Britain: our divided nation

The income gap between rich and poor goes on getting bigger, yet we seem remarkably unconcerned

Income inequality is at a historic high in Britain, but according to new research from the Joseph Rowntree Foundation, the public is becoming pessimistic about the possibility of changing this. In a report last month on British attitudes to inequality, the social policy research charity found that although a large and enduring majority of people think the income gap between rich and poor is too large, there is little understanding about the extent of inequality in Britain and a poor grasp of how wide the gap has become in recent years.

People still express concern about unequal distribution of wealth, but are clear that they don't want to pay higher taxes. Many consider today's income inequalities unfair but equally they firmly believe that people get what they deserve. Most significantly, among complex and, the report's authors admit, contradictory results, they found a strong pessimism that poverty would fall within the next ten years.

The extent to which inequality has increased has been well documented in recent years. An Institute for Public Policy Research report in May showed that the proportion of wealth held by Britain's richest 10 per cent rose from 47 per cent in the 1990s to 54 per cent in 2004. And another report, from the Rowntree Foundation in July, noted that over the past 15 years, more households had fallen below the poverty line. In 2001, one in four households was classed as "breadline poor".

But though a large majority of Britons still find the growing income gap unacceptable, we appear less certain now than before Labour came to power in 1997. Back in 1993, 87 per cent agreed that the income gap was too large. In 2004, only 73 per cent found the (even greater) gap unacceptable.

More worrying for policymakers who believe in increasing equality as a social goal is that the public appears confused and ignorant about the extent of the problem. The Rowntree Foundation describes the general knowledge of actual distribution of wealth as "limited".

"The gap between high- and low-paid occupations is far greater than people think it should be, or would consider appropriate," the authors write. For example, asked what they think a chairman of a large national corporation earns, most would say about £125,000. A more appropriate salary, they believe, would be about £75,000. In fact, at the time of the research (2004), the real average salary of a chairman of large national corporation was £555,000. Similarly, those questioned thought an Appeal Court judge would be overpaid at £80,000 and should earn £50,000; the actual salary then was £139,900. Despite the old Tory gibe of "the politics of envy", the public tends to estimate the pay gap rather benignly. The Rowntree Foundation's respondents believed that the income of a company chairman was 12.5 times higher than that of an unskilled worker. In fact, it was more than 40 times higher.

Nor does the public hold particularly trenchant or united views on how to deal with huge pay discrepancies. Support for wealth redistribution increased between 1985 and 1995 - two years before Labour came to power - but then declined substantially from 44 per cent in 1996 to 32 per cent in 2004.

Karen Rowlingson, professor of social policy at the Uni versity of Birmingham and co-author of the Rowntree Foundation report, told the New Statesman that this may be connected to values in the UK. "These are a bit of a mix between Europe and America. [Britons] think that if you work hard you can make it, and therefore if you don't succeed it is because you haven't worked hard enough."

The report points out that even those who agree the income gap is too large may not believe that governments should intervene to force a redistribution of wealth. Younger people are the most hostile to redistribution, Rowlingson finds: "Scepticism of young people towards inequality in general and redistribution in particular is quite worrying."

She elaborates: "Taking from the rich and giving to the poor is not something that most people in the UK want. They are more willing to invest in services, like education and health."

Why this lack of support for redistribution? Certainly, the "r" word was banned from Labour vocabulary for some time, even if the reality was that, as chancellor, Gordon Brown practised redistribution by stealth to avoid even deeper inequalities. The Office for National Statistics showed in May that Brown used tax credits, for example, to boost incomes for the less well-off. The former Treasury financial secretary John Healey told the BBC recently that, as a result of such policies, families from the poorest fifth of the population were £3,000 a year better off than in 1997.

But a culture hostile to equality was created by remarks such as that of Prime Minister Tony Blair in 2005: "It's not that I don't care about the gap [between high and low incomes], so much as I don't care if there are people who earn a lot of money. They're not my concern. I do care about people who are without opportunity, disadvantaged and poor."

With such statements, the Labour Party failed to combat the public's gloomy view that inequality is inevitable.

"You cannot have equality of opportunities when people don't start from the same point. Inequality is a barrier to aspirations," says Rowlingson.

