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Letter from Burnley: the shifting sands of the cost of living crisis

With a worsening crisis affecting his community, Alex Frost reflects on the growing struggle and the impact on its people.

Alex Frost is a vicar in Burnley, Lancashire, and an advocate for the local community.

Two older men lean agains the wall of a football club's entrance, next to thin open doorways.
Burnley football club turnstiles.

Have you ever watched one of those retrospective television programmes, that takes us back to the 1980's or 1990's? They usually include clips of Wham or Oasis or Yuppies with massive mobile phones. 

 I don't know about you but the label 'The cost-of-living' is one that I suspect might take its own place in one of those shows twenty or so years from now. And I do wonder if things will be better or worse than they are presently. 

You might that hope which ever political government of the day is in power in 2044, the cost of living crisis and poverty will have significantly shifted from where they presently are. 

In my own town, Burnley in Lancashire, the shifting sands of such matters are starkly evident, and things seem to be getting worse rather than better. The evidence of a cost of living crisis has shifted matters from financial insecurity to many other areas. For example, within the cost of living crisis sits another crisis that appears to be getting more concerning as the months go by and we drop into the harshest months of the year. 

He cites places of refuge as dangerous, violent, volatile places that are not in keeping with his desire to live a quiet and normal life that befits a gentleman in his late fifties.

That crisis is one of extremely worrying mental health issues with adults and some very young children in our community. On a personal level, there is nothing more painful than taking a funeral service for a young person who has taken their own life, which happened to me in recent months. Alongside such sadnesses, there are almost daily examples of individuals, many of whom are young mothers pouring their hearts out on social media with woes of poor mental health with seemingly nowhere to turn. In my own borough the mental support provision within the NHS is at breaking point with long delays for mental health counselling and support. Thank goodness then for the voluntary sector who help me to help others on a regular basis. After the pandemic of COVID in Burnley, where a recent Joseph Rowntree Foundation poverty report suggested 38 oer cent of children in Burnley live in poverty, we are in a battle to keep our most vulnerable people mentally well and with an optimistic outlook for a brighter future. 

And then there is the matter of homelessness. Who'd have thought we'd be living in a time when people are now being evicted from a tent? And what about those who lived outside for many years - what are we to do for them? There is a chap in Burnley, who by choice is living rough behind our corporation cemetery because the accommodation offered to him would place him in a hostel where addiction and violence is commonplace. The only blessing to be taken from it is that he has found a warm spot and he is relatively safe against the winter elements that are coming our way during the winter. But the saddest thing about this gentleman is that it is a preferable option to what is offered were he to use the provision available. He cites places of refuge as dangerous, violent, volatile places that are not in keeping with his desire to live a quiet and normal life that befits a gentleman in his late fifties. 

Watching young mums literally gathering up the crumbs from our food provisions at church is a chastening and humiliating experience for them and those who serve them. 

And as the sands shift, what about our young people? In the school where I am a governor, 58 per cent of our children are on free school meals, and many come from broken homes and difficult circumstances. What encouragement can we give them to ensure their young lives are ones of opportunity, fun and learning? What can we do to ensure the struggles of the children's parents don't bring their own development to an uncertain and worrying future? Some parents in the grip of a cost-of-living crisis lose their filter on vocabulary and so every worry, concern, disappointment and crisis is shared. Shared with little boys and girls who shouldn't be constantly subjected to a world that is always churning out negative scenarios on their innocent and immature minds.  

And what about the national celebration of a food bank and community kitchens and all they do for the poor people of our parishes? Three cheers for the voluntary sector who take the strain of a failing social security system that gives food with one hand but potentially snatches self-worth with the other. Watching young mums literally gathering up the crumbs from our food provisions at church is a chastening and humiliating experience for them and those who serve them. I hate foodbanks, not because of the good they clearly do, but, because they normalise and hold up a failing social security system in our country today. 

As we approach Christmas and a new year, I wonder how the shifting sand of the cost-of-living crisis might influence, our cultural horizon? Is it idealistic, romantic or downright stupid to think we might change the great and mighty to think differently in their approach to poverty? I am keen football fan, and you might be familiar with the term 'He/She talks a good game' and after many years following Burnley Football Club I have witnessed on many occasions when Managers have talked a good game but sadly failed to deliver on the field of play. And I think that is true of the majority of our politicians of all parties. They can talk a good game but often fail to impress us because the substance doesn't match the sentences. 

I am convinced through many years of dealing with abject poverty, that people in difficulty respond better to compassion over criticism, understanding over instruction, reality over rhetoric. So many people in my context don't want to be in poverty. They would prefer not to struggle, and they would recognise they need help. The shifting sands of surviving should encourage society to prioritise people before pedestrianisations of town centres, and hope over HS2 railway lines. As the sands of our landscape continue to shift, it surely must be the priority of the church, the government, and for people to stop people from sinking in a swell of poverty and hardship. When it does that, perhaps the church can demonstrate to the society, its role and its mission still has much to offer in 2024 and beyond.  

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Economics
6 min read

How to tax ethically to avoid a two-tier society

From income tax to property and inheritance taxes, which is fairer?
a pile of coins.
Sarah Agnew on Unsplash.

Few doubt that Chancellor Rachel Reeves will be putting up taxes when she presents her first Budget on October 30th.  

The political narrative of recent months has very much been of an alleged fiscal “black hole” of £22bn - or is it £40bn? - that somehow needs to be filled. 

