No “skin in the game”, no vote?

Ian Cowie of the Daily Telegraph wrote a post yesterday arguing for “a tax-based alternative to the Alternative Vote”.

Basically, this would involve limiting the franchise to those who pay at least £100 of income tax each year, while excluding those “large numbers of people who have no ‘skin in the game’ and who may even comprise the majority of voters in some metropolitan areas today”. Pensioners and mothers (even single mothers, Mr Cowie?) would retain the vote, however, which is nice of him.

Now I’m not remotely interested in discussing the merits of this worthless idea. Maybe Mr Cowie will claim that those objecting to him are “humourless lefties” who “can’t take a joke” – but the final couple of sentences suggest that he is deadly serious. Even if accepted as satirical, it’s a satire that rests on some unpleasantly dismissive attitudes: “no skin in the game” (says the comfortably well-off journalist of those who end up bearing the brunt of job losses and cuts), “everyone who gets out of bed in the morning to go to work”, and so on.

Mr Cowie’s proposal will, of course, never get anywhere near being adopted. But as Anna Hedge pointed out on Twitter, this is yet another example of how some on the political right are feeling emboldened to say things they would never have dared utter in the past 15 or 20 years.

And while there is no prospect of an income tax-based franchise becoming reality, such nakedly “class-war” proposals contribute to an atmosphere in which significant democratic reform becomes even less thinkable (let’s see how that “elected House of Lords” looks once the proposals are finally unveiled, eh?), public services are easily removed from democratic control to control by those with some “skin in the game” (see: free schools, GP commissioning), and the political concerns and expression of those “who may even comprise the majority of voters in some metropolitan areas today” are systematically delegitimised.

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Child benefit: hitting the middle, not just the rich

One point that has been made in relation to the child benefit changes is that earning £44,000 is not “average”, but puts you in the top 10% of earners in the country. (Indeed, I made it in my own previous post.)

Before we get too carried away with that idea, however, we should bear in mind this is about household income rather than individuals. To see what type of households this change will affect, I went over to the Institute of Fiscal Studies’ excellent “Where do you fit in?” site and entered the following details:

  • Family of four: two adults, single earner, two children aged 0-13.
  • Household income after tax: £32,860 (equating to £45,000 gross for a single earner, according to this calculator).
  • Council tax: £1,200 a year.

According to the IFS, a family fitting that profile is on the 57th percentile of household incomes:

In other words, more or less slap bang in the middle – and with plenty of people only just below that level, whose aspirations to a higher income will be discouraged (to put it mildly) by the prospect of an instant loss of child benefit.

Mobility and equality

Social mobility has been all the rage this week, with the appointment of Alan Milburn as “social mobility tsar” (a wonderfully self-contradictory term when you think about it) and Nick Clegg’s speech on the subject.

Social mobility is one of those things which everyone is in favour of – so long as the mental picture is that of the bright working-class kid who gets to Oxford or whatever. The moment it’s suggested that those bright working-class kids might dare to edge out the middle classes, it becomes apparent that social mobility is only acceptable so long as it doesn’t interfere with the natural order of things: that is, existing social relations.

Hence the cross-party popularity of social mobility. It enables Conservatives to feel at ease about inequality, because “those who have what it takes can still make it in life, wherever they start from”. It enables Labour to feel at ease about its inability (or unwillingness) to make a serious effort at reducing inequality. And it allows Lib Dems to feel that warm inner glow of niceness which is of such importance to them.

As such, “social mobility” is an inherently conservative concept, and indeed a hopeless one. It takes it for granted that existing social relations and levels of inequality are unchangeable, and that the post-industrial lot of what we used to call “working-class communities” cannot be substantially improved for the better. All we can do is let ladders down into the abyss so that a few able people can scramble up into the middle class.

In addition, social mobility without reduced inequality is a chimera, as can be seen in this chart from Richard Wilkinson and Kate Pickett, the authors of The Spirit Level (src):

(It’s worth noting that this is an update of a chart in The Spirit Level, which originally only had data points at the top and bottom of the regression line, and was criticised by some for this reason. Subsequent research has added in more data points which confirm the relationship.)

