Inequality is falling, and for once, Cameron would be right to blame Brown

Nothing the Government has done will help equality. That's why they're keeping quiet about it.

A piece by John Rentoul in today's Independent has been making waves. Rentoul argues that, because inequality in Britain fell in 2010-2011 – the first year of the Conservative government – the Coalition has actually lived up to its promise to ensure that "we're all in it together".

He writes:

In June, the Institute for Fiscal Studies (IFS) published an analysis of official data that found that, although all after-tax incomes fell in the first year of the Coalition (2010-11), higher incomes fell more than lower incomes, resulting in a more equal distribution.

This is true. Although it's hard to check, because he doesn't cite with any specificity, it appears that these are the findings he's referring to:

Three different measures of inequality, including the internationally-accepted Gini coefficient, all fell sharply in the first year of the coalition government. The Gini in particular fell to levels which Britain hasn't seen since 1997.

But although these are after-tax measures of inequality, attributing all the changes to the tax system would be incorrect. And although they happened during the first year of the coalition government, giving credit to that government would be inaccurate.

The IFS explain why inequality fell so sharply in section 3.6 of their report. Part of the rise in equality was because "the largest falls in income took place at the very top of the income distribution"; the introduction of the 50p income tax rate "is one of the major drivers" of that fall. So a measure enacted 37 days before the coalition came to power – and halved in magnitude in that coalition's second budget – is responsible for a lot of the fall in inequality which Rentoul is attributing to Cameron. Perhaps the Government deserves credit for not scrapping the tax band completely, but normally one praises people for doing good, not for doing less bad than they might have.

The IFS doesn't break out any further causes of the 2010-11 rise in equality, but it does point out that, between 1997 and 2010, Labour supported the bottom part of the income distribution with "significant increases in the amount of redistribution". It adds that, since the Government plans further spending cuts, "changes in private incomes and government tax and benefit policy… seem likely to lead to increases rather than decreases in income inequality in the coming years."

In other words, the Government would be silly to stake its reputation on a chance fall in inequality due mostly to the actions of its predecessor – because what it has got planned will make the situation much, much worse.

Rather than looking at what the government inherited, Rentoul should instead have looked at what it's got planned. That was in the IFS report as well. Here's the chart summarising it:

 

That's rather less sharing of the pain than Rentoul implied. The bottom four deciles are taking by far the most pain proportionally, and only then does the richest decile take its portion of the cuts.

The reason why the coalition hasn't been shouting from the rooftops about narrowing the gap between the rich and the poor is because it didn't do it. To quote Cameron from what seems like every Prime Ministers Questions since he was elected, "it was the fault of the last Labour Government". We will have to wait a bit longer to see what effects his vision of equality in Britain turns out to have; but judging by the changes he has implemented, they won't be pretty.

David Cameron in May 2010. His first action as PM was to travel back in time and implement the 50p tax rate, thus ensuring inequality would fall under his Government. Photograph: Getty Images

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

PETER MACDIARMID/REX
Show Hide image

Ken Clarke: Theresa May has “no idea” what to do about Brexit

According to the former Chancellor, “nobody in the government has the first idea of what they’re going to do next”.

Has Ken Clarke lost the greatest political battle of his career? He doesn’t think so. With his shoes off, he pads around his Westminster office in a striped shirt, bottle-green cords and spotty socks. Parliament’s most persistent Europhile seems relaxed. He laughs at the pervasive phrase that has issued from Downing Street since Theresa May became Prime Minister: “Brexit means Brexit.”

“A very simple phrase, but it didn’t mean anything,” he says. His blue eyes, still boyish at 76, twinkle. “It’s a brilliant reply! I thought it was rather witty. It took a day or two before people realised it didn’t actually answer the question.”

A former chancellor of the Exchequer, Clarke has served in three Conservative cabinets. His support for the European Union is well known. He has represented the seat of Rushcliffe in Nottinghamshire for 46 years, and his commitment to the European project has never wavered over the decades. It has survived every Tory civil war and even his three failed attempts to be elected Tory leader, standing on a pro-Europe platform, in 1997, 2001 and 2005.

“My political career looks as though it will coincide with Britain’s membership of the EU,” Clarke says, lowering himself into an armchair that overlooks the Thames. There are model cars perched along the windowsill – a hint of his love of motor racing.

