Clever gimmicks won't make a more equal society

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The Independent Online

It might be thought that, after five years, it would be possible to begin to form a judgement on the Blair Government's record. There is one issue, however, on which it is too early to tell, and that is the fundamental one – for a Labour government – of inequality.

It might be thought that, after five years, it would be possible to begin to form a judgement on the Blair Government's record. There is one issue, however, on which it is too early to tell, and that is the fundamental one – for a Labour government – of inequality.

Insofar as governments can influence the overall distribution of income in modern capitalist economies, the Chancellor has a creditable record. High employment and the reweighting of state support towards children and pensioners have countered the forces in the labour market that tend to pull rich and poor apart.

The distribution of wealth, on the other hand, is a deeper pattern, and harder to influence on any timescale recognisable to a politician.

The Institute for Public Policy Research is dishonest, therefore, to rely on the most recent data, which is for three years ago, to make the case for its child trust fund idea that the state should give all UK citizens a lump sum at birth that they could use when they turn 18.

It is true that for the first two years of the Labour Government, until 1999, the distribution of wealth remained as unequal as it had been under the Conservatives. But the most important factors that affect the degree of wealth inequality in the short term are house prices and stock markets. The fall in share prices since 1999 will have hit the richest, while the onward rush of house prices will have benefited a larger group – thus making the overall distribution seem more equal without much improvement in the poorer half of the population.

The question of what to do about young people's unequal access to capital ought to be considered without misleading rhetoric about a widening gap between rich and poor. And it must be asked whether the child trust fund idea is the most effective way of using up to £1bn a year of public money.

The Chancellor took up the idea before the last election in an attempt to make Labour's manifesto look more interesting, but has gone quiet since. Perhaps Gordon Brown should return to the old-fashioned socialist – or simply meritocratic – idea of taxing inheritance more heavily. Would that not be a better way of achieving a similar objective?

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