Does Blair dare to be a meritocrat?

To many on the left, it will be disappointing, but unsurprising, that income inequalities have actually widened during Labour's first term of office. To some extent, Labour can blame its own success: everybody does well during a boom, but the rich do better than most. It is also true that many of the government's policies designed to help the poor - tax credits and the minimum wage, for example - will take time to find their way into the figures. But there must be a doubt, reinforced by Tony Blair's reported insistence that Labour should pledge once more not to raise either the basic or higher rates of income tax, about the government's true intentions. Is Mr Blair just a spruced-up Tory, who has merely cast off that party's associations with stuffed shirts and fox-hunters in the interests of modernity?

Mr Blair's answer is that he favours meritocracy, or equality of opportunity, rather than equality itself. Let success be rewarded, he would argue, provided that everybody, no matter how poor their background, can achieve it. And Britain is very far from being a meritocratic society (though it is a myth that America is better). The Cabinet Office, in a new paper from its Performance and Innovation Unit (which can be read on the internet), has set out the evidence. Only 9 per cent of sons born to fathers in the lowest social class rise to the top social class. As many as 38 per cent stay in the class where they were born, and another 23 per cent rise just one rung up the social ladder. There is evidence, too, that the expansion in professional occupations that allowed many to climb up the social hierarchy in the 20th century - without any corresponding need for those more favourably born to move down - is now slowing, if not coming to an end. Moreover, it seems that education, in which new Labour has placed so much faith, may not in future - because so many people now have access to it - be the potent force for social mobility that it once was. Hidden away in the Cabinet Office paper is a rather devastating implication for the new Labour project: that it cannot proceed much further with making Britain a more meritocratic society unless it takes the risk of upsetting the established middle classes. If the children of the poor are to move up in the 21st century, the children of the rich may well have to make room and move down - an outcome all the more unlikely if wide family income inequalities give them such unequal starting points.

Will baby bonds, as announced by Tony Blair and Gordon Brown last month, make a difference? The idea is that the government creates a trust fund for every child at birth, adding further payments at intervals up to the age of 18. The money can then be used to buy property, to finance post-school education or to start a business. Thus, one of the chief obstacles to the poor bettering themselves - lack of capital - is reduced. All of which is admirable, in principle. But the sums that ministers mention are unlikely to produce much more than £2,000 for each 18-year-old. If this, as some suggest, is to be new Labour's version of Bevan's NHS or Thatcher's sale of council houses, it is as though Bevan had limited free healthcare to the treatment of flu and Thatcher had allowed tenants to buy only a minority stake in their houses. NS articles advocating baby bonds over the past two years have mentioned such sums as £10,000 or even £50,000. Certainly, the former is not unreasonable, since it is somewhat less than the costs of undergraduate degree courses that (save for a small contribution to fees) are routinely handed out annually to thousands of young people, most from middle-class homes. A proposal to combine baby bonds with charges for the full cost of university courses - with generous exemptions for poor 18-year-olds so that their trust funds remained intact - would be a real contribution to meritocracy.

If Labour is to be so cautious about a proposal like this, it is hardly likely to consider the more drastic measures needed for true meritocracy. These include a far steeper, perhaps even a 100 per cent, inheritance tax, an idea backed by some on the free-market right. But therein lies the difficulty. The neo-liberal right has no hesitation in preferring dynamism to stability. As the Cabinet Office paper points out, any significant degree of downward mobility "for dull middle-class children" could create enormous social tensions, as the privileged fought to hold on to their and their families' advantages. To imagine the scale of what might happen, remember that many of the upwardly mobile, displacing the children of the previous generation's successes, would inevitably come from the ethnic minorities.

Thus, meritocracy, so often presented as the moderate answer to egalitarianism, may in fact be the more revolutionary and dangerous doctrine. Wide inequalities demand meritocracy if they are to seem tolerable at all. But they also make any significant move towards it potentially explosive, because the penalties of falling down the social scale, of having the silver spoon snatched from your mouth, are so great. Mr Blair would save himself (or his successors, at any rate) a great deal of trouble in future if he countenanced higher income taxes now.

Evenings free again

As John Lloyd reports on page 11, London's May Day demonstration was little more than spectacle, a show put on for the media, with no programme, no route, no speeches, not even many leaflets. For television, it was the ideal protest, providing drama without issues. No need for mind-bending graphs or for extended analysis by political or economics correspondents. "Fuck capitalism", the perfect soundbite, said it all. Yet we should not mock. Simply by feeding the media with preposterous stories - which only just stopped short of reports that anarchists had hired spacecraft to bring in alien lizards to take over the Tube - the organisers struck a far greater blow against capitalism than any number of broken windows would have done. Much of the capital, in fear of disorder, shut down for the day, at an estimated cost of £20m. This was a high return for minimal planning. We are in the age of virtual protest; socialism (if that is what it is) need no longer interfere with one's evenings.

This article first appeared in John Prescott: sinking fast