A New Deal To Tackle Inequality
Economist Stewart Lansley writes that poverty is rooted in the practices of big business that enjoys privileges while the poorest are subjected to penalties. He calls for a new deal to tackle inequality by addressing wealth ownership
Poverty in the UK is at near record post-war levels. Over four million children (30 per cent of all children) live in poor households, a figure that is set to go on rising. Poverty is institutionalised and embedded in an economic and social system. It works in the interests of a small financial and corporate elite, and against those of the most vulnerable.
Rising impoverishment has been driven by the profound economic and social changes of recent decades: the erosion of high and semi-skilled skilled and well paid, secure jobs; the excessive freedoms awarded to finance; the fall in private and public investment; a regressive tax system; and austerity economics - all fuelled by an endemic ‘cycle of privilege’.
Despite the scale of poverty in Britain, official attitudes towards the poorest are not much softer than in the Victorian era. Society is a long way from the national consensus on social security of the post-war era. In the last decade, policy towards the poor has become increasingly harsh, with poverty, as in the nineteenth century, widely dismissed as self-inflicted - ‘a lifestyle choice’ as some ministers like to call it.
Since 2012, five million sanctions have been issued against claimants. Food banks – along with other forms of charitable help – have become normalised. With recent governments blaming the individual, an increasingly ‘disciplinary state’ has emerged that exercises greater and greater control over claimants aimed at pushing people into work, whatever its quality or stability.
In contrast, the highest paid corporate leaders, financiers, private equity and hedge fund barons get an easy ride from government, the media and public, leaving them largely free to use their political and economic muscle to secure an inflated share of national wealth out of proportion to their contribution.
Corporate subsidies and grants stand at £93 billion. Yet while the social security system now comes with ever harsher obligations, corporate financial help – which is nearly as high as the cost of benefits (excluding pensions) -comes free of conditions on tax dodging, employment practices, or social responsibility.
Britain now offers generous rights and rewards for the privileged but obligations and penalties for the poorest. This is not the politics of reciprocity and of mutual obligation that underpinned the post-war social system.
Poverty is rooted in the practices of big business, the uneven divisions of the gains from economic growth, and the hierarchical structures that determined life chances. Tackling it needs a commitment to a 21st century ‘new deal’ involving much more than a series of tweaks.
As Beveridge declared in 1942, ‘patching’ is not the solution. Such a deal needs to tackle the asymmetry of treatment between rich and poor, construct stronger checks and balances over corporate power and build new pro-equality biases into the economic and social system.
These should include a new politics of reciprocity that embraced those on high incomes, cut tax avoidance, and which committed to national minimum as of right through a guaranteed income floor below which no-one would fall.
Such an approach would mean changes to the tax and benefit system, rebuilding Britain’s depleted social capital through higher levels of public investment and a more even distribution of the national wealth pool, including greater common ownership especially of land and other natural resources.
Greater control over markets, changes in the ownership of companies along with major reforms in the way they are run and in the operations of the financial system are needed to ensure a closer fit between economic activity and the common good. Without such changes, Britain will continue to see poverty and inequality levels at historic highs.