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.

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Two referendums have revived the Tories and undone Labour

The Scottish vote enabled the Conservatives' rebirth as the party of the Union; the Brexit vote has gifted Theresa May a project to reunite a fragmented right.

In the final week of the Scottish independence referendum campaign, as the Union appeared in peril, David Cameron pleaded with voters to punish his party rather than Scotland. “If you are fed up with the effing Tories, give them a kick,” he said. Cameron’s language reflected a settled view: the Conservatives were irredeemably loathed by Scots. For nearly two decades, the party had no more than one MP north of the border. Changing the party’s name for devolved contests was discussed.

Since becoming Conservative leader, Theresa May has pursued a hard – she prefers “clean” – Brexit strategy that Scots voted against and the Conservatives have achieved a UK-wide poll lead of 20 points.

Yet rather than regressing, the Scottish Conservatives have resurged. On 22 April, a Panelbase poll put them on 33 per cent in Scotland (a rise of 18 points since 2015). A favoured Labour barb used to be that there were more pandas (two) in Scotland than Tory MPs (one). The poll would leave the Tories with 12 seats and Corbyn’s party with none. Tory aides confess that they were surprised by the figures but declare there are “no limits to our ambitions” in Scotland.

The roots of this recovery lie in the 2014 independence referendum. The vote, and the SNP’s subsequent landslide victory in the 2015 general election, realigned Scottish politics along unionist and nationalist lines. Led by Ruth Davidson, the Scottish Conservatives have ably exploited the opportunity. “We said No. We meant it,” the party’s official slogan declares of Nicola Sturgeon’s demand for a second referendum. Under Ruth Davidson, the Tories have already become the official opposition at Holyrood.

Labour is torn between retaining unionists and winning back nationalists. It has been punished for its equivocation, as it is being punished over its confused response to Brexit. In April 2016, the Scottish Labour leader, Kezia Dugdale, said that it was “not inconceivable” that she could back independence if the UK voted to leave the EU (and earlier suggested that MPs and MSPs could be given a free vote). Jeremy Corbyn recently stated that he was “absolutely fine” with a second referendum being held.

“For us it’s a badge of honour but there are some people in Scottish Labour who are quite queasy about that word [unionist] and I think Jeremy Corbyn would be very queasy about it,” Adam Tomkins, a Conservative MSP for Glasgow and public law professor, told me. “Don’t forget the Northern Ireland dimension; we’ve all seen the photos of him rubbing shoulders with leading republicans. The Scottish Union is very different to the Irish Union but the word migrates.”

The irony is that Corbyn allies believed his anti-austerity, anti-Trident platform would allow Labour to recover in Scotland. Yet the pre-eminence of the national question has left it in a political no-man’s land.

In contrast to the rest of the UK, Scots backed Remain by 62 per cent to 38 per cent. Far from protecting EU membership, as David Cameron had promised in the referendum campaign, the preservation of the Union now threatened it. Theresa May has since yielded no ground, denying Scotland both a second independence referendum on terms dictated by the SNP and single market membership. But polls show no rise in support for independence.

Conservative aides believe that Sturgeon miscalculated by immediately raising the prospect of a second referendum following the Leave vote last June. Families and communities were riven by the 2014 contest. Most had little desire to disrupt the uneasy peace that has prevailed since.

Nor are the politics of Brexit as uncomplicated as some assume. Thirty-six per cent of SNP supporters voted Leave and more than a third of this bloc have since turned against independence. As elsewhere, some Remainers have accepted the result and fear the instability that secession would cause. Scotland’s trade with the UK is worth four times as much as that with the EU. Davidson, who was one of the most forceful advocates for Remain, says that pursuing independence to counter the effects of Brexit would be “stubbing your toe to then amputate your foot”.

Theresa May, who spoke of the “precious” Union when she became Prime Minister, has devoted great attention to Scotland. Cabinet ministers are instructed to develop a “Scottish plan” when they formulate policy; buildings funded by the UK government now bear its insignia. Davidson’s influence was crucial to May’s decision to retain the 0.7 per cent foreign aid commitment – an emblem of compassionate conservatism.

After a decade of SNP rule, Tory aides believe that their rival’s poor domestic record, most notably on education, is “catching up with them”. More than a year has elapsed since the Scottish Parliament passed new legislation. “We’ve got a government that simply isn’t very interested in governing,” Tomkins said. “I thought that Nicola [Sturgeon] would change that. I was wrong.” What preoccupies the SNP is the constitutional question.

Shortly after the remarkable Scottish polls, a new survey showed the Tories on course to win the most seats in Wales for the first time since 1859. For some former Labour supporters, voting Ukip is proving a gateway drug to voting Conservative.

Two referendums have now realigned politics in the Tories’ favour. The Scottish vote enabled their rebirth as the party of the Union; the Brexit vote has gifted May a project to reunite a fragmented right.

Before the 2015 general election, Labour derided the Tories as a southern English force unworthy of their official name: the Conservative and Unionist Party. Partly through accident and partly through design, May and Davidson are now reclaiming it. 

George Eaton is political editor of the New Statesman.

This article first appeared in the 27 April 2017 issue of the New Statesman, Cool Britannia 20 Years On

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