Rising Poverty Shames Capitalism

The Joseph Rowntree Foundation has published its annual Poverty in Scotland report on the current state of poverty levels in Scotland, and its findings make for dire reading. Even before the coronavirus pandemic, around a million people in Scotland were in poverty, “living precarious and insecure lives”. That breaks down as 230,000 children, 640,000 working age adults, and 150,000 pensioners.

Over the past five years these numbers have been rising, particularly the child poverty rate which has increased to 24%. There has also been a significant increase in poverty levels amongst pensioners. Keeping to this trend means that the Scottish government’s own target of reducing child poverty to 18% by 2023-24 is almost certain to be missed.

Unemployment and Underemployment

The report highlights the scale of in-work poverty, which stands at 10%. Workers in the food, wholesale and retail sectors faced amongst the highest in-work poverty rates by industry. Underemployment — defined as workers not being able to work as many hours as they would like to — is given as one of the main culprits of this phenomenon, as being restricted in the number of hours a person can work restricts their choices and income. Underemployment is higher for those working in accommodation & food services, retail, and health. These sectors also have lower average hourly wages than other sectors, compounding the problem. 

Unemployment is also on the rise across Scotland. The impact of COVID-19 is not shown in these figures, but the report makes clear that it will have a dramatic effect on unemployment and therefore poverty levels. Particularly when the furlough scheme is withdrawn in November and replaced with much less generous support, and also next April when temporary increases in Universal Credit and Working Tax Credit payments are due to expire.

The impact of lockdown has also not been equal throughout Scotland. Those in the lowest-paid sectors are most likely to be furloughed or made redundant, and workers in the jobs and industries that were already struggling are being the hardest hit.

The jobs market is looking bleak for those finding themselves out of a job, with stiff competition for any positions that come up. As sectors that are facing the brunt of the crisis face collapse, such as hospitality, travel, tourism and retail, the workers from these industries might find themselves without the skills needed to compete for these new vacancies.

A slow and difficult recovery will ensure that poverty levels are only going to rise.


Housing is an area that is highlighted as a significant contributor to levels of poverty. Over the past period Scotland has seen slightly lower poverty levels compared to England and Wales, which is correlated with Scotland’s lower average housing costs. However, this gap has been narrowing in recent years, reducing this ‘advantage’. In 2013-14 Scottish rents were 73% of English rents, and in 2017-19 that figure was 81%.

In order to continue to provide below-market rent housing over the next few years the report claims it will be necessary to build 53,000 new homes over the course of the next parliament, to combat the financial pressures of the sector and rising rent, with 70% of them for social rent.

Social renters have seen their housing costs increase by 9% over the past few years, increasing the poverty rate up from 35% in the period 2012-15 to 40% in 2016-19. Private renters have also seen their housing costs consistently rise above inflation, leading to the proportion of income spent on rent rising over the same period. The Scotland-wide figures also hide local variations, particularly in the Lothians and Greater Glasgow which have seen much more significant increases in housing costs for private renters, leading to a greater proportion becoming at risk of sliding into poverty.

The impact of the pandemic is also felt significantly here. COVID-19 brought social housing construction to a halt, which means the Scottish Government’s previous target of building 50,000 new affordable homes by May 2021 will not be met. This will obviously have a big knock-on impact on the targets the Scottish government has set itself for reducing poverty levels over the next period.


The report concludes with a number of proposals for action, in three mains areas: employment, housing, and family income. In employment it calls for the expansion of various job support and transition schemes and a significant extension in the eligibility requirements for them.

It also calls for a major new affordable house building programme to act as an economic stimulus and drive down housing-related poverty. Current legal protections against eviction should be extended until September 2021, the Foundation argues, and loan finance for landlords should be tied to higher standards on maintenance, energy efficiency, and affordability. Finally it calls for using alternative channels to bring forward the introduction of the delayed Scottish Child Payment scheme, which is not due to come in until February 2021, which could provide a lifeline for struggling families over the winter period.

While these measures would of course be welcome, what it really amounts to is tinkering around the edges, placing a sticking plaster over an arterial wound. Even if met, the Scottish government targets are pitiful in a country that has so much wealth to spare. We should be aiming for a child poverty rate not of 18%, but 0%! This is perfectly possible to do with the resources that are available in Scotland today.

So what is it that stands in the way? Capitalism: the economic system of ownership and profit that concentrates wealth in the hands of a tiny few. Inequality and poverty are an inherent part of the capitalist system, and therefore they cannot be solved within the confines of such a system. The banks, landlords and big businesses that control all the resources have no interest in challenging the system which produces these poverty levels, because that system also produces their wealth and power.

Socialist solution

Capitalism is the root of poverty. What is certainly clear from reading the Joseph Rowntree Foundation report is that poverty was an endemic problem in Scotland for a long time before the pandemic struck. Poverty was getting worse even before the pandemic, and so the blame for the current situation cannot be placed purely on COVID-19. The virus has exposed capitalism and showed up its flaws in a very dramatic fashion, intensifying the crisis, but it did not create it.

Tackling poverty is not a priority for capitalism. It’s only priority is to protect profit and wealth. A socialist answer is needed; a revolutionary transformation of our society in order to take the power and the wealth out of the hands of a tiny elite and put it in the hands of working people.

We need to build a better society based on fairness and satisfying human needs, owned and managed under democratic workers’ control, where we can implement a rational socialist plan of production guaranteeing full employment opportunities for everyone and distribute the resources fairly so everyone can enjoy a decent quality of life. Only then can we banish the scourge of poverty to annals of history.

by Phil Martin, Edinburgh