The UK has a very high level of income inequality compared to other developed countries.
Households in the bottom 10% of the population have on average a disposable (or net) income of £9,644 (this includes wages and cash benefits, and is after direct taxes like income tax and council tax, but not indirect taxes like VAT). The top 10% have net incomes almost nine times that (£83,875). As can be seen from the graph, income inequality is much starker at the top of the income scale, with the group with the 9th highest incomes making only 61% of the top 10%’s income.
Inequality is much higher amongst original incomes than disposable incomes with the poorest 10% having on average an original income of £4,436 whilst the top 10% have an original income 24 times larger (£107,937)1.
UK Income Inequality The UK has a very high level of income inequality compared to other developed countries. Households in the bottom 10% of the population have on average a disposable (or net) income of £9,644 (this includes wages and cash benefits, and is after direct taxes like income tax and council tax, but not indirect taxes like VAT). The top 10% have net incomes almost nine times that (£83,875). As can be seen from the graph, income inequality is much starker at the top of the income scale, with the group with the 9th highest incomes making only 61% of the top 10%’s income. Inequality is much higher amongst original incomes than disposable incomes with the poorest 10% having on average an original income of £4,436 whilst the top 10% have an original income 24 times larger (£107,937)1.
In France it could soon be illegal to discriminate against people in poverty. Under proposed legislation – already approved by the senate and likely to be passed by the chamber of deputies – it would be an offence in France to “insult the poor” or to refuse them jobs, healthcare or housing.
Similar laws banning discrimination on the grounds of social and economic origin already exist in Belgium and Bolivia, but the French version is said to be the most far-reaching. Anyone found guilty of discrimination against those suffering from “vulnerability resulting from an apparent or known economic situation” would face a maximum sentence of three years in prison and a fine of €45,000 (£32,000).
It is easy to judge the proposed French law as showing the worst excesses of the state, or to bemoan the practicalities of how difficult it could be to implement. But most of us are content to outlaw discrimination on the grounds of race, religion, or sex. Is it so ridiculous to add poverty to that list? And if it does feel ridiculous, why is that?
Whether it’s the discrimination of people in poverty or how government should respond to it, this is not a problem just for other countries. “People think that because we are poor, we must be stupid,” Oréane Chapelle, an unemployed 31-year-old from Nancy, eastern France, told Le Nouvel Observateur. Micheline Adobati, 58, her neighbour, who is a single mother with no job and five children, said: “I can’t stand social workers who tell me that they’re going to teach me how to have a weekly budget.” One study reported by The Times found that 9% of GPs, 32% of dentists and 33% of opticians in Paris refused to treat benefit claimants who lacked private medical insurance. Doctors say they are “reluctant to take on such patients for fear that they will not get paid”.
Does any of this sound familiar? These are attitudes – and even outright discrimination – that have been growing in Britain for some time. You can hear it in stories about local authorities monitoring how much people drink or smoke before awarding emergency housing payments. Or when politicians respond to a national food bank crisis by saying the poor are going hungry because they don’t know how to cook. It is there in the fact that it’s now all too common for landlords to refuse to rent flats to people on benefits. Britain is front and centre of its own discrimination of the poor – whether that’s low-income workers, benefit claimants, or the recurring myth that these are two separate species.
Economic inequality cannot survive without cultural prejudice. The media and political rhetoric surrounding the new round of cuts – from the benefit cap to child tax credits – shows this well enough. Benefit claimants “slouch” on handouts as hardworking taxpayers toil away to pay for them. Families on benefits should reproduce – or “breed” – as little as possible. Benefit sanctions – a system in such dire straits that Iain Duncan Smith’s own advisers have warned that it needs to be reviewed – are based on the very premise that the feckless poor need an incentive to get themselves out of poverty.
It is reflective of the success of the demonisation of people on low incomes or benefits that discrimination against these people could be seen as less damning than when it happens to other groups. Equally, to believe that “the poor” do not deserve protection from such prejudice buys into the myth favoured by our own government: poverty is a personal choice that the individual deserves to be punished for.
