In his Budget, George Osborne claimed inequality is at its lowest level in 28 years. Yet recent research by Oxfam highlights this statement hides a more nuanced and worrying picture. Rachael Orr argues that if the Chancellor is serious about halting the growth of inequality he needs to start listening to some of the 13 million people living in poverty in the UK today

McGettigan, Andrew

LSE Research Online

3/25/2014There are plenty of things the Chancellor could be doing tohalt the growth of inequality and help some of the 13 millionpeople living in poverty in the UK todayblogs.lse.ac.uk /politicsandpolicy/tackling-inequality-is-challenging-both-in-ideology-and-action-but-there-are-plenty-of-things-the-chancellor-could-be-doing/In his Budget, George Osborne claimed inequality is at its lowest level in 28 years. Yet recent research byOxfam highlights this statement hides a more nuanced and worrying picture. Rachael Orrargues that if the Chancellor is serious about halting the growth of inequality he needs to startlistening to some of the 13 million people living in poverty in the UK today.It’s always nice when you get some front page headlines to elicit a response that is both publicand high profile from the people you’re trying to influence. Last Monday, Oxfam released abriefing A Tale of Two Britains, which showed the 5 richest families in the UK own the same asthe poorest 12.6 million people. In turn, on Wednesday in his Budget, the Chancellor claimed inequality is at itslowest level in 28 years.(Credit: Jamie Livingstone/Oxfam)There are two reasons why the Chancellor can make this claim. The  first is because he has front-loaded taxincreases, meaning there may have a minor drop in incomes for the richest, lowering income inequality, but he hasalso ensured more than half of cuts to public spending are still to come, so the poorest will be experiencing greaterlosses in income over the coming year. And the second is that his definition of inequality only covers incomeinequality, not wealth inequality.But while we might challenge the Chancellor’s definition of inequality, it’s important that he’s talking about it. AsOxfam’s paper Working for the Few outlines, we are becoming increasingly concerned about a world in whichincome inequality is spiralling, with wealth and power concentrated in the hands of a few, leaving the rest far behind.Despite the upbeat tone of the Budget this week, this is all too true in the UK.  On Budget day, I went to visitFoodshare, one of Oxfam’s partners working in West Dunbartonshire in Scotland (yes, Oxfam has projects in the UKas well as overseas). 26% of children growing up here are living in poverty, and blocks of the flats we drive past look1/3set for demolition. “People are living in there, there’s nowhere else for them to go” says Danny McCafferty, localactivist and chair of Foodshare.The Foodshare service was set up by residents in response to the growing numbers of their neighbours whocouldn’t afford to feed their families. It’s all run by community volunteers, and responds to local needs. After openingone outlet, they have added two more after finding that people were walking for up to two hours to get to them,unable to afford the bus fare. Volunteers are now working on developing links with local advice agencies, so thatpeople who come to them for food don’t just get a bag of provisions to keep them going, they get help so that theymight not need to rely on emergency food aid again.That services like Foodshare exist, and are growing in number, is the evidence of an increasingly divided Britaintoday. Half a million people used foodbanks in the last year. And while austerity policies and welfare changes areundoubtedly increasing poverty and inequality in the UK, the problems poor communities around the county aresuffering aren’t just the result of the recession. Median incomes have been in decline for 10 years inDunbartonshire, and the loss of jobs due to the decline of industry in the 80s has never been replaced.So what is to be done? Tackling inequality is challenging, both in ideology and action. But there are plenty of thingsthe Chancellor could be doing to halt the growth of inequality and help some of the 13 million people living in povertyin the UK today.Tax evasion, by companies and individuals, costs the UK economy billions of pounds every year. The ‘tax gap’ – thetotal amount of missing tax money the Treasury is owed – is estimated by the Government at £35 billion.  Of that taxgap, Oxfam estimates that at least £5.2 billion a year is being evaded by wealthy individuals who use tax havens.Although some encouraging steps have been made to, far more must be done to clamp down on tax dodgers byimproving transparency and accountability standards in tax rules and increasing government capacity to tackle taxevasion.But it’s not just about tax evasion. We need to look at to a fairer, more progressive taxation system. TheGovernment should implement a financial transactions tax to ensure the financial sector contributes its fair share.They should also address the fact that economic inequality is driven by wealth as much as income by exploring howto tax wealth directly, for example through a land value tax.And then we need to focus on policy making that really targets help at the poorest.  The Chancellor’s flagship policyin the Budget was the rise in the personal income tax threshold, which changes nothing for those earning under£9440. But it does help everyone earning up to £100,000 see an increase in their income.Rather than a focus on raising the tax threshold, we need more focus on a fair social protection system to help thosewho are out of work or unable to work, and on policies to really make work pay. For all of the Chancellor’s talk ofgetting people into work to help them out of poverty, reality couldn’t be further from the truth. Poverty in real termssaw the biggest increase in a decade last year and working poverty overtook out-of-work poverty. Since 2009, thenumber of workers earning below a Living Wage has increased by 1.5 million to 4.8 million. Political parties havebeen good at talking up a living wage, now it’s time for them to outline a long-term strategy for raising the minimumwage to living wage levels, and to use tools such as government procurement to promote a living wage.But there is something else that is critical to tackling inequality, that is beyond policies of tackling poverty and (thatword politicians consider so dirty) redistribution. Extreme economic inequality is damaging because of the negativeimpact it has on poverty reduction and overall prosperity. But in many cases extreme economic inequality alsocauses unequal political representation: those with the most money are able to rig the rules, and influencegovernment policy in their favour, often at the expense of everyone else. According to a recent Oxfam poll, morethan two thirds of the British population think the rich have too much influence over where the country is headed. Soif I was the Chancellor and I was serious about tackling inequality, I’d start by talking to people like DannyMcCafferty and his Foodshare volunteers. It’s only by their voices and experiences having the same weight in2/3decision making as those with spiralling wealth that we can really begin to reduce inequality in the UK. Note: This article gives the views of the authors, and not the position of the British Politics and Policy blog, nor of theLondon School of Economics. Please read our comments policy before posting. About the AuthorRachael Orr is Head of Oxfam’s UK Poverty Programme, overseeing all the programmesOxfam run to tackle UK poverty and leading their policy and campaigning on domestic issues.Before joining Oxfam  she worked for Shelter as Campaigns Manager and London Campaignsand Public Affairs Manager, having started her career working in homeless hostels and as asupport worker. She is also Chair of Trustees for Angel Shed Theatre Company, an inclusivetheatre company in Islington.3/3

There are plenty of things the Chancellor could be doing to halt the growth of inequality and help some of the 13 million people living in poverty in the UK today

There are plenty of things the Chancellor could be doing to halt the growth of inequality and help some of the 13 million people living in poverty in the UK today

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