UK income inequality lower than a decade ago: three challenges for the Lib Dems

Counterintuitive though it may seem to many, Britain is significantly more equal than it was a decade ago – especially in London, where the fall in inequality has been “dramatic” according to the IFS.

This poses several challenges for those who consider that reducing income inequality should be a policy priority, among whose number are many Liberal Democrats.

First, are people really that concerned about inequality (i.e. their income compared to others) or do they care primarily about how they themselves are doing? The evidence from the last decade would suggest it is the latter.

Second, what is the virtue of reducing inequality through recession/slow economic growth? The fall in inequality is due in large part to the rich becoming poorer to a greater extent than the poor. I don’t see that as a cause for celebration, but if it is the easiest (and possibly only realistic) way of reducing inequality, would proponents of that end be content with this means?

Third, we have as a party in recent years asserted — falsely — on a few occasions in conference motions that inequality has been increasing, and from there have proposed policy solutions based on that falsity. How as a party do we get better at accepting independent evidence, even if it is uncomfortable?

You can read the whole IFS paper here.

* Nick Thornsby is a day editor at Lib Dem Voice.

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62 Comments

  • David Evershed 20th Jul '17 - 9:27am

    The Lib Dem policy should be equality of opportunity.

    Mozart was not equal and nor should he have been made equal..

  • The give away is in the title of the IFS document, “poverty and inequality are relatively unchanged”.

    What I know for certain is that the number of referrals to my local food bank continues to grow, very often because of the system of universal benefit which I’m afraid we voted for when in government.

    David Evershed, Mozart – yes, sublime music – but also subject to the whims of aristocratic patronage and dying in poverty at a young age.

  • Rob Parsons 20th Jul '17 - 9:44am

    Inequality is a lot more than income. You have to measure also things like the services people use which used to be available free of charge and are now either charged for or, increasingly under austerity, are no longer there. Those changes hit the poorer much harder than the richer, and there is a very long way still to go there.

  • Laurence Cox 20th Jul '17 - 10:05am

    Over the Thatcher years, the Gini coefficient in the UK (Figure 3) rose from a level of around 0.26 to around 0.35, where it has remained. Just because it has been static for a decade and a half is no cause for celebration. The IFS paper cited shows that the poorest 20%, who benefitted in the 2007-10 period are now losing out relative to the higher income percentiles (Figure 2). Clearly, what we need to do is to target these. As they are paying little or no income tax, raising the income tax threshold further does not benefit them, but we could and should be raising the level at which they pay NI contributions. To remain fiscally neutral, this means raising taxes on the better-off, such as those on the higher and additional rates of income tax.

    This IFS income calculator https://www.ifs.org.uk/wheredoyoufitin/ shows how household income relates to the income percentiles used by IFS.

  • To me the notion of income equality has always been a bit of a red herring. If incomes drop even slightly at the top end income equality increases. If poor people move or are moved from an area then the area becomes more equal and so on. What we really want to know is have standards of living increased or decreased? Are there more or less people on low incomes? Otherwise it could be construed as a bit of semantic jiggery pokery.

  • @ Nick Thornsby Are we reading the same document ? I’m sorry, Nick, but I think you’re putting a gloss on it. There are no grounds for complacency amongst Liberal Democrats – unless it is an attempt to be an apologia for the Coalition years.

    I quote :

    “Overall, the relative poverty rate has remained roughly unchanged since the mid-
    2000s, having fallen markedly through the late 1990s and early 2000s. The
    exception is relative pensioner poverty, which has continued to fall. Viewed in this
    historical context, the increases in relative poverty among children, pensioners
    and across the entire population observed over recent years are relatively small;
    the changes for 2015–16 are, again, not statistically significant.

    However, recent IFS research (Hood and Waters (2017)) suggests the rise in
    relative child poverty, small as of yet, will continue over the second half of this
    decade, as cuts to working-age benefits act to reduce the incomes of low-income
    households with children.”

  • The problem comes when wonks meet the real world. This article feels a bit like 2 people talking past each other basically arguing from two sides of a pin head.

    Most people take ‘Tackling inequality’ to mean reducing food bank use, making sure work pays (i.e. protecting tax credits) and repairing the holes in our welfare system amongst other things. Focussing pedantically on income inequality – on whatever side of the debate you’re on – both misses the real problem and what most people are interested in.

    There is of course always an element of the green eyed monster when looking at the other end – top pay levels – but things like the 45% tax rate haven’t exactly sunk the economy and we shouldn’t be afraid to say that we can get revenue from those at the top. After all that’s where a lot of it already comes from.

  • One of the reasons for a more equal society is that there is some evidence that those including the richer in a more equal country live healthier, happier and less stressed lives see https://inequality.org/facts/inequality-and-health/

    But a significant confounding factor is that those countries with lower gini indices tend to be the richer and more developed nations in the first place.

    There is also an argument that many on modest wages do jobs that have massive benefits to society. Which is of more use to society a nurse or a premier league footballer?

    Of course on the other hand why should someone doing 3 jobs or spent long hours developing skills or learning be taxed heavily and their hard earned money given to someone who is bone idle?

  • Of interest is the NICE guidance on health inequalities at https://www.nice.org.uk/advice/lgb4/chapter/What-can-local-authorities-achieve-by-tackling-health-inequalities

    Which states:
    In England, the cost of treating illness and disease arising from health inequalities has been estimated at £5.5 billion per year. In terms of the working-age population, it leads to productivity losses to industry of between £31–33 billion each year. Lost taxes and higher welfare payments resulting from health inequalities cost in the region of £28–32 billion (Estimating the costs of health inequalities: A report prepared for the Marmot review).

