Contemporary Finance in Action

Executive Summary

Poverty in the United Kingdom is a menace that cannot be tolerated because the country is already a developed one. Although a big part of the population is in the middle class, there are still those who are trapped in the poverty line such that they do not have enough for their basic needs and some decent housing. In a bid to tackle poverty, the government must take steps to focus on the financial strength of the people. It is only through empowering the people financially that they could come out of poverty and support themselves. Public policy must be focussed towards giving the people a financial strength so that the state of poverty is eradicated. The education that is offered in the United Kingdom must be centered towards enabling the people to benefit from such skills. They should have the opportunity to utilize their skills effectively. The time of seeking white collar jobs is long gone, and so the skills and knowledge that many find to acquire nowadays are aimed at being applied practically. This would be done through the government empowering the poor by giving them the power to prosper financially. The setting up of businesses would be the best place whereby they would combine the skills, knowledge and the funding in a way that would benefit them directly (Andreotti, and Mingione 254). Also, teaching people to have a culture of saving would prove poverty wrong because investment is possible when the saved funds are utilized well. Nonetheless, the government has been depending on the private sector to take care of the poor by giving them employment. When they are employed, they are paid so poorly that they do not improve financially but remain at the same level. Furthermore, reduction in the rate of interest to allow loans and credit facilities be availed to the low income earning group also boosts their financial strength. This is because when the loans are cheaply available, the little income group can take out cheap loans that they can invest and earn some reasonable amount of money. By getting low income, the people continue staying in the small income group, and so a strategy has to be found to get them out of this problem.

Part 1: Introduction

The financial burden of tackling poverty among organizations and individuals has presented a challenge to the government of the United Kingdom. Suggestions are needed on how to alleviate poverty by establishing the financial strength of individuals primarily in the United Kingdom. Research by the Institute for Public Policy Research recommended that serious attention has to be thrown behind this case due to the weight it has and the usefulness to the people of the United Kingdom and the world at large (Gordon, and Pantazis 17). Establishing a strong financial base that would eliminate the problem of poverty in the United Kingdom would serve to increase the gross domestic product and create wealth for individuals and the state. Turning consumers into creators of wealth would improve the financial situation of the people of the United Kingdom and give way to the prosperity of the country. This is because they would become taxpayers since they shall be entering into the class of the active income earners who qualify for taxation. The reason why people are poor in the UK is because of the lack of enough measures to alleviate poverty.

The ideas of eliminating poverty through the use of financial muscle of Britons are an excellent example of how to solve this pertinent social issue that has left devastating effects in society. However, before the explaining of the financial ways, the definition of poverty has to be detailed. This definition of poverty covers the three aspects of life which are social, political and economic. Poverty is the inadequacy of the essential resources necessary for the fundamental development of humans. These are stated as the material resources as well as social participation. The experimental, as well as the social dimension of poverty, is recognized the powerful impacts and cause of this menace, the political and economic relations are all considered.

Part 2: Use of Fiscal Choices

The fiscal choices are most important in poverty elimination because an anti-poverty program must consider the appropriate approach for the underlying circumstances as far as wages are concerned. This is because a salary or rather a paid work can never be assumed to be sufficient tool to eliminate poverty; therefore, it cannot guarantee the absence of poverty (Andreotti, and Mingione 255).  When salaries are enough, the individual is in a position to afford the essential commodities that are necessary for living. These commodities are housing, food and other services such as education. Most of the people who are considered poor in the UK cannot afford decent housing. They live in houses that are not so good for the conditions of humans. In some of the families that live in poverty, the homes are in deplorable conditions because the owners cannot afford to pay for their renovation or refurbishment. Also, the same applies to the management of the funds the families have for education and health care (Gordon and Pantazis 16). These are fundamental needs that must be fulfilled at all costs. However, when the wages that the individuals derive from their daily work are not enough to cater for these needs, they remain to be poor. An expansionary fiscal policy that would see the country get enough wages even for the unskilled and semiskilled labour would be best suited to solve the crisis. If the workers in factories and different companies only rely on their salaries to pay all the bills, then the government should act swiftly to correct the financial problems facing these people in a bid to attain the required standards.

