benefits filter down across the country.

However, it is true that without growth, there's zero chance at all. Growth does a lot of things:

It creates jobs
It brings in more income for government in the form of taxes
It brings in more income for everyone in the form of increased goods available for expert (taxes, foreign revenue into the country etc)
Increased revenues and income across the country have knock on effects, plus of course, more money swishing around just means more jobs or more investment in all kinds of things.

The trick is wht HAPPENS to that money. eg as government income increases, what do they do with it? How do they direct growth to ensure it's not localised to small parts of the country which then see massive disproportionate housing prices while other parts of the country stagnate. What and how do they choose what to subsidise etc etc. If the government has more money, they can theoretically invest mor ein the NHS, in social housing, in infrastructure. If private companies are more wealthy and have more capacity and more people they can offer better pricing or they can agree to deals that offer a more ideal solution vs the cheapest solution etc etc etc.

I agree. It seems all this extra money will just go on the defence budger(war). Lovely world we live in.

And here's me tucking into my Greek yogurt with tahini and berries just back from a run, checking on my homemade kimchi and just about to get up to date with my UC journal before going to work. Hopefully I won't get sanctioned for not spending enough on "UPFs and vapes" eh 🙄

I really hate that we’re spending all this money on defence and on preparing in case of war. I think we should just bow out of that.

Why on earth do you think we have a choice?

Without growth there’s no more money from taxes to spend on helping poor children. With growth the tax money might still not be spent on helping poor children but that’s a separate decision.

I think helping poor children absolutely should be a priority but I can see it’s difficult because there are so many priorities. For example defence is important to protect freedom and the threat from Russia and lack of support from the US probably does mean we need to spend more.

Bow out of that and let Russia take over other countries and Putin get more and more powerful until Russia is a direct threat to the UK too?

And growth is one thing but it's also growth per capita. It's okay saying the economy is growing (slightly) but we're importing a million extra people every year to share resources/infrastructure/services with.

Thanks Matt, this is helpful.

I can see that investment in the NHS, schools, infrastructure etc can help everyone but I still can’t make the connection to how that reduces housing costs or improves wages and employment conditions. Where is the incentive on companies to prioritise wages/recruit liberally rather than keep headcount minimal to increase profits, dividends, etc.

I don’t mean to be all doom and gloom and gloom but am struggling to have faith that corporations will ‘do the right thing for the greater good’ rather than just cut headcount (eg supermarkets introducing self checkouts for cost efficiency - not to create jobs).

Building social housing is all well and good but it will realistically be many years before we see the benefits. We know that the construction industry is far less interested in building social housing than luxury flats for professional landlords to add to their portfolio.

It will be fantastic to see improvements in NHS waiting lists and school properly funded. But it will still leave a lot of people struggling to have enough for basics after rent and bills are paid.

I’m no economist
No bad thing - you need an economist to fix a broken country like you need a homeopath to fix a broken leg

Growth means more jobs, that in itself will remove some children from poverty and put more money in some people's pocket increasing their spending power which can improve health and boost the retail sector which in turn creates more jobs etc.

More jobs, more sales means more tax income which can in return be invested in things like nhs, education, social care which helps improve lives.

In theory it all has a beneficial effect however it takes a long time to improve and changes to filter through.

Many of your concerns are completely justified. Growth is a prerequisite for improved lives for citizens, but it's not a guarantee of an improved life for citizens.

In terms of some or your specific cpoints:

I can see that investment in the NHS, schools, infrastructure etc can help everyone - absolutely. But remember it's also not just about getting to the bare minimum. Healthier populations are likely to be more productive. Well educated populations lead to further long-term growth and stability and, ideally, less crime etc.

but I still can’t make the connection to how that reduces housing costs or improves wages and employment conditions. Well, NHS, schools, infrastructure don't necessarily. Infrastructure can in that it can allow towns to be built in new places, or open opportunities for more housing. Wage increases happen in part when there's competition for workers - ie when there's more work than there are people who are qualified to do the work.

Where is the incentive on companies to prioritise wages/recruit liberally rather than keep headcount minimal to increase profits, dividends, etc. Absolutely NONE except continued profitabiltiy. So even if headcount remains lower today than it would have been for a company of the same size in the past (due to technology etc), the hope would be that the company grows so you do still need more people. Also, different types of jobs open up - eg in technology to support all these snazzy techtools that allow other companies to have fewer people. So as an example, one of the clients I work for has grown their business by about 3x over the last 5 years but they've only increased their headcount by 2x. But they ARE still employing a lot more people AND, they're bringing in a lot of additional services that they didn't use before.

I don’t mean to be all doom and gloom and gloom but am struggling to have faith that corporations will ‘do the right thing for the greater good’ rather than just cut headcount (eg supermarkets introducing self checkouts for cost efficiency - not to create jobs). - As above. You're right, the number of retail jobs drops as a result of self service checkouts. But as the population increases (and hopeflly as money flows more) the volme of goods going through those supermarkets should also increase making the self service checkout a tool for them to be able to process more. Supermarkets may then need to employ more people to do stock taking and logistics, to service the technology etc.

Building social housing is all well and good but it will realistically be many years before we see the benefits. We know that the construction industry is far less interested in building social housing than luxury flats for professional landlords to add to their portfolio. Housing is a huge issue, I couldn't agree more, and it's so bloody slow to implement changes. This is where government will is even more important than in other areas impacted by the generic "growth". To be creative on solutions, to incentivise developers, to direct money to the right places, to support housing development with th eincrease in infrastructure needed from roads to hospitals to schools.

