I am a solid “Remainer,” believing that the United Kingdom is better off inside the European Union, particularly in terms of the economy but also because of the standards which the EU upholds in terms of consumer protection, human rights, commitment to protecting the environment and assuring our security.
In fact, I would like to push towards a more equal society in Britain – an idea which seems to escape the majority of the right wing and, unbelievably, some of the extreme left wing as well.
Although I am not an economist, it appears fairly obvious to me that the increasing gap in inequality in the UK has to do with asset appreciation more than any other factor but I am also fairly certain that the Conservative Government does nothing to curb it. I appreciate that we need entrepreneurs and, in particular, small and medium businesses to both improve individual aspirations as well as to increase the overall wealth of our society. Notwithstanding the excellent work of some charities, I am aware that public services run by local authorities are vital to ensure that everybody has access to support.
Here are some areas which I think need improvement: Our pre and post-natal maternity services need to be bolstered with free parenting support for anyone who would like it. Our educational system needs to ensure that all children receive a good quality education and further education in apprenticeships, technical or arts college, or university. Our National Health Service needs to be solid with additional funding and intelligent use of private contractors and both qualified and unqualified staff. Our roads and infrastructure need to be maintained to a proper standard so that they are safe for pedestrians, cyclists and cars. We need creative, affordable and social housing AND we need to ensure equal access for everybody wherever possible.
The government must stop handing over contracts to preferred providers in a way which only adds to their coffers and puts themselves and the public at risk. There should be a balance in private business so that not only are top executives and shareholders but ALL stakeholders considered – including customers, employees and the local community. I would extend this to charities and other organisations as well.
We need to take a good hard look at our system and our legal structures. When Theresa May was campaigning prior to the election in 2015, she vowed to ensure that the highest wage in a corporation was no more than 7 times that of the lowest wage. This seemed to be brushed aside as the Rees Moggs and Boris Johnsons of the party gained power.
Yes, taxpayers want value for money but they also want to live in a community which provides for everyone, not just a select few who have the ability to pay for their services. People cannot just be fobbed off with a benefit and told to buy their own services. We are better than that. We are not ruled by the almighty pound sterling. We want a functioning and thriving society.
* Gillian Douglass is a member of Tunbridge Wells Liberal Democrats
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35 Comments
Gillian
very well constructed article. I think You are spot on in stating “it appears fairly obvious to me that the increasing gap in inequality in the UK has to do with asset appreciation more than any other factor. I recently referenced, on another thread the speech last September by Vince Cable to the Resolution foundation on this ‘elephant in the room’ issue https://www.libdems.org.uk/cable-inequality-full-speech-060915.
In the speech he concludes “Income and wealth inequality is a continuing social and economic weakness in the UK. It undermines any attempt to build a national consensus on the future of the country and helps to explain why the country voted Brexit (though it is likely that their own position will be worse as a result).
My party and I want to major on the issue of how to reduce inequality. Our 2017 manifesto was judged the most redistributive of the three by the IFS. There is a Coalition legacy of measures like the Pupil Premium, improving minimum wage enforcement and disciplines on executive pay, and seeking to lift low earners out of tax . This will be a theme of my leadership.”
I support many of the proposals in the article as being good – not just for the poorer but also for “better off” as well.
I would add one.
An even greater “pupil premium” for disadvantaged pupils. The National Audit Office said the current pupil premium has massive potential to increase educational attainment.
There is one I would take away:
Paying someone no more than 7 times the salary of the lowest paid.
Lovely “motherhood and apple pie” policy but completely unworkable and not in line with a relatively free society which hopefully Liberals want.
We are I believe essentially supporters of a free market capitalist system – as probably the worst way to run an economy until you consider all the others. We do though want it ameliorated through taxation and redistribution and controlled
It would be I am sure it would be easy to get round. You just separate out the company. Put all the highest paid in one company that then contracts to a second company.
Take two different companies – one that has its own cleaners for example and one that doesn’t. One could may be pay much more than the other.
And I am not sure that football fans would be best pleased that football clubs couldn’t sign top football players any more.
@Gillian,
“Although I am not an economist, it appears fairly obvious to me that the increasing gap in inequality in the UK has to do with asset appreciation more than any other factor “
I remember being told by Prof Randall Wray, UKCM, that I had a much better chance of understanding the economy than most economics graduates from the better known universities who’ve been forced fed a diet of neoliberalism for several years. If he’s right, saying ” Although I am not an economist” actually puts you at some advantage! You haven’t been brainwashed!
