It is a commonplace of political commentary these days that there is little difference any more between what the parties believe in. Few Conservatives advocate unadulterated capitalism, red in tooth and claw, and there aren’t many members of the Labour Party who still talk about socialism. Among those who do, even fewer define it in the old terms of state ownership of the means of production and exchange. We’re all supposed to be social democrats of one sort or another now.
Yet there still is a difference. If you asked members of the Labour Party what it was that drove their politics and provided common ground of belief with other members of their party, many would say it was a commitment to equality. Few Liberal Democrats and almost no Tories would say that, although some Conservatives would say they believed in equality of opportunity and all LibDems would say they were in politics to create a fairer society.
For all parties, however, the publication this week of a government-commissioned report into the state of inequality in Britain is an important event because, whatever one’s beliefs about equality, the state of equality in the country (or its absence) has effects that none of us can avoid.
The report, ‘An Anatomy of Economic Inequality in the UK’, will provide most uncomfortable reading for the egalitarian Labour Party. That’s because the report reveals that after nearly thirteen years of Labour government things have improved nothing like as much as the party hoped it would have done by now. Indeed in some respects we are now a more unequal society than we were when Labour came to power.
The most shocking increase in inequality is in relation to people’s wealth, that’s to say the resources they own, including such things as savings, houses they own and pension pots they have accumulated. The richest ten per cent of the population is on average about a hundred times as wealthy as the poorest 10%. On average the top ten per cent has wealth worth £853,000 while the bottom ten percent has just £8,800. 2.4% of the population has no wealth at all, just debt. The top 1% has average wealth of £2.6m.
The gap is not so great in relation to people’s incomes – that’s to say, what people earn every year as distinct from the wealth they have accumulated. Here, on some measures, inequalities have narrowed or stabilised over the last ten years. But on other measures income inequality is greater now than at any time since the Second World War.
Even if you take out of the mega-earners – the bankers and footballers, for example – those at around the 90% per cent mark in income distribution earn four times what those at the ten per cent mark earn: thirty years ago the difference was only three times. The report says: “Over the most recent decade, earnings inequality has narrowed a little and income inequality has stabilised on some measures, but the large inequality growth of the 1980s has not been reversed.”
Britain has a poor record of income equality compared with other industrialised countries. Child poverty, despite the government’s target of abolishing it by 2020, is no longer falling, with 13% of children living in severe poverty, according to Save the Children. And the government’s aim, stated back in 2001, of leaving no one, in ten or twenty years time, seriously disadvantaged by where they lived, is as far off being achieved as ever.
Neither of the main parties, then, can be happy with the record on equality. Labour has failed on many measures to make the country less unequal and the increased inequality is in part caused by policies the Tories pursued in the 1980s.
But does economic inequality matter? Those who say it doesn’t argue that what really matters are not measures of relative wealth or income but absolute measures. Britain has become an unimaginably richer country in the last thirty or forty years and there are very few people who have not joined in the rising standards of living. Furthermore, they argue, growing inequality is a sign of a dynamic economy. In other words, if we weren’t becoming more unequal we wouldn’t be becoming richer and it is better that we should all become richer even if it means some become much richer than others.
Those who say growing inequality does matter see things very differently. In the first place, many find it simply morally repugnant to live in a society in which the gap between rich and poor is widening and in which the very rich can fritter away money on unnecessary luxuries while very poor people go without what many of us would regard as essentials. They argue too that growing inequality fosters envy and is demoralising for the poor.
But their case against inequality goes beyond such sentiments. They argue that inequality entrenches disadvantage, that it makes the attainment of equality of opportunity (never mind equality per se) impossible. In this the report seems to confirm their view. It says that inequality acts as a barrier to social mobility.
The authors of the report write: “It matters more in Britain who your parents are than in many other countries. … Your origins and your parents’ income provide a series of nudges that tend to push people in a particular direction, from your chances of being read to as a child, whether your parents can buy a house in the catchment area of a good school, educate you privately, pay for a second degree, provide help with a deposit to buy a house, or leave an inheritance.” The effects on a child of a different background are felt by the age of three and are liable to become engrained.
An influential book published last year, ‘The Spirit Level’, compared different countries according to measures of inequality and concluded that that single measure accounted for the different incidence of a whole range of social problems in those countries.
But if inequality does matter, what can be done about it? Some would say that the problems are intractable. If a Labour government, believing in greater equality and presiding for most of its time in office over a healthily growing economy and significant rises in public spending, cannot reverse the trend of increasing inequality, then who can, they say. Is it something we are going to have to live with? And if so, what are the effects likely to be?
What’s your view? Do you think growing inequality matters or not? Does it surprise you that income equality has not improved and that wealth inequality is increasing? If you do think it matters, what do you think can be done about? Do you think Labour has seriously tried to reduce inequality and, if so, why do you think the results have been so poor? If you think they haven’t tried seriously, what do you think they ought to do? What do you think the Tories would do about inequality? And do you think Britain will be a more equal or less equal society in ten years time?
