Even after Tony Blair’s astonishing speech in the east end of London in 1997 when he pledged Labour to the abolition of child poverty within twenty years, poverty remained the Great Unmentionable spectre at the New Labour feast. As Polly Toynbee and I showed in our book Did Things Get Better? Labour did things, some great things, to improve the condition of those living on the lowest incomes, but the limits of permissible political rhetoric did not stretch to include the ‘p’ word, let alone ‘inequality’. Concern for social justice permeated Labour policies in education, health, and welfare but it was often unspoken. This may have been sensible politics. People tell opinion samplers they dislike large gaps between rich and poor; they also say they do not much like active government measures (such as tax) to do anything about it. Social policy in the United Kingdom has always had to dance a fine line between selectivity (directing benefits to the worst off) and universalism (offering unmeans-tested benefits to all which elicites the political support of the better off). There is remarkably little resentment at the way the modern capitalist economy allocates rewards, for all the occasional outbursts at fat cats, and Labour has chosen not to scratch this sore.
Yet recently the rhetoric has changed. During the election, it is true, the Prime Minister raised hackles in some quarters by saying the gap between rich and poor did not matter much. Yet in the run up to the election and since, poverty and (to some extent) its cognates, inequality and social justice, have become more common elements of ministerial speeches and official pronouncements.
The Treasury’s priorities in its 2001-2002 review of spending include health inequalities: ‘The impact on health of poverty, employment, education, crime, transport, fuel poverty and related factors.’ Another focus is to be children at risk. Poverty is self-evidently a strong risk factor in the lives of children who become offenders. The first new project for the Social Exclusion Unit announced after the election was on the relationship of access to transport and means – for example, how distance from health facilities deprives people of care and how lack of transport precludes participation in the labour market.
The point, in these examples, is not just the size of the policy problems Labour is identifying – they are stark examples of how unjoined up much public provision remains. It is that lack of means is now being identified as the determinant of social dysfunction and Labour no longer feels a need to disguise the centrality of poverty by such euphemisms as social exclusion.
A political risk attaches to all this. Expectations of policy change are raised. Critics of the government, on the left, have been quick to seize on the new rhetoric and demand results. The latest Households Below Average Income data published in July were quarried for evidence that under Labour the volume of poverty had increased or that relative shares of income had changed to the advantage of the better off. These figures, which I will return to later, were ambiguous; they ran only until spring 2000, a cut off that prevents analysis of some of Labour’s most ambitious anti-poverty measures such as the Minimum Income Guarantee for pensioners. But for Roy Hattersley and critics of his ilk, they were enough. The gap between rich and poor was increasing and Tony Blair was indifferent, Hattersley wrote.
But there you have a principal problem for progressives in discussing poverty. Short of equal incomes all round, there will always be room to criticise lack of movement towards the goal. The trouble with a commitment on the masthead to social justice is its imprecision. Differential rewards are endemic in the operations of capitalism, indeed in any conceivable economic process founded on historical property relations. During the Thatcher years, the rationale of inequality was argued: without the incentives of high and low rewards, people would not work. This is now seen as merely self-serving; there is little hard economic evidence to link any given pattern of rewards to performance. Trading economies coexist with a large variety of income distributions, as they do with large differences in the size of the state and the energy of its interventions. It is never clear, in rightwing rhetoric, why the need to reward risk taking necessitates the need to keep poor people poor by refusing to tax the better off.
Social justice is, of course, a process not a state, a series of approximations to greater fairness in conditions of life, income and access. Some people, perhaps Roy Hattersley, have been seduced by the promise in the work of, among others, John Rawls. His A Theory of Justice suggests that a stable state of ‘equality’ is attainable – perhaps even resembling the Marxist dream of a post-revolutionary Eden. To such people, incrementalism is never enough. But in a pluralist democracy such as ours, incrementalism is all there is. New Labour has, in some measure, made the United Kingdom a fairer society and, as such policies as the Minimum Income Guarantee fall into place, it will become fairer still. This will be so even if there is also a dynamic element increasing rewards for top people in private companies and the dependents to whom they pass wealth and advantage.
What people broadly sympathetic to the Blair government are entitled to ask of critics is that they try harder to quantify their discontents with this small progress. What critics of the government are right to do is to ask for more coherence among the multiplicity of policies which have as their central or subsidiary objective the reduction of inequality. Let’s look at some of them.
Labour inherited a sea of poverty. In 1997 four million children, one in three, lived in households getting by on less than half of the average income (or 60 percent of the median). A third of all poor children so defined inside the European Union were born in the UK. The Tory era had seen average incomes rise by 40 percent in real terms yet there was also a dramatic increase in numbers of people living in (relative) poverty. Poor people live shorter lives; they are more accident prone and subject to ill health.
As of spring 2000, 23 percent of the UK population lives below this poverty line. There are heated arguments about how many children still live in poverty. One estimate says 3.2 million, another 2.8 million. That represents progress, though the reductions are hardly dramatic. The policy question is whether the trends are moving up with sufficient speed to accomplish Tony Blair’s great promise of abolishing child poverty within a few years. The consensus answer is yes, provided there is no economic downturn which cuts employment dramatically. Another proviso is tricky: increases in spending above those projected may also be required.
