Children play football in front of a residential development in the London borough of Tower Hamlets. Photograph: Getty Images.
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How inequality is costing the economy billions

The social consequences of inequality, such as reduced life expectancy and worse mental health, cost the equivalent of over £39bn every single year.

Since the late 1970s, the UK has become one of the most unequal countries in the developed world. As the rich have got richer, the rest of us have been left behind. Research released today by Oxfam shows that just five families now have as much wealth as the poorest 20 per cent of the population. It’s a frightening statistic, and for most people, one that offends their basic sense of decency. Can anyone really be "worth" this much? Can so many people be worth so little?

Worryingly, for some the answer appears to be "yes". For these people, an elite but small group of "wealth creators" are delivering jobs and driving economic growth. If five of these people happen to have the same wealth as a fifth of the population, well that’s just reward for their hard work and, no doubt, superior intellect. Perhaps even more concerning is the argument that inequality is not just acceptable, but desirable - driving the competitiveness vital to entrepreneurialism. But does seeing someone paid hundreds or even thousands of times more than you act as encouragement, or as a painful reminder of how little society values you?

The reality is that the consequences of the UK’s extraordinarily high levels of inequality are far-reaching and catastrophic. Of the developed OECD countries, the UK is ranked 17th out of 23 for life expectancy, 19th out of 22 on obesity, 17th out of 21 on teenage births, and 17th out of 23 for imprisonment. More equal societies, meanwhile, top the table on almost every measure.

Inequality shapes how we see others, our levels of trust in strangers, our sense of community. It erodes the bonds between individuals. But might it go even further? The IMF and others have pointed towards the damaging effects that inequality may have on economic growth. It makes perfect sense; if wages stagnate or fall for the majority of people, a consumer-led recovery becomes tricky to engineer without encouraging a huge growth in personal debt.

In addition, the impact of inequality on our health, wellbeing and crime rates may also have a financial cost. Research recently conducted by the Equality Trust has found that the impact on the UK of some of the social consequences of inequality, including reduced healthy life expectancy, worse mental health, higher levels of imprisonment and murder, could cost the equivalent of over £39bn every single year. If this was broken down to an individual level, it would show that the impact of inequality on every man, woman and child in the UK can be valued at £622.

Yet these figures may be just the tip of the iceberg. Many of the costs associated with inequality remain incalculable. For example, how does one value the higher level of community cohesion, trust, and social mobility associated with less unequal countries? Our estimate is based on a comparison between the level of inequality in the UK and the average level seen in developed countries. In other words, small changes to our level of income inequality would have a huge effect.

In recent weeks, the issue of inequality has gained significant coverage, it is now unquestionably part of the public and political narrative. But we need action to match the rhetoric. A living wage, a fairer tax system, and the creation of jobs with genuine opportunities for advancement should all be part of political party manifestos. But all parties serious about reducing costly social problems must also include an Inequality Test - an explicit goal that the net impact of their policies will be to reduce the gap between the richest and the rest. The benefits of reducing economic inequality are clear - a richer, healthier and quite possibly happier society. But we need politicians to have the courage and conviction to deliver real change.

Duncan Exley is the director of the Equality Trust

Duncan Exley is the director of the Equality Trust

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Voters are turning against Brexit but the Lib Dems aren't benefiting

Labour's pro-Brexit stance is not preventing it from winning the support of Remainers. Will that change?

More than a year after the UK voted for Brexit, there has been little sign of buyer's remorse. The public, including around a third of Remainers, are largely of the view that the government should "get on with it".

But as real wages are squeezed (owing to the Brexit-linked inflationary spike) there are tentative signs that the mood is changing. In the event of a second referendum, an Opinium/Observer poll found, 47 per cent would vote Remain, compared to 44 per cent for Leave. Support for a repeat vote is also increasing. Forty one per cent of the public now favour a second referendum (with 48 per cent opposed), compared to 33 per cent last December. 

The Liberal Democrats have made halting Brexit their raison d'être. But as public opinion turns, there is no sign they are benefiting. Since the election, Vince Cable's party has yet to exceed single figures in the polls, scoring a lowly 6 per cent in the Opinium survey (down from 7.4 per cent at the election). 

What accounts for this disparity? After their near-extinction in 2015, the Lib Dems remain either toxic or irrelevant to many voters. Labour, by contrast, despite its pro-Brexit stance, has hoovered up Remainers (55 per cent back Jeremy Corbyn's party). 

In some cases, this reflects voters' other priorities. Remainers are prepared to support Labour on account of the party's stances on austerity, housing and education. Corbyn, meanwhile, is a eurosceptic whose internationalism and pro-migration reputation endear him to EU supporters. Other Remainers rewarded Labour MPs who voted against Article 50, rebelling against the leadership's stance. 

But the trend also partly reflects ignorance. By saying little on the subject of Brexit, Corbyn and Labour allowed Remainers to assume the best. Though there is little evidence that voters will abandon Corbyn over his EU stance, the potential exists.

For this reason, the proposal of a new party will continue to recur. By challenging Labour over Brexit, without the toxicity of Lib Dems, it would sharpen the choice before voters. Though it would not win an election, a new party could force Corbyn to soften his stance on Brexit or to offer a second referendum (mirroring Ukip's effect on the Conservatives).

The greatest problem for the project is that it lacks support where it counts: among MPs. For reasons of tribalism and strategy, there is no emergent "Gang of Four" ready to helm a new party. In the absence of a new convulsion, the UK may turn against Brexit without the anti-Brexiteers benefiting. 

George Eaton is political editor of the New Statesman.