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5 April 2011

Clegg can’t increase social mobility without reducing inequality

The Deputy PM needs to remember that the most socially mobile countries are the most equal.

By George Eaton

For Nick Clegg, the ultimate test of the success or failure of the coalition is whether it increases social mobility. Indeed, he has previously declared that increasing mobility, not reducing income inequality, should be the “ultimate goal” of progressives (obviously a false dichotomy, as I’ll explain below). Today, with the publication of the government’s social mobility strategy, he has a chance to explain how the coalition will succeed where Labour failed.

Clegg’s plans to “open up” internships, which, as he says, “rig the market in favour of those who already have opportunities”, are previewed in this morning’s papers. Ministers will reportedly warn firms that they must pay young interns, or risk a legal challenge under the National Minimum Wage legislation.

In addition, the Conservative Party chairman, Sayeeda Warsi, will announce that the civil service will end informal internships by 2012 and that all vacancies will be advertised on a central website. Progressive stuff from the party that auctioned off City internships to raise funds at its Black and White Ball.

In their joint op-ed piece for the Daily Telegraph, Clegg and Iain Duncan Smith, the Work and Pensions Secretary, write:

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Labour couldn’t make up its mind on what goal it was chasing. Social exclusion? Income poverty? Inequality? Social mobility? Lacking a clear agenda, it fixated on just one measure of fairness – the poverty line, defined as 60 per cent of median income. This is a necessary part of the equation, but it is very far from sufficient.

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Labour deserves to be criticised, but not for the reasons that Clegg and Duncan Smith suggest. It was the Blair government’s unwillingness to address runaway inequality that meant social mobility remained stagnant. As I have repeatedly pointed out, all the international evidence we have suggests that the most socially mobile countries are also the most equal.

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As the graph above (from the excellent book The Spirit Level, by Richard Wilkinson and Kate Pickett) shows, countries such as Sweden, Norway, Denmark and Canada, where income inequality is low, have far higher levels of social mobility than the United States and the UK, where income inequality is high. 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 recent report on public-sector pay for the coalition government 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.”

To suggest, based on just 13 years of Labour government, that redistribution failed is wilfully naïve. It took decades of centre-left government in Scandinavia to create the most equal societies the world has known. I hope that I will be proved wrong, but all the evidence we have suggests that the coalition’s cuts will increase inequality and, consequently, reduce social mobility.