Most of Labour’s ‘money’ policies have addressed the relative position of the poor. The phrase ‘lifting children or pensioners out of poverty’ means raising their income relative to the average. But ministers, including Tony Blair, have also toyed with absolute definitions of poverty – how much people need to get by, according to some pre-defined standard of civilised existence. Professor John Veit-Wilson of Newcastle University has rightly criticised Labour for, so far, failing to establish such an absolute baseline; the semantic force of the word poverty rests on the belief that good and bad lives are tangible and measurable things. But the motor of progressive politics for the past two centuries has been relative incomes and wealth. There will probably always be tension between definitions.
Labour’s money policies for poverty have been built around its elemental belief that work is the route out of poverty for all but those physically incapable of gainful employment (and the government has faced some tough challenges on just where that boundary of capacity lies). In opposition in the 1990s, Labour had concluded that any job, however lowly, however part time, was the path back, the beginning of inclusion. Labour’s cyclical fortune, assisted by confident macroeconomic management, has hitherto been a buoyant economy, with increasing employment. A precondition for the New Deals was demand for labour.
But along with the New Deals came Gordon Brown’s reworking of Family Credit into Working Families’ Tax Credit, introduced in full only by April this year – payable to one million households. Income support for children in non-working households rose significantly; child benefit increased. The broad effect of these measures will be to increase income in households where poor children live. A new ‘integrated’ child credit is coming, affecting all seven million households with children. Active fiscal policies directed to such households tends automatically to be progressive since families with children tend to be concentrated towards the bottom of the income distribution. What is proposed is a single credit for children, which would be claimed by around six million households. Such radical change to taxes and benefits will, of course, be complicated but the prize might be further increases for the families of poor children.
The numbers of very poor pensioners had doubled in number in the Tory era; by 1997 2.4 million old people (out of a pensioner population of about twelve million) were living in poverty, defined as half average income. After its stumble over the 75p pension increase, Labour policy took a progressive track: the Minimum Income Guarantee, linked to increases in earnings, lifts pensioner income. If the government can find all those entitled and get them to claim, pensioner poverty is over. And this is a considerable political achievement. The government held out against those arguing for an increase in universal pensions. Pensioner Credits are on their way, giving extra to those with small savings up to a ceiling.
The Institute for Fiscal Studies has sought to measure the effect of Labour’s policy changes and the graph on the previous page sums up the result. It looks like progress: post-tax income rose proportionately more for the poorest income groups and the richest even lost out. And a similar picture obtains for pensioners: the poorest ten percent gained three percent in measures adopted to 2001 while the richest pensioners saw their incomes rise by only the tiniest of fractions. This was hardly redistribution, in the sense that not much more income was taxed away from the better off. Instead Labour distributed new money, the proceeds of growth, disproportionately towards the poor – giving without taking much away. Over four years from 1997, the Institute for Fiscal Studies registered a small drop in post-tax income for the better off tenth of households. Some of Gordon Brown’s budgetary measures – the increase in National Insurance for higher earners – had undoubtedly been progressive, but without causing much political pain.
Against these reforms has to be set the stark facts of income inequality, that the share of national income going to the poorest ten percent of people was less than three percent. The best off ten percent get nearly thirty percent. The trend in the Tory years had been towards more concentration of wealth in the upper deciles, the rich getting richer. There is a data gap. In 1997 the wealthiest ten percent had £63,000 of assets on average versus a notional £100 or more likely nothing for the bottom ten percent. Labour has not made it any harder to inherit and changes to capital gains taxation may in fact have made it easier for possessors of assets. The distribution of wealth under Labour may indeed have become even more skewed. Surveys of rewards at the top of private companies suggest there is a mechanism in place concentrating rewards and widening the gap within companies between higher and lower earners. Labour has chosen to ignore such tendencies – apart from some handwringing about the mechanisms by which corporate boards determine salaries and share options. What that all means is that there is a huge disparity in the means available to different households; they are unlikely to be next door, but they are certainly within streets of each other.
Labour has kept saying that poverty is not just a matter of tax credits, benefits and the arithmetic of income distribution, important as they are. It is a human condition, about the way people live together. So it has pushed a raft of what might be called ‘non-money’ policies to improve the lives of the poor. Of course, they involve public expenditure but they are not intended directly to raise household incomes. The list is long and begs questions about co-ordination and coherence. Sure Start is intended to bring poorer children of pre-school age living in poor areas in reach of health and social services, nurseries and opportunities to learn. And to this must be added health and education action zones, the various estate action programmes, the New Deals, efforts to promote entrepreneurship in poorer communities, neighbourhood renewal, childcare initiatives, the Children’s Fund, Connexions, the social investment funds, local strategic partnerships and more. The problems of measuring the effect of this compendium of community-based activity are horrendous – there is a growing impression that the government has given up trying to work out effects in the hope (probably correct) that together these programmes will work. Rioting in Oldham, Bradford and other cities have occluded the work of the Social Exclusion Unit.
Time will tell: twenty years hence will the fate of the poorest babies born under Labour who pass through Sure Start and the other programmes, the regenerated estates, better schools be felt to be different?