The financial muscle of individuals must be established such that they shall be enabled to eliminate poverty menace.  Although in the recent years, the UK’s economy has strongly bounced back by registering a healthy growth of the employment rate, the growth of earnings remains weak and almost stagnant because it is increasing at a negligible percentage of less than 5% (Lansley and Mack 4). This implies that the wages of labour in the United Kingdom are being squeezed instead of being expanded for all the new and existing job contracts. When the payments are being squeezed, the financial implication is that the people only get poorer instead of expanding financially. The consequences are reflected in the living standards of the people. The lowly paid remains to be poor even as the economy grows and prominent figures are reported in the growth of the GDP.

The uncertainty associated with the pace of the future expansion of the United Kingdom’s economy is because the concentration of the efforts being used to eliminate poverty is directed to the wrong place. The efforts being done now are insufficient because there is a lack of the financial part of it.

The first point on how to boost social investment and wages is through the provision of finances to offer quality childcare. Through the elimination of the gender inequality which has contributed to immense levels of inequality in the distribution of resources, poverty can be pinned alleviated. This is only possible through the use of a social investment strategy as the cornerstone of the economy. Although the United Kingdom is among the top developed countries in the world, she still lags in social equality in terms of balancing the availability of opportunities to both genders. Subsidizing the funding of childcare is critical to the creation of the social balance for economic growth.

The financial aspect emphasizes that a dual-earner model of households is necessary. The dual-earner model facilitates that the parents in the families in the United Kingdom should all be working so that they can contribute positively towards the income of the family. Paid employment works to create a reliable income method for families. This also touches on the legal and cultural barriers that have to be removed through the policy framework. Eliminating poverty is not just about making sure that every family has working people or the creation of employment because if there exist barriers that prevent the realization of the anti-poverty programs. In some of the times, households are not enabled to earn the maximum they are supposed to. This is because, in most circumstances, only one parent works. The presence of the two parents should be a chance that should be exploited to the maximum by employing all the partners. However, statistics show that it is only one in 20 families whereby the two parents are fully engaged in employment. In some of the cases, the father is fully engaged such that he is in full-time employment. The mother is involved in part-time jobs such that she only works some few hours within a day or a week. However, most of the families are single earner households. This means that either the mother or the father has engaged in income generating activity. The other partner stays unemployed or takes care of the children or stays at home. These families make up 20 percent. It is one in every five families that have a single parent as the sole breadwinner (Reed and Lansley 7). The fact that an only breadwinner exists in a family against some 3 or 4 family members is an indication that there still need strategies to eradicate the trend (JRF 4). The most effective approach is ensuring that the households are made to be dual earners. However, a small percentage of the population is made up of single parent families. In these cases, the single parent (either the mother or the father) must be working to cater for the family.

Part 3: Enabling The Physically Disabled Financially

More so, the financial insights regarding the economic wellbeing and the incomes of the household as far as the disabled are concerned must be highlighted. It analyses how a back to work plan could be implemented among the disabled in the United Kingdom. This is because, even though the income of many individuals are improving and the employment rate is also increasing in the country, the disabled have remained backward. Only a percentage of 35 of the disabled workers in the United Kingdom compared to the able-bodied people who work and whose portion is 75% (JRF 6). It has been established that 35 percent of the disabled who are actively engaged in employment are employed in different organizations and government offices because of their physical status. It is a fact that work is not the only solution to attaining the fruits of the anti-poverty program. Nonetheless, addressing the inequalities as far as the disabled are concerned so that they also become engaged and earn some income is crucial to the antipoverty strategy. The United Kingdom must wake up to the reality that supporting the disabled is key to attaining the goal to eliminate poverty in the country. This is because the policies in place are not effective in promoting the disable to lead healthy economic lives. When these people are enabled to secure jobs that they can work and participate comfortably, they also pay taxes and also help in the growth of the economy. Nevertheless, finding employers who would accept to take them in is no easy because many of the potential employers prefer to have abled people (Gordon and Pantazis 17). The willingness of employers to engage the disabled is questionable because it is at its lowest. This strategy can only be implemented through the active brokering as well as the carving of jobs that would see the disabled get a back to work support. The potential employers could prepare for the coming of the disabled into the workforce by making sure that the work patterns or the responsibilities are formed in such a way that they suit some particular candidates. Further, the disabled must be supported even in their workplaces so that they can be able to maintain their jobs. The challenge that this particular strategy is likely to meet is the fears and costs that employers are not ready to shield (Kenworthy, and Marx 5). This is because the disabled are more likely to be affected by sicknesses and the potential employers unusually small and medium enterprises are not ready to shoulder such a burden.

