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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Labour’s best general election bet is Keir Starmer

The shadow secretary for Brexit has the heart of a Remainer - but head of a pragmatic politician in Brexit Britain. 

In a different election, the shadow Brexit secretary Keir Starmer might have been written off as too quiet a man. Instead - as he set out his plans to scrap the Brexit white paper and offer EU citizens reassurance on “Day One” in the grand hall of the Institute of Civil Engineers - the audience burst into spontaneous applause. 

For voters now torn between their loyalty to Labour and Remain, Starmer is a reassuring figure. Although he says he respects the Brexit vote, the former director of public prosecutions is instinctively in favour of collaborating with Europe. He even wedges phrases like “regulatory alignment” into his speeches. When a journalist asked about the practicality of giving EU citizens right to remain before UK citizens abroad have received similar promises, he retorted: “The way you just described it is to use people as bargaining chips… We would not do that.”

He is also clear about the need for Parliament to vote on a Brexit deal in the autumn of 2018, for a transitional agreement to replace the cliff edge, and for membership of the single market and customs union to be back on the table. When pressed on the option of a second referendum, he said: “The whole point of trying to involve Parliament in the process is that when we get to the final vote, Parliament has had its say.” His main argument against a second referendum idea is that it doesn’t compare like with like, if a transitional deal is already in place. For Remainers, that doesn't sound like a blanket veto of #EUref2. 

Could Leave voters in the provinces warm to the London MP for Holborn and St Pancras? The answer seems to be no – The Daily Express, voice of the blue passport brigade, branded his speech “a plot”. But Starmer is at least respectful of the Brexit vote, as it stands. His speech was introduced by Jenny Chapman, MP for Darlington, who berated Westminster for their attitude to Leave voters, and declared: “I would not be standing here if the Labour Party were in anyway attempting to block Brexit.” Yes, Labour supporters who voted Leave may prefer a Brexiteer like Kate Hoey to Starmer,  but he's in the shadow Cabinet and she's on a boat with Nigel Farage. 

Then there’s the fact Starmer has done his homework. His argument is coherent. His speech was peppered with references to “businesses I spoke to”. He has travelled around the country. He accepts that Brexit means changing freedom of movement rules. Unlike Clive Lewis, often talked about as another leadership contender, he did not resign but voted for the Article 50 Bill. He is one of the rare shadow cabinet members before June 2016 who rejoined the front bench. This also matters as far as Labour members are concerned – a March poll found they disapproved of the way Labour has handled Brexit, but remain loyal to Jeremy Corbyn. 

Finally, for those voters who, like Brenda, reacted to news of a general election by complaining "Not ANOTHER one", Starmer has some of the same appeal as Theresa May - he seems competent and grown-up. While EU regulation may be intensely fascinating to Brexiteers and Brussels correspondents, I suspect that by 2019 most of the British public's overwhelming reaction to Brexit will be boredom. Starmer's willingness to step up to the job matters. 

Starmer may not have the grassroots touch of the Labour leader, nor the charisma of backbench dissidents like Chuka Umunna, but the party should make him the de facto face of the campaign.  In the hysterics of a Brexit election, a quiet man may be just what Labour needs.

What did Keir Starmer say? The key points of his speech

  • An immediate guarantee that all EU nationals currently living in the UK will see no change in their legal status as a result of Brexit, while seeking reciprocal measures for UK citizens in the EU. 
  • Replacing the Tories’ Great Repeal Bill with an EU Rights and Protections Bill which fully protects consumer, worker and environmental rights.
  • A replacement White Paper with a strong emphasis on retaining the benefits of the single market and the customs union. 
  • The devolution of any new powers that are transferred back from Brussels should go straight to the relevant devolved body, whether regional government in England or the devolved administrations in Scotland, Wales and Northern Ireland.
  • Parliament should be fully involved in the Brexit deal, and MPs should be able to vote on the deal in autumn 2018.
  • A commitment to seek to negotiate strong transitional arrangements when leaving the EU and to ensure there is no cliff-edge for the UK economy. 
  • An acceptance that freedom of movement will end with leaving the EU, but a commitment to prioritise jobs and economy in the negotiations.

Julia Rampen is the digital news editor of the New Statesman (previously editor of The Staggers, The New Statesman's online rolling politics blog). She has also been deputy editor at Mirror Money Online and has worked as a financial journalist for several trade magazines. 

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