Will the former redistributive chancellor change the culture? His March Budget was short on handouts and, in response to new statistics on child poverty, he concentrated on measures to encourage parents to work. There is little parliamentary push for major tax realignments. The Liberal Democrat shadow secretary for children, schools and families, David Laws, recently said: "It is a national disgrace that Britain is the developed country where your chances in life are most dependent on your family background." But the Lib Dems have abandoned as a party their policy of a 50p rate of income tax for those with incomes above £100,000.

The Conservatives, too, who talked of redistribution in 2005, have recently been silent on the issue.

The Rowntree Foundation findings suggest that Britain risks falling into a gulf of apathy made even deeper by ignorance of the true nature of our current economic segregation.

"In Africa, the feeling you cannot do anything about things is called compassion fatigue," says Rowlingson. "Leaders have to prove action against inequality is possible."

Rich and poor

1997 "The boundaries of the welfare state are going to have to change"
Tony Blair, days before becoming prime minister

2001 "It's not a burning ambition for me to make sure that David Beckham earns less money"
Tony Blair, rejecting higher tax rates for the rich

2006 "I don't think making the top 1 per cent richest poorer makes the 10 per cent poorest richer"
David Cameron, leader of the opposition

2007 "This Budget was an opportunity to rebalance the tax system in favour of the less wealthy and the Chancellor has failed to do that"
Menzies Campbell on Gordon Brown's final Budget as chancellor

This article first appeared in the 13 August 2007 issue of the New Statesman, Road fix

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Paul Mason: How the left should respond to Brexit

It's up to the labour movement to rescue the elite from the self-inflected wound of Brexit.

For the first time in a generation there is a tangible split between the Tory leadership and the business elite. Forget the 41 per cent poll rating, forget Theresa May’s claim to have moved towards “the centre”; the most important thing to emerge since the Tory conference is a deep revulsion, among wide sections of normally Conservative voters, at the xenophobia, nationalism and economic recklessness on display.

Rhetorically, May has achieved a lot. She quashed any possibility of a soft Brexit strategy. She ended 30 years of openness to migration. She scrapped the Tories’ commitment to balanced books by 2020 – though she neglected to replace this keystone policy with anything else. And she pledged to stop constitutional scrutiny over the Brexit process from Holyrood, Westminster or the courts.

Yet in reality she achieved nothing. May’s government is not in control of the crucial process that will define its fate – the Brexit negotiations. And on Scotland, she has triggered a sequence of events that could lead to the end of the UK within the next five years.

In the light of this, the left has to be refocused around the facts that have emerged since the referendum on 23 June. Britain will leave the EU – but it faces a choice between May’s hubristic nonsense and a strategy to salvage 30 years of engagement with the biggest market in the world. Scotland will hold its second referendum. Labour will be led through all this by a man who, for the first time in the party’s history, cannot be relied on to do the elite’s bidding.

Brexit, on its own, need not have caused a great shift in British politics. It is the new, visceral split between Tory xenophobia and the implicitly liberal and globalist culture in most boardrooms that makes this a turning point. It is a challenge for the left as big as the ones Labour faced in 1931, when the gold standard collapsed; or in 1940, when the reality of total war dawned. It represents a big opportunity – but only if we jolt our brains out of the old patterns, think beyond party allegiances, and react fast.

Let’s start with the facts around which May, Philip Hammond and Amber Rudd constructed their rhetorical body swerve at the Tory conference. Britain is £1.7trn in debt. Its budget deficit cannot be eradicated by 2020 because, even on the steroids of quantitative easing, growth is low, wages are stagnant and its trade situation deeply negative. Austerity, in short, did not work.

With sterling weakened, by next year we’ll begin to feel the pressure of imported inflation on real wages, re-creating the economic pain of 2011-12. On top of that, by attempting a “hard Brexit”, May has created damaging uncertainty for investment that no degree of short-term positivity can mitigate. Even if the range of outcomes only widens, investment will get delayed – and with May’s commitment to hard Brexit the range of outcomes will get significantly worse: 7.5 per cent lopped off GDP, according to a leaked Treasury assessment.

Civil servants believe Britain’s negotiating position is so weak that it will have to leverage its intelligence-providing services to Europe and concede “free movement of high-skilled workers”, just to persuade the French and the Germans to cut any kind of decent bilateral deal. Yet in the two years of brinkmanship that begin when Article 50 is triggered, the EU27 will have no reason whatsoever to concede favourable terms for bilateral trade. By adopting hard Brexit and hard xenophobia, Theresa May has scheduled a 24-month slow-motion car crash.

