At the recent Conservative Party conference, Prime Minister David Cameron claimed that income inequality has decreased under the Coalition government, but a lot of evidence suggests that most people aren’t feeling the benefits of a supposed economic recovery: on Sunday, national media reported on the Resolution Foundation’s study which showed that 5.2 million people are now in low-pay jobs- a significant increase in numbers from the year before. Clearly, as our panellists emphasised throughout the evening, the present state of affairs harms Britain, both economically and socially, and will continue to do so unless politicians are brave enough to enact the major changes needed to tackle the problem.
Our first speaker was Stewart Lansley, the author of ‘The Cost of Inequality’, a study which convincingly demonstrates that income inequality in the UK is detrimental to its economic performance. He described how, despite the publicly issued concerns of the World Economic Forum, US President Barack Obama and The Pope, inequality has grown since the crisis of 2008/9- in 2013/4, the top 1% in the UK took 46% of total income whilst the bottom 50% lagged well behind on only 28%. Lansley identified several causes for this situation: politicians continue to deny there’s a major problem with income inequality; despite the OECD and the IMF recognising the problem, they encourage national government to pursue policies which only exacerbate the issue of inequality; there are major splits over the causes of inequality and best ways in which to tackle it.
Stewart, however, wondered whether we are approaching the moment of a seismic shift which would see things change- he notes that 4 key conditions have to be met before a shift can occur. Firstly, a severe economic shock precipitates change: if what is known in the USA as ‘The Great Recession’ can’t be described as a “severe economic shock”, then I’m changing my name to Genghis Kahn! This first condition is followed closely by the failure of prevailing orthodoxy: even Establishment economists such as Adair Turner recognise that the practises of the last 30 years have created more problems than they solved. Additionally, there has to be public and political momentum for change- in the UK, the Uncut and Occupy movements have stimulated debate whilst some commentators described the Scottish referendum as the ‘first referendum on inequality.’
The big sticking point, however, is whether there is an existing workable alternative to the existing system- this point would be discussed later on, but Stewart warned that if nothing changes and inequality is not addressed then the British economy will continue to stagnate, and be at even further risk from future crises. Our next speaker Joy Warmington, the CEO of Birmingham-based equalities consultancy brap discussed what inequality does at a human level: fundamentally, it sets different groups in society apart. Most of the policies enacted by the government will never affect those politicians who devised them in the first place- instead, the policies pose an ever greater challenge to already poor people, and serve to further disenfranchise them.
The political and media climate has helped to harden attitudes towards poorer people- increasingly, they’re not seen as part of society. Joy cited a poll in which 60% of the respondents agreed with the statement that people could get a job if they wanted, despite much evidence that this isn’t the case. This poll reveals another side to this hardening: the shifting of blame onto others- increasingly, it’s seen as someone’s own fault if they don’t make it when in fact systemic disadvantages can seriously undermine a person’s chances of succeeding in life right from the very start. The shifting of blame also has a very ugly undertone: in 2013, 31% of people said that they had experienced some form of racial prejudice.
In seeking to find a solution to the problem, Joy noted that many companies say all the right things on providing equality of opportunity for everyone, but ultimately fail to act upon it- if any changes are to be occur, people in power (not just politicians) need to practise what they preach and do things differently. Joy observed that legislative drivers aren’t enough, though- there has to be a moral imperative to take action; she proposed asking the simple question: how much worse does Britain want things to get before change occurs?
The third panellist, Karen Rowlingson, a Professor in Social Policy from the University of Birmingham, spoke on wealth inequality. A Policy Commission set up by the University assessed various ways in which to deal with total inequality and the likely outcomes of the pursuit of differing policies. Part of the Commission’s work revealed that there are three broad economic groupings in British society: firstly, there are those with little to no wealth- 20% of the British population have more debts than savings; the middle group is affected by house price inflation fuelled by George Osborne’s Help to Buy scheme and the decline of defined pensions; the third group is the very richest in British society- current policies allow them to avoid taxation of much of their wealth. Karen identified several policies such as Labour’s recently announced Mansion tax and proper funding of the Social Fund which could help to tackle the problem: however, public attitudes, such as a perhaps surprising belief amongst poorer people about the unfairness of inheritance tax, and a general lack of understanding about wealth and taxation issues makes it hard to sell progressive policies.
After the three speakers had given their presentations, the audience were invited to submit questions: the topics discussed in this part of the evening ranged from the role of trade unions to the strong influence of political will; from globalisation to localism; from UKIP to using GDP as a measure of growth; from the need to reform the taxation system to the thorny question of whether if challenged, CEOs would carry out their threats and actually leave the UK. This lively debate concluded on a positive note- change is possible, but it requires political and public will to make it happen.