Category Archives: Equality

Even the high priests of capitalism are now inveighing against inequality

The IMF is the last place that one would expect to hear the argument being made that inequality has gone far too far.   So the recent detailed research from the citadel of capitalism has to be taken seriously.   What they found was that raising the income share of the poorest fifth of the population increases growth by as much as 0.38% over 5 years, whilst increasing the income share of the richest fifth by 1% actually reduces growth by 0.08%.   On that basis the argument that enriching the rich yet further benefits everyone collapses.   Trickle-down which both Thatcher and Blair devoutly believed in is therefore seen for what it is – merely a rationalisation to justify their hold on power and wealth.
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Cameron’s one-nation programme: pull the other one!

Like Thatcher declaring on the steps of Downing Street in 1979 that, like Francis of Assisi, ‘where there is discord, I will bring peace’, so Cameron in the Queen’s Speech debate has pledged a one-nation Britain – until one looks at the detail and reads between the lines.   To take one example, the most recent government statistics show that the poorest 10% of households pay 47% of their gross income in direct and indirect taxes, while the richest 10% pay just 35% of their income in taxes.   How is that to be addressed?   Further, the higher tax-free personal allowance will do nothing for the 44% of adults, including pensioners, whose income is already too low to pay any income tax. – which is why raising the personal allowances will do more to benefit the well-off than the poor.
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1,000 richest Britons now hold assets worth £547 billions, 13m Britons now in poverty, half in work

The Murdoch paper Sunday Times has just published its Rich List for 2015 which shows that the richest 1,000 persons based in Britain now have wealth valued at £547.1bn.   That works out at an average level of wealth of nearly £550 millions per person, though there are wide variations between the threshold level of £100 millions at the base to £13.2 billions at the top (someone called Len Blavatnik).   These are not only staggering figures, but perhaps even more staggeringly, they have more than doubled since the financial crash in 2009.   In that year the richest thousand had £258 millions, but they now have 112% more.   They include 117 billionaires with a total wealth of £325 billions, nearly £3 billions each on average.   Indeed Britain apparently now has more billionaires per 100,000 of the population than any other country in the G20 group of the world’s biggest economies, more even than the US.   The number of billionaires in Britain has almost trebled in the past decade: there were only 40 in 2005.
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Labour must outline a new settlement for public services

The future of public services is at a watershed in this election.   The independent Resolution Foundation has calculated that Tory plans to balance the deficit by 2018 mean £37bn more cuts still to come.   The stark truth of that means a cut in local government spending of no less than 42% between 2010-18, nearly halving the services that councils are able to provide.   The public service jobs lost as a result will almost certainly reach beyond a million.   What Labour should therefore be arguing for is a new settlement for public services, including higher taxes on the very rich, writing off some of the debts created by the financial crisis, and more financial freedom for local authorities to set council tax and to borrow.   Councils should be enabled to set higher council tax bands for higher-value properties and business rates, as well as to levy small local taxes such as a tourism tax.
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Why has the recovery from the crash 6 years ago been so slow and feeble?

The ‘new mediocre’, as the response from the deepest recession in post-war history is now often called, is an anomaly that cannot be accounted for by the factors that mainstream economic models normally consider important.   One explanation which is gaining currency is that excessive inequality is to blame.   Even Lagarde, IMF Director, admits that inequality is casting a ‘dark shadow’ over the world economy, on the reasonable grounds that the rich and particularly the super-rich tend to save a larger proportion of their income than the poor, so that the huge increase in inequality, at least in the G20 and OECD countries in the last 30 years, is not just a source of social tension but also a major drag on demand.   That then invites the further question: why has inequality increased so much in the last 3 decades?   Probably the most powerful underlying factor is the rise of the neoliberal Thatcher-Reagan ideology which via untrammelled markets, deregulation of finance, widespread privatisations, and deep limitations on trade union rights which then allowed the rise of excessive corporate power to dramatically expand its share of national income.
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Under marketisation NHS managers get £1.6bn redundancy payments, care workers get 25% cut in pay

