Mind the (wealth) gap

Published: Posted on
Food Donation Point, Tesco
Food Donation Point, Tesco by Tim Sheerman-Chase – https://www.flickr.com/photos/68932647@N00/53311153808/, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=140176618, cropped image

By Dr Huw Macartney
Department of Political Science and International Studies, School of Government, University of Birmingham

Three million emergency food parcels were handed out in the UK over the past 12 months; the number of people living in absolute poverty is predicted to increase by 300,000, to almost 12 million, in 2024; and 17 per cent of children live in “food insecure” households according to a House of Commons report published in April 2024. It is therefore baffling to me that neither of the main parties has made tackling poverty an explicit priority in this election campaign.  There is nothing “bold” or “ambitious” about the Conservative or Labour election promises nor any mention of measures to address the worst social issue of our time: economic inequality.

Rather, both parties have chosen to focus on economic stability and sound finances. For Labour this means limiting wastage; spending wisely; and restoring ‘security to family finances’. The core assumption being that the ‘biggest fall in living standards in a generation’ can be solved by improving the country’s rate of economic growth. The Tories have likewise promised a stronger, more secure economy delivered through a plan of tax cuts, the reaping of an elusive post-Brexit dividend and the restructuring of welfare benefits to create fiscal headroom in future budgets.

The economics

Both parties’ promises are built on the faulty logic of “trickle-down economics” (if we get the economy growing, everyone benefits, proportionately). It is a logic that has been recycled by successive governments since the 1980s; and it has been shown to be false and misleading time and time again. What we have actually experienced is a siphoning-off of the gains at the top, with an attendant increase in the wealth of the 1%. The trickle-down-economics mantra is deployed by politicians to abdicate responsibility for being more interventionist and decisive in the economy and to absolve the state from ensuring the fair distribution of its rewards across society.

Economic inequality comes in two guises, as (earned) income inequality and (accumulated) wealth inequality. The consensus among economists is that wealth – not income – is where the real political battle needs to be fought. The past four decades have witnessed a staggering concentration of wealth in the UK. In 2023, according to the Times Rich List, the 350 richest individuals in the UK had a combined wealth of £795bn; and the richest 50 families in the UK now hold more wealth than half of the UK population (33.5 million people). We live in a society where it is not politically correct to label something as objectively wrong. But in a country where 4.3 million children (30 per cent)  live in poverty, this is objectively wrong.

Moreover inequality is not just a problem for the poor. Tackling inequality needs to be a priority for the rich too. Inequality erodes the fabric of society. It is divisive and breeds crime, intolerance and extremism. It undermines democracy, increases the appeal of populism and far-right, as well as far-left, ideologies. The evidence of the past 14 years suggests that burying our heads in the sand and hoping that the threats posed by inequality will simply pass us by, is no longer a viable strategy.

The solution?

Both parties have remained conspicuously silent on politically contentious policies – like wealth taxes or council tax reform – that might help address the increase in accumulated wealth. But the hard truth is that the promise of economic growth only works to the benefit of all with a more interventionist and redistributive strategy by the government. Simply creating the right conditions for economic growth – the focus of both parties as things stand – will not therefore address the root causes of inequality. Without redistribution – which can only ultimately happen through the state – all the evidence suggests that inequality will only worsen.

What would redistribution look like? First, the Trussell Trust has recently emphasised the urgent need for universal credit reform to ensure that people have the basic essentials for living and do not face the impossible choice between heating and eating. Second, a complete overhaul of the Department of Work and Pensions – which has presided over the privatization of a punitive and unjust system of benefits for the poor, the sick and the disabled – would be another step in the right direction. Lastly, a return to the foundational principles of the welfare state outlined in the 1942 Beveridge Report is a pressing need.

The views and opinions expressed in this article are those of the author and do not necessarily reflect the official policy or position of the University of Birmingham.

Leave a Reply

Your email address will not be published. Required fields are marked *