How should a centre-left government tackle inequality?

Helen Goodman MP

Modern Britain is changing. In 2013, Professor Mike Savage published the Great British Class Survey, describing these new classes and what they look like. Fabian readers might remember taking this quiz to find out which of the seven new classes in modern Britain they belong to. Mike highlights the multidimensional nature that class has taken on, including how economic, cultural and social capital are built up by different groups of people.

In a country where the wealthiest 10% of households own 45% of the wealth – it’s clear we are failing on equality. From Mike’s work we can discern the issues a new progressive government of the left must address.

The elite, the precariat and the middle

A new elite – about 6% of the population – have high levels of every type of capital and are pulling away from the rest of society. Its children will continue to have privileged access to wealth and influence.

The precariat – a huge group of about 15% or 9 million people – sit at the other end of the scale, facing low pay and insecure work, and have no capital of any type.

Former distinctions between the middle and working classes are disintegrating with the emergence of five new groups ‘in the middle’.

Britain is much more unequal than 30 years ago. Now, the top 10% earn 4 times the bottom 10%. Contrary to popular thought, we can’t have more equality of opportunity, without having more equality. The GCBS shows that a person with the same professional position, skills and education will earn between £10,000 and £20,000 less than their peers if their father was a manual worker!

“Education, education, education” is no longer the key engine of social mobility, because by itself, it cannot tackle the accumulation of other valuable assets such as economic, social and cultural capital.

The task of a centre-left government is to build up and distribute more equally each category of capital.

Economic capital

Jobs: A good, fulfilling job is the most valuable asset a person can have. But a falling proportion of national income goes to wages – only 40%. We need a legal framework which promotes better pay and conditions. Unfortunately, many people are in a state of insecurity which is detrimental to their incomes, health, wellbeing, and family life. Without a secure income, you can’t plan for the future. This is a policy priority.

Housing: People need secure homes. Today many, even well educated, young people are excluded from financial security and home ownership. A third of households in the private rented sector are those with children. Meanwhile the average home in London is over £500,000.

We need to build 300,000 homes each year. But politicians have been nervous about bringing prices down as a ratio of incomes and scaling up social housing – which is what we need.

At the last election Labour proposed to tackle land banking. Across the country, tying planning permission to affordable housing for locals is under discussion, and Frank Field argues that we should tackle youth unemployment by training 74,000 young bricklayers.

These ideas need to be developed into a coherent plan.

Redistribution:  The steeper the slope the harder it is move up it – equality and equality of opportunity are linked. The IFS have shown that tax and benefit changes since 2010 have hit the poorest 10% hardest. Today, wealth differences are stark: a quarter of the population are in ‘negative net wealth’ meaning that they have more debts than assets, while the top 10% of households each have over a million.

To reverse inequality, we must review the taxation of all wealth, alongside developing measures to help people to save and to access financial services.

Education: a good education is becoming more important in the knowledge economy, even though it may not change relative social positions as it did 40 years ago.

We want to Britain to develop new technologies, so maths and science are key. At the same time we need soft skills and creativity. Yet we have a shortage of maths and science teachers and artistic subjects have been removed from the core curriculum. This is where a left-of-centre government should focus.

Cultural capital

Cultural capital is important both because people use their knowledge of highbrow culture as a social signifier and because culture is intrinsically valuable. Library use has been found to be equivalent to a £1,400 pay rise! But in Lincolnshire a couple of years ago, the Arts Council spent 25p per person, meanwhile in London George Osborne has just put £5m of taxpayers’ money into a feasibility study for a new £250m concert hall just half a mile from the Barbican!

The availability of good books, plays and concerts on an affordable basis requires an effective infrastructure of national and local support.

Social capital and geography

We have a shared interest in re-balancing this country, but poor northern councils like Liverpool and Newcastle face cuts of 25% while the Home Counties have seen their budgets rise.

Handing over power without resources as in the current ‘devolution deals’ is a sham. The regions must be at the table when the funding allocations are agreed.

Social capital is developed by building social ties across class boundaries, meaning we need equal  opportunities at work; mixed public and private housing; schools which avoid social selection; universities which harness the talents of the whole nation; and cultural institutions which are open and available.

Modern Britain is complex – we are more unequal today than for a generation. What this means is that a left-of-centre government needs a strategic approach to equality: we need to ask of every idea – will it make us a more equal or less equal society?

The above is an extract from a lecture Helen Goodman gave at the LSE looking at the political implications of Mike Savage’s book. You can read my full lecture here.
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