Income inequality has fallen in the last 20 years – but only thanks to the Labour government

Labour's expansion of benefits and tax credits boosted the incomes of poor families

These are dark days for Labour. The party is at war with itself, MPs are resigning and local council seats are being lost. Worst of all, national support is plummeting and, according to the Fabian Society, Labour could be left with as few as 140 seats after the next general election. Considering all this, it’s very easy to get disillusioned.

But we should remember that the work of successive Labour governments between 1997 and 2010 continues to benefit working families, despite Tory attempts to turn back the tide.

New analysis from the IFS, shows that although pre-tax pay inequality has risen in Britain over the last 20 years, post-tax income inequality has fallen thanks to the Labour’s redistributive economic policies, particularly the expansion of tax credits.

The lasting impacts of those decisions — taken mostly between 1997 and 2004 — demonstrate the power of progressive government to bring about social and economic change.

Indeed, while Labour (understandably) took lots of the blame for the 2008 financial crisis, its earlier policies ensured that working people were shielded from the very worst effects of the collapse. While earnings plummeted across the board, the availability of tax credits and benefits cushioned the blow for poor households.

Of course, seven years of Conservative government have taken their toll. While the Tories crow about low unemployment, in-work poverty is at a record high, as more and more workers grapple with low pay, part-time and precarious work, and increased caring responsibilities.

And, as Helen Barnard of the Joseph Rowntree Foundation points out, the combination of stagnant earnings and increasing costs means that growing numbers of families are struggling to pay for the essentials.

The Labour legacy —  and the families who depend on it —  can only withstand so much.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today.

4 Responses to “Income inequality has fallen in the last 20 years – but only thanks to the Labour government”

  1. NHSGP

    Wealth inequality up, thanks to socialism.

    400K of state debts.

    108K max of state pension – under review to being cut even more.

    Compared to the 800K you could have had if Mr Median had invested his money, and you hadn’t spent it.

    12 trillion pounds of debt, Labour’s real legacy.

  2. Anon


    Labour have built up bureaucracies in our cities and awarded their apparatchiks huge salaries.

    Most of this has been done whilst, as the commenter above has stated, building up massive debt.

    I, and many of my colleagues, are sick of this hypocrisy.

  3. Chester Draws

    But we should remember that the work of successive Labour governments between 1997 and 2010

    It’s nice to see LFF actually say something nice about New Labour, even if they can’t bring themselves to say the names of the leaders of the time.

    Meanwhile the Labour Party have decided that a successful party that actually manage to decrease the gap between top and bottom is unacceptably right wing, and that only a “properly” left-wing Labour party is acceptable.

    That Blair was elected because he wasn’t ideologically pure doesn’t seem to have entered the heads of Momentum.

    The perfect is the enemy of the good. Until the Left leave perfection behind they will struggle to regain power.

  4. Robert Levy

    Why does this site attract so many knee jerk reactionaries ? Reading the knee jerk right wing comments on here reminds me of reading the Daily Mail /Express /Sun letters page .It’s as if homelessness,in work poverty ,child poverty ,deaths of people on benefits etc have not grown exponentially since 2010 .
    If I wanted debate with Desmond’s droogs then I’d go to the Daily Express or one of those reactionary rags .
    I do agree with the poster who made the point that these improvements occured under New Labour however .New Labour had it’s faults but any Labour government is better than the debt loving ,poverty addicted ,tax redistributing (to the wealthy ) Tories .
    Good article by the way .

Leave a Reply