INEQUALITY

30 June 2024

Spiralling inequality is a ticking timebomb for the next government

https://www.thetimes.com/article/889c52ea-8f15-4767-8164-9b33d891d2c5?shareToken=56c991cfd097db51f13e9c85886613ba

The stark contrast between wealth and poverty in a modern British cityscape, symbolising the urgent need for bridging the gap and fostering a fairer society. The scene captures both the severity of current inequalities and the hope for a brighter, more equitable future..

Written in rhe style of SOMERSET MAUGHAN - he would have had a thing or two to say about this scourge of our modern world.

SUMMARY

Spiralling Inequality is a Ticking Timebomb for the Next Government

In the dim glow of an English twilight, as the shadows lengthen and the air grows cool, one might find solace in the serene beauty of the countryside. Yet beneath this tranquil veneer lies a disquieting truth—a truth that, if left unaddressed, will surely disrupt the delicate balance of our society. Inequality, in its many insidious forms, has become an unrelenting spectre, threatening to unravel the very fabric of our nation.

One cannot help but feel a profound sense of urgency when confronted with the stark reality of our current predicament. Consider the plight of fifteen million souls, nearly a quarter of our population, who languish in the grip of poverty. Meanwhile, the wealthiest twenty percent hold dominion over two-thirds of the nation's wealth, and a mere one percent possess half of its land. This is not merely an imbalance; it is a chasm, a gulf that separates the fortunate few from the struggling masses.

And what of our children, those beacons of hope and promise? Disadvantaged youths find themselves nearly nineteen months behind their peers by the time they reach their GCSEs. It is a sobering thought, for it means that we are failing our future, condemning them to a cycle of unrealized potential and unfulfilled dreams.

In the richer boroughs of our cities, the well-heeled enjoy an additional eighteen and a half years of healthy life compared to their less fortunate counterparts. Such disparities are a testament to the pervasive and pernicious effects of inequality on our society. It is a cruel irony that those blessed with wealth are granted the luxury of time, while those burdened by poverty are denied even this most fundamental of human rights.

The inequities extend beyond mere wealth and health. They seep into the very foundation of our tax system, where the affluent—those who command incomes of ten million pounds a year—pay an effective tax rate of just twenty-one percent, akin to that of a modest earner of thirty thousand pounds. This is because their fortunes are derived primarily from capital gains, taxed with a leniency that borders on the absurd.

It is little wonder, then, that a pervasive sense of injustice has taken root among the British populace. Eighty-five percent of our citizens express concern over the state of inequality in our land. They sense, with an instinctual clarity, that the scales of fairness have tipped too far. It is not merely a question of economics, but of morality, of what is right and just.

There are three pillars to this concern. The first is a simple, yet profound, recognition of unfairness. It offends our collective conscience that a child born into poverty should be denied the same opportunities as one born into affluence, or that the wealthy can exploit a different set of rules to their advantage.

The second pillar is the corrosive impact of inequality on our society, economy, and democracy. We stifle the potential of countless would-be entrepreneurs, fostering instead a culture that rewards extraction over creation. Our social fabric frays as the wealthy wield disproportionate influence, eroding trust and cohesion.

The third pillar is the unsettling realisation that the future promises only to exacerbate these divides. The Institute for Fiscal Studies warns that inherited wealth will increasingly dictate lifetime earnings, heralding an unprecedented and unequal transfer of resources from one generation to the next.

To counter this ominous trend, bold and decisive action is required. The next government must embark on a journey to redress the balance, to forge a society where opportunity is not a privilege, but a right.

We must start by aligning capital gains tax rates with those of income, ensuring that wealth is taxed equitably. The draconian two-child limit on benefits should be abolished, lifting 250,000 children out of poverty at a stroke. A substantial increase in the supply of social housing is imperative, as is the guarantee of affordable, quality early-years provision for all children.

Employment reforms are also crucial. Zero-hours contracts must be banned, and a real living wage ensured through the cooperation of responsible businesses and trade unions. These measures would provide stability and dignity to the working populace.

Funding these initiatives need not burden the taxpayer. By empowering HMRC with additional resources to close the £39.8 billion tax gap, we can secure the necessary funds. This investment would yield substantial returns, with every pound spent generating fourteen pounds in additional tax revenue.