Last week, the Office for National Statistics (ONS) released figures showing that, between 2010 and 2013, a third of the UK population experienced income poverty. During this four-year period, 19.3 million people had a disposable income of below 60% of the national median at some point. These figures illustrate how millions of people are treading water, struggling to keep afloat and afford the very basics. Crisis loans and food banks are real.
In the wake of the election of a Tory majority government, it almost feels like the thing to do is to stop banging the same drum, to stop highlighting these issues. Yet here we are. Turning our heads away from people’s current experience of poverty – and what lies ahead – just isn’t an option.
As a senior teacher and a writer for this publication, my income is such that I can afford life’s luxuries. I own my own home and car. I can afford meals out and holidays that take me further than Europe’s shores. I don’t have to face the daily humiliation of wondering if I have sent my children out into the world in clothing that reveals reduced circumstances, and with not much in their bellies. Note the agency in these sentences; I am one of the privileged few. Yet the woman I am today wouldn’t exist without the welfare state.
It’s become almost passe to write that the Tories are dismantling our society’s safety net and pushing millions further into poverty. And although, for some, this is keenly felt as an awful new normal, it remains abstract for others – a reality several steps removed. Not so for me. I grew up knowing what it is to feel stomach cramps as a result of hunger; to have a packed lunch for school that was simply bread and butter; to be so ashamed of my ill-fitting clothes that I avoided going out altogether.
As a young adult I have been homeless and only saved from experiencing life on the streets by women’s refuges. I have moved from jobseeker’s allowance to wages so low that living was only made possible through housing benefit and working tax credit. I have accessed legal aid and had a small insight into how the law can work for even the most vulnerable. And I could undertake my bachelor’s degree because, as a poor independent student, I didn’t have to pay more than £1,000 in tuition fees.
I am the product of a compassionate state, one that believes in the potential of all its citizens. For that I am supremely grateful and lucky. Yet even writing this seems brazen, as though admitting a failure on my part. Poverty is good at shaming you into silence.
A surfeit of humiliation and guilt attaches itself to poverty. How dare I have used the state to realise a better life for myself and the children I would later go on to have? But if the state isn’t concerned with the uplift of those on the lowest rungs of society, how does it view them? Are they simply the fodder needed to realise the 1%’s wealth accumulation?
In my mid-30s, I am no longer reliant on the welfare state – and haven’t been for some time. The truth is that for the majority of those who claim benefits, it’s a short-term measure, tiding them over in their time of need. Now I am comfortably middle-class, even with all the talk of the “squeezed middle”, I am buffered from the worst the government has in store. Yet it all feels like one unfortunate calamity away, its proximity unnervingly near, made real by the daily struggles of younger family members who are trying to recover from childhoods in care, who have few or no qualifications and work on zero-hour contracts. When Iain Duncan Smith talks of “neighbourhoods blighted by worklessness” he fails to mention the poverty of opportunity in such areas, which his government’s policies will further entrench.
No one needs to remind me of the absolute necessity of our welfare state and so I happily pay into it. My wider family in Nigeria – a country where benefits are non-existent and pretty much everything has been privatised – live in the type of poverty that takes seeing to believe. And despite knowing first-hand the difference between absolute and relative poverty, I don’t believe the existence of the former cancels out the debilitating reality of the latter. Poverty in Nigeria or the UK isn’t a choice. Framing it as such is a heartless red herring, waved about to make us believe that only when people are without clothes, food or shelter should we bother to give them a passing glance.
Now more than ever, we need a chorus of voices mobilised against the draconian treatment of society’s most vulnerable. We need the millions who have at one time or other in their life accessed the welfare state to believe that they aren’t failures for doing or having done so. We need to continue the argument, which says it is decent, good and right that the state steps in when all else fails. Because to continue down the path the Tories have so gleefully outlined means society will only become more divided and unstable.
Increasingly we aren’t framing poverty as the result of political forces: the privatisation of state assets such as energy and transport; the weakening of unions; the steady erasure of the welfare state. Instead, we internalise all the guff telling us that poverty is the inevitable result of an individual’s moral decrepitude. Though the wealthy have always spun being poor as a willing choice of the selfish, dumb and lazy, now, more than ever, society seems to be buying this message.
