George Osborne holds freshly minted coins during a visit to the Royal Mint in Llantrisant, Wales on March 25, 2014. Photograph: Getty Images.
Show Hide image

Labour's new earnings data undermines Osborne's boast on inequality

The share of post-tax income received by the top 1 per cent has risen, while falling for the bottom 90 per cent.

One of the most surprising boasts in George Osborne's last Budget was his declaration that "under this government income inequality is at its lowest level for 28 years" (indeed, it prompted cries of disbelief from the Labour benches). Surprising because it's rare for Conservatives to be preoccupied with the gap between the rich and the poor and because austerity is generally held to have widened it. 

But the trend isn't as unusual 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. What Osborne didn't mention, however, is that the figures he cited date from 2011-12 and inequality is thought to have risen since as the government's welfare cuts take full effect and high-earners reap the benefits of the abolition of the 50p tax rate. 

New data released by Labour today suggests that is precisely what has happened. Over the last year, the share of post-tax income received by the top one per cent of earners – 300,000 people – has risen from 8.2 per cent (in 2012/13) to 9.8 per cent (in 2013/14), while the share taken by the bottom 90 per cent has fallen from 71.3 per cent to 70.4 per cent. 

In Labour's economic battle with the Tories, this is potent ammunition. It is empirical proof of the party's assertion that the recovery is benefiting a few at the expense of the many (one David Axelrod will hone when he holds his first meeting with Ed Miliband and other senior Labour figures today). As the coalition prepares to hail new figures showing average wages (inflated by high pay at the top) outstripping inflation, expect Labour to put this message centre stage. 

The challenge for Ed Miliband, who rightly regards inequality as the defining issue in politics today, will be convincing voters that he has both the will and the means to halt the widening chasm between rich and poor.

George Eaton is political editor of the New Statesman.

Getty Images.
Show Hide image

The Lib Dems' troubled start doesn't bode well for them

Rows over homosexuality and anti-Semitism are obscuring the party's anti-Brexit stance.

Tim Farron has broken his silence on the question of whether or not gay sex is a sin. (He doesn't.)

Frankly, this isn't the start to the general election campaign that the Liberal Democrats would have wanted. Time that they hoped would be spent talking about how their man was the only one standing up to Brexit has instead been devoted to what Farron thinks about homosexuality.

Now another row may be opening up, this time about anti-Semitism in the Liberal Democrats after David Ward, the controversial former MP who among other things once wrote that "the Jews" were "within a few years of liberation from the death camps...inflicting atrocities on Palestinians" has been re-selected as their candidate in Bradford East. That action, for many, makes a mockery of Farron's promise that his party would be a "warm home" for the community.

Politically, my hunch is that people will largely vote for the Liberal Democrats at this election because of who they're not: a Conservative party that has moved to the right on social issues and is gleefully implementing Brexit, a riven Labour party led by Jeremy Corbyn, etc. But both rows have hobbled Farron's dream that his party would use this election.

More importantly, they've revealed something about the Liberal Democrats and their ability to cope under fire. There's a fierce debate ongoing about whether or not what Farron's beliefs should matter at all. However you come down on that subject, it's been well-known within the Liberal Democrats that there were questions around not only Farron's beliefs but his habit of going missing for votes concerning homosexuality and abortion. It was even an issue, albeit one not covered overmuch by the press, in the 2015 Liberal Democrat leadership election. The leadership really ought to have worked out a line that would hold long ago, just as David Cameron did in opposition over drugs. (Readers with long memories will remember that Cameron had a much more liberal outlook on drugs policy as an MP than he did after he became Conservative leader.)

It's still my expectation that the Liberal Democrats will have a very good set of local elections. At that point, expect the full force of the Conservative machine and their allies in the press to turn its fire on Farron and his party. We've had an early stress test of the Liberal Democrats' strength under fire. It doesn't bode well for what's to come.

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

0800 7318496