  • Sue Sutherland 20th Jul '17 - 1:37pm

    This report is a challenge for we Lib Dems but not for the reasons that Nick suggests. The change in inequality is because some high earners are earning less than previously not because low earners are earning more. The greatest effect is in London and the South East where one might argue that inflated salaries have taken a small hit which will have little effect on their expenditure.
    The situation of the poorest group hasn’t changed which is why we have so many people needing food banks. Therefore our party must still consider ways in which we can improve the lot of these people who are undoubtedly still trapped by their poverty.

  • Nick T Nick Thornsby 20th Jul '17 - 3:38pm

    Sue – I absolutely agree with your conclusion, and I suppose that is my point: what is important is the lot of those trapped in poverty in an absolute sense, not whether or not they are poorer or richer compared to someone else. That is why I think focussing on inequality in itself — as opposed to poverty, ill health etc — is not a good idea.

  • David Allen 20th Jul '17 - 3:50pm

    Here (taken from the link cited by the OP) is the BBC business correspondent’s take on the IFS report:

    “Incomes have declined among the highest earners, many of whom work in the finance and insurance industries. That’s because these sectors were hit hardest by the financial crisis. That brings down the gap between rich and poor. But if someone who once earned £5m per year is now earning £2.5m, they are still pretty rich.”

    So there we have it. Apologists for high inequality seek to claim that everything is hunky dory, simply on the basis that millionaire bankers are not coining it quite as much as they once did. The bankers do still, of course, have plenty salted away.

    And those apologists think they belong in what used to be denoted a “centre-left” party!

  • The data showing reduced income inequality is based on income before housing costs. This is not very useful given the prevalence of high rents and house prices. Later on in the report, rates of absolute and relative poverty are presented after housing costs. There is hardly any change in such rates over ten years plus. I think all of this means the author’s argument that unequality is falling doesn’t necessarily stand up.

  • Nick, I think you are looking at the wrong thing. (I could not find any dramatic decline in inequalities stated in the report.) The Gini coefficient was 0.24 in 1978 and rose to 0.34 by 1990, an increase in inequality of 41.67%, rising to 0.35 in 2015.

    The report also states that 20% of the UK population lives in absolute poverty in 2015-16. What I find surprising is that about 14% of pensioners still live in absolute poverty. What it doesn’t show is those of working age in work and not in work, which would be interesting.

    I would be happy for us to pursue economic policies to reduce inequalities down to the 1978 level alongside policies to reduce the number of people living in absolute poverty to under 1% of the UK population.

  • Joseph Bourke 20th Jul '17 - 5:22pm

    Good article, Nick. I would echo the comment by Martin above “Nick Thornsby is right that we should start with the evidence and then decide what should be done about it. It cannot be a good idea to try to shape reality according to our preconceptions: that way Brexit lies.”

    One of those preconceptions is that income levels are a determinant of health and happiness. Research such as that conducted in the Spirit Level book points to the fact that people with much lower per capita incomes than the UK but greater levels of equality tend to have healthier lifestyles and are generally more happy with their lot.

    Unlike Nick, I do not criticise the assertions in para b.10 of the 2016 economics motion
    https://docs.google.com/forms/d/e/1FAIpQLSczjXis-b5IqfQAiXv4jkBwNHlH53PnSu0oMid9_6pxDpLgtA/viewform

    “growing inequalities in wealth and income, coupled with unfair and regressive action against the poorest people in the country, now exacerbated by the assault on welfare spending.”

    There is strong evidence of inter-generational inequalities in wealth (particularly housing wealth) and inter-generational disposable income (after rents/housing costs). The bottom decile of income earners are among the most vulnerable and susceptible to distress as a consequence of benefit changes. Many people attending food banks have cited long delays (up to 6 weeks) in receiving benefits under the Universal Credit system.

    We do need to focus on issues like the relative distribution of income in society between wages, interest, profits and economic rents, with a focus on ensuring that work pays (not increasingly absorbed by rents or mortgage payments) and firms can earn an adequate return on invested capital.

    An integrated system of tax and benefits based on a foundation of taxation of economic rents and Universal basic income might be a good policy area to start with.

  • jayne Mansfield 20th Jul '17 - 6:20pm

    @ Joseph Burke,
    There is a wealth of research evidence that income is one of the factors that favours good health or adversely affects it.

    One could look at reports on the determinants of health by the WHO ‘Health Impact Assessment. The determinants of Health’, or research by such organisations as the Joseph Rowntree Foundation.

    The context of a person’s life has profound effects on a persons health, and whereas some factors such as a person’s genetic make-up cannot be changed, changes can be made that can demonstrably improve health if there is political will.

  • I was under the impression that while income inequality might be reducing, if you frame it right, that wealth inequality was on the increase. This is particularly pertinent when you factor in the huge impact of the cost of housing.

    If you are lucky enough to get help with the deposit for a mortgage from the bank of mum and dad, then you can live comfortably on a salary that would leave those with less resources struggling. And then you get those who complain that inheriting a million pounds worth of assets is ‘nothing these days’. How many of them have calculated the number of hours they’d need to work to earn a million (tax free), never mind someone on minimum wage?

    When I was thinking of getting a new car, my dad donated an extra thousand pounds to my savings pot just to make sure I could get something a bit nicer and safer. That’s small change to some, but would be a lifeline for others. When my brother’s boiler broke in the middle of Winter, my parents paid for half so he didn’t need to take out an expensive loan. That sort of support is about more than being able to afford slightly nicer things, but it means we are lucky enough not to worry about the unexpected expenses.