You are quite right about asset appreciation, particularly in the housing market, causing an increasing gap between the haves and have-nots in our society.
“I am also fairly certain that the Conservative Government does nothing to curb it.”
Right again. They’ve actively encouraged it. Although no Government of the last 30 or more years is blameless. All three major parties have to accept their share of responsibility. The neoliberal narrative has been that Government debt is bad. Private Sector Debt tends to be described as “investment” when it really isn’t. The trade deficit is something that only the economists of the 60’s worried about and they aren’t around any longer. A floating currency should, according to neoliberal thinking, fix any imbalances there. It obviously doesn’t.
BUT the UK’s trade deficit, (more accurately the current account deficit) which we’ve had for as long as most people can remember, has to be financed by someone in the UK doing the borrowing. Government doesn’t want to do the borrowing, or be seen doing it, so it has pushed the burden on to the private sector with a program of low interest rates and deregulation.
That borrowing is inevitably directed in the direction of the housing market. The more prices rise the more others are determined to borrow to “get on the ladder”. It’s is a bubble and it will have to deflate at some point and the outcome won’t be pretty.
Thanks for your comments. At the moment, our Boards of Directors and accountants are obliged to maximize profits for shareholders and, while we all agree that business is primarily concerned with increasing shareholder wealth, this entirely at odds with providing staff with proper wages and living conditions. We need to consider the wellbeing of all stakeholders and the community at large and stop living in a create problems/fix problems world.
This article makes total sense. Brexit was the result of a civil war in the Conservative Party brought about by the rise of UKIP.
There is a practical way to restrict top salaries without taking control away from company managers. Don’t get rid of Employers’ NI. Use it to solve the otherwise intractable problem of top salaries – tax the companies that pay super salaries, not the employees.
Specifically, tax employers who pay employment packages, salary, bonuses etc, over say £500,000 pa using a special category of Employers’ National Insurance. (I think 20 times may be more practical than 7 times, and we should pay our Prime Minister more.)
The mechanics of the tax are well established. It is a difficult for employers to avoid, easy and cheap tax to collect, and it would moderate top salaries while allowing companies freedom to set their own salary policies.
It does not penalise the individual employees because the tax is paid by the employer.
This is a deliberate ‘cliff edge’ tax. (There would be no tax to pay on employees on less than £500K.) It would focus the attention of any employer considering paying an employee more than £500K.
I agree with you Gillian, that inequality in Britain is the biggest issue that we face. Having full employment as history shows us is the best method of reducing inequalities in society. If there is no large pool of unemployed people (and under employed people) then employers have to compete for workers by offering better working conditions and higher wages and employing marginal workers who they wouldn’t employ if they had more choice.
Linked to economic inequalities are the 14 million people in the UK living in relative poverty which we need to eliminate or at least reduce dramatically. This is why we should be advocating increasing benefits so no one on benefits is living in relative poverty and supporting a National Living Wage of 70% of average earnings by 2027.
@ Michael 1
Pay ratios should be reduced. In the 1950’s they averaged 20:1. In 2010 they seemed to average 262:1 with M & S at the top with 656:1 (https://www.equalitytrust.org.uk/sites/…/A%20Third%20Of%20A%20Percent_0.pdf). I am not sure if we can get back to 20:1, but the government could levy extra taxes on companies with excessively high ratios to encourage them to be reduced over time. I think it should be possible to get them reduced to less than 1:100 within five years and below 1:50 with ten years.
@ Ronald Murray
“Brexit was the result of a civil war in the Conservative Party brought about by the rise of UKIP”
Let’s get it right!
It was the EUref of June 2106 which was the result of the Tory civil war.
Brexit was the result of the 52:48 vote by the UK electorate to Leave the EU.
No amount of factional infighting in any party could have caused that!
Thanks for your comments. Some really good ideas! Why aren’t we running the government?
Gillian,
the advert on the riight betwwen op-eds and twiiter feeds has a link to Charlotte Pickles discussing inequality https://unherd.com/2018/02/audiocast-charlotte-pickles-presents-wealth-tax-manifesto/. She makes some very good points and interviews a number of Conservative and Labour politicians as well as the IFS and assorted economic commentators, throwing in a quote from J S Mill for good measure.