Clarke won’t be based here, in this poky rooftop room in Portcullis House, Westminster, much longer. He has decided to step down at the next election, when he will be nearly 80. “I began by campaigning [in the 1960s] in support of Harold Macmillan’s application to enter [the EU], and I shall retire at the next election, when Britain will be on the point of leaving,” he says grimly.

Clarke supports Theresa May, having worked with her in cabinet for four years. But his allegiance was somewhat undermined when he was recorded describing her as a “bloody difficult woman” during this year’s leadership contest. He is openly critical of her regime, dismissing it as a “government with no policies”.

For a senior politician with a big reputation, Clarke is light-hearted in person – his face is usually scrunched up in merriment beneath his floppy hair. A number of times during our discussion, he says that he is trying to avoid getting “into trouble”. A painting of a stern Churchill and multiple illustrations of Gladstone look down at him from his walls as he proceeds to do just that.

“Nobody in the government has the first idea of what they’re going to do next on the Brexit front,” he says. He has a warning for his former cabinet colleagues: “Serious uncertainty in your trading and political relationships with the rest of the world is dangerous if you allow it to persist.”

Clarke has seen some of the Tories’ bitterest feuds of the past at first hand, and he is concerned about party unity again. “Whatever is negotiated will be denounced by the ultra-Eurosceptics as a betrayal,” he says. “Theresa May has had the misfortune of taking over at the most impossible time. She faces an appalling problem of trying to get these ‘Three Brexiteers’ [Boris Johnson, David Davis and Liam Fox] to agree with each other, and putting together a coherent policy which a united cabinet can present to a waiting Parliament and public. Because nobody has the foggiest notion of what they want us to do.”

Clarke reserves his fiercest anger for these high-profile Brexiteers, lamenting: “People like Johnson and [Michael] Gove gave respectability to [Nigel] Farage’s arguments that immigration was somehow a great peril caused by the EU.”

During the referendum campaign, Clarke made headlines by describing Boris Johnson as “a nicer version of Donald Trump”, but today he seems more concerned about David Cameron. He has harsh words for his friend the former prime minister, calling the pledge to hold the referendum “a catastrophic decision”. “He will go down in history as the man who made the mistake of taking us out of the European Union, by mistake,” he says.

Clarke left the government in Cameron’s 2014 cabinet reshuffle – which came to be known as a “purge” of liberal Conservatives – and swapped his role as a minister without portfolio for life on the back benches. From there, he says, he will vote against the result of the referendum, which he dismisses as a “bizarre protest vote”.

“The idea that I’m suddenly going to change my lifelong opinions about the national interest and regard myself as instructed to vote in parliament on the basis of an opinion poll is laughable,” he growls. “My constituents voted Remain. I trust nobody will seriously suggest that I should vote in favour of leaving the European Union. I think it’s going to do serious damage.”

But No 10 has hinted that MPs won’t be given a say. “I do think parliament sooner or later is going to have to debate this,” Clarke insists. “In the normal way, holding the government to account for any policy the government produces . . . The idea that parliament’s going to have no say in this, and it’s all to be left to ministers, I would regard as appalling.”

Clarke has been characterised as a Tory “wet” since his days as one of the more liberal members of Margaret Thatcher’s government. It is thought that the former prime minister had a soft spot for his robust manner but viewed his left-wing leanings and pro-European passion with suspicion. He is one of parliament’s most enduring One-Nation Conservatives. Yet, with the Brexit vote, it feels as though his centrist strand of Tory politics is disappearing.

“I don’t think that’s extinct,” Clarke says. “The Conservative Party is certainly not doomed to go to the right.”

He does, however, see the rise of populism in the West as a warning. “I don’t want us to go lurching to the right,” he says. “There is a tendency for traditional parties to polarise, and for the right-wing one to go ever more to the right, and the left-wing one to go ever more to the left . . . It would be a catastrophe if that were to happen.”

Clarke’s dream of keeping the UK in Europe may be over, but he won’t be quiet while he feels that his party’s future is under threat. “Don’t get me into too much trouble,” he pleads, widening his eyes in a show of innocence, as he returns to his desk to finish his work. 

Anoosh Chakelian is deputy web editor at the New Statesman.

This article first appeared in the 29 September 2016 issue of the New Statesman, May’s new Tories