  • jayne Mansfield 20th Jul '17 - 9:48pm

    @ Nick T,
    You pose the question as to whether people are interested in health inequality or how tey themselves are doing.

    Admittedly the JRF report ‘Public attitudes to economic inequality was written in 2007, Michael Orton, Karen Rowlingson. but nevertheless, you may find it interesting reading. I know of no similar report that supercedes this one in tackling the same questions.

  • jayne Mansfield 20th Jul '17 - 9:51pm

    Sorry, I meant the question you posed about inequality ( not health inequality) and how they themselves are doing.

  • There are a number of questions to ask when looking at something like income inequality. The first has to do with how robust the figures are. This tends to be focussed upon. The key question though is whether it reflects anything important in the real world. We need to focus upon the real lives of real people. What is the daily experience of people trying to raise a family with a minimum wage income? This is something which is not difficult to find out. It is particularly easy for the huge numbers of people experiencing it to find out!

    For any figures we produce we must always ask what if anything these figures represent in the real world we live in.

    The same applies to the league tables for schools, but that is another story!

  • David Thorpe 21st Jul '17 - 10:25am

    I agree completely with Nick T’s article, and with David Eveershed’s comments, equality of opportunity should be the goal, Lib Dems have no policy to achieve this.

  • jayne Mansfield 21st Jul '17 - 10:38am

    @ David Thorpe,
    Is equality of opportunity rather than equality of outcome now accepted Liberal Democrat doctrine?

  • A few points on the study, which can be read in full at https://www.ifs.org.uk/uploads/publications/wps/WP201701.pdf.

    1) It concludes that household earnings inequality has increased overall, rather than reducing. Overall household income inequality once tax, benefits and (most significantly) pension payments are taken into account has reduced, which is perhaps a reflection of Government doing more to tackle increasing earnings inequality (and specifically a reflection of efforts to tackle pensioner poverty, such as the triple lock).

    2) The reductions in income inequality are not as significant as the increases that occurred during the 1980s. In 1961, for example, the Gini coefficiant and 90:10 ratio were 0.26 and 3.2 respectively. In 2014 they were 0.34 and 3.9. So, if we take a longer term view, we still see an overall increase in household income inequality.

    3) The data focuses on the middle 90% of the income distribution. They specifically excluded the outlying top and bottom earners whilst also conceding that, during much of the period studied, there has been a “racing away of the very top”. Including the top and bottom 5% in the study might well have changed the resulting conclusions.

    4) The period studied was 1997 to 2015. Thus benefit and taxation changes that are yet to be (or have recently been) implemented have not been factored in. As an interesting aside, the IFS concluded that changes introduced by the Coalition disproportionately affected those on lower incomes, but that this was offset for higher earners by taxation changes introduced by Labour in early 2010 (http://election2015.ifs.org.uk/uploads/publications/bns/BN159.pdf).

    In conclusion, the study suggests to me that the relatively modest changes in income inequality in the period they studied:

    a) Are down to the actions of Government rather than Businesses.

    b) Have not served to offset the increases in inequality between 1961 and 1997.

    c) Could well be reversed as a result of BREXIT and changes to benefits and taxation over the next few years as a result of austerity.

    d) Mask an increasing centralisation of wealth among the top 5% (and especially the top 1%) of the income distribution.

    I’ll leave my views on the subject of merit and inequality for another day.

  • jayne Mansfield 21st Jul '17 - 1:08pm

    @ Gary Fuller,
    ‘I will leave my views on merit and inequality for another day.’

    Please don’t!

    Equality, Equality of opportunity, such warm words, but what do they mean in practice to the Liberal Democrat Party? I am not sure that if one put a group of Liberal Democrats in a room one would get the same answer. In fact . I suspect that one would get as much disagreement, on the meaning of equality of opportunity and how to achieve it, that one would get from the public at large.

    If one wants to attract people to the party who care about social justice, and want to know which party to vote for, this is hardly a satisfactory state of affairs.

  • Julian Heather 21st Jul '17 - 1:15pm

    Thanks, Nick. Excellent article. Thanks for getting the debate going.

    What surprises me is that no-one, apart from Gary Fuller, seems to recognise the role of the Lib Dems in the Coalition, in helping to ensure that income inequality did not grow in the period 2010-2015.

    There was a range of initiatives to ensure that the necessary cuts in government expenditure, following the financial crash of 2007/8 were softened and that the impact of austerity (as necessary as it was at that time) fell more heavily on the well-off rather than the poorer parts of British society.

    Above all, raising the tax threshold for low and middle earners. In May 2010, people paid income tax as soon as they earned above £6,475. By April 2010 the income tax threshold had risen to £10,600, and to £11,000 in April 2016. And, just as important, those earning above £100, 000 were excluded from these tax breaks:
    https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/625241/Table-a1.pdf

    And as Gary pointed out, there was the action of Liberal Democrats in the Coalition Government in tackling pensioner poverty, by introducing the triple lock, which meant a significan rise in the state pension, by at least 2.5% a year.

    And, as I recall, there were a raft of measures introduced under the Coalition to increase the tax burden on the rich, and to reduce their tax breaks, for example raising Capital Gain Tax from 18% to 28%, while drastically cutting the tax allowances for the wealthiest in building up their pension pots.

    In March 2013, Tim Gordon, as Chief Executive of the Liberal Democrats was able to write to members to point out this remarkable fact:

    “Over the five years of this Parliament under the Coalition, a millionaire (earning £1m per year) will pay £381,000 more tax on their income (Income Tax and NICs) than they did under the last five years of the Labour Government.”