It will be fantastic to see improvements in NHS waiting lists and school properly funded. But it will still leave a lot of people struggling to have enough for basics after rent and bills are paid. Yes. And it' sa huge concern. But as I said at the start, without growth, there is ZERO chance of improvements. At least WITH growth, there are opportunities to see improvement.

Well thank God it's all the fault of feckless parents and not the feckless disabled. Makes a change.

@MattCauthon
If private companies are more wealthy and have more capacity and more people they can offer better pricing or they can agree to deals that offer a more ideal solution vs the cheapest solution etc etc etc.
They can (and do) also export that wealth to places where they pay less / no taxes whilst selling their services more and more to the poorer sections of society with targetted advertising and credit offers (that draw in and trap poorer people whilst making massive profits for financial institutions).

So even if headcount remains lower today than it would have been for a company of the same size in the past (due to technology etc), the hope would be that the company grows so you do still need more people.
But a great deal of that headcount will be based in India, Eastern Europe and South East Asia. So generating not a penny in wages in the UK. And increasingly if you can get AI to do it, then relocated to a cloud.

In a global economy, which is what we have, individual countries are tinkering on the edges trying to improve their lot when the majority of economic power rests in the hands of capitalist organisations whose profits exceed the GDP of many countries. Multinational corporations like Apple, Amazon, and Microsoft have market capialisations that dwarf the GDP of the UK. Investment in "growth" in the UK makes very little difference to the GDP because of the sectoral composition of the GDP: agriculture contributed around 0.58 percent to the United Kingdom's GDP, 17.5 percent came from the manufacturing industry, and 72.53 percent from the services sector. No amount of investment will significantly change the first two, and the latter is substantially made up of travel and tourism - now around £250billion, and although dropped slightely since the pandemic it is now on an upwards trend again. The problem of course, with a heavy dependancy upon travel and tourism, is that it represents a lot of low paid and seasonal work which does not fuel internal growth, especially (again) given the amount of the market that is owned by large and/or multinational organisations (or the landed gentry).

When you see Trump imposing tariffs to promote growth in the USA, do people really think he is considering the fortunes of the poor? When he says that he wants to make America great again, he means for the likes of Elon Musk. Why do you think both Tories and Labout attack the living standards of the poor and not those of the rich? It is nigh on impossible to deliver substantial improvements to the majority of society without breaking the rules - and those rules are not set by governments.

We should bow out of being able to defend our country? We have been extremely lucky since the end of WW2 to live in a time of extraordinary peace. We would be foolish to assume that will last.

”growth” just isn’t possible full stop. All the time the private sector are vilified.

More growth = more company revenue and jobs = more businesses and people paying taxes, more companies taking corporate responsibility.

True. Going for the private sector isn’t helping. Halved growth.

@PhilippaGeorgiou

I said right at the front that growth doesn't mean we will get improvements - as you've pointed out, it still takes significant effort. for example, government finding incentives to prevent firms from attempting to take their money elsewhere, to use your example.

however, I think you'r ebeing unnecessarily cynical and obfuscating how things work in some cases. Yes, the services sector makes up the bulk of the UK economy. In fact, the largest sector within that is government services - including health and education. Trade (retail and wholesale), transportation, accomodation, food etc is th enext big one and yes, a big chunk and travel and tourism is close to 10% so important yes. But financial services is another big one, also at close to 10%.

Having said all that, I agree - without a lot more effort by the UK government to encourage a cascade effect, to tighten tax laws where appropriate, to incentivise business to invest in the UK etc, we're not goign to see anywhere near the benefit from growth we'd like to.

I think you'r ebeing unnecessarily cynical and obfuscating how things work in some cases.

Quite the reverse - I'm still an optimist. I just don't accept there is only one set of rules and you clearly do.

What? I have said about 10 times already that without the will to see the benefits of growth being percolated across the country, it doesn't help us. I'm 100% ware that growth can often just benefit certain people, and it isn't necessarily me and you.

I'm jiust not wild about statements like the fact the bulk of GDP is travel and tourism, when it isn't. Becuase you can't make decisions, or recommendations, on improvements if we don't even have the right information to hand.

There are many benefits of growth, one of which is, the more money moves around the more tax is raise.

However I don't think we're going to see any significant growth any time soon so I wouldn't worry too much!

Defence spending can contribute to growth. A defence contract will result in 200 jobs in my region.

Growth would lead to more jobs. Increased household income is good for kids in poverty.

More jobs means more tax revenue so services can be better funded. Better police, social services etc is good for kids in chaotic situations.

Kids in poverty are likely to have parents on minimum wage which has seen steady increases each year. This links to the more jobs point but parents in employment increases household income and quality of life for kids in poverty.

Employment means parents can have more choice over their housing which is a good thing as the quality of housing may be better.

Yanbu to make the point about the richest siphoning off some of the good effects of growth. For example while housing being built is good for employment of construction workers, house developers have to make a profit. Similarly more jobs in retail is good but the shareholders and managers will make more money than that individual worker on the shop floor.

Statistically we know that wealth at the top end (multi millionaires) has increased while the number in poverty has also increased.

This will always be the case, because of the way relative poverty is measured: as more people become wealthier, so too the proportion of people classed as in relative poverty increases.

Frankly I’m dubious about this 4.5 million children in poverty statistic, anyway. According to Ofcom, 96% of children aged 11-18 own a smartphone - an expensive and unnecessary device for a child to have, and absolutely not something a family supposedly living in poverty and unable to afford food or heat should be buying and paying data contracts on for children.