Why inequality has fallen and why it's set to rise from now on

The gap between the rich and the poor has narrowed as real earnings have fallen but the coalition's welfare cuts mean it is set to widen from now on.

The most notable finding from the ONS's annual report on "the effects of of taxes and benefits on household income" is that income inequality fell betwen 2010-11 and 2011-12 to its lowest level since 1986. It notes: 

The Gini coefficient for disposable income in 2011/12 was 32.3%, a fall from its 2010/11 value of 33.7%, and the lowest level since 1986. This fall in income inequality is partly due to earnings (including income from self-employment) falling towards the top of the income distribution but increasing for the poorest fifth of households.

This is not as surprising as some suggest; it's normal in times of economic stagnation for inequality to fall as middle class earnings decline and the automatic stabilisers protect the incomes of the poorest. The decision of the rich to delay earnings until 2012-13 in order to benefit from the cut in the 50p tax rate is also likely to be a factor. But it's still a finding the Tories will hail as they seek to prove that "we're all in this together". 

They would be wise, however, to resist the temptation to do so. Owing to the coalition's welfare cuts, many of which only took effect this year, inequality is forecast to significantly increase between now and 2015-16. In particular, George Osborne's decision to cap benefit increases at 1 per cent for at least three years (an unprecedented real-terms cut) means the poorest will see a sharp fall in their incomes. The IFS expects inequality "to rise again from 2011–12, almost (but not quite) reaching its pre-recession level by 2015–16." 

While the Tories can take little credit for the fall in inequality (which is largely due the decline in real earnings), they will deserve the blame for the rise.

George Osborne delivers his Mansion House speech on June 19, 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

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Not since the Thatcher years have so many Tory MPs been so motivated by self-interest

Assured of an election win, backbenchers are thinking either advancing up the greasy pole, or mounting it for the first time. 

One hears despair from Labour not just about probable defeat, but from MPs who felt they had three years to improve the party’s fortunes, or to prepare for personal oblivion. In the Conservative Party, matters seem quite the opposite. Veterans of the 1983 election recall something similar: a campaign fought in the absolute certainty of winning. Theresa May talked of putting the interests of the country first when she engineered the poll, and one must believe she was sincere. However, for those expecting to be Tory MPs after 8 June there are other priorities. Theirs is not a fight for the national interest, because that for them is a foregone conclusion. It is about their self-interest: either advancing up the greasy pole, or mounting it for the first time. They contemplate years ahead in which to consolidate their position and, eventually, to shape the tone and direction of the party.

The luxury of such thoughts during a campaign comes only when victory is assured. In 1983 I worked for a cabinet minister and toured marginal seats with him. Several candidates we met – most of whom won – made it clear privately that however important it was to serve their constituents, and however urgent to save the country from the threats within what the late Gerald Kaufman later called “the longest suicide note in history”, there was another issue: securing their place in the Thatcher revolution. Certain they and their party would be elected in the aftermath of the Falklands War, they wanted their snout in the trough.

These are early days, but some conver­sations with those heading for the next House of Commons echo the sentiments of 1983. The contemporary suicide note has not appeared, but is keenly awaited. Tories profess to take less notice of opinion polls than they once did – and with good reason, given the events of 2015 and 2016 – but ­imagine their party governing with a huge majority, giving them a golden opportunity to advance themselves.

Labour promises to change the country; the Liberal Democrats promise to force a reconsideration of Brexit; Ukip ­promises to ban the burqa; but the Tories believe power is theirs without the need for elaborate promises, or putting any case other than that they are none of the above. Thus each man and woman can think more about what the probability of four or five further years in the Commons means to them. This may seem in poor taste, but that is human nature for you, and it was last seen in the Labour Party in about 2001.

Even though this cabinet has been in place only since last July, some Tory MPs feel it was never more than an interim arrangement, and that some of its incumbents have underperformed. They expect vacancies and chances for ministers of state to move up. Theresa May strove to make her team more diverse, so it is unfortunate that the two ministers most frequently named by fellow Tories as underachievers represent that diversity – Liz Truss, the Lord Chancellor, who colleagues increasingly claim has lost the confidence of the judiciary and of the legal profession along with their own; and Sajid Javid, the Communities Secretary, whom a formerly sympathetic backbencher recently described to me as having been “a non-event” in his present job.

Chris Grayling, the Transport Secretary, was lucky to survive his own stint as lord chancellor – a post that must surely revert to a qualified lawyer, with Dominic Grieve spoken of in that context, even though, like all ardent Remainers in the government, he would be expected to follow the Brexit line – and the knives are out for him again, mainly over Southern Rail but also HS2. David Gauke, the Chief Secretary to the Treasury, and the little-known Ben Gummer, a Cabinet Office minister, are tipped for promotion with Grieve if vacancies arise: that all three are white men may, or may not, be a consideration.

Two other white men are also not held in high regard by colleagues but may be harder to move: Boris Johnson, whose conduct of the Foreign Office is living down to expectations, and Michael Fallon, whose imitation of the Vicar of Bray over Brexit – first he was for it, then he was against it, and now he is for it again – has not impressed his peers, though Mrs May considers him useful as a media performer. There is also the minor point that Fallon, the Defence Secretary, is viewed as a poor advocate for the armed forces and their needs at a time when the world can hardly be called a safe place.

The critical indicator of how far personal ambition now shapes the parliamentary Tory party is how many have “done a Fallon” – ministers, or aspirant ministers, who fervently followed David Cameron in advising of the apocalyptic results of Brexit, but who now support Theresa May (who is also, of course, a reformed Remainer). Yet, paradoxically, the trouble Daniel Hannan, an arch-Brexiteer and MEP, has had in trying to win selection to stand in Aldershot – thanks to a Central Office intervention – is said to be because the party wants no one with a “profile” on Europe to be added to the mix, in an apparent attempt to prevent adding fuel to the fire of intra-party dissent. This may appease a small hard core of pro-Remain MPs – such as Anna Soubry, who has sufficient talent to sit in the cabinet – who stick to their principles; but others are all Brexiteers now.

So if you seek an early flavour of the next Conservative administration, it is right before you: one powering on to Brexit, not only because that is what the country voted for, but because that is the orthodoxy those who wish to be ministers must devotedly follow. And though dissent will grow, few of talent wish to emulate Soubry, sitting out the years ahead as backbenchers while their intellectual and moral inferiors prosper.

Simon Heffer is a columnist for the Daily and Sunday Telegraphs

Simon Heffer is a journalist, author and political commentator, who has worked for long stretches at the Daily Telegraph and the Daily Mail. He has written biographies of Thomas Carlyle, Ralph Vaughan Williams and Enoch Powell, and reviews and writes on politics for 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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