Cameron’s confusion on inequality

David Cameron has today re-entered the debate over poverty and inequality. He is confused on the causes and remedies of Britain's unequal society.

David Cameron has today re-entered the debate over poverty and inequality claiming on the Today programme that a Conservative government would have done better at dealing with inequality “because we’re going to address the causes of poverty”. He said that these were “family breakdown, poor education, people stuck on welfare”.

Listen:

Four points are worth making in response. First, because of Margaret Thatcher’s legacy, the Labour government inherited a profoundly unequal country. Left Foot Forward has repeatedly shown how inequality rose dramatically during the 1980s and 1990s. Front benchers including Theresa May have refused to defend this record. But as Next Left points out today: “the big question which David Cameron never answers is how he explains the rise in poverty and inequality in the 1980s, and what lessons he has learnt from it.”

Second, David Cameron is plain wrong to attack Labour’s record on poverty while the story on inequality is more complex than he ever concedes. As Channel 4 Fact Check has shown:

“Cameron’s claim on poverty just doesn’t wash – the number of people in general, and particularly children and pensioners, in poverty have reduced since Labour came to power, although progress seems to have stalled in recent years.”

On inequality, globalisation – including technological change and increased labour mobility – have meant that, as Evan Davis made clear, the Government has been running to stand still. The OECD has found that across the developed world, “economic growth of recent decades has benefitted the rich more than the poor.” This is not to excuse the further slippage under the Labour government which could have been dealt with through a greater prioritisation on unjustified salaries at the top and redistribution to the bottom but the Government has actually made real progress in difficult circumstances. The Institute for Fiscal Studies have recently published a report which points out the redistributive effect of Labour’s tax policies. While a 2008, a country report on the UK’s performance noted that:

“Since 2000, income inequality and poverty have fallen faster in the United Kingdom than in any other OECD country. However, the gap between the rich and poor is still greater in the UK than in three quarters of the of OECD countries.”

Third, against Cameron’s own measures of the causes of poverty, Britain is doing better than 13 years ago. As Seema Malhotra showed earlier this week, the number of marriages actually rose during the early 2000s. The Conservative’s marriage tax break which transfers money to the ‘stock’ of married people will do little to encourage a greater ‘flow‘ of weddings. On education, in 1997 half of all secondary schools had fewer than 30 per cent of pupils gaining five good GSCEs including English and Maths while in 2009, it was one in twelve. Finally on welfare dependency, the big problem is “marginal deduction rates” but as the Table 5.2 of the Budget shows, the number of people facing marginal rates over 90 per cent has fallen from 130,000 before 1998 to 70,000 in 2010-11. More to be done, sure, but significant progress nonetheless.

Finally, no matter what he claims, inequality will get worse under the Tories. As Johann Hari eloqently points out in today’s Independent:

He will give a £1.2bn inheritance tax cut to the richest 2 per cent in Britain – with most going to the 3,000 wealthiest estates (including his wife’s). Then he promises to end the 50p top rate of tax, giving another £2.4bn to the richest 1 per cent. Then he has pledged to cut taxes on the pensions of the richest, handing another £3.2bn to the same 1 per cent. Then his marriage tax relief policies will give 13 times more to the rich than the poor. To pay for this, he will slash programmes for the middle and the skint, like the Child Trust Fund, SureStart and state schools …

[Labour’s] redistribution will be slammed into reverse by him, with state cash flowing in the opposite direction.

If Cameron was serious about tackling inequality he would start by scrapping these regressive policies.

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