Initiating projects for the disabled so that they get to become self-employers would be the best strategy. This is because this group of individuals receives an enormous amount of insubordination at their places of work. Worse enough is the fact that employers do not see the productivity of the disabled. This group of workers is abled differently such that they have good brains and many are known to be trustworthy. Whenever there are a job selection and recruitment, the disabled are not included in the list of the chosen candidates. This is because they are known to have challenges with physical movement or execution of various duties and functions. It is not the work of private investors to deal with the problems of the disabled, but the government should pick up this issue. In reducing the unemployment among this group, poverty levels are significantly eliminated because they are empowered. Giving them the financial power is the only way out of this situation. With economic freedom, the disabled are given the ability to overcome poverty.

The prevention of the exclusion of young people from their jobs is another thing that is not healthy financially. Despite the statistics showing that the unemployment of youths has been decreasing each year, there is still about a million youths who are unemployed. They are of the age of 18 – 24 years (Dreyer et al. 4). These unemployed youths cannot be accounted to be in the training institutions or colleges, but they lie idle for lack of meaningful economic activities that they can engage in. Of these youths, 45 percent of them do not even have the minimum GCSE qualification while 24 percent have never been involved in any income generating activity (A’Hearn et al. 11). The growth of unemployment of the youths was active during the years of 2000 when the economy was still doing exceptionally well. This has become even worse because the number of unemployed youths has been rising slowly over the years. These individuals do not have qualifications because most of them quit school when they have not yet attained any decent qualification that can be relied upon.

Part 4: Financial Knowledge and Training

The government, therefore, acknowledges that the trends being reflected by these statistics show that there is a need to worry because the structural shifts in the markets are reflecting labour market weaknesses. The jobseekers allowance was established so that it helps to prevent the continued and fulltime training or education that renders many from working. This means that those who choose to keep with their education or training do not stand to benefit from this allowance. Knowledge should not be based on the strategy of leading many to work in a bid to seek white collar jobs but to be trained to take up industrial roles and to take up positions as entrepreneurs. The pieces of training should be given to the people who have received the funding by the government to form SMEs. The education should be aimed at leading the people on how to manage their businesses and give them hands-on skills to run the daily operations of such ventures. Sometimes the firms that are started by many people end up collapsing because of the lack of the requisite knowledge to run such businesses. However, with the financial training and being given skills, the low-income groups would be empowered economically and avoid falling into the trap of poverty.

This strategy has been aimed at making sure that people are discouraged from staying for long periods without any meaningful employment yet they are in the 18 – 24-year bracket (JRF 10). In this age bracket, everyone should be working and contributing positively to the economic growth and alleviation of poverty in their households. All those that are interested in the youth allowance should be required to have personal advisors as well a plan of action while those who do not have the minimal GCSE level qualification are called upon to continue their education. However, after the attainment of the minimum level of education, these youths should be urged to look for jobs or even self-employ themselves (Andreotti, and Mingione 255).

Part 5: Provision of Low-Cost Credit

The provision of low-cost credit services to households is fundamental to the elimination of poverty. This is because increased availability of credit generates investments which could be used by the homes to provide employment opportunities to their members to supplement their income. Extending financial services to the people would give the chance to develop financially and thus be in a position to eliminate poverty. Through cheap credit, the poor could be able to start small businesses which would go a long way to elevating them financially. When they get loans and start businesses, they cease being employees who earn low wages (Dreyer et al. 5). This way would stop the problem of always complaining about inadequate salaries. When the funds are available for investment, the people who have entrepreneurial minds get their ideas to work and therefore make more money than usual because they get a chance to try their skills. It is a fact that when a person is employed, their efforts may not be rewarded justly but when they have their business ventures such as sole proprietor and partnership businesses, they get the value of their efforts. The importance of this is that the poor who are being employed could cease being so and become employers and also their efforts are being rewarded so that the more the work is done, the better the rewards in terms of improved finances. These individuals are also able to pay taxes and give the country a boost because when they work harder, they get their businesses growing. Instead of becoming dependants, they turn into providers.

