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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Live blog: Jeremy Corbyn hit by shadow cabinet revolt

Shadow health secretary Heidi Alexander becomes the first to resign following the sacking of Hilary Benn. 

11:21 Shadow Scotland secretary Ian Murray (see 09:11) and shadow transport secretary Lillian Greenwood are expected to be the next to resign. 

11:11 Shadow minister for young people Gloria De Piero has become the latest to resign. It's worth noting that De Piero is a close ally of Tom Watson (she's married to his aide James Robinson). Many will see this as a sign that the coup has the tacit approval of Watson (who is currently en route from Glastonbury). 

De Piero wrote in her resignation letter to Corbyn: "I have always enjoyed a warm personal relationship with you and I want to thank you for the opportunity to serve in your shadow cabinet. I accepted that invitation because I thought it was right to support you in your attempt to achieve the Labour victory the country so badly needs.

"I do not believe you can deliver that victory at a general election, which may take place in a matter of months. I have been contacted by many of my members this weekend and It is clear that a good number of them share that view and have lost faith in your leadership.”

10:58 Shadow defence secretary Emily Thornberry has backed Corbyn, telling Michael Crick that "of course" she has confidence in his leadership. She is the fourth shadow cabinet minister to back Corbyn (along with McDonnell, Abbott and Trickett). 

10:52 Our Staggers editor Julia Rampen has written up Benn and McDonnell's TV appearances. 

"Two different visions for the Labour Party's future clashed today on primetime TV. Hours after being sacked from the shadow cabinet, Corbyn critic Hilary Benn was on the Andrew Marr Show ruling himself out of a leadership challenge. However, he issued a not-so-coded cry for revolt as he urged others to "do the right thing" for the party. Moments later, shadowhancellor John McDonnell sought to quell rumours of a coup by telling Andrew Neil Jeremy was "not going anywhere". He reminded any shadow ministers watching of the grassroots support Labour has enjoyed under Corbyn and the public petition urging them to back their leader."

10:46 Asked to comment, Tony Blair told the BBC: "I think this is for the PLP. I don't think it's right for me or helpful to intervene." 

10:38 On the leadership, it's worth noting that while Corbyn would need 50 MP/MEP nominations to make the ballot (were he not on automatically), an alternative left-wing candidate would only need 37 (15 per cent of the total). 

10:27 Jon Trickett, one of just three shadow cabinet Corbynites, has tweeted: "200,000 people already signed the petition in solidarity with the leadership. I stand with our party membership." 

10:14 McDonnell has told the BBC's Andrew Neil: "I will never stand for the leadership of the Labour Party". He confirmed that this would remain the case if Corbyn resigned. McDonnell, who stood unsuccessfully for the Labour leadership in 2007 and 2010 (failing to make the ballot), added that if Corbyn was forced to fitght another election he would "chair his campaign".  

10:12 Tom Watson is returning from Glastonbury to London. He's been spotted at Castle Cary train station. 

10:07 A spokesman for John McDonnell has told me that it's "not true" that Seema Malhotra, the shadow chief secretary to the Treasury, is canvassing MPs on his behalf. Labour figures have long believed that the shadow chancellor and former Labour leadership contender has ambitions to succeed Corbyn. 

09:51 Appearing on the Marr Show, Hilary Benn has just announced that he will not stand for the Labour leadership. "I am not going to be a candidate for leader of the Labour Party." Tom Watson, Angela Eagle and Dan Jarvis are those most commonly cited by Corbyn's opponents as alternative leaders. 

09:46 Should Corbyn refuse to resign, Labour MPs are considering electing an independent PLP leader, an option first floated by Joe Haines, Harold Wilson's former press secretary, in the New Statesman. He argued that as the representatives of the party's 9.35 million voters, their mandate trumped Corbyn's.

09:38 Here's Stephen on the issue of whether Corbyn could form a shadow cabinet after the revolt. "A lot of chatter about whether Corbyn could replace 10 of his shadow cabinet. He couldn't, but a real question of whether he'd need to. Could get by with a frontbench of 18 to 20. There's no particular need to man-mark the government - Corbyn has already created a series of jobs without shadows, like Gloria De Piero's shadow minister for young people and voter registration. That might, in many ways, be more stable." 

09:32 Despite the revolt, there is no sign of Corbyn backing down. A spokesman said: "There will be no resignation from the elected leader of the party with a strong mandate".

09:11 Shadow Scotland secretary Ian Murray is one of those expected to resign. As Labour's only Scottish MP, the post would have to be filled by an MP south of the border or a peer. 

09:01 Diane Abbott, Corbyn's long-standing ally, has been promised the post of shadow foreign secretary, a Labour source has told me. 

The shadow international developmnent secretary is one of just three Corbyn supporters in the shadow cabinet (along with John McDonnell and Jon Trickett). Though 36 MPs nominated him for the leadership, only 14 current members went on to vote for him. It is this that explains why Corbyn is fighting the rebellion. He never had his MPs' support to begin with and is confident he retains the support of party activists (as all polls have suggested). 

But the weakness of his standing among the PLP means some hope he could yet be kept off the ballot in any new contest. Under Labour's rules, 50 MP/MEP nominations (20 per cent of the total) are required. 

08:52 Welsh First Minister Carwyn Jones has joined the revolt, telling BBC Radio Wales that events make it "very difficult" for Corbyn to lead Labour into the next election. 

08:50 Tom Watson, a pivotal figure who Labour MPs have long believed could determine the success of any coup attempt is currently at Glastonbury. 

08:26 Following Hilary Benn's 1am sacking, Jeremy Corbyn will face shadow cabinet resignations this morning. Shadow health secretary Heidi Alexander has become the first to depart.

The New Statesman will cover all the latest developments here. John McDonnell, Corbyn's closest ally, is appearing on The Andrew Marr Show at 9:45.

"This is the trigger. Jeremy's called our bluff," a shadow cabinet minister told me. He added that he expected to joined by a "significant number" of colleagues. The BBC's Laura Kuenssberg has reported that half of the 30 will resign this morning. 

Corbyn is set to face a vote of no confidence from Labour MPs on Tuesday followed by a leadership challenge. But his allies say he will not resign and are confident that he will make the ballot either automatically (as legal advice has suggested) or by winning the requisite 50 MP/MEP nominations. 

George Eaton is political editor of the New Statesman.