The Big Question: Why has the equality gap widened even through the years of plenty?
Thursday 28 January 2010
Why are we asking this now?
The National Equality Panel, an independent group of academics, yesterday published the most ambitious state-of-the-nation wealth assessment ever conducted. The report, An Anatomy of Economic Inequality in the UK, concluded that, after 13 years of Labour rule, the divide between rich and poor is greater than at any time since the Second World War, despite Labour pumping billions of pounds into initiatives designed to narrow the gap.
The new findings revealed that the household wealth of the top 10 per cent of the population is £853,000 and above – 100 times higher than the wealth of the poorest 10 per cent, which is £8,800 or below.
When the highest-paid workers, such as bankers and chief executives, are put into the equation, the division in wealth is even more stark, with individuals in the top 1 per cent of the population each possessing total household wealth of £2.6m or more.
Why did the Government commission the report?
It was commissioned by Harriet Harman, the Equalities Minister, in 2008 to shape proposals to tackle the class divide. Labour had hoped that a focus on social mobility during the election would damage the Conservatives and make voters question whether the Tories would improve prospects for poor families or simply protect the privileged classes. The damning verdict on Labour's record on tackling inequality could mean that the plan has backfired.
How does Britain compare internationally?
Britain is among the most unequal societies in the developed world, with the highest rate of poverty in western Europe. Britain was the seventh worst country for income inequality out of 30 industrialised countries in the mid-2000s behind countries including the US, Mexico and Turkey. The UK also lags behind other countries in the proportion of the working age population with the equivalent of GCSE passes. Levels of inequality are slightly higher within England than within Scotland and Wales. Average wealth ranges between £151,000 in Scotland, £206,000 in Wales and £211,000 in Scotland.
Why the widening gap?
Social class emerges as the central theme of the report. Children of poorer people live much harder and shorter lives than those of the wealthy. Being born poor and into a disadvantaged social background has a life long negative impact on a child's chances. These inequalities accumulate over the life cycle, the report concludes. Social class determines how ready for school children are at the age of three.
But it also continues to hamper children's progress during their school years and beyond.
Differences in wealth enable some parents to buy houses in the catchment areas for the best schools or to afford private education – giving advantages to their children that continue through and beyond education.
The result is that bright children from poorer homes are overtaken by less bright youngsters from wealthier backgrounds. By 16, half of all boys receiving free school meals have results in the bottom quarter in England. Once at work, the divisions grow further. Within four years of graduation, boys who went to private schools are earning 8 per cent more than their peers. Wealth levels are also associated with stark differences in life expectancy.
What about gender inequality?
Girls leave school with better qualifications than boys, are more likely to go to university and to graduate with good degrees. Up to the age of 44 women are better qualified than men. But the average hourly pay for a woman is 21 per cent less than for a man.
White British pupils with average or below average GCSE results are less likely to go to university than those from minority ethnic groups with the same results. But nearly all minority ethnic groups are less likely to be in paid work than white British men and women. Compared to a white British Christian man with the same qualifications, age and occupation, Pakistani and Bangladeshi Muslim men and black African Christian men are paid 13 to 21 per cent less for doing the same work.
Who is to blame?
The report concludes that some of the biggest inequalities opened up in the 1980s under Conservative rule. But it also argues that the government has failed to plug the gulf that existed between the poorest and richest in society in the 1980s. "Over the most recent decade, earnings inequality has narrowed a little and income inequality has stabilised on some measures, but the large inequality growth of the 1980s has not been reversed," it states.
What does this mean for the Government?
It will make uncomfortable reading for Labour, which has invested huge sums in programmes such as Sure Start and early years education to try to narrow the class divide. The report concluded that the structure of Labour's tax and benefit system had narrowed the range of incomes that would have otherwise resulted from the market. But this effect was much less in the UK than in many other European countries.
Harriet Harman, the equality minister, said: "We have made progress over the past 13 years – especially in tackling poverty – and halted the rising growth of inequality that dates back to the 1980s and which we still see the effects of today. But we will do more to increase social mobility and tackle the barriers that hold people back unfairly."
And what does it mean for the Conservatives?
It is a chance to round on Labour, even though the report concluded that growing inequality dated back to the Thatcher era.
The Tories' Equalities spokeswoman Theresa May said: "It is unbelievable that Labour thinks it can claim to be the party of aspiration when its failure to tackle the causes of poverty have let down so many lives. We cannot go on like this. We need a change from Labour's failed one-dimensional approach to tackling poverty and inequality. Conservatives will tackle the causes of poverty and inequality – not just the symptoms through radical policies to address educational failure, family breakdown and worklessness."
What can be done about the equality gap?
The report highlights the importance of early years policies in making sure that children from poor backgrounds have the skills needed to start school successfully. It also called for more to be done to reduce child poverty and improve the staying-on rates after 16 for children from the poorest homes.
Is this a divide destined never to be bridged?
* Richer people will always be able to buy advantages for their children
* The children of successful parents are more likely to be successful themselves. Poverty of ambition, as well as economic poverty, is a hard cycle to break
* The gap is now too large to ever be bridged
* The Government's Sure Start programme will give the poorest children a better start at school
* More young people from the most disadvantaged areas are now going to university
* An overhaul of the tax and benefits system will give more help to the poorest families
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