I usually use this blog for work issues but as someone who writes about social issues and works extensively in the charity sector I need to get something off my chest.
Poor people should be taking more risks, according to welfare minister and peer Lord Freud.
The former financier, in an interview with House magazine stated Universal Credit is about changing people’s lives by improving incentives to work. “ We’ve got the circumstances now where… people who are poorer should be prepared to take the biggest risks, they’ve got least to lose. We have, through our welfare system, created a system which has made them reluctant to take risks so we need to turn that on its head and make the system predictable so that people will take those risks. I think we have a dreadful welfare system.”
Let’s ignore for a second the rights and wrongs of Universal Credit and lumping every individual on benefits in the same boat.
Let’s focus instead on what this hugely privileged and wealthy man is saying about people who are at the very bottom rung of the ladder here.
Because they have nothing – no food, secure accommodation, job – they have the least to lose.
The least to lose? They have the most to lose.
When you have money you can speculate. You’re happier to take risks with the extra money because you have your survival budget. You have enough to pay the bills so the extra is just that, extra. It’s the cream in your coffee. It might be a new business venture, or perhaps an investment idea but the risk is calculated because you’re not putting every egg in the basket.
If you have nothing you have much, much more to lose even if you don’t appear to be loaded with possessions. If you are struggling to pay each and every bill each month then the risk you are taking could be the difference between having a roof over your head and not. It could be the difference between being able to feed your family and not.
As a society we are judged by how we look after our weakest and most vulnerable. This isn’t about encouraging them to take risks and live their lives like they’re speculating on the stock market. This should be about empowering, strengthening and supporting, not demonizing, threatening and destabilizing.
The biggest risk I ever took was to set up my own business. I had a cushion, I had support and I wasn’t on my own. Would I have done it without that money I was able to set aside, a partner who could cover the bills if I failed to make any money and a network of friends and connections ready to offer advice and help when I needed it? I don’t think I would have done.
Being told you’re at the bottom rung of the social ladder does damaging things to your outlook and psyche. It robs you of aspiration and the confidence to believe you have any real control over what happens to you. Telling these people that not only are they failing (they’re not) but that they only have themselves to blame isn’t going to incentivise anyone to risk what they have, particularly when everything they have can fit into one room.
What we sorely need in this country is a little more compassion. There are few people who can say, hand on heart, that everything is going exactly how they want it to right now. Kicking the people below us to make ourselves feel better is merely going to entrench frustration, anger and resentment. Hardly the goal we want for society.
It’s actually all about confidence and related to the more solid parts of Maslow’s work. Many (but not all) poorer people lack confidence to take risks due to the financial burden of living hand to mouth.
So you’re right, Lord Freud is wrong. Although the poor have less to lose, they have far more to lose.
Typical example: housing. Whether they rent or buy, they can’t take the risk of moving to a new area to find new opportunities because of their financial status (renters require references and credit checks).
Ironically plenty of “rich” people are far poorer in absolute terms of wealth due to running large debts. So in fact these people, of high social standing, have even less to lose. Only they can afford to take risks like moving to a new area because no landlord will deny them a tenancy, they will qualify for mortgages.
I’m about as far from a “lefty” as you can get, but #Occupy has got one thing right. Today’s financial system has maintained many of the impossible social divides of bygone eras. The poverty trap is very real.