With all Labour’s chatter about failing to recognise the value of aspiration – as if only those who want to pay less tax have it – the party is running scared and away from the most vulnerable. It is an unsightly manoeuvre, one that comes off as grasping and shortsighted. It is important that they do not become complicit in a lie that claims the poor can be shamed and punished out of poverty.
My parents didn’t receive benefits when living in England, yet our poverty was no less degrading as a result; it is not more dignified to offer oneself as cheap, easily exploitable labour. The Tories must not win an argument that is immoral to its core: that accessing the welfare state is a sign of individual failure.
The campaign is nearly over and it is time to choose. We believe Britain needs a new direction. At home, the economic recovery is only fragile, while social cohesion is threatened by the unequal impact of the financial crisis and the continuing attempt to shrink the postwar state. Abroad, Britain remains traumatised by its wars, and, like our neighbours, is spooked by Vladimir Putin, the rise of jihadist terrorism and by mounting migratory pressures. In parts of Britain, nationalist and religious identities are threatening older solidarities, while privacy and freedom sometimes feel under siege, even as we mark 800 years since Magna Carta. More people in Britain are leading longer, healthier and more satisfying lives than ever before – yet too many of those lives feel stressed in ways to which politics struggles to respond, much less to shape.
This is the context in which we must judge the record of the outgoing coalition and the choices on offer to voters on 7 May. Five years ago, Labour was exhausted and conflicted, amid disenchantment over war, recession and Gordon Brown’s leadership. The country was ready for a change, one we hoped would see a greatly strengthened Liberal Democrat presence in parliament combine with the core Labour tradition to reform politics after the expenses scandal. That did not happen. Instead the Conservatives and the Liberal Democrats have governed together for five difficult years.
David Cameron has been an increasingly weak prime minister. On issues such as Europe, the integrity of the United Kingdom, climate change, human rights and the spread of the low-wage economy, he has been content to lead the Tories back towards their nastiest and most Thatcherite comfort zones. All this is particularly disappointing after the promise of change that Mr Cameron once embodied.
The union at risk
The Conservative campaign has redoubled all this. Economically, the party offers more of the same, prioritising public-sector austerity which will worsen life for the most needy – imposing £12bn of largely unspecified welfare cuts – while doing little to ensure the rich and comfortable pay a fair share. Internationally, the party is set on a referendum over Europe which many of its activists hope will end in UK withdrawal. It’s also set on an isolationist abandonment of British commitment to international human rights conventions and norms, outcomes which this newspaper – unlike most others – will always do all in its power to oppose. At the same time, the Tories go out of their way to alienate Scotland and put the UK at risk. The two are related: if a 2017 referendum did result in a British exit from the EU, it could trigger a fresh and powerful demand for a Scottish exit from the UK. The Conservative campaign has been one of the tawdriest in decades.
The overriding priority on 7 May is therefore, first, to stop the Conservatives from returning to government and, second, to put a viable alternative in their place. For many decades, this newspaper’s guiding star has been the formulation offered by John Maynard Keynes in a speech in Manchester in 1926: “The political problem of mankind is to combine three things: economic efficiency, social justice and individual liberty.” The task on 7 May is to elect the parliament and government that will come closest to passing Keynes’s triple test.
Some despair of the whole system, believing a model created for two-party politics is now exhausted, failing to give adequate expression to the diverse society we have become. We are hardly newcomers to that view: we have demanded electoral reform for a century and believe that demand will find new vigour on 8 May. But for now, this is the voting system we’ve got. How should we use it?
To the charge that they enabled a government whose record we reject, the Liberal Democrats would plead that they made a difference, mitigating and blocking on issues such as Europe, the environment, child benefit and human rights, without which things would have been worse. That adds weight to the view that the next Commons would be enhanced by the presence of Lib Dem MPs to insist on the political reform and civil liberties agendas – as they did, almost alone, over Edward Snowden’s revelations. Similarly, it would be good to hear Green voices in Westminster to press further on climate change and sustainability. Where the real constituency choice is between these parties and the Conservatives, as it is between the Lib Dems and the Tories in the south-west, we support a vote for them. But they are not the answer.