The market degrades all decent human instincts of fairness and concern for others.   Two events in the last few weeks dramatically expose how far this corruption of the values of the health service and social care has now gone.   One was the publication of the latest Department of Health accounts which shows payouts to some 4,000 ‘revolving door’ managers who have left since May 2010 with large payouts, only to return either on full-time or part-time contracts.   Altogether there have been over 38,000 redundancy packages awarded to managers costing a total of £1.6bn.   Since 2010 there have been 1,700 payouts to managers of £100-150,000, nearly 600 of between c£150-200,000, and 370 of over £200,000.   For comparison, in the last year before the 2010 election total redundancy payments amounted to just £35m.
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Do we want a society based on work and innovation or on rent?

The Office of National Statistics data published last month found that the richest 1%in the UK owned as much wealth as the poorest 55%.   Oxfam, even more poignantly, calculated that 5 billionaire families controlled the same level of wealth as 20% of the population (i.e. 13 million people).   In fact these figures almost certainly greatly underestimate the inequality in wealth because of the huge diversion of wealth to offshore tax haves which account for, on the latest estimate, some £21 trillions of savings.  It seems strange therefore that the Financial Times, in particular their right-wing political commentator Chris Giles, a close friend of Osborne, should be seeking to rubbish the conclusions of the French economist, Thamas Piketty, that inequality has been rising in the West since the 1970s.   Even more they have been attacking Piketty’s contention that rising inequality is the central contradiction of capitalism.   This was not just an intellectual cross-checking of data (which is always desirable in principle).   What is at stake is the urge on the part of the Right to portray rising wealth as a social benefit spread across society, not a monopoly of a tiny elite.
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My speech today in the House of Commons on ‘Welfare Reforms’ and Poverty

I beg to move:

That this House believes that a commission of inquiry should be established to investigate the impact of the Government’s welfare reforms on the incidence of poverty.

I am very grateful to the Backbench Business Committee for giving the House the opportunity to debate this issue, which has been seriously neglected over the past three years. I am pleased to move the motion, which appears in my name and the names of Members from other parties.

It is clear that something terrible is happening across the face of Britain. We are seeing the return of absolute poverty, which has not existed in this country since the Victorian age, more than a century ago. Absolute poverty is when people do not have the money to pay for even their most basic needs. The evidence of that is all around us. There are at least 345 food banks and, according to the Trussell Trust, emergency food aid was given to 350,000 households for at least three days in the last year. The Red Cross is setting up centres to help the destitute, just as it does in developing countries. A study that was published two months ago shows that even in prosperous areas of the country, such as London, more than a quarter of the population is living in poverty. This point is really scary: according to the Joseph Rowntree Foundation, for the first time, the number of people in working families who are living in poverty, at 6.7 million, is greater than the number of people in workless and retired families who are living in poverty, at 6.3 million.
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One law for the rich, another for the poor – and this time, literally

There is no conceivable justification for slashing £220m from criminal legal aid and removing the defendant’s right to choose a solicitor than a wilful determination gratuitously to hobble one of the fundamental pillars of the Welfare State, namely the principle of equality before the law.   This is yet another manifestation of the Tory objective to establish a fully-fledged Market State in which what you get depends entirely on your wealth, whether created or inherited, and what you earn.   It’s not only that this is deeply unjust in a profoundly unequal society – and one which has become significantly more unequal since 2010 – but it will unquestionably lead to serious miscarriages of justice and radically undermine Britain’s well-deserved reputation for equal legal rights for all.

The essence of this backward step is that in future legal aid cointracts will be awarded, not on the basis of the defendant’s choice of solicitor which is now being taken away, but through price-competitive tendering to the lowest bidder.   This will obviously lead to lowest-cost justice at the expense of hgi-quality justice, made worse by the price cap being imposed at a level at a sixth below previous rates paid.   It is expected that the number of contracts will fall by some three-quarters, and preventing a defendant from choosing who should represent him is justified by the MOJ on the basis that it will guarantee economies of scale.
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