To orient the Labour Party, trade unions and the wider progressive movement, we need first to understand the scale of the break from normality. Labour already faced deep problems. First, without Scotland it cannot govern; yet many of its members in Scotland are so dislocated from the progressive Scottish national movement that the party is bereft of answers.

Next, the old relationship between the urban salariat and the ex-industrial working class has inverted. With a vastly expanded membership, Labour is the de facto party of the urban salariat. Its heartland is Remainia – the cities that voted to stay in Europe. Its electoral battlegrounds are now places such as Bury, Nuneaton, Corby and Portsmouth, where the “centre” (as measured by the Lib Dem vote) has collapsed, to be replaced by thousands of Green voters and thousands more voting Ukip.

This was the known problem on the eve of Brexit, though layers of Labour MPs and councillors refused to understand it or respond to it. The solution to it was, even at that point, obvious: Labour can only attract back a million Green voters and hundreds of thousands of Ukip voters in winnable marginals with a combination of social liberalism and economic radicalism.

The alternative, as outlined in the Blue Labour project of Maurice Glasman and Jon Cruddas, was an overt return to social conservatism. That cannot work, because it might win back some ex-Labour Ukip voters but could not inspire Labour’s new urban core to go on the doorstep and fight for it. On the contrary, it could easily inspire many of them to tear up their membership cards.

A new strategy – to combine social liberalism, multiculturalism and environmentalism with left-wing economic policies aimed at reviving the “communities left behind” – was, for me, always the heart of Corbynism. Jeremy Corbyn himself, whatever his personal strengths and weaknesses, was a placeholder for a political strategy.

Brexit, the attempted Labour coup and the Tory swing to hard Brexit have changed things all over again. And Labour’s leadership needs to move fast into the political space that has opened up. The starting point is to understand May’s administration as a regime of crisis. It is held together by rhetoric and a vacuum of press scrutiny, exacerbated by Labour’s civil war and the SNP’s perennial dithering over strategy to achieve Scottish independence. The crisis consists of the perils of hard Brexit combined with a tangible split between the old party of capital and capital itself. The elite – the bankers, senior managers, the super-rich and the ­upper middle class – do not want Brexit. Nor does a significant proportion of Middle Britain’s managerial and investing classes.




All this presents Labour with a series of achievable goals – as an opposition in Westminster, in London, as the likely winner in many of the forthcoming mayoral battles, and at Holyrood. The first aim should be: not just oppose hard Brexit, but prevent it. This entails the Labour front bench committing to an attempt to remain inside the European Economic Area.

The wariness – shared by some on the Corbyn side, as well as the Labour right – is born of the assumption that if you commit to the single market, you must accept free movement of labour. The party’s new spokesman on Brexit, Keir Starmer, expressed perfectly what is wrong with this approach: first it’s a negotiation, not a finished relationship; second, you start from the economics, not the migration issue.

Leaving the single market will be a macroeconomic disaster, compounded by a social catastrophe, in which all the European protections – of citizens’ rights, labour rights, consumer and environmental standards – will get ripped up. That’s why the Labour front bench must commit to staying inside the single market, while seeking a deal on free movement that gives Britain time and space to restructure its labour market.

John McDonnell’s “red lines”, produced hurriedly in the days after Brexit, embody this principle – but not explicitly. McDonnell has said Labour would vote against any Brexit deal that did not involve some form of single-market access, and preserve the City’s passporting arrangement, where banks are authorised to trade across an entire area without having to be incorporated separately in each country. Freedom of movement is not included in the red lines.

May, meanwhile, insists there will be no parliamentary scrutiny of the negotiating stance, or of the outcome. This position cannot stand, and overthrowing it provides a big, early target for Labour and the other opposition parties. They should use their constitutional influence – not only in Westminster but at Holyrood, Cardiff and the mayor-run cities, to bust open the Conservatives’ secrecy operation.

By declaring – formally, in a written pact – that they will refuse to ratify a Brexit deal based on World Trade Organisation tariffs, the progressive parties can destroy May’s negotiating position in Brussels overnight. Let the Conservative press accuse us of being “citizens of the world”, undermining the national interest. They will dig their own political grave even faster.