In Scotland, politics is going through a cultural revolution. The energy and engagement on show are formidable – and welcome. The level of registration is an example to the rest of Britain. If the polls are right, and the SNP is returned as Scotland’s majority party, we must respect that choice – and would expect all parties that believe in the union, and the equal legitimacy of all its citizens, to do the same. We do that even as we maintain our view that, whatever myriad problems the peoples of these islands face, the solution is not nationalism. Breaking apart is not the answer: not in Europe and not in the UK. We still believe that the union rests on something precious – the social and economic solidarity of four distinct nations – and that is to be nurtured and strengthened, not turned against itself.
A sense of what is just
Which brings us to Labour. There have been times when a Labour vote has been, at best, a pragmatic choice – something to be undertaken without enthusiasm. This is not such a time. Of course there are misgivings. The party has some bad instincts – on civil liberties, penal policy and on Trident, about which it is too inflexible. Questions linger over Ed Miliband’s leadership, and whether he has that elusive quality that inspires others to follow.
But Mr Miliband has grown in this campaign. He may not have stardust or TV-ready charisma, but those are qualities that can be overvalued. He has resilience and, above all, a strong sense of what is just. Mr Miliband understood early one of the central questions of the age: inequality. While most Tories shrug at that yawning gap between rich and poor, Labour will at least strive to slow and even reverse the three-decade march towards an obscenely unequal society. It is Labour that speaks with more urgency than its rivals on social justice, standing up to predatory capitalism, on investment for growth, on reforming and strengthening the public realm, Britain’s place in Europe and international development – and which has a record in government that it can be more proud of than it sometimes lets on.
In each area, Labour could go further and be bolder. But the contrast between them and the Conservatives is sharp. While Labour would repeal the bedroom tax, the Tories are set on those £12bn of cuts to social security, cuts that will have a concrete and painful impact on real lives. Even if they don’t affect you, they will affect your disabled neighbour, reliant on a vital service that suddenly gets slashed, or the woman down the street, already working an exhausting double shift and still not able to feed her children without the help of benefits that are about to be squeezed yet further. For those people, and for many others, a Labour government can make a very big difference.
This newspaper has never been a cheerleader for the Labour party. We are not now. But our view is clear. Labour provides the best hope for starting to tackle the turbulent issues facing us. On 7 May, as this country makes a profound decision about its future, we hope Britain turns to Labour.
“There is no alternative.” It is the slogan, battle cry and sneer of our era. It is ever present in this general election, like a police sentinel guarding a sacred political consensus, batoning anyone who deviates from received wisdom. The fortunes of Britain’s richest 1,000 can double in a period of economic trauma while hundreds of thousands depend on charities to meet that most basic human need, food. A proposed mansion tax levied on a tiny fraction of the population is met with accusations of cruelty while predominantly poor disabled Britons are compelled to shell out money they don’t have because they are deemed to have a spare bedroom, all in order to balance the nation’s books. More than 400 people can be paid over £1m at one business alone, Barclays Bank, when the whole country of Japan has fewer than 300 executives paid that amount. Why? Because there is no alternative: either policies are pursued that guarantee the concentration of wealth and power in the bank accounts of a tiny elite, or the rich will flee and the economy will collapse.
Britain’s booming elite is soaked with triumphalism. It believes its traditional enemies – principally a trade union movement and political left with a coherent ideology and mass following – have been seen off. This elite is flattered, comforted and protected by an ideology that equates the perpetual enrichment of the wealthy with the wellbeing of the nation, promoted by a media owned by its own kind, an academy largely emptied of intellectual dissidents, and a network of thinktanks kept afloat by corporate and well-to-do private individuals. Any puncture, however small, to this suffocating triumphalism is welcome: to those of us who reject the status quo, it is like coming up for air.
Professor Anthony Atkinson is a pioneer of the study of the economics of poverty and inequality. His latest work, Inequality: What can be done?, is an uncomfortable affront to our reigning triumphalists. His premise is straightforward: inequality is not unavoidable, a fact of life like the weather, but the product of conscious human behaviour. The explosion of inequality as a result of intentional policy decisions has been rather spectacular. Take the US, which became steadily more equal from the end of the second world war to the late 1970s. By 2012, the top 1% had more than doubled the share of national income they enjoyed in 1979, and now receive a fifth of gross US income.
