An anxious Osborne

The British Chancellor came onto the BBC Radio 4 'Today' programme to promote the idea that his coalition government's economic policy was vindicated by the latest report from the Independent Institute of Fiscal Studies (IFS.) The IFS report apparently told us that 'median incomes' in the UK had now risen to their pre 2008 level. Osborne then lied that the report had also indicated that there was a reduction in income inequality. It actually says that, taking in to account both the rise in the poor's benefits in 2008 and 09 after the crash, which slightly decreased the inequality of income AND the rise in food and energy prices subsequently, which increased the income equality gap again, inequality of income remained roughly the same as in 2008.  Additionally, Osborne had nothing to say about IFS's Director Paul Johnston's comment from the same report that he had made previously on the same programme;
'Working age households' incomes' he noted 'are still less than they were prior to 2008.' If you are working, the chances are you are still at 2007 levels. Osborne was not asked about his plans for a further, deeper round of cuts should his party get back to power.

Nevertheless it is worth spending a little more time, just on the equality issue in the UK. The Chancellor's false claim about the IFS report shows some nervousness among the UK elites in this regard.

The whole political Internet is familiar with Oxfam's briefing on inequality put out for the Davros Conference earlier this year, that by 2016 the top 1% in the world will own more of the world's wealth than the bottom 50%. Even 'Fortune' (4 March 2015) the US mag promoting wealth, adds
'The richest 80 people on the planet doubled their cash wealth between 2009 and 2014. They now have as much as the bottom half of humanity put together. Whereas five years ago, it needed the 388 richest billionaires to rival the spending power of the poorest half, by 2014 that number had fallen to just 80.'

What about Britain. What is making Osborne anxious?

On the 15 May 2014 the Office for National Statistics (ONS) reported that 1% of Brits already owned as much as the bottom 55%.  (The measure was made in property, pensions and assets.) The Poverty and Social Exclusion Website, an independent research tool, noted on 17 March 2014 that 5 families were 'worth' more than the total assets and income of the bottom 20% in the UK. Credit Suisse recorded in its Global Wealth Report for 2014 that
'The UK is the only country to record rising wealth inequality from 2000 to 2014...Wealth inequality has risen by 4 times faster in the 7 years after the crash compared with the 7 years before. Wealth inequality' the report goes on, 'rose under Labour; it rose faster under the Coalition.' It concludes ' The rich in the UK are becoming richer faster than ever.'

A recent article (John Nickson 19 May 2014) in the Huffington Post is well referenced and worth quoting at some length.
'Wealth is news. the Sunday Times Rich List tells us the top 1000 have doubled their wealth in five years, the UK has more billionaires per head of population than any other country and that London is the world capital of the super rich...
According to the ONS, the number of millionaires has risen by 50% in four years despite the financial crisis. 9% of households have assets worth more than £1million...
The bad news is that growing inequality is approaching pre first world war levels. The richest 10% in Britain own 44% of total national wealth, five times more than the poorest 50% of the population who collectively own 9%. The figures for share of national income are even more startling. The share going to those on the lower half of earnings has fallen by 25% since the 1970's (OECD) whilst the slice going to the top 1% has increased by 50%. The most recent figures from HM Revenue and Customs confirm that the return of economic growth in the last year has overwhelmingly benefited the top 1% of earners.'

Returning to the IFS report, it puzzles over a problem that many mainstream economists and politicians have also worried at. Why is productivity (of labour) still so low in Britain? There are many suggestions on offer to explain this apparent paradox - low grade jobs; lack of government incentive; etc. What however turns out to be the most obvious and glaring reason for Britain's dismal record on productivity is the ingrained investment 'strike' by big capital in the UK. That 'strike' is intimately linked to the UK's horrific concentration of wealth which is constructed completely outside of the creation of new tecniques and new means of production. We will return to this issue, and also the direct and indirect effects of this economic gangrene for our political system. Suffice it here to say that inequality in Britain is a scandal and a disaster and getting worse. 

Welfare crime committed by Osborne

It is significant that Osborne's latest crime against the poorest in society is being promoted by him not as a sad necessity but as a Conservative Party Conference cherry, designed to keep Tory votes and possibly win Labour votes. Why is this possible? Because just as with reducing immigrants, official Labour joined the race with the other mainstream parties to attack welfare 'scroungers.' There was no immediate response from Labour in defence of the poor, or indication that they would reverse this latest Tory drive to increase poverty and immiseration. Osborne's measures are therefore more accurately called a completely mainstream, cross-Westminster party drive to squeeze the poorest, 'until the pips squeak.' The Westminster coalition is much wider than just the government. 

But the dynamics in wider society are shifting and Osborne et al have made a mistake. In Scotland the referendum drew out thousands of those at the poorest margins of society. New social actions, in housing, in defence of hospitals etc., are breaking through, led by groups that traditionally had been excluded from participation in the national debates that have swirled around single mothers, the unemployed, criminalised youth and the millions on the minumum wage or less. The general public now know that the majority in receipt of benefits are the working poor. They are aware of food banks. They know child poverty is increasing dramatically. They watched the TV debates about Benefit Street. They heard the teachers who tell us their pupils need food when they come to school. Bashing welfare is no longer the star turn it once was. 

So the debate is turning again, albeit belatedly, in Westminster. Not against austerity as such in any of the three mainstream parties, (although it is virtually the main feature of all extra parliamentary activity.)  But rather the establishment's discussion centres on austerity's 'distribution.' Even Osborne has to bash the US multinationals over tax in his speech. And some 'experts' are publicly wondering if pensions can continue to be let off 'so lightly'. (But pension changes - in terms of the delays in the access to them, and their low levels compared with most of the rest of Europe - have already provided an additional £500 billion saving to the state over the next 20 years according to the Institute of Fiscal Affairs. Additionally pensioners remain active politically, and those beneath pension age know it was not pensioners that pulled up the ladder.)

With roughly £25 billion already cut and £25 billion to go - none of the pro-austerity options for part two of Osborne's plan or Ball's repeated commitment to no new spending and no reversing the cuts already made, are looking feasible, let alone bearable. The sense of the need for a deep alternative direction is growing. Those who require welfare are increasingly forcing themselves into the argument. We need some new politicians to give the real political life of the country some expression.