Investing in a fairer society is not merely an altruistic endeavour; it is a pragmatic one. By fostering success irrespective of one's birth, we cultivate a more prosperous and harmonious nation. If we fail to act, the consequences will be dire. The spectre of extreme political shifts looms on the horizon, a stark reminder of the stakes at play.

In conclusion, "Spiralling Inequality is a Ticking Timebomb for the Next Government" is a clarion call to action. It presents a meticulously crafted argument, rich with thoughtful and practical solutions. The structure is clear, the prose engaging, and the vision compelling. As we stand at this crossroads, the choice is ours: to act decisively and create a fairer society, or to ignore the warning signs and face an uncertain future. The time for action is now.

ARTICLE

Spiralling inequality is a ticking timebomb for the next government

Some 15 million people in the UK, almost 25 per cent, are living in poverty. There are practical steps ministers can take to tackle injustice in our society

Idon’t want to sound alarmist, but inequality — whether socioeconomic, regional, racial, gender, class-based, or disability-based — is getting out of hand. Consider the following statistics, which the Fairness Foundation (an organisation I founded) collates in its Fairness Index:

• Some 15 million people in the UK, almost 25 per cent, are living in poverty, while the richest 20 per cent own two thirds of the country’s wealth and less than 1 per cent own half the land.

• Disadvantaged children are almost 19 months behind their peers in terms of learning outcomes by the time they take their GCSEs.

• People living in the richest areas of the UK enjoy an average of 18.5 more years of healthy life than the poorest 10 per cent.

• Some people earning £10 million a year pay an effective tax rate of 21 per cent on their income, the same as someone on £30,000 a year, because most of their income is in the form of lightly taxed capital gains.

There’s plenty of evidence that, while many Brits do not think that we should live in a society of perfect equality, the overwhelming majority think things have gone too far, with 85 per cent of people being concerned about inequality in Britain today.

This concern has three components. The first is an increasingly unavoidable sense that these forms of inequality are just unfair. It’s not fair that children born into poorer families do not get the same opportunities as everyone else, or that many wealthy people are able to benefit from a different set of rules to everyone else.

The second is that inequality is damaging our society, our economy and our democracy. We’re depriving thousands of potential wealth creators of the chance to set up their own businesses, and we’re incentivising business models that are not based on creating wealth, but just extracting it.

The third is the widespread feeling that wealthy citizens and corporations have a disproportionate influence over our legislature. We’re creating social divisions that undermine cohesion and trust, and reducing public faith in democracy and in the ability of politicians to do anything about it.

And the bad news is that all of this is likely to get worse. We’re on a negative trajectory in terms of fairness and inequality. To take just one example, the Institute for Fiscal Studies has shown how the wealth you inherit has a much bigger impact on your lifetime earnings than it used to, and the coming decades will see an unprecedently large — and unequal — passing down of resources, primarily from property, from the baby boomers to younger generations.

To address this, the next government has to take bold action to reduce wealth inequality and build a fairer society. Levelling up opportunity through education is important, but won’t be enough on its own; we have to deal with inequalities outside as well as inside the school gates if we are going to make a noticeable difference to people’s living standards and life chances.

Bringing rates of capital gains tax closer to income tax rates on working people would be a good start, as would scrapping the punitive two-child limit on benefits (which would immediately lift 250,000 children out of poverty).

Massively ramping up the social housing supply, guaranteeing that all children can access affordable and decent quality early-years provision, banning zero-hours contracts, and responsible businesses working together with responsible trade unions to ensure all working people earn a real living wage would all help, too.

The cost of this crucial shopping list could be easily funded without any extra taxation by giving HMRC more resources — an absolute bargain when you consider that every £1 spent produces £14 in additional tax revenue, to go after the £39.8 billion the Revenue admits is leaking out of the tax collection bucket known as the “tax gap”.

Investing in a fairer society would pay for itself in the long term by encouraging and enabling success from all citizens irrespective of the throw of the dice at birth.

If we don’t make progress on this agenda over the next parliament, I fear the 2029 election result might see the hard right making gains we have never seen before in this country, as foretold in the results of the recent EU elections.

The stakes for the next government, and for all of us, are pretty high.