Her manifesto for making capialism work is based around reforn of the tax system and includes three principle measures:
1. Alingning the taxation of unearned and earned income by taxing capital gains at rates similiar to earned income.
2.. Replacing business rates and council tax with a Land Value Tax.
3. Replacing Inheritance tax with an Accessions based system (gifts tax).
She makes the point that all of these reforms have been proposed by economists and tax policy experts in the treasury but the obstacles have always been political. She goes on to say the the political climate may be changing with older homeowners worried about the future of theit children and grandchildren.
It’s worth a listen and although coming from a centre-right perspective advocates measurews hat should be at the forefront of Libdem Tax Policy.
Michael 1 16th Feb ’18 – 1:19pm “And I am not sure that football fans would be best pleased that football clubs couldn’t sign top football players any more”. Are you a football fan? or an economist perhaps? Entire “clubs” are being bought by the super rich and loyal fans are being priced out of attendance at the home ground although they want their kids to support it. If football clubs own people, no matter how well paid, are we really returning to a system of serfdom or chattel slavery? If you are a football fan how do you think players such as Harry Kane became so efficient at finishing?
In 95-96, 65% of middle income 25-34 year-olds owned a home and in 15-16, 27% do.
“A nation will only prosper when its young thrive,” [Xi Jinping]
“We know that greater equality will help us reign in consumerism and ease the introduction of policies to tackle global warming”.
“The health of our democracies, our societies and their people is truly dependent on greater equality.” [The Spirit Level: Why Equality is Better for Everyone by Wilkinson and Pickett (Penguin)]
“If we reduce the inequality of economic outcomes, then this contributes to securing the equality of opportunity that is seen as a key feature of modern democratic society.”
[Inequality: What can be done?: A.B.Atkinson (Harvard)}
P.S. “The achievement of a less unequal society in the period of the Second World War and subsequent postwar decades has not been fully overthrown.” [Ditto]
@Peter Martin
The referendum was called in the misguided hope it would calm the Civil War in the Tory Party. Instead it has got worse
It should not be about purely politics.
There are many things that need improvements. The NHS is badly struggling, is it being pushed into privatisation. There should be a way to improve the situation and find ways to make it cost effective and efficient. Not the Hunt way.
Maternity care is another area, again, struggling to survive. Depression after the birth of a child can be so destructive. More needs to put in to help new mothers.
Housing, and helping those off the streets is another how ever it happened to become their lifestyle. In Bristol they have turned containers, into small homes. Helping those with addictions, easy targets on the streets.
You are correct, there is much that could help change society for the better.
I very much welcome this topic being discussed. We need to look at the real lives of many people in our country. We must not be afraid of questioning everything. And we must accept that we all have, to varying degrees, a vested interest in maintaining various aspects of an unfair society.
The fact is that there are very many young people graduate from universities and can only get what are described as non graduate jobs. They are near minimum wage, insecure, unable to dream of a mortgage, a few weeks away from destitution. There are many children of course who finish education earlier and most go straight into this insecure world. Meanwhile they see services being outsourced at great cost. OK the companies make money, but the real people involved, as from the pension funds which own the shares, are the directors and senior people in the companies who get disproportionate salaries and extra payments for no real purpose.
I wonder why so many in our society feel alienated from the political process?
There was a recent poll showing support for return of compulsory military service (with the elderly in favour and young opposed) but I don’t see how military service “treats” the parts of our society that needs fixing/is raised here. Whether it is in structure or quality of education or quality of health service, there seems to be a flood of good resources directed to few and usually in parts of London and home counties. Would it be possible to have, for example, a compulsory education service where the top rated schools donate the time of their best teachers for a period of a year to the poorest, worst performing areas? This could be replicated with health and transport gurus to provide a real spark to poorer areas and hopefully help reduce inequality.
http://www.telegraph.co.uk/politics/0/margaret-thatcher-became-known-milk-snatcher/
Yes, inequality is a big issue, but why “beyond the EU”? Inequality has three reasons:
1. Uncompetitiveness of the poorly skilled in a global marketplace.
2. Lack of industrial capital deployment to make the unskilled productive.
2. Unwillingness of the right to redistribute.
Those who want to leave the EU want to aggravate 1. and 2. and perpetuate 3. The unskilled will become even more exposed, capital will continue to leave, and the redistributable tax-base will further erode. In these circumstances, a left Government becomes pointless, the privatization of wealth will be terminal, just like in the US.
