Inequality is on the rise. And it really is the coalition’s fault

Now that coalition reforms are in place, we're starting to see the true impact of government policy - and inequality is on the rise.

Now that coalition reforms are in place we’re starting to see the true impact of government policy – and inequality is on the rise

Despite many claiming that Britain is a more unequal society under the coalition than under previous governments, inequality had (until today) actually been reduced since 2010.

Believe it or not, the incomes of the better off suffered the biggest hit in the early years of the downturn, while the poorest were sheltered to some extent by their reliance upon tax credits and/or benefits.

And yet as we previously predicted (with a bit of help from the Institute for Fiscal Studies (IFS)), inequality is once again on the rise according to new figures.

Until recently, coalition claims of reducing inequality (George Osborne boasted of the fact earlier this year) were in fact correct. As George Eaton notes in the New Statesman, “the Gini coefficient for disposable income in 2011-12 (the most recent figure then available) was 32.3 per cent, the lowest level since 1986”.

But then this was largely because many coalition welfare reforms only became policy fairly recently:

The Bedroom Tax – introduced in April 2013

Universal Credit – introduced in April 2014 (ongoing)

The Benefit Cap – introduced in April 2013

Changes to child tax credits – introduced in April 2012

Changes to Working Tax Credits – introduced in April 2012

As the IFS put it last year, much of the pain for lower-income groups was “occurring now or is still to come because these groups are the most affected by cuts to benefits and tax credits”.

As such, it’s only now that we’re seeing the true impact of coalition policy. And inequality is on the march, according to the figures:

Inequality newj

So in sum, it was the welfare system put in place by the last Labour government that sheltered the poor from the full brunt of the recession in the initial years of this government. Rather than George Osborne boasting about reduced inequality, it should actually have been Gordon Brown and Tony Blair doing so.

Now that coalition reforms are finally in place, we’re starting to see the true impact of government policy – and inequality is on the rise.

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14 Responses to “Inequality is on the rise. And it really is the coalition’s fault”

  1. swatnan

    Correction … ‘the fault of Govt … all Govts’.

  2. treborc1

    ATOS was labour, labour will tell you it was Tories , the poorest got better under the Tories in fact under Thatcher and we got DLA for the sick and the disabled .

    Of course we had child credits and tax credits because of Brown playing with the poor tax band remember he took from the poor gave to the middle class, then was found out and it was getting close to a election.

    Labour under Blair made the rich much richer if fact returned them to the highs before the first world war.

    Sadly all labour can talk about now is beating the Tories at cutting so nothing to bother about, labour the party likely to fall in love with the bankers again.

  3. sarntcrip

    aTOS WAS INDEED LABOUR BUT THE TORIES TOUGHENED UP THE RULES AND REGULATIONS THEY HAVE TO ENFORCE

  4. sarntcrip

    LABOUR AREN’T GREAT IN ALL AREAS PARTICULARLY DISABILITY
    IT’S ONLY REALISTIC TO LOOK AT 5% CHANGE IF LABOUR GET IN BUT THEY ARE, FOR DISABLED PEOPLE THE BEST OF AN HORRIFICALLY POOR BUNCH

  5. sarntcrip

    I REMEMBER AT THE BEGINNING OF THE RECESSION AS A DISABLED PERSON I WAS NOT EXACTLY ROLLING AROUND IN FILTHY LUCRE BANKERS WERE AT THE START OF THE RECESSION GETTING EVEN MORE OUTRAGEOUS BANKERS BONUSES THAN NOW DON’T KID YOURSELF THE RICH HAVE HAD IT A BLOODY SIGHT BETTER THAN THE REST ALWAYS HAVE,UNDER TORIES ALWAYS WILL UNDER THE TORIES BE THEY TRUE BLUE OR PALE PINK

  6. Phoebus

    Is this the same treborc now sunning himeself on Pefkos, (Rhodes), Greece at taxpayers expense – just asking?

  7. Phoebus

    PLEASE GIVE CREDIT WHERE IT IS DUE. Labour’s legacy on welfare includes being the party of full civil rights for disabled people, the party of independent living, the Disability Equality Duty, the Human Rights Act and the party which signed and ratified the UN Convention on the Rights of Persons with Disabilities.

    In that spirit, it is true that Labour began the closure of the anachronistic and wasteful state-subsidised sheltered factories run by Remploy.

    It is also true (unfortunately) that in 2006, David (now Lord / Baron) Freud was appointed by the then Prime Minister, Tony Blair, to provide a nominally independent review of the British ‘welfare to work’ system.

    HOWEVER, REMEMBER, FREUD DID NOT JOIN THE CONSERVATIVE PARTY UNTIL 2009.

    Although Freud’s recommendations on single parents were adopted, when Gordon Brown became Prime Minister in June 2007 other restructuring measures that involved paying private contractors thousands of pounds for processing long term unemployed people WERE REJECTED.

    He was later rehired as an adviser to the government when James Purnell was appointed Secretary of State for Work and Pensions in 2008. Freud was involved in producing a white paper, published in December 2008, which would require most people receiving benefits either to participate in some form of employment or prepare formally to find paid employment later.

    Freud was only later appointed Minister for welfare reform in 2010 by the current government – NOT by Labour. BY THIS TIME HE HAD ALSO JOINED THE TORIES. He was responsible for designing the Employment and Support Allowance and the Work Capability Assessment (2013) and hired ATOS.

    Labour may be engaged in a process of disinheriting all this history, but it was actually brought in by a Tory administration – NOT LABOUR. T

    his distancing now by Labour is no bad thing surely.

  8. Julian Gibb

    Labour should never have agreed to the austerity plans nor the welfare cap.

    If you do not know what the economic conditions will be post GE2015 how can you agree a cap?

    Why are we so scared to make clear our belief in a fair society – living wage, decent allowances etc.

    I thought New Labour was gone?

  9. Paul Taylor

    The Gini coefficient is a gross oversimplification and should not be relied on to provide a true picture of inequality. In fact, inequality has been on the rise in the UK since the early 80’s, as Picketty eloquently illustrates in Capital.

  10. Leon Wolfeson

    They are. This is Newer Labour.

  11. Leon Wolfeson

    That’s the weakest data in the book, and I’d hesitate to draw on it.

    The income figures show that productivity increases have gone into capital rather than wages since the late 1970’s, incidentally…so it’s probably worse than that, but better data is needed.

  12. Leon Wolfeson

    “So in sum, it was the welfare system put in place by the last Labour government”

    It was put in place before Thatcher, New Labour did very little for it. Indeed, much of it dates back directly to the Spirit of ’45, something Newer Labour has resoundingly rejected – along with the votes of the left.

    Newer Labour, for instance, has committed to running the benefit caps on a forward-looking 3 year basis, i.e. big cuts to welfare every three years, based on economic projections.

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