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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