In our own country, the share of gross income belonging to the richest 1% after the first world war was 19%; it had fallen to 6% by 1979, and has since more than doubled. Inequality actually rose twice as much in Thatcher’s Britain as it did in the US, albeit from a significantly lower base.
Atkinson identifies the usual culprits: globalisation, in which the wealthy can easily pick and choose nations most favourable to their bank balances; rapid technological change, which has stripped away middle-income secure jobs; the explosion of a rapacious financial sector; a shift in attitude to high pay; the hobbling of trade unions, once a formidable counterweight to wealth being sucked to the top; and the erosion of redistribution based on progressive taxation.
It doesn’t have to be like this. Take the explosion in technology. In Britain, we’ve seen the rise of an “hourglass economy”, with professional middle-class jobs at the top (often reserved for the pampered through unpaid internships and expensive post-graduate qualifications) and insecure, low-paid service-sector jobs at the bottom. Many middle-income skilled jobs have been lost, often on the basis that machines can perform such labour more cheaply and efficiently. A recent study suggested that 10m jobs, or a third of all those in Britain, could be wiped out because of new technology and computers.
But Atkinson refutes the idea that technological change is “determined by the gods”: it is the result of decisions taken by scientists, investors, governments, consumers and others. Much of research and development happens in the public sector, as the economist Mariana Mazzucato has underlined in her book The Entrepreneurial State. If you’re reading this column on an iPhone, thank the state for its touchscreen technology, GPS and Siri. So why doesn’t the state take more of an active role in directing technological change so it benefits all? Look at Germany, which rather than opting for a hands-off approach promoted renewable energy industries, both confronting the climate change crisis and avoiding the rotting away of decent jobs seen in this country.
Some of Atkinson’s proposals are heresy in an era like our own. He suggests raising the top rate of tax to 65% – casting a cynical eye over studies that claim this is counterproductive when it comes to revenues – and calls wisely for proper crackdowns on tax avoidance. Partly it comes down to fairness for the professor: the government’s universal credit scheme aims to cut the marginal tax rate on the poor to 65%. If that’s good enough for those scraping by, why not for those richer than ever before?
In other European countries, it is taken as read that trade unions have a role in drafting social security legislation – why not here too? Another radical but attractive proposal is to grant all citizens an inheritance payment on reaching adulthood, funded by a 2% tax on personal wealth. With the return to precarious employment, the state could guarantee work, with a minimum wage that actually meets people’s living costs. A maximum pay ratio in businesses would stop shamelessly self-interested CEOs paying limitless salaries and bonuses while their cleaners languish on poverty wages.
These are the sort of proposals that are banished from the media-defined mainstream of the election debate. The parameters of acceptable political conversation are, after all, heavily policed: even a modest challenge to continually stuffing the mouths of the richest with gold is ignored, ridiculed or demonised.
We need a whole new way of thinking. The nation’s wealth is not the product of the genius of a few canny entrepreneurs. It is a collective endeavour, the product of the labour of millions and the support of the state. The hospital cleaner, the road-builder, the teacher training up both workers and the entrepreneurs of the future: all help generate wealth. The state builds and maintains the infrastructure, funds the research, educates the nation, protects property and tops up low wages. So much of our collectively produced wealth should not be locked away in a few bank accounts. The triumphalists will tell us that there is no other way. They are wrong, and it’s about time we called their bluff.
I think we have been desensitised as a nation or is it perhaps just good old fashioned brain washing? Whilst we continue to demonise people for what is often essentially bad luck like illness infirmity, sudden redundancy’s that leave people long term unemployed.
Why also is there so much stress on work above everything else? We work to live rather than live to work unless we are lucky enough to have a vocation of course. The fallacy that can all work our way out of any hardships is simply not the case. the universe doesn’t do equal opportunities, but we as human beings can control some aspects and even things up.
It was the raw early days of the coalition, and one of David Cameron’s lieutenants was giving a frank answer to my blunt question: what would it take for the government to pull back on its planned cuts? You didn’t need a Mensa membership to see that this topic would define the next five years.