    It’s strange that, even here on Liberal Democrat Voice, we don’t seem to be recognising the significant role of the Liberal Democrats in government, in ensuring fairness, and in helping to reduce income inequality, even while cuts to public expenditure were a necessary measure in the economically challenging years betweeen 2010 and 2015.

  • Julian Heather 21st Jul '17 - 1:19pm

    *reminder to self to proof read before posting*

    “By April 2010 the income tax threshold had risen to £10,600, and to £11,000 in April 2016. ”

    It should, of course, have read: “By April 2015 the income tax threshold had risen to £10,600, and to £11,000 in April 2016.

  • jayne Mansfield 21st Jul '17 - 1:50pm

    @ Julian Heather,
    Try telling the least well off ( including those in absolute poverty), that thanks to the Liberal Democrats in government, they’re better off now than if the

    The fact that high and middle class earners might earn less, a hit that they could take without too much misery, hasn’t changed the circumstances in which the less fortunate live at all.

    If one wishes to spend one’s life analysing graphs etc, may I say that the conclusions different analysts reach is dependent on the measurements chosen.

  • Gary Fuller 21st Jul '17 - 2:15pm

    @ Julian Heather I had a similar proof reading issue on my post, as I meant to say “this study” rather than “the study”. The study in Nick’s piece is a briefing note for 2015-16, which I think is a reflection on the continuing trend from the study I reference.

    My conclusions aren’t quite as universally supportive of the Coalition as they may first appear though. Whilst it made some great strides on pensions, the Coalition did adversely affect low income working age households. The additional briefing note I mention (http://election2015.ifs.org.uk/uploads/publications/bns/BN159.pdf) summarises this nicely:

    “Low-income working-age households have lost the most as a percentage of their income from tax and benefit changes introduced by the coalition, mainly as a result of benefit cuts. However this changes if we include in our analysis the tax rises introduced immediately before the coalition came to office (the first element of the fiscal consolidation that began in April 2010): the richest households have lost the most both in cash terms and as a percentage of income from the overall tax and benefit changes that have taken place since the beginning of 2010. Including these tax rises increases the average loss to households to £810 per year. ”

    In short, you might surmise that the Coalition did a great deal to reduce pensioner inequality, but at the expense of low income families, and using money from taxes on the rich that Labour had already introduced.

  • Gary Fuller 21st Jul '17 - 2:48pm

    @ Jayne Mansfield A party built on the idea that Government should exist to preserve individual freedom whilst preventing harm to others as a result of exercising that freedom is always going to be a broad church. We all have a unique definition of what constitutes harm to others, one that we arrived to as a result of our uniqueness as individuals, our unique experiences, and the unique path that we took to our present circumstances (whatever they may be). To make matters worse our definition of harm shifts subtly every minute of every day.

    In terms of inequality though, I have a question rather than an answer. At what stage does a combination of chance factors truly become a free choice? The reason I ask is because I believe that any society that seeks to justify inequality of outcome should first answer that question.

  • @ David Thorpe
    “I agree completely … equality of opportunity should be the goal,”

    I remember when the Conservative Party always went on about equality of opportunity and wasn’t concerned with inequalities of outcome, and I still think this is Conservative and not liberal.

    As liberals we need to be interested in reducing inequalities of outcome and inequalities generally as they affect greatly a person’s freedom. I can’t imagine any of us believe that someone who worries about how to afford living in their home, buying enough food and paying for heating their home is as free as someone who has money left over after these expenses and others we would consider necessary (such as transport costs).

  • @ David Thorpe “I agree completely with Nick T’s article, and with David Evershed’s comments, equality of opportunity should be the goal, Lib Dems have no policy to achieve this.”

    Equality of opportunity assumes 1.A level playing field, and 2.A condition that you don’t tie some of the competitors legs together on the starting line.

    I find it depressing that there are still blinkers around amongst some Lib Dems who can’t, or won’t, see this. I wholeheartedly support Jayne Mansfield’s incredulity that this should be the case in a party traditionally claiming to be progressive and historically left of centre.

  • Malcolm Todd 21st Jul '17 - 4:40pm

    David Raw
    I think the point of those who go on about “equality of opportunity” is that they think it should be enough to achieve precisely the two starting conditions that you describe.
    Unfortunately, they are usually unwilling to countenance measures that would actually make this possible – since it would only be possible to do so by preventing the “winners” in the imagined society from spending their gains on improving their children’s start in life relative to the “losers”, in opposition to a pretty fundamental drive in human nature.
    Unforgivably, they prefer simply to ignore not only this inconsistency, but the unspoken assumption that it’s okay to let the losers suffer what they will, so long as they theoretically had the same opportunity to start with. After all, with equality of opportunity, success must be entirely down to merit not luck. Mustn’t it?

  • jayne Mansfield 21st Jul '17 - 5:29pm

    @ Gary Fuller,
    Indeed we all have unique experiences.

    Whilst still at school I worked as a volunteer in a children’s home in Rotherham. It became clear to me then, if it hadn’t become clear earlier that our life chances are too often determined by an accident of birth and that life is not a level playing field.

    I have a question for you. In what way can equality of opportunity give people of different backgrounds access to free and fair competition , or an ability to overcome discrimination when the barriers that prevent this happening are not removed so that they are not enabled to compete fairly?

    I believe in greater equality of outcome because it is essential to the achievement of a more fair and just society, where individuals have an equal chance of obtaining their goals and changing their lives through ability and genuinely free and fair competition.