As the chart (and the research behind it) demonstrates, social mobility is significantly lower in countries with high inequality. The USA, despite its supposed ideological commitment to social mobility (“the American Dream”), has far lower levels of social mobility than any of the other “rich countries” for which data is available – and is also the most unequal. (It’s probably relevant that the concept of the American Dream originated at a time when the USA was one of the most equal societies on the planet.)

One reason for this relationship (which I think Wilkinson and Pickett suggest, though I’m working from memory here) is that more unequal societies not only make it harder for people to ascend from the bottom, but make those in the “sharp-elbowed middle classes” (and upper class, Dave) far more determined to hang on to what they have rather than see themselves or their children sink irrevocably into the “lower orders”.

Whatever the explanation, it is clear that the only way to ensure true social mobility is to reduce levels of income inequality. I predict that this government will achieve neither.

All in this together?

I don’t propose to blog in detail today on George Osborne’s budget and its likely effects. There’ll be plenty of analysis and discussion going on elsewhere over the next few days.

But while all the discussion is going on, here’s a chart to keep in mind, from p.67 of the Red Book (PDF), showing the percentage impact on net income for different levels of income:

You’ll notice two things. First, those at the very bottom are hit harder than almost anyone else. Only the top two deciles – who can well afford it – suffer a bigger impact.

Second, even the Treasury is acknowledging that the VAT rise is deeply regressive. VAT makes up the bulk of the “indirect tax” impact shown in the chart, and the impact of such rises is -1.5% for those at the bottom of the income range and less than 1% for those at the top. And for those in the bottom deciles, 1.5% or 1.25% is a significant amount of money.

Talk of “lifting 880,000 people out of income tax” by raising personal allowances sounds good, and may mollify the consciences of some Lib Dem supporters, but in reality the benefits of this are far outweighed by the impact of the VAT rise.

In short, the Budget is as many predicted: a re-run of this celebrated Labour election poster from the 1930s:

The only differences are that the guy at the top is arguably being asked to step down two rungs – and the guy at the bottom to step down one and a half.

IDS at the DWP: the good, the bad and the ugly

The Spectator this week has an interview with Iain Duncan Smith, secretary of state for Work and Pensions (print edition only, so far). Well worth reading if you have an interest in where the Conservatives plan to take the welfare system.

The interview is a mixture of the good, the bad and the ugly. Taking them out of order: the ugly is IDS’s ungracious and faintly misogynistic reference to his Labour predecessor at the DWP, Yvette Cooper: “what was her name? Ed Balls’s wife…”.

The good is his sincere commitment to tackling poverty. He complains that Labour focused too much on a single measure of poverty: people whose income was less than 60 per cent of the median. As the interviewers put it:

Money was spent moving people from just below the line to just above it, and those people were then declared to have been “lifted out of poverty” even if their income had increased by only £10 a week.

A fair criticism – provided we remember that £10 a week isn’t a trivial amount of money for many people. Duncan Smith told civil servants on his first day at the DWP that he wanted it to become “the poverty-fighting department in government, not the place that simply pays money out”. Some of his proposals – such as continuing paying benefits to those in low-paid work in order to help reduce the “poverty trap” – are positive (though IDS admitted the other day that he hadn’t managed to get that particular idea past the Treasury as yet). I think he is also right about the socially-destructive effects of cheap alcohol.

The bad, however, is the distinct whiff of past attitudes towards poverty in some of IDS’s proposals and those of his think tank, the Centre for Social Justice (CFJ). I’d made a sarcastic comment on Twitter when IDS was appointed suggesting his brief was to “reintroduce the Poor Law”. Well, here is his “most radical” idea, for a “universal benefit”:

At the CFJ, he proposed abolishing all 52 current benefits – from incapacity to housing – and replacing them with a universal benefit designed entirely to make sure that no one is better off out of work.