There will not be “a more equal society in Britain” if Brexit happens, quite the opposite.
I must declare an interest first. I was a school teacher, now retired with a teacher’s pension – and of course a state pension. As far as schools are concerned we really need to look at the real lives of children. There are far too many who arrive at school without breakfast for example. That means that they may not have received a proper meal since tea time the day before, or perhaps the school meal the day before. There are far too many whose families have difficulty paying for school uniform, and even more paying for school trips and so on. Stress in the family, caused by insecure jobs, etc. This results in stress to the children. All these factors need to be dealt with. There are many areas where the majority of parents pay for tutors for there children on a regular basis. Some schools it would be unheard of. When the issues of poverty are dealt with other things can be dealt with.
Any manifesto must include the two not very sexy topics of a written constitution and leading on combating climate change. We have consistently campaigned on both these issues longer than any other Party. Now is not the time to abandon them.
The country has followed a path that simply makes folks poorer, static wages, zero hours, over inflated housing costs, colossal student fees and so on. These are the products, to an extent, of economic liberal dogma about the benefits of globalism and market forces. The point is that a lot of the safety nets and infra structure people rely on are the result the concept of the Nation State and are undermined by supposedly progressive internationalism.
Glenn,
this beneficial nation-state must generate the wealth to fund the “safety nets and infra structure people rely on”. The UK economy is now highly specialized as a result of the “economic liberal dogma about the benefits of globalism and market forces” and “supposedly progressive internationalism”. What do you propose? With such a small, and strongly export-oriented manufacturing sector, and far-from self-sufficient farming, the imperative to export services to buy things is now irreversible.
Pulling up the drawbridge will not make folks richer, yield dynamic wages, bring full-time jobs, deflate housing costs, or eliminate student fees. Quite the contrary. Underutilizing your strengths and putting more effort into your weaknesses is a recipe for mediocricity and poverty, both for individuals and countries.
Inequality of income and wealth is a major issue. They are based to a significant extent on inequalities of power and influence.
Inequities in life expectancy and experience of good health are extreme demonstrations of the results of those inequalities. Worldwide as well as in the UK, it is clear that lack of control over your own life in work, unemployment, housing and pollution are the major determinants of health and life expectancy. Our collective failure as a society – it certainly isn’t just about government – to address these issues means that poorer people, those in the worst condition’s and those who have the least control over their lives die sooner after living with worse health.
And yet, this debate on equality doesn’t mention it!
Another theme should be co-ownership in industry which involves employees in larger firms in sharing power and profit.
A major source of inequality is inheritance. Popular views (shared by many liberals) are that we should be able to pass on the results of our work to our children. Should that include passing on privilege, opportunity and status? I was reminded recently (thanks, Iain Brodie-Browne) of the Liberal Party’s concept of Accessions Tax, which is levied not on the value of the estate of the person who dies, but on the wealth and income of the recipient.
@ Arnold Kiel,
“this beneficial nation-state must generate the wealth to fund the ‘safety nets and infra structure people rely on’ “.
It doesn’t work like that. The nation state depends upon resources. A sovereign currency issuing country can always regulate its economy to ensure that the available resources are maximised. So if we have people available to work as doctors and teachers etc then we can have doctors and teachers etc. If we have people to make cars we can have cars etc etc.
Our standard of living, after Brexit, will be defined by what we can produce for ourselves and what we can swap for the produce of others. That’s what international trade is all about. There’s no point swapping a greater value of products for a lesser value year after year. It doesn’t make any sense for us to do that personally, and it doesn’t make any sense for the big exporters like Germany to do that either. They are just distorting world trade in the process.
@ DJ
From your post it seems you think inequality is about poorer services being provided in different areas. While we all want the best services everywhere, it is the way the economy has been run that has increased inequalities since 1979. We need to stop accepting that the government can run the economy and leave 1.4 million unemployed, nearly 2 million too unwell to work and I don’t know how many millions underemployed. If everyone who wanted a job had one inequalities would be reduced. As Liberals we should not accept that the marginal worker who wants to work can’t because of the way the economy is run.