In parallel, Labour needs to lead – intellectually, morally and practically – the fight for a coherent, pro-globalist form of Brexit. In order for this to embody the spirit of the referendum, it would have to include some repatriation of sovereignty, as well as a significant, temporary retreat from freedom of movement. That means – and my colleagues on the left need to accept this – that the British people, in effect, will have changed Labour’s position on immigration from below, by plebiscite.

In response, Labour needs to design a proposal that permits and encourages high beneficial migration, discourages and mitigates the impact of low-wage migration and – forgotten in the rush to “tinder box” rhetoric by the Blairites – puts refugees at the front of the queue, not the back. At its heart must be the assurance, already given to three million EU-born workers, that they will not be used as any kind of bargaining chip and their position here is inviolable.

Finally Labour needs to get real about Scotland. The recent loss of the council by-election in Garscadden, with a 20 per cent swing to the SNP, signals that the party risks losing Glasgow City Council next year.

It is a problem beyond Corbyn’s control: his key supporters inside Scottish Labour are long-standing and principled left-wing opponents of nationalism. Which would be fine if tens of thousands of left-wing social democrats were not enthused by a new, radical cultural narrative of national identity. Corbyn’s natural allies – the thousands of leftists who took part in the Radical Independence Campaign – are trapped outside the party, sitting inside the Scottish Greens, Rise or the left of the SNP.

The interim solution is for Scottish Labour to adopt the position argued by its deputy leader, Alex Rowley: embrace “home rule” – a rejigged devo-max proposal – and support a second independence referendum. Then throw open the doors to radical left-wing supporters of independence. If, for that to happen, there has to be a change of leadership (replacing Kezia Dugdale), then it’s better to do it before losing your last bastion in local government.

The speed with which Labour’s challenge has evolved is a signal that this is no ordinary situation. To understand how dangerous it would be to cling to the old logic, you have only to extrapolate the current polls into an electoral ground war plan. Sticking to the old rules, Labour HQ should – right now – be planning a defensive campaign to avoid losing 60 seats to May. Instead, it can and must lay a plan to promote her administration’s chaotic demise. It should have the ambition to govern – either on its own, or with the support of the SNP at Westminster.

To achieve this, it must confront the ultimate demon: Labour must show willing to make an alliance with the globalist section of the elite. Tony Blair’s equivocation about a return to politics, the constant noise about a new centrist party, and signs of a Lib Dem revival in local by-elections are all straws in the wind. If significant sections of the middle class decide they cannot live with Tory xenophobia, the liberal centre will revive.

The best thing for Labour to do now is to claim as much of the high ground before that. It must become the party of progressive Brexit. The worst thing would be to start worrying about “losing the traditional working class”.

The “traditional working class” knows all too well how virulent Ukip xenophobia is: Labour and trade union members spend hours at the pub and in the workplace and on the doorstep arguing against it.

All over Britain, the labour movement is a line, drawn through working-class communities, which says that migrants are not to blame for poor housing, education, low pay and dislocated communities. For the first time in a generation Labour has a leader prepared to say who is to blame: the neoliberal elite and their addiction to privatisation, austerity and low wages.

It was the elite’s insouciance over the negative impacts of EU migration on the lowest-skilled, together with their determination to suppress class politics inside Labour, that helped get us into this mess. An alliance with some of them, to achieve soft Brexit, democratic scrutiny and to defeat xenophobic solutions, must be conditional.

We, the labour movement, will dig the British ruling class out of a self-made hole, just as we did in May 1940. The price is: no return to the philosophy of poverty and inequality; a strategic new deal, one that puts state ownership, redistribution and social justice at the heart of post-Brexit consensus.

That is the way forward. If Labour politicians can bring themselves to explain it clearly, cajole the party apparatus out of its epic sulk and make a brave new offer to Scotland – it can work. But time is important. We are up against a corrosive nationalist bigotry that now echoes direct from the front page of the Daily Mail to Downing Street. Every day it goes unchallenged it will seep deeper into Britain’s political pores.

Paul Mason is the author of “PostCapitalism: a Guide to Our Future” (Penguin)

This article first appeared in the 13 October 2016 issue of the New Statesman, England’s revenge