Compare this with the principle of “less eligibility” that lay behind the nineteenth and early-twentieth century Poor Law, as described in this article on the 1909 Minority Report on the Poor Law:

Its central principle of “less eligibility” demanded that the condition of the able-bodied pauper must be kept inferior to that of the poorest independent labourer. This was seen as the “just deserts” of those entering the workhouse, and was designed to force the pauper from the workhouse in search of whatever employment he could find on the open market.

I’m not for one minute suggesting that IDS wants to take us back to the cruelties of the old Poor Law – let alone the days of the workhouse. (Days more recent than you might think: the workhouse was abolished only in 1930, and the Poor Law in 1948.)

But there does seem to be a lingering assumption that the poor are to blame for their own poverty (“poverty was generally seen as a voluntary condition, with the pauper not so much the victim as the perpetrator of his own distress”) and that the poverty trap is mainly due to too-generous benefits rather than excessively low pay for those jobs that are available (“anxiety that the existence of poor relief would tempt many that were otherwise self-sufficient to claim”) – so that only the stick of minimal state support (rather than the carrot of decent, well-paid work) can encourage people to work.

Above all, it is dispiriting to see the problem of “economic inactivity” laid yet again at the feet of the indolent, feckless poor and their welfare state enablers. Unemployment for the last quarter was 2.5 million; the Tories’ preferred measure of “economic inactivity” (which includes those on incapacity benefit/ESA) covers 5.9 million people; but the number of vacancies was 475,000 (src). To talk as if we lived in a country of plentiful jobs ignored by indolent benefit-claimants is a fantasy – and will become all the more so as public spending cuts begin to take effect.

So I’m not going to paint IDS as a heartless Victorian throwback – however tempting it may be to compare Philippa Stroud (defeated for parliament but still able to end up in government as a special adviser – welcome to the New Politics, same as the old politics) with Helen Bosanquet of the Charity Organisation Society, guiding spirit of the Majority Report. He clearly has a genuine desire to reduce poverty, and an engaging lack of ambition (“I didn’t come to do anything else … I am not interested in climbing rungs of ladders any more”).

The question is whether spending constraints prevent his best ideas finding fruition while leaving his more paternalistic and moralistic tendencies intact.

The Spirit Level: why inequality matters

As I mentioned in a previous post (and also here), I hope that, whoever becomes leader, Labour will start to take more seriously the issue of inequality.

Even New Labour never claimed that inequality was a good thing. However, Labour in government preferred to focus on issues of poverty and social exclusion rather than inequality as such, and the assumption seemed to be that inequality didn’t really matter provided that those further down the income ladder received proper help.

Richard Wilkinson and Kate Pickett’s book The Spirit Level challenges this assumption, by arguing (on the basis of vast amounts of international data) that it is inequality, not poverty or average income levels, that lies behind most social problems in “developed” nations. Their data and arguments can be found on the website of the Equality Trust, including slides showing key charts from The Spirit Level.

The essence of their argument can be captured in just two of those slides, the first showing how health and social problems are associated with inequality in developed countries:

However, those same social problems are not related to average levels of income in those countries:

As set out in their book, and as summarised in the other slides, a relationship with inequality is found (to a greater or lesser degree) in relation to each of the social problems contained within the overall measure used in the above charts. (And yes, before anyone says it: they do address issues such as correlation and causation.)

To give just one example: the relationship between inequality and health, as shown by life expectancy between and within societies:

What the second graph in the above slide shows, the authors argue, is that inequality affects everyone in society, not just those at the bottom. At almost every point in the income scale, statistically you will tend to be healthier than those below you and less healthy than those above you.

This is only a very brief summary of The Spirit Level‘s argument – and those of you still muttering about “correlation” and “causation” are referred to the book, or at least the Equality Trust’s evidence section and FAQs – but it helps demonstrate the essence of Wilkinson and Pickett’s central claim: that inequality matters, matters perhaps more than any other factor, and that it matters to everyone, not just the poorest.

In the posts that follow I propose to look at a couple of questions which flow out of this: first, what is the UK’s current record on inequality, and second, how is that inequality has these negative effects across such a range of social issues?