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Sunday, August 03, 2008

Equality -- the story so far

The latest issue of the Common Good, the magazine of the Christian Socialist Movement, looks at inequality. My article addresses recent evidence on income inequality:

Since when did equality become the standard to which we should rally as Christian Socialists? What do we mean by it? Equality is under threat. It is seen by some as outdated and too difficult to define or achieve, while super-rich lifestyles are applauded.

The CSM statement of values begins with a timeless principle. For the first time CSM stated in 2006 that ‘We believe that all people are created in the image of God. We all have equal worth and deserve equal opportunities to fulfil our God-given potential whilst exercising personal responsibility.

If God values each of us equally – his Son came to die for each of us – we must each do the same. A society that does not have this characteristic still has work to do for the common good. Each person is unique, with his or her own personality, character, aims, strengths and weaknesses. That is one reason why we need to live and work together. It is also why there can never be uniformity of outcome.

Here the liberal argument stops, with equality a worthy principle but one to which government is never held to account. We go further, since we cannot rest while fellow citizens are so clearly denied the opportunities others easily enjoy. That is why policies designed to help parents, to support children in early years, and to improve education standards are so important. Equality is about more than redistribution. As RH Tawney explained, it is about economic and social freedom for all.

We may shun uniformity but we look for evidence that policies designed to give people better opportunities in life are having an impact, particularly among the poor. In early June the government released data on income poverty, which together with other income data has been analysed by the Institute for Fiscal Studies (IFS).

When income inequality is assessed using a common measure called the Gini co-efficient, in 2005/6 and 2006/7 it is around the same level as in 1997/8. The IFS found that income inequality is now equal to its highest level since 1961 using this measure. On this basis there has been no progress at all in reducing inequality over the past ten years. However, income inequality did fall from 2001/2 to 2004/5 before rising again. Lower incomes grew faster, in part due to increases in the minimum wage and tax credits for families with children.

Indeed, the IFS found that inequality rose significantly in the late 1980s as the Conservative government cut direct taxes. Tax rises in the early 1990s and tax credits under Labour worked to lower inequality. While higher incomes have grown the fastest in the period 1996/7 to 2006/7 as under the previous Conservative government, income growth has been more equal under Labour. This measure has limitations. If we all had the same low income there would be perfect equality but widespread poverty. We need to focus on low income households.

The data show that in 2006/7 there were 13.2 million people living in households below 60% of median income (which was just over £19,600 for a couple with no children, before housing costs but after tax). This represented a fall of 0.8 million compared to 1998/9 but a rise of 0.4 million compared to the previous year (2005/6). This seems consistent with the Gini coefficient data quoted above. The number of children and pensioners living on low incomes rose over the year but is still down compared to 1998/9.

Children in households in severe poverty (less than 40% of median income) are actually less materially deprived than those in households with incomes between 40% and 60% of the median. Working adults on low incomes but without children have fared particularly poorly in recent years.

These snapshots do not reflect improvements in living standards from investment in public services or what would have happened if Conservative policies had been followed for the past ten years. They do not allow for the substantial time required to put right mistakes of the past. Neither do they reflect changes in wealth. In particular, they do not show if inequality of opportunity is falling.

Government may have found further progress difficult because average real income growth has been low in recent years (with the exception of those on very high incomes), even though average real income has grown 2.1% since 1996/7. Average income grew over 3% in Labour’s first term. Higher fuel and food costs due to global forces are now reducing money available for other things and we are probably experiencing a fall in real incomes. This helps to explain why people are so pessimistic about the economy, and disgruntled with Labour, at present.

We should ensure the UK remains an attractive place for businesses offering high quality jobs. Employment is the best way out of poverty. Labour’s focus on early years development must continue even though most results will not be seen for a generation. Some tax reform maybe appropriate. Finally, we should build and strengthen relationships between people in our society.

Real challenges lie ahead. As the credit crunch takes effect and economic growth slows further, we have to get our message right on equality. A static approach, moving a tax credit here and a tax allowance there, will not do. Our political message must embrace again the cause of the Common Good and the merits of a society in which everyone has a stake.


Laban said...

Interesting stuff. You couldn't post a link to the data, could you ?

Jaxon said...

Kevin DeYoung and Ted Kluck just released a great book on the growing Socialist Christian movement and what a load it truly is. Why We're Not Emergent. It is a must read.