Opinion: Divisions between the rich and the poor

To the average person on a low income or who is unemployed, the idea that voting for a political party can make much, if any, difference to their life would seem absurd.

It has not always been this way. The Liberal government of 1906 did much to respond to the social agenda, although it did not do enough to halt the emergence the Labour party. The 1945 Labour government implemented policies such as the introduction of the NHS which secured the disproportionate support of the working class, even to this day.

Today of course the divisions between rich and poor are getting wider, and have done so for many years. The Lib Dem policy of extra income tax for the very rich to secure more funding for public services was a net vote winner at the last general election, by a substantial margin.

However I am not going to argue that we change this policy back again. The argument that the Red-Green coalition in Germany had been changing their tax policy in the other direction was well made by Vince Cable in the debate last year. The key criteria is the net take taken by the exchequer, and if specific progressive taxes causes the rich to dodge the tax laws and pay less then there is no point in doing it.

In any case, as was pointed out in the debate, the FSA was quoted as saying that our tax policies overall are even more progressive than before.

So what concerns me, coming from a Labour stronghold, is that the message is not getting made. Nationally the Lib Dems are not associated with tackling poverty.

At the last conference Vince Cable made what I thought was a very interesting speech which again sounded very progressive. And in his leadership speech, Ming made it very clear that the division between rich and poor was one of his top priorities.

Yet I am meeting at a grass roots level activists who do not care about this division, and they say that the division should be left to market forces. This of course will mean that you extrapolate the trends we saw under Thatcher and Major.

So I am concerned that the party is rather half hearted on this issue.

More generally I am wondering what we can do in terms of policies in addition to taxation.

The UNICEF report that put the UK 21 out of 21 countries in the world, in how we look after children in this country. 20th place went to the USA.

The anglo-US economic model, low taxes and underfunded and privatised public services does not work well for children, even if it makes the GNP figures look good (to some extent helped by easy credit and high level consumer spending generated from high personal debt levels financed by an unsustainable housing boom).

So where is our commitment to public services? How do we turn this sorry state of affairs around for the Liberal Democrats?

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7 Comments

  • We need to really get it out there that Labour no longer represent the working classes and it is our party that is standing up for the poorest in society. We not only need to emphasise our tax and spend policies but also that we are the only party dedicated towards universal public services (something which labour gave up on a long time ago and that the Nordic countries still have in their more successful cases). The main problem is that i think for too long we have been too soft on new labour. We need to become the main party of the left again in Britain but we can only do that if we really get our act together and make it a key objective to destroy the Labour Party.

  • Geoffrey Payne is right to be concerned about the growing wealth inequality in Britain and its political consequences.

    There will always be a big spread between the richest and poorest and that, in itself, is not a problem. It signifies only that some are more skilful or energetic or just plain luckier than others. However, when inequality grows beyond some (undefined) point and then goes on growing it is a warning sign that society is becoming ossified and that the ladders of opportunity are not working. It is no coincidence that the growing inequality since Thatcher has been accompanied by decreasing social mobility.

    On the ground this shows up as the 20% of school leavers who are functionally illiterate, as houses which have become utterly unaffordable to first-time buyers, as communities that are visibly disintegrating and so on. In short, Labour isn’t working (again!). Most people know the system is broken though probably very few can articulate the reasons.

    So what is wrong? I suggest that there are several things going on.

    Firstly, there is the sheer managerial incompetence of New Labour with everything driven by spin and tabloid headlines with remarkably little coherent strategy. Specifically, at a time when other large organisations are devolving power and shedding bureaucracy, Blair has been doing the exact opposite creating a thoroughly dysfunctional government and imposing a huge cost burden on the nation.

    Secondly and more fundamentally, the Labour philosophy has run out of road and Blair’s attempt to reinvent it as a ‘Third Way’ is gibberish. Yes, there is a need for a safety net to maintain a decent minimum standard for all and that is expensive and implies a certain level of taxes but Labour’s instinct to solve ALL society’s problems by top-down ‘tax and spend’ is doomed. Implementing socialist policy from behind a yellow rosette as some liberals would like is no answer either.

    And the solution? In simple terms to remember that markets are human institutions and not some God-given force of nature like gravity. As such, can be made to work for the common good and provide opportunity for all or they can be hijacked by an elite and run in ways designed to protect their power and wealth – which has in fact happened to a quite remarkable extent. We need to put that right and make them work for the common good. That would be both more effective and much cheaper than tax and spend.

  • I am concerned that certain contributors to the comments seem to imply that government spending stifles growth. This simply isn’t true when changes are made in moderation – Keynes said so and it has underpinned most economic decisions over the last century.

    Government doesn’t spend money in isolation – it has to spend it somewhere. It creates jobs and so on and so forth through its spending, thus pushing growth. Therefore as long as we don’t start falling off the edge of the bell curve as we did with 98% income tax (thus stifling innovation) we should be okay. A few more points of tax on the rich could go a long way.

    I’d personally be happy to see the money spent on consultancy from the large US players diverted to frontline services, aimed at reducing divisions in society. I don’t believe progressive taxation is a panacea in itself either, but it’s an important moral point.

    One of the things we’ve been talking about in our area is breaking the cycle both in terms of crime, and poverty. So many little things on a local level (mostly in my view stemming from local services in education and social care) can combine together to have a big long term effect.

  • Joke Tammerijn from Holland 11th Jun '07 - 9:43am

    Hi Geoffrey, my question is: are you the Geoffrey Payne living in Hartlepool I used to write with as a penfriend in the early days??

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