John Rentoul is outraged that the BBC have chosen to cover the publication of the government’s new report on equality with the headline “Rich-poor divide ‘wider than 40 years ago’.” He is of course correct to point out that the main increase in inequality over the past 40 years took place during the Thatcher years.
But the Harriet Harman approved wording that he picks out of the report’s executive summary is equally misleading:
The large inequality growth between the late 1970s and early 1990s has not been reversed.
It certainly hasn’t been reversed, but that suggests that it has at leasted been reversing. The reality is somewhat different.
I would refer you, dear reader, to page 9 of the report which has a handy graph showing both the Gini coefficient and the 90/10 factor from 1961 to 2007. What this graph shows is that both measures of inequality peaked in 1991, dropped a bit as we came out of recession and then hovered around the same level in the years following. Indeed, while the 90/10 scale shows a slight dip in inequality since 1991 (to 1989’s levels), the Gini coefficient was at an all time high in 2007.
Since 2007 of course, we have had a major recession. Inequality spiked in 1991 for this reason and so we have every reason to believe it will have spiked again between 2007 and 2010. It is quite possible that both scales will exceed the 1991 levels.
So not only have Labour failed to reverse Thatcher’s increase in inequality, they’ve failed to make any impact on it at all.
The BBC should indeed change their headline. I would suggest that it reads “Rich-poor divide ‘wider than 1997′”. John Rentoul won’t like it but it would accurately reflect the real failings of this Labour government.
I find it hard to believe that you think a news article that describes inequality as being higher than at any point in the last 40 years to be “More BBC pro-Labour propaganda”. Come off it.
I don’t, I was parodying John Rentoul’s claim that it was “anti-Labour propaganda”. If you aren’t prepared to respect this blog’s standard sarcasm disclaimer (see above) then you shouldn’t be reading it.
Fair enough. It’s hard to tell though.
Doesn’t inequality tend to increase with economic growth? (By some measures equality has increased in the US during the recent recession, as many people in the top quartile have seen significant falls in income). Looking at the graph on page 9 of http://www.equalities.gov.uk/pdf/NEP%20Summary.pdf that you mention the dips in inequality seem (just based on a glance, nothing more rigorous than that) to coincide with recessions…
Tom,
It is certainly the case that inequality increased during the last recession, although looking at the graph again, the experience in the 1970s appears to be more mixed. Generally, I would expect to see the wealthy holding onto their assets during a recession while the poorest struggle further, but it depends on what policies the government of the day has in place, clearly.
Why are people surprised that Labour have not set about narrowing the poverty gap. The Labour party far more than the Conservatives or Lib Dems stand to benefit from a large, resentful underclass who know their place and vote for the party of … erm … lawyers, academics and media people.
Labout have moved on, what they have failed to realise is many of their core vote have too but in a different direction.
I agree with the general thrust of the email, but I’m also not convinced that recessions tend to increase inequality.
Certainly from an asset perspective it’s only in a recession where inequality ever reasonably be reduced (because in a situation with economic growth the richest are likely to be most adept at capturing a share of that growth). It’s less clear from an income perspective, but the income of the top 10% is much more closely tied to asset appreciation than that of the bottom 10% (which will be social benefits, minimum wage, etc).
Of course, all that aside, we still disagree as to whether income inequality is actually something in itself to be concerned about, or only one of many relevant statistics to examine when looking at poverty.