Inequality is worst for 50 years

The gap between rich and poor is at its widest for 50 years with millions now denied a stake in future prosperity, the Joseph Rowntree Foundation warned yesterday.

Inequalities in income have widened further and faster in the UK than in almost any comparable country to the point where the bottom 20 to 30 per cent have failed to benefit from the rising prosperity of the past 15 years. The deepening divide is puttingthe fabric of society at risk and the Government should forgo across-the-board tax cuts before the election in favour of a far-reaching programme of investment to reintegrate the excluded minority into society and work, the foundation said.

The report, remarkable for being drawn up by an inquiry team that included Howard Davies, Director General of the CBI, and John Monks, the General Secretary of the TUC, said that to prevent growing polarisation, large-scale investment in education and training was needed, along with the reversal or modification of half a dozen key government policies.

New benefit strategies should be introduced to get people back to work and to help them support themselves better when out of work. And benefits which have been linked only to prices since 1981 should rise faster than inflation when living standards generally are rising.

Without such measures, the report warns, "millions of people have no stake in future prosperity". The threat that poses to the fabric of society "is a matter of the gravest concern", Sir Peter Barclay, the inquiry's chairman, said yesterday.

As the economy expanded, policy-makers and business had the choice of stimulating investment or encouraging consumption. If the latter course was chosen "we are throwing away the chance of survival," Sir Peter said.

At Prime Minister's questions yesterday Tony Blair asked whether the Prime Minister accepted that inequalities should be reduced.

The foundation's recommendations include direct provision of employment for the long-term jobless, greatly improved child care, more loans in place of grants from the Social Fund, increases for those who remain dependent on benefits and improved housing benefit.

Income and Wealth, JRF, The Homestead, 40 Water End, York YO3 6LP, two volumes, £15.

News Analysis, page 17

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