@ Arnold Kiel
Regional economic inequalities are greater across the whole EU than across the whole of the UK. This is why the EU has the huge problem of economic migration.
If we had full employment employers would have to train their workers with the skills they need and because labour would be short they would have to invest to increase productivity. Win, win win.
Inequalities are made worse by having economic policies which accept that about 5% of the adult population must always be unemployed to keep control of inflation. This aimed for rate of unemployment is called the Non-Accelerating Inflation Rate of Unemployment (NAIRU).
As Liberals we should reject running society so there will always be at least 5% of the adult population unemployed.
@ Gordon Lishman
If every citizen had a Basic Citizens Income, each citizen would have more control over their lives and more options with regard to work.
We should explore the possibility of reforming inheritance tax so the recipient of the inheritance is taxed not the value of the estate (I think we last did it sometime in the last 20 or so years).
@ Michael BG,
“Inequalities are made worse by having economic policies which accept that about 5% of the adult population must always be unemployed to keep control of inflation. This aimed for rate of unemployment is called the Non-Accelerating Inflation Rate of Unemployment (NAIRU). As Liberals we should reject running society so there will always be at least 5% of the adult population unemployed.”
If we ran the present day economy to give a job to everone, who wanted one, without having to move too far from home we’d certainly have an inflation problem. But the idea of the NAIRU is flawed for several reasons. At one time workers were, in the main, either fully employed on 40 hour weeks, or they were unemployed with no work at all. In those circumstances a NAIRU might have made some sense but 5% is probably too high a figure. Workers are far less likely now to be in one of those two binary states.
There’s now much more part-time and insecure low paid employment about.
In addition, the unemployed of one country can more freely move to another. So the idea of the NAIRU does, at least, need some modification, to allow for these factors.
@ Peter Martin
I am surprised that you support having an unemployment level which is higher than the full employment level. The Modern Monetary Theory states that governments should spend to achieve their economic outcomes which you support. You wrote in the comments section of my last article, “Parents and Guardians need full time jobs on living wages. There’s plenty of work that needs doing that simply doesn’t get done at the moment because, supposedly, there is ‘no money’ available to pay for it”. I really thought you supported full employment and so rejected NAIRU.
@MichaelBG,
I don’t. I was mainly questioning your figure of 5% for the NAIRU which I’d say is too high.
But say we decide it’s 3%. About half could be long term unemployed. Say 1.5% What about them? The MMT answer is to guarantee them a job. I generally support this idea but it isn’t without problems. What happens if workers refuse the job? Do they still get JSA? What happens if a right wing government misuses the program and turns it into a kind of workfare? I definitely don’t support that.
What happens if the workers on the JG want to join a union and strike for better pay and conditions? The theory, of MMT as I understand it, is that the base pay of JG workers effectively guarantees the currency against inflation. So if they have a pay rise we could have an inflation problem.
Then what about immigrants? Do we offer anyone from anywhere in the world a JG on a living wage?
So some details need to be worked out but in the meatime I’d settle for 3% if it was a genuine 3% with no workers on ZHCs etc.
This is a very important subject, and too often side-lined as being too complicated. Many suggested ‘solutions’ come with their own set of problems, but all the more reason to discuss it in depth and keep working on it.
I do agree with Michael1 that simply requiring a company to restrict top pay to 7 x the lowest will result in larger organisations dividing themselves into separate entities, as is already popular with those trying to minimise accounting profits in a particular country. Already it is very common for organisations advertising paying only the actual living wage to do this by outsourcing cleaning contracts, and allowances would need to be made for employees based on other countries with different costs of living, which might just mean getting more of certain work done abroad.
IMO, we need to firm up the responsibilities of corporations towards their own staff, which includes maintaining pension funds, before they get to hand out larger dividends, or bonuses to senior staff. I accept there could be issues with cancelling all dividends for an extended period, but there could be a cap.
And I whole-heartedly back enhanced pupil premiums, and doing more to support teachers who are having to deal with poverty on top of teaching. It’s really not fair that some children will be assumed to be less intelligent, or struggle during exams because they didn’t have a proper breakfast.
@ Peter Martin
I support full employment which I define as running the economy to try to keep unemployment below 2.5% of the working age population. Some people would argue that I have set the level too low and it should be 3%.
