Costs of inequality

Government is about setting priorities. In terms of social
objectives, what should come first:housing, education, health or
children’s services? Of course, all should be properly funded by
the state. But I believe that the government’s first aim should be
to promote a society marked by greater equality of income and
wealth.

The New Labour government has increased the incomes of poor people
but those of the affluent have risen more. The top 1 per cent of
the population receive more than £100,000 a year. They receive
8 per cent of all the nation’s income while the bottom 10 per cent
get just 3 per cent. Millionaires are common while others struggle
to survive. Differences in wealth are even wider.

It is inequality, not just poverty, that is the main social evil.
Consider housing. Highly paid professionals in London can afford a
large house which can rise in value to more than £1m. They can
then move anywhere. By contrast, those at the bottom may have their
minimum wage or benefits slightly raised above the government’s
meagre poverty line but they still have no choice but to live in
inferior public or private rented accommodation.

Deborah Ghate and Neal Hazel have undertaken a study of parents in
poor neighbourhoods. They show that lone parents are more likely to
suffer problems with accommodation because they have the lowest
incomes.¹ Even where such areas are regenerated with
“low cost” private homes, the poorest cannot compete. As long as
the UK remains a grossly unequal society, huge differences in
housing conditions will remain.

Similarly in education. Research, which the Liberal Democrats had
to drag out of the government, reveals that schools with high
percentages of pupils having free school meals fare less well in
examinations. Raising the incomes of their parents by small amounts
will not change matters, they will still be unable to provide books
or afford leisure activities. They will still not be able to afford
to drive their children to a better school, still not be able to
pay private tutors to boost their performances. As the Liberal
Democrats’ education spokesperson said: “Only by putting inequality
firmly on the agenda will we begin to see a rise in
standards.”

The connection between inequality and social difficulties has been
made by a number of academics. Professor Richard Wilkinson shows
that many forms of ill-health are affected more by relative poverty
– that is inequality – than by absolute poverty. Inequality is
linked with child abuse, receptions into care, crime and drug
abuse. He explains that people at the bottom end of very unequal
societies frequently regard themselves as failures, as beyond hope.
When internalised, their feelings may lead to apathy, withdrawal or
aggression. The outcome is individual or family behaviour
associated with social problems.² Of course, this is not
the only explanation but researchers are convinced that greater
equality would reduce them.

Equality should be a top priority because it would tackle a whole
range of problems. But there is one more reason: social justice. It
is simply wrong that many should live comfortably on £50,000 a
year while many others struggle on under £10,000.

Unfortunately, New Labour has failed to push for financial
equality. The one target it has not set concerns reducing income
and wealth inequality. Cleverly it has focused the equality debate
on which of the various equality bodies – race, gender, disability
and so on – should be united into the overall watchdog. No mention
is made of the failure to appoint an agency to promote financial
equality for all citizens.

So what can we do? Voluntary organisations, the British Association
of Social Workers, trade unions could put equality on the agenda by
defining the acceptable ratio of difference between top and bottom.
They could then suggest how to achieve this ratio – for instance,
by income tax, a wealth tax, a maximum wage.

If nothing else we can put our own principles into practice. I
admire Scottish socialist MSP Tommy Sheridan, who refuses to take
an income above the average wage. If many more declined to take
even one and a half times the average then the message would go out
that personal gain does not have to dominate. After 40 years in
welfare, I still hope for a society characterised by fellowship,
happiness, social health and justice and I believe this is more
likely to come if equality is a main priority.

¹ D Ghate and N Hazel,
Parenting in Poor Environments, Jessica Kingsley,
2002

Bob Holman is the author of Champions for Children. The Lives
of Modern Child Care Pioneers, The Policy Press,
2001.