    Equality of opportunity does not offer individuals equality of opportunity at all, it entrenches unfairness and social injustice. It gives people the opportunity to say, well we have a meritocracy and they , those who started off disadvantaged, didn’t cut the mustard.

  • jayne Mansfield 21st Jul '17 - 5:35pm

    @ Malcom Todd,
    I couldn’t read your post before posting mine, because I started mine some time ago but left it half finished before returning just now to complete and post it

    I fully agree with what you say.

  • Malcolm Todd 21st Jul '17 - 6:11pm

    Thanks, Jayne. You also describe very well the fallacy and the danger in the meritocratic argument on which “equality of opportunity” tends to rely. Are you familiar with Michael Young, who seems to have invented the term “meritocracy” 60 years, and who despised it as much as you or I? He was still arguing the case eloquently early in this century.

  • jayne Mansfield 21st Jul '17 - 6:54pm

    @ Michael Todd,
    Thank you for the link which I found interesting.

    No, I am not familiar with Michael Young. I wish my eyes were still up to reading more than small chunks of the written word at any given time. I think that I would enjoy his book.

  • Joseph Bourke 21st Jul '17 - 6:54pm

    Thomas Jefferson (paraphrasing Aristotle) once said “There is nothing more unequal than the equal treatment of unequal people.”

    All should have the same opportunities, with the chance to find their own particular path. Some need more help along the way, and this assistance should not be denied to them simply because others do not require it. Everyone should have opportunities for a good education (throughout life). Some thrive in accelerated classes while others can benefit from remedial teaching.

    A great majority of those who find themselves in a time of need, actually had received fewer good opportunities earlier in their lives than most folks. The public or private programs to help them may be considered a form of “evening up” previous injustices.

    So “treating unequal people equally” would be trying to fit everyone into the same mould, ignoring the individual inborn traits and external circumstances that make each of us unique – regardless of where we start from/

    Adequate investment in early years education is vital, as is maintaining a comprehensive safety net. It is not the function of the state, however, to make choices for people. Some individuals will pursue a life dedicated to wealth accumulation, others the complete opposite,with the majority choosing a path somewhere between the extremes.

    Social and economic programs like job guarantees and universal basic income can help to ensure that no one is left destitute, has the opportunity to escape absolute poverty and the freedom to make their own choices as to how they live their life. If you can achieve these outcomes then equality of income is unimportant – freedom and choice prevail.

  • jayne Mansfield 21st Jul '17 - 6:56pm

    Malcolm , I apologise for addressing you incorrectly.

  • If getting what you want makes you unhappy, probably you have set yourself the wrong goal.

  • Nick T Nick Thornsby 22nd Jul '17 - 7:36am

    Joe Bourke – very well put!

  • jayne Mansfield 22nd Jul '17 - 9:57am

    @ Joe Bourke,
    As wealth becomes ever more concentrated in fewer hands, I find your comments about choice and freedom a sign of the pervasiveness of current neoliberal ideology and orthodoxy.

    There are some who would argue that the choices and freedoms available to the rich are dependent upon restricting the choices and freedoms of the poor.

    Although my husband and I, are individuals who turned our backs on making ourselves rich, (In in financial terms), my experiences both here and abroad, are that the constant references to individual freedoms and choices are just excuses for maintaining inequality, the sort used by Conservatives and Trump supporter to explain the social gradient of income distribution and its relationship to wealth, access to power and health.

    In my opinion, people do not have a moral right to unlimited freedom to choices that restrict those of others, and it not good enough to explain away this harm as a matter of personal choice. It is quite wrong that people who are at the bottom of the income scale ( including those who might one day be in receipt of basic income), are encouraged to internalise the codswallop about their situation being a consequence of freedom and choice.

  • David Allen 22nd Jul '17 - 1:41pm

    Malcolm Todd and Jayne Mansfield make many good points about the fallacy of “meritocracy” and “equality of opportunity”. I think there is more to be said.

    It was Blair who championed meritocracy against “the forces of conservatism”. Conservative governments promoted inequality and helped the undeserving rich, those who had inherited wealth, to stay rich. Blair instead favoured high rewards for “deserving” high achievers, which he demonstrated by lionising the likes of David Beckham, Noel Gallagher and Richard Branson.

    No doubt many of us thought that it might be a modest social advance if the milionaires with the biggest mansions were people who had worked hard to get there, rather than hereditary peers. It feels a little less unjust, and it does more to incentivise effort. However, there is also a big snag.

    If you believe in “equality of opportunity”, you believe that the resulting inequality of outcome is entirely justifiable, and that there is no need to apologise for it. Of course, it is “polite” to talk about the deserving rich, rather than the undeserving poor – but the meaning is the same. Those who squandered their “opportunities” and ended up in squalor got what they deserved, and we need not strive to help them out of it.

    The old-fashioned postwar Conservatives were well aware that they were mounting a rearguard action in defence of inherited wealth, that they had plenty to apologise for, and that they had better espouse compromise “one nation” policies if they were not to be entirely discredited. Their meritocrat successors – starting with Blair, following with people like Osborne – had no such qualms. Inequality could be justified.

    The consensus in favour of meritocracy took us away from seesaw politics – with Tories and Labour regularly reversing the economic policy shifts made by their predecessor opponents. It took us instead toward a policy of steadily increasing inequality – which is closer to the reality of the past thirty years. The meritocratic fallcy has much to answer for.