While the size of the shortfall and the identity of those responsible are both hotly disputed, and despite a lack of detail from the Treasury about what it actually consists of, the questions now being asked are not whether taxes will rise but which ones and by how much.  

Months of speculation have focused on employer National Insurance, capital gains tax and freezing income tax thresholds as areas that Reeves could look to for the additional revenue. 

But beyond the immediate issue of raising enough revenue to make good any shortfall, lies a deeper, trickier question about the way in which taxes should be levied for the good of society. If a government is to force people and companies to hand over their money, then what is the most ethical way to do this? Who should pay and who shouldn’t? How can tax be used to reduce inequality and build a better society? 

Answering such questions is, of course, far from straightforward, because there are plenty of other factors in play. 

For instance, some taxes are surely levied because they are simpler to collect. Take income tax - an unpopular measure introduced in 1799, then abolished before being reintroduced as a supposed temporary measure. It could certainly be argued that taxing people’s income - their attempt to get on in life and improve their lot in life - is less “fair” than taxing wealth that has been accumulated by someone’s ancestors years ago. Working hard and earning income is often surely a way of breaking down class divisions. But income tax - contributing 28 per cent of UK government tax take in 2023-24, according to The Institute for Fiscal Studies - has the advantage that it is relatively difficult for the average worker at a UK company to avoid it. Ease of levying it is surely a driver.  

Equally, some taxes that might seem “fairer” have deliberately not been levied because of the difficulty in collecting them, and/or because to try to do so could be counterproductive.  

A wealth tax, for instance, would be “economically damaging”, according to one of the UK’s highest profile tax experts Dan Neidle. 

Or take the politically contentious issue of non-doms, a colonial era tax break allowing rich foreigners to avoid UK tax on overseas income. It would be fairer, the argument goes, to tax them on the whole of their income. If they are going to be resident in the UK, then surely they should be taxed like a UK resident whose home is here? 

Former Chancellor Jeremy Hunt abolished this regime earlier this year but left a number of concessions that the incoming Labour government pledged to abolish. But non-doms are tax-sensitive and highly mobile, and a number of jurisdictions compete to attract them. Many are entrepreneurs and wealth creators that many countries need. Reports have suggested a clampdown could raise no money or even cost money and could drive people away. 

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.” 

Paul Williams

So, what can be done to use tax in an ethical way? Paul Williams, research professor of marketplace theology and leadership at Regent College, Vancouver and chief executive of the Bible Society, takes a Biblical perspective that he believes offers some solutions. 

He takes as his starting point a story from the gospel of Matthew, where Jesus is asked whether people should pay taxes to Caesar. The question is a trap - either Jesus gives his backing to taxation that is highly unpopular with the Jewish people, or he rejects the tax in an act of rebellion against the Romans. 

Jesus replies that they should “pay to the Emperor what belongs to the Emperor, and pay to God what belongs to God.” We are to pay our taxes to those in authority, but we are also to honour God. 

While Williams believes that too much emphasis is placed on the Budget and political parties’ promises to be able to fix everything, and that a more radical rethink of our economy is required, he also sees room for positive tweaks to the current system. 

One key area is the property market, the manifestation of so much inequality in society, with some people owning multiple houses while others cannot afford to buy one. 

Williams argues that the ready availability of debt finance has allowed those who already hold assets to easily acquire properties, turning real estate into an investable asset class to the detriment of many of the poorer in society. 

“The reason there’s so many homeless people and empty houses is due to debt finance. It makes it easy for a relatively small proportion of the population to acquire a large percentage of the assets. 

“The system has allowed a structure in which a small advantage in the beginning can lead to big, big differences over time.” 

Williams highlights parts of Devon and Cornwall that have been, he says, “completely ruined” by wealthy people from elsewhere buying second homes, leaving property “out of reach of anyone who lives and works there”. 

Nevertheless, he believes taxation can be used in this area to help level the playing field. 

He proposes a “pretty punitive” marginal rate of tax on ownership of more than one home. (Stamp duty only partly does the job and is a blunt instrument also affecting people moving homes, thereby makes mobility expensive). 

“You want to disincentivise the way the housing market is used for speculation,” he said. 

“Housing is being treated as a commodity. The problem is, it’s not; it’s not just an asset. It has utility value and a communal and quasi-spiritual value, enabling people to feel rooted.” 

Buy-to-lets, meanwhile, are better than having empty second or third homes, but “wouldn’t it be better if occupiers could buy that house?” he adds. 

Meanwhile, research by the Financial Times recently found a huge wealth gap between the average millennial and the top 10 per cent of millennials, who are benefiting from family wealth to accumulate substantial housing assets.  

So, would increasing the rate of inheritance tax - one of the most hated of taxes - and/or lowering the threshold also help reduce some of this inequality? After all, how is it fair that one child in the UK is born to inherit large property wealth while another is born to inherit little or nothing? Or, even worse, that second child will only ever be able to afford to be the tenant of the first, paying them rent for the rest of their lives? 

Williams is not a fan of inheritance tax per se, arguing that it is “not part of the package” in a Biblical image of a flourishing economy.  

But he adds an important caveat: “the playing field is not level. 

“There might be circumstances to impose a one-off tax on the very wealthy… if you want a transition to a more equitable society.” 

Such steps are not easy to take. It is, he admits, probably “career suicide” for a politician to adopt such views. But if we are to take steps towards a fairer way of life, and avoid a two-tier society in decades to come, then maybe the conversation needs to shift this way. Perhaps the Budget could be the time to start.