You state that according to MMT the Job Guarantee controls inflation (I assume wage inflation). I also assume because those on the Job Guarantee are paid the Minimum Wage. If you support this then you are not supporting keeping unemployment to the Non-Accelerating Inflation Rate of Unemployment (NAIRU). You are not supporting the government keeping unemployment at a level to control inflation. You are supporting controlling wage inflation by another means. I would be very interested in how MMT thinks a Job Guarantee will control Wage Inflation.
The Government targets inflation to be around 2.5%. I think the government should not be so concerned with inflation. I think some more wage increase pressure would be a good thing and it would reduce economic inequalities. I think having companies compete for workers would benefit the economy by increasing wages and improving working conditions, by encouraging employers to give their workers the skills they need (by training them) and to invest to increase productivity. When companies have to compete for workers they are more likely to employ the more marginal workers who at present find it very difficult to find work. This group I think includes the nearly 2 million who are not well enough to work. I think companies will be more willing to employ these people when they can’t get anyone else.
I think the Job Guarantee should be completely voluntary. A person’s unemployment benefit would not be affected no matter how many Job Guarantee positions they refused. The employer of last resort is about giving suitable work to those unemployed not forcing them to do things they have never done before. I would not just want to provide jobs; I would want there to be the opportunity for the unemployed person to enhance their existing skills or learn new ones and so I would want there to be a training option (I don’t think this is included in MMT).
An excellent piece from Gillian, and from Gordon.
We need to see that it is not public vs private, this is the stale and outdated rhetoric of old politics gone sour.
It is as shown in the article from Gillian and the responses from Gordon, about power , influence and the lack of both in people in their lives.
Empowerment is not having a local council run healthcare. That might be good as far as structures or budget allocation for public health.
Empowerment is not the ghastly phrase of Mcdonell, , that we should put services into the hands of the workers…yes with the “people ” a add on.
Empowerment is the people equal, and involved in their own lives.
I live my life with a terrible lack of power.
My finances are hampered by my bank . I cannot get a loan due to a manageable overdraft even though I have a west end , and also broadway,director interested in my musical aimed at the west end and broadway.
My wife cannot get the treatments she needs as she has been written off as chronic, by the NHS and even though many therapies might help her, the NHS does not do them, they are in the private sector, freelance massage therapists, not big private companies we hear demonised.
We together she and I cannot make progress unless we push and shout and try day in , and out, despite being educated to degree and beyond, because of the lack of opportunities both in the work and market we are in, no longer in London, and because of the terrible treatment by private big businesses, banks, and blinkered and old fashioned public sector attitude in the NHS.
Ideology, right , left. private , public, is destroying progress.
Only very few see it even in this party , it seems though we are far more likely to.
@ Michael BG,
This is how the MMT guys would have it working but obviously on a much grander scale. I’m not totally sold on the idea and would describe myself as Post Keynesian. My approach to the JG would be to make it totally voluntary and an additional option to the JSA.
https://www.huffingtonpost.com/warren-mosler/the-umkc-buckaroo-a-curre_b_970447.html
@ Peter Martin
I don’t think the UMKC Buckaroo is an example of how MMT controls inflation. I have found this article which might – https://modernmoney.wordpress.com/2011/05/02/controlling-inflation/. “If the private sector is inflating, a tightening of fiscal and/or monetary policy shifts workers into the fixed-wage JG-sector to achieve inflation stability without unemployment.”
There is also your favourite Stephanie Kelton
https://www.youtube.com/watch?v=fMe_aE4VxlQ.
There seems different interpretations. The one I favour would be to run the economy to achieve full employment and when the economy overheats and inflation is rising use monetary and fiscal measures to reduce inflation while providing a minimum wage job for everyone who wanted one.
The alternatives seems to be still run the economy to control inflation but do not be concerned about keeping a pool of unemployed people and only ‘control’ inflation when it is getting too high while at the same time providing a minimum wage job for everyone who wanted one.
@Micheal BG,
There’s no contradiction. MMT folk do talk about the fixed-wage JG-sector . They do mean fixed-wage wage. And they could perhaps add fixed conditions too. And that’s a potential problem as I see it.
It’s fine in the hands of a government which can be trusted to run the economy, in the manner that you describe, and also make sure that the fixed-wage is a living wage. But…..