John Rentoul: Cameron is cheeky, but right

The Conservative leader's bid for 'Guardian' reader support on public sector differentials is smart

Cheek can get you a long way in politics. David Cameron's article in The Guardian on Friday was a prize exhibit of brass neck. "To Guardian readers everywhere I say: overcome any prejudices you may have." Just as in 1997, Tony Blair wrote an article for The Daily Telegraph, similarly addressed to "Daily Telegraph readers", in which he declared: "It is important to recognise that Labour offers a degree of continuity as well as change."

The policy that Cameron proposed in his article was clever too. He wants a fair pay review to ensure that "no public sector worker can earn over 20 times more than the lowest-paid person in that organisation". When I say it was clever, I do not mean to disparage it. It is a good policy. But it is ingenious in two dimensions. Politically, it drives a tank not just on to Labour's lawn but right through the wall into the kitchen. Guardian readers will like it. And so will readers of the Telegraph and the Daily Mail. Labour ministers will shake their heads and wish they had thought of it. But the pay multiple is also a clever policy in its own right. It deals with a source of genuine puzzlement, namely why so many top jobs in quangos and local government seem to command salaries of £250,000 and up. And it also acts a symbol for the private sector, applying a "nudge" to social norms on pay. Simply by using the ratio of highest to lowest pay, it invites people to make the comparison in private-sector companies.

As Cameron acknowledged, there are "many complex questions" to be resolved. How to account for agency and contract workers brought in to do low-paid work, for example. But it is a real policy that exposes the failure of the Labour Party to think creatively. Labour should have been on to this. Liam Byrne, the Chief Secretary to the Treasury, asked his civil servants when he was at the Cabinet Office to look at the ideas of Richard Thaler and Cass Sunstein, the authors of Nudge, and of similar American thinkers. And Byrne's father was a local government official, who called himself "general manager" of Harlow district council, not chief executive, and was paid a modest salary.

It is also a rebuke to people, such as me, who mocked Cameron's criticism of Labour's record on equality. I thought it was a bit rich for Cameron to earn a standing ovation at his party conference last October by claiming that Labour had failed to close the gap between rich and poor.

Who had widened that gap in the first place? Cameron's flame Margaret Thatcher, that's who. In December, Cameron described himself as "a Lawsonian, basically". Nigel Lawson was a great tax simplifier, but he presided over the biggest increase in inequality in modern British history. Cameron's tax policies tend to favour the better-off. They would cut in inheritance tax; even cancelling of next year's rise in national insurance contributions would affect those earning above a certain level.

Cameron is right to say that Labour's record on equality has been imperfect. The Blair-Brown governments allowed far too many people to remain dependent on benefits. But they stopped the gap between rich and poor becoming significantly wider, despite the common myth that Blair in particular encouraged the super-rich to engross themselves. This is one of the anti-Blair fictions that is promoted by the unholy alliance of The Guardian and the Daily Mail.

The Mail was at it again last week with a headline, "In 13 years of Labour, the richest have got even richer." It reported "the growing dominance of the super-rich" as revealed by Social Trends, "the annual snapshot of the nation published by the Office for National Statistics".

Social Trends revealed no such thing. It reported what we already know, which is that inequality of incomes increased during the 1980s and early 1990s, but has been roughly stable under Labour, while data on the inequality of wealth, which started to increase in the late 1980s, were discontinued as unreliable in 2002.

Cameron has exploited this myth cleverly, despite having opposed all the Labour policies that redistribute money from rich to poor, without which the gap really would have widened dramatically since 1997. Until last week, I was dismissive of Cameron's new-found concern with the social division allegedly fostered by the Labour government. He showed no sign of having learnt anything from the experience either of the last Conservative government in widening the gap or of the Labour government in trying, not wholly successfully, to soften the forces of global competition that continue to drive earnings differentials apart.

But a public-sector pay multiple is a plan. It would not have a measurable effect across the economy, but it is a signal of intent and a cultural marker. It is a small step in the right direction. Polly Toynbee, once briefly cited by the Tories in their critique of Labour, didn't like it. But Labour supporters are foolish to dismiss it as tokenistic or, worse, for not going far enough. It goes further than Labour went.

Yet the truth is that none of the parties knows how to deal with the vast mess of benefit dependency that acts as a deadweight on this country's economy and on its human spirit. Dimly, I remember Alistair Darling saying in the Budget last month that he wanted to stop people claiming housing benefit for very expensive properties. But the ban wouldn't come in until October next year. I thought: they have had 13 years; Darling was Work and Pensions Secretary from 1998 to 2001. He personally has had 12 years to sort this out. And now he's leaving it to Theresa May. The human spirit remains cast down.

On that basis, any progress, even from an unconvincing progressive, is welcome. Cameron's pitch for the Guardian vote is cheek. But it is right, and it is clever.

John Rentoul's blog is at www.independent.co.uk/jrentoul