More so, as part of the financing, the people of low-income groups, the availability of savings is also fundamental because, without a good savings plan, the availability and accessibility of credit facilities would be impossible (A’Hearn et al. 12). However, this is not possible because many households are used to spending heavily and saving little. Nonetheless, this is possible with an incentive plan to motivate the saving culture (JRF 12). When the savings are made in a significant manner, the credit needed to start up new businesses would be possible. Households are a hub of innovation, but they are unable to actualize their plans due to the lack of capital for investment. When the stakes are done, wealth creation is possible. The spirit of entrepreneurship is renewed by the savings whereby wealth creation is possible (Musterd et al. 9). The individuals and the entire economy benefits which would see the levels of poverty among the citizens of the United Kingdom decrease substantially. When savings are available, investment is vast because the loans could be given to the potential entrepreneurs cheaply. Additionally, the people are taught on the savings culture, and there must be a financial reward for the savings. The investment decisions being made must be wise enough. The government could make the environment conducive for business which belongs to the poor such that there are rewards. The rewards could come in the form of reduced taxes, protection of the small and medium enterprises. Also, when the government motivates the informal sector, it should also be willing to take on the job of investing by setting up infrastructure in such areas that the businesses of these individuals are to be set up.

Part 6: Research Approach

The research into the poverty levels of the people of the United Kingdom especially the low-income earners can only be done through quantitative analysis. This would look at the role of the government of the United Kingdom in promoting the financial power of the poor to alleviate poverty. The research would be done deductively whereby the data that is collected on poverty levels and the rate of employment would be tested on a theory. The association between the variables is then examined. In this case, the variables include unemployment, credit facilities, financial knowledge and finally poverty level. Each of these independent variables which include unemployment, credit facilities, and financial expertise would be tested whether they influence the poverty levels of the people in the country. These people are the low-income earners, and they are to be examined as a sample of the population of the poor. The relationship between the dependent and the independent variables that are in the study. I will be explaining the relationship between the availability of credit facilities and poverty reduction in terms of business financing. The question that I will consider is whether there has been enough credit in the market and what has been the impact. Also, the change that is expected to be realized as a result of pumping more credit needs to be examined. Additionally, the availability of financial knowledge concerning poverty levels is another thing that I shall investigate. What is the level of education that is already existing in the market? I shall address this question to show that this specific factor is needed and that there is a shortage of the same among the low-income earners. This shortage means that even if these people were to be given credit facilities, they would not benefit because they do not have the knowledge that is required. However, examining how many of them have this knowledge shall help a lot because the experience can be pumped into their minds and fail to produce the required fruits. However, this knowledge shall be accompanied by credit facilities and this is why they have to be educated as well as given the required credit. Lastly, unemployment as a factor must be examined as to whether it influences poverty levels. The question would be, does unemployment increase or reduce poverty levels. However, this factor can only be eliminated by having the low-income group granted the financial freedom that they need.

Part 7: Conclusion

In conclusion, there must be a collective effort being led by the government, and also the low-income group must be willing to collaborate so that the shots would be enough and sufficient to alleviate poverty. It is a fact that in a bid to eliminate debt, all the concerned stakeholders must be present as well as the resources needed to keep low income out of sight. When all the conditions are availed, the government must be the supervisor and principle in making sure that everything has been done to detail. It is only through the use of financial factors that poverty could be eliminated from the United Kingdom.






Works Cited

A’Hearn, B., Di Battista, F. and Vecchi, G., 2016. Old questions, old data, and a new approach: Poverty in the United Kingdom at the rise of the 20th century. mimeo.

Andreotti, A. and Mingione, E., 2016. Local welfare systems in Europe and the economic crisis. European Urban and Regional Studies23(3), pp.252-266.

Gordon, D. and Pantazis, C. eds., 2018. Breadline Britain in the 1990s. Routledge.

Dreyer, B., Chung, P.J., Szilagyi, P. and Wong, S., 2016. Child poverty in the United States today: introduction and executive summary. Academic Pediatrics16(3), pp.1-5.

JRF. (2018). Ideas to tackle poverty for the long term. [online] Available at: [Accessed 27 March. 2019].

Kenworthy, L. and Marx, I., 2018. In-work poverty in the United States. In Handbook on In-Work Poverty. Edward Elgar Publishing.

Lansley, S. and Mack, J., 2015. Breadline Britain: The rise of mass poverty. Oneworld Publications.

Musterd, S., Murie, A. and Kesteloot, C., 2016. Neighbourhoods of Poverty. Palgrave Macmillan.