On that sunny autumn afternoon, the newspapers were full of students besieging Conservative central office, but Cameron’s aide coolly judged that they’d blown it by picking the wrong target. Had they swarmed on Lib Dem HQ “that would really have put Clegg under pressure”. So what would change Tory minds? “The crunch will come when the Mail puts on its front page pictures of some Iraq war veteran in a wheelchair who’s lost his disability benefits.”
What my contact foresaw back in 2010 was that if this political link were ever broken, and money seen to be taken from the plainly deserving, the central plank of austerity would snap in two. However, that Mail front page has never appeared, and yesterday Cameron was able to warn of Labour “chaos … higher taxes for every working family to pay for more welfare”. Even so, the Law of Welfare Cuts has just taken two shattering blows.
The first was delivered by the Conservatives themselves, in the form of a leaked paper discussing options to make more benefit cuts. Commissioned by the Tories, written up by senior civil servants and already under discussion by ministers, the proposals include taking allowances from about 40% of carers for the sick; the scrapping of government compensation for those who’ve suffered industrial injuries; and the taxing of disability benefits.
The Conservatives have tried to stamp all over this story, and with excellent reason. Where’s the justice in taking cash off someone who’s mangled an arm on a construction site, or who’s had to cut back on work to look after a sick child? These savings manifestly break the coalition law of welfare cuts: that they must be seen to be fair.
And they don’t even save that much money. As with so many “reforms” since 2010, these reductions would turn people’s lives upside down, plunge some into debt and tear families apart – and in some cases raise little more than loose change. It may be that we have passed the high tide of public support for cuts in social security – and it would be for exactly the reason predicted by that Conservative aide in 2010. The Tories have set a goal of cutting another £12bn a year from welfare by April 2017. This target is so stupidly implausible that it will force any future government led by Cameron into ever more manifestly unjust benefit cuts. That fictional divide between deserving and undeserving poor may be on the verge of collapse.
In my years writing on this subject, I have read scores of reports and books on welfare reform – but I’ve never seen anything like this. Here are hundreds of people, all living at the sharp end of austerity. Every interviewee is a social-housing tenant of working age, which makes them the number one target of this government. Last September Iain Duncan Smith, in an interview with the Express headlined “We are breaking up Shameless housing estates”, boasted: “We’re making real progress into that stubborn part of the out-of-work group who are in housing estates …” The work and pensions secretary was talking about exactly the LSE interviewees – and this report allows them the right of reply: the LSE authors let their subjects do the talking.
The first thing to come screaming out of the report is how many of the interviewees didn’t plan to be out of work. They’ve got a disability, or they were caring for children or a sick parent, or they were just laid off. You meet Mrs Spencer, who spent seven years out of the jobs market to nurse her daughter through cancer. The daughter died two months ago and the last of their savings went on her funeral. Now her husband has been made redundant after 27 years of work. He’s 59 and has only one eye.
Well over half the respondents claim to be coping. This sounds like good news – until you discover what they mean by that. Getting by means falling behind on rent or into debt; managing means eating less or going without heat. “I’ve got a dog and I’ve got to make sure he’s OK,” one says cheerfully. “If need be I’ll eat his biscuits.”
Re-read that sentence, remembering that you and he live in one of the richest societies on the planet.
How has the government helped? The bedroom tax “is a tax on my disability”, according to one interviewee who used his second bedroom to take oxygen. Respondents hate the jobcentre, which just holds up ever higher hoops to jump through – or else it sanctions them. Another interviewee tells of how his sanction meant that he lost his home, and now sleeps on a sister’s couch.
These people represent a society that has been cut adrift by politicians of all parties: a society that will go unaddressed by the election campaign, and uncourted by any major party. And yet these people talk just like you and me; they just have worse stories to tell.
In that same Express interview, Duncan Smith claimed that he had moved the Shameless estate-dwellers from a “dependency culture” to independence. Here is a different version of events from one of the LSE interviewees: “My best friend committed suicide in March – she went through … relentless reassessments, and found the forms very confusing. She was disabled but they were questioning her over and over again. DWP hounded her for information. It’s a horrible feeling, knowing that your friend was pushed over the edge like that. I’m pretty certain that if these welfare reform changes weren’t going on, I’d still have her with me.”