  • Lorenzo Cherin 22nd Jul '17 - 2:49pm

    David Allen

    In the midst of a post of quality , you make what in my view is the mistake of left and right and why I prefer the description of Liberal , or radical centre .

    You seem to think the opposite of something is the only course of action as a reaction to it. Thus to believe in the idea of the deserving rich means believing in the undeserving poor.

    I have been, in the relative sense we know it in modern uk politics, poor. As a result of a car accident that effected my personal and professional life, it has too, effected my political life. In that I am more forensic than ever in my analysis of cant and humbug.

    I aspire to earn at a high level. If I ever get the projects I pursue to where only my effort and self belief and that of a few loved ones or enthusiasts, is what would have got me and these projects , to that position. I would be amongst the deserving rich, because only effort, would have got me there.

    I am not nor have I ever been undeserving poor.

    The undeserving rich are those who are bone idle and get everything on a plate and get money that way too.Or who squander what they get. Or get it through ciminality.

    The undeserving poor are those who get very little and squander whatever it is they do get or are criminal in there fraud to get out of it.

    But it is a mistake of anyone to believe everything is either or.

    Nuance counts. I am fed up with the brick wall of a society that spends a fortune on garbage as well as necessities.

    I yearn for social justice.A society with no social mobility has no social justice .

    And no liberty.

  • Joseph Bourke 22nd Jul '17 - 3:47pm

    Jayne,

    from an article on this site about Jo Grimond https://www.libdemvoice.org/jo-grimond-towards-the-sound-of-gunfire-michael-mcmanus-29004.html. that notes:

    …he was often sceptical of central government spending, keen to see taxes cut and hostile to the state drawing up endless rules about how people should behave. He called for smaller government, warning that, “A great deal of government expenditure today is not helping the poor or anyone – it is positively harmful”.

    Grimond is widely regarded as among the most influential of leaders to shape the post-war liberal Party and his close association with the social democratic wing of the Labour party, particularly Roy Jenkins, laid the foundations for the merger with the SDP to form the Liberal Democrats. Relevant quotes include:

    “The poorest he that is in England hath a life to live, as the greatest he…” [Colonel Thomas Rainsborough, Putney Debates 1647] This is one Liberal Text. And it is more distinctive than may at first appear. It asserts the individual and the value of any individual – even the poorest He. But it asserts it without envy. It does not demand that the rich be made poor – nor even claim that the poor are more deserving than the rich. It demands equality in one thing only, the right to live one’s own life.”

    “…At present, the Liberal-Social Democratic Alliance occasionally looks too much like a half-way house on the old road to state socialism. It will spend more than the Tories but rather less than Labour…Such compromises may win votes, but they will not improve the country.”

    Grimond was a pragmatist as was his contemporary Roy Jenkins. Both men shared a strong sense of social justice borne of their experiences of unemployment in the pre-war years and the post-war welfare state. They had the insight and understanding to appreciate that economic and social justice would not be achieved by top down socialist planning or class conflict in age of dwindling class distinctions , but rather by enabling and supporting individual freedom of choice buttressed by the Beveridge safety net from cradle to grave.

  • Joseph Bourke 22nd Jul '17 - 4:48pm

    David,

    I have no problem with meritocracy. It gave us reforming prime ministers like David Lloyd George, Attlee, Wilson and Callaghan. You might argue too many if you include Thatcher and Major.

    High earnings for talented individuals whether in sport, the entertainment industry, the professions, business management or elsewhere are merely a reflection of the labour market for scarce talent.

    Hereditary peers with crumbling mansions to look after have had a lot on their plate since Inheritance tax was introduced. That’s why so many of these country estates are now in the hands of the national trust and open to the public.

    It is where the market or economic system does not function in the interest of society that targeted intervention and remedial measures are important. This malfunction is overwhelmingly concentrated in land ownership, money creation and trading in government bonds, intellectual property and radio spectrum rights among other monopoly rights. Economic rents derived from these sources distort the proper functioning of free markets and exert downward pressure on the wage and return on productive capital elements of national income.

  • Lorenzo Cherin 22nd Jul '17 - 4:56pm

    Excellent piece from Joe Bourke.

    I love Grimond even though born as he was saying toodle pip as leader.

    I think we need to be more radical in our thinking , but see , as Joe here and Jo once , that the individual , with the community , the latter with the government as the enabler as much as the first, people together to nurture each one, is the austerity antidote.

    As a boy I was taken with Oscar Wilde in his The soul of man under socialism. With the exception of some guff about ending private ownership of property rather than Joe’s favoured , Land Value Tax, or other policies based on the great Henry George, it stands up as a remarkable piece about equality of opportunity as empowerment of each individual.

    The ghastly Shaw said it had nothing to do with socialism.

    If it meant his brand of support or apology for Stalinism or worse, good, too right.

    It is libertarian socialism, minus the propoerty utopia, it is social liberalism.

    In it Wilde makes a stunning case for true fulfilment of potential.

  • @ David Allen
    “If you believe in “equality of opportunity”, you believe that the resulting inequality of outcome is entirely justifiable, and that there is no need to apologise for it. … Those who squandered their “opportunities” and ended up in squalor got what they deserved, and we need not strive to help them out of it.”

    Thank you for this. I had not thought of it like this. This leads to the question – how far are our current economic states the result of bad decisions or bad luck or our own nature? Then another question arises even if we made bad decisions or there is something about us that means we are not as successful as we could be, should we be penalised for it? For a liberal the answer has to be no. Freedom is not something for only those who make the correct decision, have good fortune or have natures that assist in their success; if is a right for every human being without any restrictions.

