To tackle personal debt we need to tackle inequality first

An inequality test should be applied to all government policies to assess whether they will increase the gap between the richest and the rest.

Today’s report on personal debt from the Centre for Social Justice makes for sobering reading. With average household debt at £54,000, nearly twice the level of a decade ago, it is clear just how many are struggling in austerity Britain.

We’re told that the causes of this astonishing personal debt are people being forced to use credit to pay bills as the cost of living rises, as well as the legacy of cheap credit before the financial crash. These are clearly significant issues, but the reality is that they are part of a far wider, systemic problem. One that many seem unwilling to recognise. The gap between the rich and the rest has widened alarmingly over the past 30 years, with the UK now experiencing one of the highest levels of income inequality in the developed world. Study after study, in both the UK and internationally, has shown that as inequality rises, so does household debt.

According to research by the Joseph Rowntree Foundation, single people need to earn at least £16,850 a year before tax in 2013 for a minimum acceptable living standard. Couples with two children need to earn at least £19,400 each. But according to the ONS, just under half of people don’t get £19,400. About a third don’t get £16,850. For years, people have been told that if they work hard, they’ll get the rewards, but that simply isn’t true anymore. This is partly a result of a greater proportion of UK jobs being low paid. The proportion of jobs classed as low paid by the OECD is now among the highest of developed nations, and around 20 per cent of employees earn below the Living Wage.

Another issue is the increasing amount of insecure work such as temporary work and zero-hours contracts. Being trapped in a low-pay-no-pay cycle understandably plays havoc with budgeting. A further problem is a result of inequality driving up prices. This is most obvious in housing costs, where the average person trying to find a home finds themselves in a market where they are competing with people who are buying second homes, and with investors who are fuelling speculation-driven property inflation. In fact around 85% of new-build properties in central London and 38% of re-sales are estimated to have been purchased by overseas buyers.

Perhaps the biggest problem is also the simplest. Pay for FTSE Director’s may have increased by 14 per cent in the last year, but for the average employee pay continues to fall behind prices. We’ve now had four years of pay falling in real terms for most people. To tackle the debt crisis, the government needs to focus on reducing the UK’s high levels of income inequality. An inequality test should be applied to all government policies to assess whether they will increase the gap between the richest and the rest. Raising the level of National Minimum Wage and incentivising employers to offer jobs that pay a reliable income is a key way of tackling debt, driving demand in the economy, and reducing social security costs.

We also need a more progressive tax system, including proposals like a property speculation tax to stop the rich pricing the rest of us out of a home, but also a fiscal rebalancing away from consumption taxes like VAT, because they hit average and poor people hardest and hold back spending. Inequality is more than a driver of debt, it supresses our economic recovery and fractures our society. If the government wants to tackle debt, it needs to tackle inequality first.

Duncan Exley is director of The Equality Trust

Children play a game of football in front of a residential development in the London borough of Tower Hamlets on February 21, 2013 in London. Photograph: Getty Images.

Duncan Exley is the director of the Equality Trust

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Who "speaks for England" - and for that matter, what is "England"?

The Hollywood producer Sam Gold­wyn once demanded, “Let’s have some new clichés.” The Daily Mail, however, is always happiest with the old ones.

The Hollywood producer Sam Gold­wyn once demanded, “Let’s have some new clichés.” The Daily Mail, however, is always happiest with the old ones. It trotted out Leo Amery’s House of Commons call from September 1939, “Speak for England”, for the headline on a deranged leader that filled a picture-free front page on David Cameron’s “deal” to keep Britain in the EU.

Demands that somebody or other speak for England have followed thick and fast ever since Amery addressed his call to Labour’s Arthur Greenwood when Neville Chamberlain was still dithering over war with Hitler. Tory MPs shouted, “Speak for England!” when Michael Foot, the then Labour leader, rose in the Commons in 1982 after Argentina’s invasion of the Falklands. The Mail columnist Andrew Alexander called on Clare Short to “speak for England” over the Iraq War in 2003. “Can [Ed] Miliband speak for England?” Anthony Barnett asked in this very magazine in 2013. (Judging by the 2015 election result, one would say not.) “I speak for England,” claimed John Redwood last year. “Labour must speak for England,” countered Frank Field soon afterwards.

