In the wake of Iain Duncan Smith’s resignation, much was said about the unfairness of taking money away from the disabled while giving tax cuts to the well off. However, as the government scrambles to plug the holes in its budget after reversing course, we must not forget that this latest fiasco is but part of a package of reforms taken in the past decade. The government’s role and size is changing dramatically, but we have yet to address head on the fundamental question of just what kind of society we want to live in. These policy changes will have far-ranging consequences for the bottom half of the income distribution, but will also bring into ever sharper relief the tectonic shifts in inequality that have been growing for those at the very top. Beyond the squabbles over the minutiae of policy, we urgently need to tackle our blindness to growing societal inequality across the income distribution, and to forge a consensus on our new political contract.
First the facts, because to get to the heart of this malaise we need to understand why the typical Briton increasingly feels that our “political deal” is no longer fair, and that rising tides no longer lift all boats. Overall income inequality (as measured by the Gini coefficient) remains at around the same level as it was in the early 1990s. However, research reveals that this broad headline figure hides substantial changes: the share of income held by the top 1 per cent rose by some 135 per cent between 1980 and 2007 in both the United States and the United Kingdom. Today, a majority of the Cabinet, top doctors, top judges, top journalists and top military officers still come from independent schools. 19 per cent of children still live in absolute low income households, while children from wealthier families studying on the same course at the same university earn up to 20 per cent more than their low-income peers. While the median incomes of those over age 60 have risen by 10 per cent compared to where they were pre-Crisis, the incomes of those of working age have yet to recover.
Content from our partners