    Liberals believe that people should be able to accumulate wealth and with certain restrictions pass most of it to whom they wish. However if there are people who are earning huge amounts of money and some who lack some freedoms because of their poverty it is right and proper for liberals to tax the high earners to pay money to those who are restricted in their freedoms by their lack of economic resources or pass laws so that no one has an income at such a level their freedoms are restricted. How can any liberal think this is wrong?

  • Michael,

    “…tax the high earners to pay money to those who are restricted in their freedoms by their lack of economic resources.” Isn’t this what happens now with progressive taxation and redistribution via tax free allowances, tax credits and welfare benefits.

    Beveridge’s five ills remain the key areas to focus on. I would suggest updating the policy measures that address these ills is likely to have a much greater impact than continuing with the existing approach.

    Want, (poverty): Universal basic income to replace tax free allowances and most non-pension welfare benefits, based on Citizens Income recommendations.
    Disease (health); Adequately funded integrated health and social care system
    Ignorance (education); Adequately funded early years, primary, secondary and adult education and skills training provision.
    Squalor (housing); (I) housing tax credit redistribution to tenants based on 20% of land rent element of local area housing allowance and funded with Land Value tax (based on 20% of excess of imputed land rents over and above residential allowance for homeowners.)
    (ii) Major investment in Social housing program
    -Idleness (employment) Job guarantees based on employer of last resort program and monetary reform.

    Each of these reforms can contribute to both lowering inequality and enhancing productivity in the economy – a prerequisite of improved living standards. Some have been addressed in the recent manifesto, others need to be further developed and refined as we go forward.

  • @ Joe Bourke

    (There is a Michael who posts here now without any initials who is not me).

    “Isn’t this what happens now with progressive taxation and redistribution via tax free allowances, tax credits and welfare benefits.” There is an element of this but there are still millions of people in the UK who have their freedom restricted by their economic circumstances.

    Want (poverty): – Universal Basic Citizens Income would need to be higher than the Income Tax Personal Allowance, and it cannot replace all benefits particularly those for people with disabilities and long term illnesses. However I think it should be introduced at that level.

    Disease (health): – “Adequately funded integrated health and social care system.” Indeed and more health assistance for those with long term illnesses and disabilities so they can have truly fulfilling lives.

    Ignorance (education): free education and training for everyone whenever a person wants it (with no need for maintenance grants because the Universal Basic Citizens Income would cover these costs.)

    Squalor (housing): building at least 300,000 homes a year until everyone who wants a home of their own has one. (I have no idea how what you suggestion (i) would work – can you give an example with figures?)

    Idleness (employment): “Job guarantees based on employer of last resort program” Indeed. I would also like to see the economy run to achieve less than 3% unemployment when the economy is at its maximum; “and monetary reform” I am not aware of what you would like to see.

  • Malcolm Todd 22nd Jul '17 - 11:19pm

    Joebourke 22nd Jul ’17 – 8:57pm
    I agree absolutely with the measures you suggest. Of course they don’t address all the problems of current economics – in particular, the inequalities of power in the workplace (though a proper Basic Income would have some impact there); but they’re a sound basis for revolutionary change for the better.
    I suspect they’d get a more sympathetic hearing in Corbyn’s Labour than in the Lib Dems, but that’s another issue…

  • jayne Mansfield 23rd Jul '17 - 3:25pm

    @ Joseph Bourke,
    Jo Grimond was a man of his time.

    However, in your post, you give one of his quotes that is also at the crux of political differences in the present.

    ‘A great deal of government expenditure today is not helping the poor or anyone- it is positively harmful.’

    I have two friends who are , ( and will always be) Conservatives, despite being very liberal in their attitudes. I can’t tell you how many times I have heard this phrase almost word for word from them, and how many times I have disagreed.

    I believe that state expenditure and intervention is essential to the creation of my own personal vision of a decent, liberal society. A vision that sadly, seems to be receding.

  • @ Jayne Mansfield and Joe Bourke on quoting Jo Grimond : Yes Jo did say, “‘A great deal of government expenditure today is not helping the poor or anyone- it is positively harmful.’

    As an example, Jo included expenditure on first Polaris and later Trident so called independent nuclear weapons – a position I agreed with at the time and still agree with today..

    It’s not just how much you spend – but what you spend it on.

    I can think of plenty of other things like that today including the so call High Speed Train and re-introducing Grammar Schools.

  • Richard Underhill 23rd Jul '17 - 5:08pm

    @ David Raw,
    Thank you for providing the context.

    My estimation of Jo Grimond as a politician has just gone back up.

  • jayne Mansfield 23rd Jul '17 - 5:11pm

    @David Raw,
    The last post was from me, not Richard Underhill.

    It is comforting to know that technology suffers some of the same glitches as an old person’s brain!

  • @ Jayne In my native tongue, Jayne – there’s nowt wrong with thy brain, lass.

    PS Add onto the list of useless expenditure two aircraft carriers without planes. “UK’s most expensive military assets ‘increasingly vulnerable’ to cheap missile attacks by Russia and China. UK defence equipment capabilities costing £16bn a year are increasingly vulnerable to low-cost, technology-rich weapons from hostile states,” the RUSI report concluded”. The Independent 12 July, 1917…

  • Joseph Bourke 24th Jul '17 - 1:59pm

    David Raw,

    this link gives the top 7 quotes from Jo Grimond as a flavour of his thinking and approach to Liberalism and the issues of the day http://www.azquotes.com/author/41207-Jo_Grimond

    I think the quote you refer to re: nuclear weapons is from the Alliance magazine (December/January 1982–3).

