One of the last Labour Government’s real successes was to preside over an increase in life expectancy. In addition, the gap in life expectancy between the rich and poor decreased. Fast forward nearly 8 years, to March 2018 the Office for National Statistics published data showing that under Tory austerity the gap in life expectancy had widened. For women, the gap is the largest since the 1920s.
There is overwhelming evidence that these inequalities are not inevitable. They are socially reproduced. They can be changed. And that should give us all hope. But it needs political will to tackle them, not the soundbites of this Government.
In 2015, the International Monetary Fund stated that ‘widening income inequalities is the most defining challenge of our time’. Forty years ago, 5% of income in the UK went to the highest 1% of earners. Today it is 15%. According to the latest Sunday Times Rich List, the richest 1000 people in our society saw their wealth increase by 16% in the last year alone. This trend of increasing income inequalities has occurred in most high income countries, but some less than others.
Like Nobel economist Joseph Stiglitz’s, the IMF’s analysis showed that inequalities are a drag on growth and can also make growth more volatile. It showed that raising the income share of the poorest 20% of the population increases growth by as much as 0.38% over five years. In contrast, increasing the income share of the richest 20% by 1% decreases it by 0.08%.
The Organisation of Economic Co-operation and Development has also rejected ‘trickle down’ economics, so popular with Margaret Thatcher and her supporters, as the means of spreading income from the rich to the poor.
In spite of promises to tackle these ‘burning injustices’, according to the Equality Trust, Britain’s top bosses are paid, on average, 165 times more than a nurse, 140 times more than a teacher and 312 times more than a care worker. Indeed it would take a typical UK worker 160 years to rake in the average annual amount handed to a FTSE 100 boss.
The recent Equalities and Human Rights Commission report has revealed that the poorest tenth of households will on average lose about 10% of their income by 2022 – equivalent to £1 in every £8 of net income. This reflects other distributional analyses for example from the Institute of Fiscal Studies.
Reducing the gap between rich and poor is not just good for the economy. As evidence from The Spirit Level shows, life expectancy increases, as well as educational attainment, social mobility, trust and more. Fairer more equal societies benefit everyone.
In acknowledging the income inequalities that exist in the UK and the harm that this is doing to society as a whole, the question is what drives them and how to tackle them.
As Labour committed to in last year’s manifesto, we need changes to economic policy to address the unfair tax burden and poverty pay. But we also need to radically transform our social security system so that, for example, 8 million people currently in low paid jobs are not left living in poverty while they wait for pay improvements, and neither are their children. And if you become sick or disabled you should not be twice as likely to live in poverty as non-disabled people, as 4 million disabled people are now. Similarly, the state pension age for men and women shouldn’t be quietly pushed back, leaving increasingly frail, elderly people unable to work, subjecting them to live in poverty.
The 1942 Beveridge Report was the basis for a new welfare state set up after the Second World War, including the establishment of the NHS in 1948 and the expansion of social security. It was heralded as a revolutionary system that would provide ‘income security’ for its citizens ‘as part of a comprehensive policy of social progress’.
Since 2010, we have seen social security spending cut by nearly £34bn, with another £12bn planned by 2022. Spending on the NHS is barely keeping pace with inflation, and is falling behind countries like Germany, France, the Netherlands, Denmark and Austria.
We need a new Beveridge report for the 21st Century, defining a new social contract with the British people, addressing the poverty, inequalities and indignity millions of people, young and old, are enduring; bringing hope to a new generation as it did 70 years ago.
Of course these reforms need to be coupled with reforms to the current dysfunctional and increasingly precarious labour market as part of a coherent and comprehensive industrial strategy. Labour’s plans for a national education service that is not just about preparing you for work but is enabling you to get the most out of life, are also essential to tackle the structural issues that drive these income inequalities.
In addition to inequalities in income, inequalities in wealth, with land and property being the largest real asset, also need addressing. In 2002 it was estimated that 69% of the land in the UK was owned by 0.6% of the population. In the six years to 2011 the number of landholdings reduced by 10% but the size of these holdings had increased by 12%. So even fewer people own even more land.
Many in housing policy emphasise that if we’re to solve the housing crisis in addition to building more homes, we need to tackle the cost and availability of land and address the volatility in the market. With average house prices in the UK in 2017 at over £226,000 (over £496,000 in London), the Nationwide Building Society has estimated that it would take 8 to 10 years for people on average incomes to save the 20% deposit needed to buy a house and even longer for someone on a low income. Which means wealth inequalities are increasing even more.
And finally there’s inequalities in power. This is often the neglected inequality but is central to who we are as human beings. Power is complex. It is about having influence, control, even authority. We usually think of this as associated with having money or ‘corporate power’. But it is also about position and status. In who makes decisions and how. Whether corporate or other unaccountable, ruling elites, the dangers are clear. Elites exclude and marginalise, enabling prejudice and discrimination to thrive, and trust in others, in difference to suffer as a consequence.
Inequalities are not inevitable but to tackle them in all their forms takes commitment, it takes courage and it takes leadership.