Cameron can't talk about social mobility until he talks about inequality

The PM's refusal to acknowledge how the gap between the rich and the poor shapes opportunity shows he far he is from solving the problem.

After his spokesman's brusque dismissal of John Major's comments on social mobility earlier this week ("what counts is not where you come from but where you are going," was the non sequitur offered), David Cameron has issued a lengthier response to the former PM's fusillade. He told reporters on the first evening of his trip to India:

You only have to look at the make-up of the high levels of parliament, the judiciary, the army, the media. It's not as diverse; there's not as much social mobility as there needs to be...I agree with [Major] that we need a far more socially mobile country. That is something we need to do far more about … We are making some progress but it's not fast enough and we need to go further and faster.

What I want to see is a more socially mobile Britain. I want to see a Britain where no matter where you come from, what god you worship, the colour of your skin, what community you belong to, you can get to the top in television, the judiciary, armed services, politics, newspapers. A lot of these areas are important.

Few will disagree with that, but read the latest comments made by Alan Milburn, the former Labour cabinet minister and the government's adviser on social mobility, and it becomes clear how little Cameron has engaged with the problem. Milburn rightly noted that "deep-rooted inequality and flatlining mobility have been decades in the making" and that "in most developed countries there has been a declining share of economic growth going to labour (and a higher share to capital) at the same time as there has been growing wage inequality. In the UK, the share of national income going to wages of workers in the bottom half of the earnings distribution decreased by a quarter between 1979 and 2009." 

The UK's stagnant and even declining social mobility owes much to the surge in inequality that took place after 1979 (the gini coefficient rose from 12.9 in 1978 to 22.2 in 1990), which Labour, to its shame, failed to halt. As the graph below from the empirical masterpiece The Spirit Level shows, it is the most unequal countries, such as the UK and the US, that have the lowest levels of social mobility, while the most equal, such as Sweden, Canada and Japan, that have the highest.

This is hardly surprising: it's harder to climb the ladder when the rungs are further apart. As Will Hutton's report on public sector pay for the coalition noted: "There is now good evidence that income inequality can become entrenched across generations, as elites monopolise top jobs regardless of their talent, gaining preferential access to capital and opportunities. This harms social mobility."

There was a time when Cameron was prepared to draw on such insights. In his 2009 Hugo Young Memorial Lecture, he noted:

Research by Richard Wilkson and Katie Pickett has shown that among the richest countries, it's the more unequal ones that do worse according to almost every quality of life indicator. In "The Spirit Level", they show that per capita GDP is much less significant for a country's life expectancy, crime levels, literacy and health than the size of the gap between the richest and poorest in the population. So the best indicator of a country's rank on these measures of general well-being is not the difference in wealth between them, but the difference in wealth within them.

But he has since resorted to Thatcherite type, treating the size of the gap between the rich and the poor as an irrelevance and offering only a more elegant version of Norman Tebbit's "get on your bike". "You’ve got to get out there and find people, win them over, get them to raise aspirations and get them to think that they can get all the way to the top," he said last night. 

Some coalition ministers have recently pointed to data showing that inequality fell to its lowest level since 1986 in 2011/12 as evidence that the coalition is widening opportunity even at a time of austerity. But this is not as surprising as they suggest; it's normal in times of economic stagnation for inequality to fall as middle class earnings decline and the automatic stabilisers maintain the incomes of the poorest. The decision of high earners to defer earnings until 2012/13 in order to benefit from the cut in the top rate of tax is also likely to be a factor. But it's still a finding the Tories 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. 

Cameron's refusal to even acknowledge this problem, and its implications for social mobility, shows how far he is from living up to his rhetoric of spreading opportunity. 

David Cameron speaks at the CBI's annual conference on 4 November 2013 in London. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty
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Can Philip Hammond save the Conservatives from public anger at their DUP deal?

The Chancellor has the wriggle room to get close to the DUP's spending increase – but emotion matters more than facts in politics.

The magic money tree exists, and it is growing in Northern Ireland. That’s the attack line that Labour will throw at Theresa May in the wake of her £1bn deal with the DUP to keep her party in office.

It’s worth noting that while £1bn is a big deal in terms of Northern Ireland’s budget – just a touch under £10bn in 2016/17 – as far as the total expenditure of the British government goes, it’s peanuts.

The British government spent £778bn last year – we’re talking about spending an amount of money in Northern Ireland over the course of two years that the NHS loses in pen theft over the course of one in England. To match the increase in relative terms, you’d be looking at a £35bn increase in spending.

But, of course, political arguments are about gut instinct rather than actual numbers. The perception that the streets of Antrim are being paved by gold while the public realm in England, Scotland and Wales falls into disrepair is a real danger to the Conservatives.

But the good news for them is that last year Philip Hammond tweaked his targets to give himself greater headroom in case of a Brexit shock. Now the Tories have experienced a shock of a different kind – a Corbyn shock. That shock was partly due to the Labour leader’s good campaign and May’s bad campaign, but it was also powered by anger at cuts to schools and anger among NHS workers at Jeremy Hunt’s stewardship of the NHS. Conservative MPs have already made it clear to May that the party must not go to the country again while defending cuts to school spending.

Hammond can get to slightly under that £35bn and still stick to his targets. That will mean that the DUP still get to rave about their higher-than-average increase, while avoiding another election in which cuts to schools are front-and-centre. But whether that deprives Labour of their “cuts for you, but not for them” attack line is another question entirely. 

Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to domestic and global politics.

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