January 21, 2010
Poverty, Inequality and New Labour
Q: You all know who infamously declared that “New Labour is intensely relaxed about people getting filthy rich” – but what was the next sentence?
A: “So long as they pay their taxes”.
Mandelson’s words have haunted him since almost the moment they left his mouth. But they reveal something fundamental about New Labour’s attitude to social justice.
History will not judge New Labour kindly. Iraq will never be forgotten. Likewise the hubris of purporting to abolish boom and bust – and the nemesis which inevitably followed.
But on the question of social justice, things are more ambiguous.
What lay behind the Mandelson remark was precisely the contention that it didn’t matter if people got stonkingly rich under New Labour, because people at the bottom would get better off too. Inequality didn’t matter, poverty did.
There’s no doubt that inequality got worse under New Labour. The Gini Coefficient, a standard measure of inequality, is estimated at about 0.36 for 2007/8, higher than at any time since the relevant records began in 1961 (Brewer et al, 2009, pp.23-24). (h/t)
What about poverty?
Dr Stuart White of Oxford University remarked at the Fabian Next Left blog last October that he “would judge any broad-brush claim that ‘Poverty has increased under Labour’ or that ‘Labour has been bad for the poor’ as risible.”
He noted that:
- Poverty, on most indicators, is lower for most groups than when Labour came to office. On poverty, the basic story seems to be…that on most measures, and for most groups (children, pensioners, etc.), poverty rates are lower than in 1996/7 (Brewer et al, 2009, pp.34-36)
and
- IFS researchers expect child poverty to fall by 500-600,000 up to 2010/11, on the basis of existing policies and allowing for likely economic changes (Brewer, Browne, Joyce and Sutherland, 2009).
but also that
- Labour’s progress on reducing poverty went into reverse in its third term. Looking across the various groups (children, pensioners, etc.), poverty rates are higher now than they were in 2004/5 (Brewer et al, 2009, pp.32-34), though still lower for most groups than in 1996/7.
What to make of this? One important thing to remember is that Labour’s record must be compared to what would have been if pre-1997 policies had been continued. As John Denham MP said at the Fabian Conference:
“If you designed a social policy to have no impact, the effect of global forces would be to make opportunity more unequal. To halt or modestly reverse trends is, because of the downward escalator effect, a significant achievement in itself. We need to be careful to argue that, though I think it is clear that we do have to go further in the future.”
Denham was talking about social mobility, but the point applies to poverty too. How bad would poverty have been if Tory policies had been continued post-1997?
Stuart White helpfully explored this question too. He first noted that in Poverty and Inequality in the UK: 2007, IFS researchers calculated what the Gini for income inequality in 2005/6 under unchanged Conservative policies would have been 0.378, whereas under Labour it was actually 0.347. “[I]t seems that Labour’s redistributive budgets were preventing inequality rising by as much as it would otherwise have done – as much as it would have done under the policy regime inherited from the Conservatives.”
Yet (as Stuart notes again) Labour has actually been successful in achieving redistributive policies since 1997. “[I]f you look at who has gained and lost from the changes to the tax-benefit system since 1996/7, the gains are biggest at the bottom, disappear in the middle, with losses at the top (Phillips, 2008).”
It seems reasonable to assume that it was Labour’s redistributive actions that prevented inequality from increasing as much as it would have done under unchanged Tory policies. It also seems reasonable to assume that the poverty-reduction achievements Labour did manage were also brought about by redistribution.
Labour has not – contra Tory propaganda – presided over mass increases in poverty. Yet the results are less than many might have hoped for (not least given the huge majorities possessed after 1997 and 2001). A natural question to ask is: “could Labour have done more to aleviate poverty if it has also aimed to reduce inequality?”
I put this question to Stuart on Saturday. His answer was that it was simply too difficult a social science question to answer effectively. But having said that, things do seem to have changed since 1997. Inequality matters again, and is very much on the political agenda.
Stuart must be right. Why else would Cameron attack Labour for its record on inequality, or recently have employed (and arguably distorted) Demos findings to claim that Labour has let down poor children by increasing inequality of outcome and opportunity?
My inclination, therefore, is to say that it’s too early to form a final assessment of New Labour’s record on social justice.
It appears to be a myth that poverty has gotten worse under Labour. And it probably would have gotten worse under the Tories. Yet New Labour’s conviction that inequality doesn’t matter – adopted wholesale from the right – has faded from fashion with the return of recession, and one will always feel that far more could have been done.
