The black marks on the government's inequality record

Half way through the parliamentary term, how is the government doing? Not too well, writes One Society's Larissa Hansford.

At the half way point of the Coalition Government's term, debate rages over top pay, low pay and the persistently vast gulf between the two.

The trend to an expanding pay gulf is one that right and left alike have denounced. Front page headlines express outrage over the £1.32m payout to theformer director-general of the BBC, influential multinational board members call for a pay cap on corporate bonuses, and studies show that pay for top bosses rose an average of 10 per cent in 2011. Meanwhile £5m people are living at below living wage pay, with both Boris Johnson and Ed Milliband, backing an expansion of the scheme.

In the midst of so many calls for a reduction in the UK pay gulf, how have the Government performed on these issues? A new report by One Society, The Coalition Government and Income Inequality: The half term report, indicates that their record is wanting. It finds not only that inequality has not been reduced, but concludes that Coalition polices are actually likely to produce an increasing gap between the richest and the rest, at the same time as average incomes fail to keep up with the rising cost of living.

A One Society report on fair pay in Local Authorities showed how much progress has been made in the public sector over the last few years in addressing its inequalities. However, the private sector points out the report, where pay ratios are much more extreme, has largely escaped notice. The much reported "shareholder spring" led to just six substantial protest votes over extortionate pay at the top. BIS (The Department for Business, Innovation and Skills) proposals to increase shareholder power have failed to incorporate important stakeholders such as company employees. Proposals on binding pay votes have been watered down and there has been no significant action on issues such cash bonuses and simplification of pay packages.

At the lower end of the payscale, the two year public sector pay freeze and the upcoming two year below-inflation pay rise have put pressure on already low public sector salaries. Not only does this have a direct impact on inequality, but along with increasing costs of living, has serious implications for living standards. Increased costs of childcare, transport and cuts to tax credits have all played their part in this.

When they stood in the general election, inequality was a major concern for both coalition parties. The Conservative manifesto called for a society in which “wealth and opportunity must be more fairly distributed”. The Liberal Democrats meanwhile decried the fact that “Britain [is] one of the most unequal societies in the developed world, where ordinary people struggle to make ends meet.”

With 74 per cent of people believing that income inequality is too high and even CEOs beginning to recognise they are probably overpaid, it is clearly still a highly relevant issue to the electorate. On top of this, No. 10's favourite think tank recently warned that the Conservative Party are still seen as the party of the rich.

"Excessive" levels of income inequality are not only unpopular, but, as the One Society's report sets out, they are also inefficient. Growing evidence shows that large pay differentials stunt economic growth and cause instability. It also highlights the harmful effect that inequality has on our communities, our health and our environment.

For all these reasons, argues the report, political parties who want to be taken seriously in the next general election will have to outline a plan of action to tackle the UK's unacceptable levels of income inequality. Left and right alike must sit up and take notice of the harmful effect of extreme wealth disparities, and the significant impact that government policy could have in addressing them.

Marking the scorecard. Photograph: Getty Images

Larissa Hansford is a Campaign Assistant at One Society.

Photo: Getty
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Theresa May is paying the price for mismanaging Boris Johnson

The Foreign Secretary's bruised ego may end up destroying Theresa May. 

And to think that Theresa May scheduled her big speech for this Friday to make sure that Conservative party conference wouldn’t be dominated by the matter of Brexit. Now, thanks to Boris Johnson, it won’t just be her conference, but Labour’s, which is overshadowed by Brexit in general and Tory in-fighting in particular. (One imagines that the Labour leadership will find a way to cope somehow.)

May is paying the price for mismanaging Johnson during her period of political hegemony after she became leader. After he was betrayed by Michael Gove and lacking any particular faction in the parliamentary party, she brought him back from the brink of political death by making him Foreign Secretary, but also used her strength and his weakness to shrink his empire.

The Foreign Office had its responsibility for negotiating Brexit hived off to the newly-created Department for Exiting the European Union (Dexeu) and for navigating post-Brexit trade deals to the Department of International Trade. Johnson was given control of one of the great offices of state, but with no responsibility at all for the greatest foreign policy challenge since the Second World War.

Adding to his discomfort, the new Foreign Secretary was regularly the subject of jokes from the Prime Minister and cabinet colleagues. May likened him to a dog that had to be put down. Philip Hammond quipped about him during his joke-fuelled 2017 Budget. All of which gave Johnson’s allies the impression that Johnson-hunting was a licensed sport as far as Downing Street was concerned. He was then shut out of the election campaign and has continued to be a marginalised figure even as the disappointing election result forced May to involve the wider cabinet in policymaking.

His sense of exclusion from the discussions around May’s Florence speech only added to his sense of isolation. May forgot that if you aren’t going to kill, don’t wound: now, thanks to her lost majority, she can’t afford to put any of the Brexiteers out in the cold, and Johnson is once again where he wants to be: centre-stage. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.