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Leader: The battle over poverty starts here

A reduction in poverty should be the centrepiece of any future Labour programme

Of all the claims made by the Conservatives, the most preposterous is David Cameron's, in his Hugo Young lecture on 10 November, that
they are "best placed to fight poverty in our country". We know too little about current Tory policies to be sure of their effects, and Mr Cameron's lecture offers little detail on how to beat poverty beyond an appeal to "human kindness, generosity and imagination". We have, however, ample evidence of what to expect from 18 years of Tory government up to 1997.

In an era of unregulated global markets, any government that wishes to reduce inequality faces an uphill struggle. Only the most determined policies of redistribution can counter the tendency of modern economies to create yawning disparities of income and wealth. The UK's Gini coefficient (the standard measure of inequality) is now at its highest level on record. Labour promised to abolish child poverty within 20 years and halve it within ten. It made good early progress but, since 2004, has lost about half the ground gained. To meet the 2010 target, Alistair Darling needs to conjure an unlikely £4bn in his next budget.

Many critics warned that Labour's bold pledges were not matched by sufficiently bold policies. But poverty and inequality would be much higher if Labour had not increased benefits and tax credits faster than inflation. There lies the contrast with the Tories. In the name of strengthening "work incentives", they manipulated taxes and benefits throughout the 1980s in a way that inevitably increased poverty and inequality. They also weakened or dismantled institutions that protected working people's incomes - trade unions and industry wages councils, for example - and abandoned self-reliant communities that had earned a living from industries such as coal, shipbuilding and steel. There lies the origins of what the Tories call a "broken society". When Labour left office in 1979, Britain was more equal than at any time in its history. When the Conservatives left in 1997, inequality had returned almost to Victorian levels and the child poverty rate was among the highest in Europe. Inequality was integral to Margaret Thatcher's "economic miracle" whereby wealth created by liberated entrepreneurs was supposed to "trickle down" to the poor. It didn't. There lies the deficit in "human kindness, generosity and imagination".

Labour accepted Mrs Thatcher's formula for growth but tried to make a reality of "trickle down". It believed financial services would produce enough tax revenue for the government's social programme. Alas, too much money, inside and outside financial services, trickled away to tax havens or other devices invented by accountants to avoid payment. The tax collected was not enough and the jobs that were supposed to relieve poverty were not of the right type.

In the 1990s, surveys suggested wide public support for redistribution and sympathy for the poor. The mood now seems harsher, partly because ministers frequently lapse into the Tory habit of blaming the poor for their plight. But as more families experience the effects of unemployment, the mood may change again. Labour needs to recommit itself to the battle against poverty, and to rethink what it means. As Fran Abrams's report, the first of an NS series, suggests on page 34, the causes and effects of poverty are not well understood. But recently published work by Richard Wilkinson and Kate Pickett argues that inequality underlies nearly all social ills, including crime, ill-health and educational failure. Forget improving education or health by reforming schools or the NHS: a reduction in poverty and inequality will do the job better and more cheaply, and this should form the centrepiece of any future Labour programme.

This article first appeared in the 16 November 2009 issue of the New Statesman, Dead End