But our final judgement must be reserved until we’ve seen what a Cameron government inflicts. If poverty and inequality explode as they did under Thatcher ((Brewer et al, 2008, p.27), we may all judge Labour very much less harshly than we are inclined to at present.
Labour’s years of running up the down escalator, as Denham put it, may seem altogether venerable if the next lot spend a term or two gleefully sliding down it.
Linky Love: 22nd January 2010 « Left Outside said,
January 22, 2010 at 8:05 am
[...] Paul Sagar – Poverty, Inequality and New Labour: It seems reasonable to assume that it was Labour’s redistributive actions that prevented inequality from increasing as much as it would have done under unchanged Tory policies. It also seems reasonable to assume that the poverty-reduction achievements Labour did manage were also brought about by redistribution. Labour has not – contra Tory propaganda – presided over mass increases in poverty. Yet the results are less than many might have hoped for (not least given the huge majorities possessed after 1997 and 2001). A natural question to ask is: “could Labour have done more to aleviate poverty if it has also aimed to reduce inequality?” [...]
Bill le Breton said,
January 22, 2010 at 1:31 pm
Paul,
I worked in Liverpool between 1989 and 2007. In certain neighbourhoods, across that time, every conceivable initiative seemed to be tried to tackle the consequences of deprivation, and millions of pounds were available through Objective One funding. It is hard to find anyone who will publically admit it, but the real worry is that everything that was tried failed.
All were directed against poverty, when the real primary cause is inequality.
About ten years ago a GP from the north of the city told me about the work of Prof Richard Wilkinson – forgive me if know him. He has recently left Nottingham and moved to York where is has set up (with Kate Pickett) The Equality Trust (http://www.equalitytrust.org.uk/) and published The Spirit Level.
This GP was convinced that his surgery was filled with people suffering complaints, physical and emotional that originated not in poverty, though all would be poor, but in the unequal nature of the city and wider society and the effect that has on trust, on self-respect, on social relationships, on community strength and from these on mental health, physical health, obesity, education, teenage births, violence, mobility, opportunity, consumption and sustainability.
If you and your readers have not read this book or looked at the website, please do. The website contains a power point with all of his research into the positive relationship between inequality and a range of social issues.
A good introduction to their ideas can be found here
http://www.liberator.org.uk/article.asp?id=178504115
Wealth does not trickle down. The self-respect that comes from equal regard, the mutual respect, the trust, the good relations, the strong and inter-dependent communities all lead upwards through health to knowledge, to opportunities to exchange to commonwealth.
In short as Wilkinson and Pickett say, ‘more equal societies work better for *everyone*.’
If we wish to act, we must look forward and keep campaigning.
James A said,
January 22, 2010 at 1:58 pm
Bill,
Equality works better for everyone *if* there is not a class in society who prefers the majority to be divided and weak, with broken communities and low self-respect. But, in my view, there is such a class – namely, business leaders, who want to maximise their profit margins, and often realise that strong communities built on solidarity and mutual aid are likely to organise to overcome the deleterious effects of putting profit above all else.
I’m not saying that we shouldn’t explain the great social benefits of increased equality (obviously we should), but rather that we shouldn’t assume that appealing to these benefits will bring *everybody* on board.
A Mirror to Society? « Bad Conscience said,
January 24, 2010 at 3:28 pm
[...] rather more to do with crime than prison-as-deterrence. And as I noted the other day, poverty has fallen under New [...]
Rounding Up « Qmceconomics said,
January 27, 2010 at 9:04 am
[...] Inequality has risen over the last half a century. Here’s another take. [...]
New Labour and the ‘Good Society’ « Though Cowards Flinch said,
January 27, 2010 at 10:52 pm
[...] Which is all very noble, I’m sure, but it rather escapes the harmful effect many of New Labour’s more direct policies have; the employer-friendly Work Trial scheme, the continuing attempt to squeeze even valid claimants off ESA, the effects of privatising council housing stock on rent costs, housing standards and numbers of Houses in Multiple Occupancy, bailing out the banks (plus bonuses) and landing the cost on the working class and so on. The proof in the pudding is that inequality under New Labour is the worst since records began in 1961 (h/t). [...]
Here comes the future « Bad Conscience said,
May 18, 2010 at 11:55 am
[...] it’s important to remember that Labour was “running up a down escalator“. And indeed, it’s not enough to simply point to the increase in inequality. We must [...]