The Mail’s invocation of Amery was misconceived for two reasons. First, Amery wanted us to wage war in Europe in support of Hitler’s victims in Poland and elsewhere and in alliance with France, not to isolate ourselves from the continent. Second, “speak for England” in recent years has been used in support of “English votes for English laws”, following proposals for further devolution to Scotland. As the Mail was among the most adamant in demanding that Scots keep their noses out of English affairs, it’s a bit rich of it now to state “of course, by ‘England’. . . we mean the whole of the United Kingdom”.

 

EU immemorial

The Mail is also wrong in arguing that “we are at a crossroads in our island history”. The suggestion that the choice is between “submitting to a statist, unelected bureaucracy in Brussels” and reclaiming our ancient island liberties is pure nonsense. In the long run, withdrawing from the EU will make little difference. Levels of immigration will be determined, as they always have been, mainly by employers’ demands for labour and the difficulties of policing the borders of a country that has become a leading international transport hub. The terms on which we continue to trade with EU members will be determined largely by unelected bureaucrats in Brussels after discussions with unelected bureaucrats in London.

The British are bored by the EU and the interminable Westminster arguments. If voters support Brexit, it will probably be because they then expect to hear no more on the subject. They will be sadly mistaken. The withdrawal negotiations will take years, with the Farages and Duncan Smiths still foaming at the mouth, Cameron still claiming phoney victories and Angela Merkel, François Hollande and the dreaded Jean-Claude Juncker playing a bigger part in our lives than ever.

 

An empty cabinet

Meanwhile, one wonders what has become of Jeremy Corbyn or, indeed, the rest of the shadow cabinet. The Mail’s “speak for England” leader excoriated him for not mentioning “the Number One subject of the hour” at PM’s Questions but instead asking about a shortage of therapeutic radiographers in the NHS. In fact, the NHS’s problems – almost wholly caused by Tory “reforms” and spending cuts – would concern more people than does our future in the EU. But radiographers are hardly headline news, and Corbyn and his team seem unable to get anything into the nation’s “any other business”, never mind to the top of its agenda.

Public services deteriorate by the day, George Osborne’s fiscal plans look increasingly awry, and attempts to wring tax receipts out of big corporations appear hopelessly inadequate. Yet since Christmas I have hardly seen a shadow minister featured in the papers or spotted one on TV, except to say something about Trident, another subject that most voters don’t care about.

 

Incurable prose

According to the Guardian’s admirable but (let’s be honest) rather tedious series celeb­rating the NHS, a US health-care firm has advised investors that “privatisation of the UK marketplace . . . should create organic and de novo opportunities”. I have no idea what this means, though it sounds ominous. But I am quite certain I don’t want my local hospital or GP practice run by people who write prose like that.

 

Fashionable Foxes

My home-town football team, Leicester City, are normally so unfashionable that they’re not even fashionable in Leicester, where the smart set mostly watch the rugby union team Leicester Tigers. Even when they installed themselves near the top of the Premier League before Christmas, newspapers scarcely noticed them.

Now, with the Foxes five points clear at the top and 7-4 favourites for their first title, that mistake is corrected and the sports pages are running out of superlatives, a comparison with Barcelona being the most improbable. Even I, not a football enthusiast, have watched a few matches. If more football were played as Leicester play it – moving at speed towards their opponents’ goal rather than aimlessly weaving pretty patterns in midfield – I would watch the game more.

Nevertheless, I recall 1963, when Leicester headed the old First Division with five games to play. They picked up only one more point and finished fourth, nine points adrift of the league winners, Everton.

 

Gum unstuck

No, I don’t chew toothpaste to stop me smoking, as the last week’s column strangely suggested. I chew Nicorette gum, a reference written at some stage but somehow lost (probably by me) before it reached print.

Editor: The chief sub apologises for this mistake, which was hers

Peter Wilby was editor of the Independent on Sunday from 1995 to 1996 and of the New Statesman from 1998 to 2005. He writes the weekly First Thoughts column for the NS.

This article first appeared in the 11 February 2016 issue of the New Statesman, The legacy of Europe's worst battle