Major doesn't name the real culprits behind the fall in social mobility

The distribution of power that the former PM laments was created by the surge in inequality under the Conservatives in the 1980s.

For the second time in the last month, John Major is attracting praise from unlikely quarters. After his recent call for a windfall tax on the energy companies, today's Telegraph reports that the former PM told a Conservative association dinner in South Norfolk: "In every single sphere of British influence, the upper echelons of power in 2013 are held overwhelmingly by the privately educated or the affluent middle class. To me from my background, I find that truly shocking."

For a government as dominated by the privately educated as this one, the comprehensive schoolboy's comments make for uncomfortable reading. But before greeting Major as an egalitarian ally, it's worth studying his comments more closely. 

Major went on to blame the "collapse in social mobility" on Labour, which, he said, "left a Victorian divide between stagnation and aspiration". Yet it was under the Thatcher government of the 1980s, not Labour, that those now occupying the "upper echelons of power" were educated. The current distribution of power, with the privately educated accounting for more than half of all cabinet ministers, 35% of MPs, 45% of senior civil servants, 15 of the 17 Supreme Court judges and heads of division, 43% of barristers and 54% of leading journalists was shaped by decisions taken by Conservative administrations. 

The decline in 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 failed to reverse. As The Spirit Level showed, 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, have the highest levels. This is hardly surprising: greater inequalities of outcome make it easier for rich parents to pass on their advantages to their children. 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."

Nor can the last Labour government be blamed for David Cameron's predilection for handing senior posts to those who were also privately educated. As Conservative MP Sarah Wollaston commented following the appointment of Old Etonians Jesse Norman and Jo Johnson to the No. 10 policy board, "I’m not asked for policy advice, but just in case . . . there are other schools and some of them even admit women." David Davis put it more bluntly: "No more Etonian advisers". 

While alive to the symptoms of inequality, Major is unwilling to name the culprits. But even for the dissentful former PM, that would have been a heresy too far. 

John Major arrives to give evidence at the Leveson inquiry in 2012. Photograph: Getty Images.

George Eaton is political editor of the New Statesman.

Photo: Getty Images
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A simple U-Turn may not be enough to get the Conservatives out of their tax credit mess

The Tories are in a mess over cuts to tax credits. But a mere U-Turn may not be enough to fix the problem. 

A spectre is haunting the Conservative party - the spectre of tax credit cuts. £4.4bn worth of cuts to the in-work benefits - which act as a top-up for lower-paid workers - will come into force in April 2016, the start of the next tax year - meaning around three million families will be £1,000 worse off. For most dual-earner families affected, that will be the equivalent of a one partner going without pay for an entire month.

The politics are obviously fairly toxic: as one Conservative MP remarked to me before the election, "show me 1,000 people in my constituency who would happily take a £1,000 pay cut, then we'll cut welfare". Small wonder that Boris Johnson is already making loud noises about the coming cuts, making his opposition to them a central plank of his 

Tory nerves were already jittery enough when the cuts were passed through the Commons - George Osborne had to personally reassure Conservative MPs that the cuts wouldn't result in the nightmarish picture being painted by Labour and the trades unions. Now that Johnson - and the Sun - have joined in the chorus of complaints.

There are a variety of ways the government could reverse or soften the cuts. The first is a straightforward U-Turn: but that would be politically embarrassing for Osborne, so it's highly unlikely. They could push back the implementation date - as one Conservative remarked - "whole industries have arranged their operations around tax credits now - we should give the care and hospitality sectors more time to prepare". Or they could adjust the taper rates - the point in your income  at which you start losing tax credits, taking away less from families. But the real problem for the Conservatives is that a mere U-Turn won't be enough to get them out of the mire. 

Why? Well, to offset the loss, Osborne announced the creation of a "national living wage", to be introduced at the same time as the cuts - of £7.20 an hour, up 70p from the current minimum wage.  In doing so, he effectively disbanded the Low Pay Commission -  the independent body that has been responsible for setting the national minimum wage since it was introduced by Tony Blair's government in 1998.  The LPC's board is made up of academics, trade unionists and employers - and their remit is to set a minimum wage that provides both a reasonable floor for workers without costing too many jobs.

Osborne's "living wage" fails at both counts. It is some way short of a genuine living wage - it is 70p short of where the living wage is today, and will likely be further off the pace by April 2016. But, as both business-owners and trade unionists increasingly fear, it is too high to operate as a legal minimum. (Remember that the campaign for a real Living Wage itself doesn't believe that the living wage should be the legal wage.) Trade union organisers from Usdaw - the shopworkers' union - and the GMB - which has a sizable presence in the hospitality sector -  both fear that the consequence of the wage hike will be reductions in jobs and hours as employers struggle to meet the new cost. Large shops and hotel chains will simply take the hit to their profit margins or raise prices a little. But smaller hotels and shops will cut back on hours and jobs. That will hit particularly hard in places like Cornwall, Devon, and Britain's coastal areas - all of which are, at the moment, overwhelmingly represented by Conservative MPs. 

The problem for the Conservatives is this: it's easy to work out a way of reversing the cuts to tax credits It's easy to see how Osborne could find a non-embarrassing way out of his erzatz living wage, which fails both as a market-friendly minimum and as a genuine living wage. A mere U-Turn may not be enough. 


Stephen Bush is editor of the Staggers, the New Statesman’s political blog.