    “The Liberal Party doesn’t seem to know in its mind what to do about it—its ostensible view is that the mix of the mixed economy must be left as it is. This seems to be a slightly doubtful proposition…We have to reduce the public sector, the state-run sector, and hand it over to other bodies. The economy is probably unmanageable so long as the state attempts to do so much. The Liberals have not given nearly enough thought to the question of the bureaucracy of the state, what is suitable for the state to run…I personally agree with the SDP line, not with that of the Liberal unilateralists. I want to remain in NATO and I believe that a deterrent is essential and it promotes peace…I would not support unilateral disarmament either on moral or practical grounds.”

    Grimond’s stance on the proper role of government is reflected in these quotes:

    “Neither the Government nor the local authorities make any wealth or have any money of their own. If we want them to spend more and more we have to pay. The remedy is in our hands. Stop running to them asking them to do this, that and everything under the sun – and demand instead that they stop doing and spending so much.”

    “The state owned monopolies are among the greatest millstones round the neck of the economy…Liberals must stress at all times the virtues of the market, not only for efficiency but to enable the widest possible choice…Much of what Mrs Thatcher and Sir Keith Joseph say and do is in the mainstream of liberal philosophy.()The Future of Liberalism, October, 1980).”

    Grimond shows the importance of reconciling social and economic liberalism or, as Henry George set out to do, presenting an alternative to the degradations of raw capitalism or forced collectivism of socialism.

  • @ Joseph Bourke No, that’s not my source. I just happened to work at Party HQ in the early 1960’s and Jo said it on various occasions in my hearing……………. at a time when he was a radical Leader of what was then a radical party.

    I don’t regard the ‘top seven quotes’ on some internet site as a respectable original source ………….. maybe you should try Hansard – or as a secondary source, David Steel’s speech in tribute to Jo as reported in the Liberal History magazine some while ago.

    What is generally accepted is that after his leadership ended Jo was prone to change his position on various occasions, sometimes jhust because he liked an argument. He certainly liked to tilt at windmills, for example, during his time as a Trustee of the Rowntree Trust.

    Maybe you should also look at the June 2013 edition of Liberal history in which Dr Peter Sloman of New College, Oxford assessed Grimond’s ideas, with a focus on his thinking around the role of the state and free market

    “Dr Sloman concluded that while the main elements of Grimond’s ideas were consistent through all his writings and speeches, the more anti-statist aspects did tend to predominate during the early 1950s and the post-leadership phases of his career, rather than in the period of Liberal revival around the time of the Orpington by-election. Yet this was the time when Grimond seemed to inspire people most and draw them into Liberal Party membership or activity. At this time he proposed more public investment and indicative planning to get the British economy moving, in contrast to his usual caution over state intervention”.

  • David Raw,

    thank you for the reference to the 2013 Liberal History review http://www.liberalhistory.org.uk/wp-content/uploads/2014/10/80_Report_Jo_Grimond_Legacy_June_2013.pdf

    I note Dr. Sloman goes on to say he felt that Grimond was seduced by the modernising mood of the early 1960s and the opportunities this presented. He hoped the Liberals might capture the spirit of the age, drawing Labour revisionists like Crosland and Jenkins into a new progressive movement. Yet somehow it never quite seemed that Grimond was fully swayed by the slogans and policies the party was using. Once out of the leadership, while Thorpe and Steel continued in more social democratic mode, Grimond reverted to his anti-statist ideas and this could explain Grimond’s detached stance towards the Lib–Lab pact and the alliance with the SDP towards which his own strategy of realignment of the left had so clearly pointed.

  • There are all sorts of inequality, that of income, wealth, education. What matters to whom? I sense that though financial inequality might be decreasing, it depends on a reduced quality of life. What matters is when people cannot afford the basic necessities of life. Their enjoyment is more a matter of perception. I’d rather be happy than rich. We need more information about how especially children suffer from “inequality”. Feeling and valuing independence is important at least to me so I might be only richer because I am dependent on the state. A sense of self worth, achievement and purpose is worth a few pounds. As a Party we should focus on those who feel they are not getting a fair innings from life.

  • @ Peter Hirst ” Feeling and valuing independence is important at least to me so I might be only richer because I am dependent on the state. A sense of self worth, achievement and purpose is worth a few pounds. ”

    Peter, I’m afraid your sense of self worth, achievement and purpose will be somewhat diminished if you needed serious health treatment and there was no NHS to get you through …… and can we take it that you are willing to give up the state pension when you get to whatever age Danny Alexander raised it to ?

    I believe the state does have a role as an enabler of personal self worth – and that there is such a thing as society to set the boundaries of fairness. Cameron used to blether on about ‘The Great Society’ as a replacement for the state – I wonder what happened to that notion………….. come to that… I wonder what happened to Cameron, Clegg, Osborne and Alexander ? Here today gone tomorrow but it seems that in the absence of coordinated action as a society the poor will always be with us.

    Six years ago when I fell into a coma at home awaiting an ambulance to take me for a transplant operation I can assure you that market economics were of little comfort to my wife at the time.

  • Joseph Bourke 25th Jul '17 - 1:56pm

    Peter makes a good point.

    Self-reliance is an important feature of self-worth and self-esteem. We are all increasingly dependent on each other in the modern world. It is how that dependence is realised that is important – through community cooperation or through the powers of the state.

    i think Henry George was right in highlighting the private ownership of land as an ethical issue and the principal source of inequality. Recognising land as a common public good and a source of finance for public services could go a long way to resolving many of the issues around poverty that continue to trouble us today.

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