David Cameron this week outlined his admiration for Nigel Lawson's period in the Treasury. This is consistent with his stockbroking heritage.
David Cameron this week outlined his admiration for Nigel Lawson’s period in the Treasury. But is this consistent with his earlier commitments to tackling inequality or the stockbroking heritage he boasted about?
On Wednesday, the Times reported comments made to a gathering of top financiers:
[Cameron said he] was in favour of flatter taxes. “I’m a Lawsonian, basically,” he said. Under Nigel Lawson’s Chancellorship, income tax was cut and other taxes were simplified, but some indirect taxes went up.
The Institute for Fiscal Studies’ ‘Poverty and Inequality in the UK‘ report contains the critical information about Lawson’s years in No. 11 from 1983 to 1989. As the chart below shows, Lawson’s tenure saw the sharpest rise in income inequality that Britain since records began.
As Sunder Katwala at Next Left has recently pointed out, the result of Lawson’s tax policies:
“was massive redistribution to help those at the top while regressive taxes like VAT went up. That Lawsonian approach did not reverse, but instead contributed to, stark increases in poverty and inequality, which Dave is famously against.”
The reason for this dramatic increase is explained by the chart below from the same IFS document. The chart explains how incomes have changed across the distribution. It compares the Labour government (bar chart) with the last Conservative government (black line). It clearly shows how over the respective period, top earners did better under the Conservatives.
Perhaps this is why Cameron was careful to use his Huge Young Memorial lecture to say:
“That doesn’t mean we should be fixated only on a mechanistic objective like reducing the Gini co-efficient, the traditional financial measure of inequality or on closing the gap between the top and the bottom …
“And we should focus on closing the gap between the bottom and the middle”
After all, attacking the top would mean attacking his heritage. From the same Times article:
“My father was a stockbroker, my grandfather was a stockbroker, my great-grandfather was a stockbroker.”
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16 Responses to “Why Cameron’s stockbroking heritage explains his love for Lawson”
willstraw
John,
When I was taught economics (1999-2002 and 2007-08), the Gini coefficient was considered a reliable statistic. There are other measures (e.g. the ratio of incomes for those at the 20th and 80th percentile) which show a similar pattern.
Wilkinson and Pickett’s groundbreaking study on inequality uses measures of income inequality rather than wealth so I don’t think you can dismiss it out of hand.
But I would be interested to see the data you cite. The latest ONS breakdown on wealth did not contain any longitudinal information. But if true it is certainly a scandal that should be addressed.
Best wishes,
Will
StopTheRight
Why Cameron’s stockbroking heritage explains his love for Lawson http://alturl.com/5a6v
Sunder Katwala
@DeclanLyons why not try engage seriously on poverty? http://bit.ly/YwBGj this graph captures Lab/Tory contrast http://bit.ly/4AYKT4
Sunder Katwala
@DeclanLyons can you deny factual claim that post-97, bottom 50% better off (fig 3.4) http://bit.ly/4AYKT4 if so, explain why
Sunder Katwala
@ByrneTofferings changes in income broadly similar across tho', top 1% do better. again IFS via LFF http://bit.ly/4AYKT4