Tackling Inequality 

Lesley Brennan

10 March 2014

In his time the famous England football player, Tom Finney , who died last month, earned £20 a week for playing football. He supplemented this income with his earnings as a plumber.

£20 a week in the 1950s is worth about £400 a week today.

Last month the HSBC bank announced that it was awarding a £32,000 a week “allowance” to its Chief Executive to get round a European Union cap on bankers’ bonuses. The Chief Executive already earns £1.2 million a year in salary.

This is an imposing inter-generational comparison of the value placed on skills and of social standing

Today, rising inequality is a major political matter as many millions of households are bearing the hardship of a cost of living crisis in which the pay for a hard day’s work doesn’t meet the rising cost of bringing up a family.

In his speech to the Resolution Foundation Ed Miliband compared the present crunch and the diminishing purchasing power of today’s families with relatively better times in previous decades :

 “The 21st century inequality, the fairness divide in our economy, threatens to be about a division between the richest at the top who have been doing well, and the majority –lower and middle-income -who have been struggling to keep up: working harder for longer for less.

 “For many decades rising prosperity benefitted the bulk of working people.

 “But that assumption is breaking down. While those at the top have continued to do well, middle earners are no longer guaranteed to share in our nation’s success. 

 “The result is a quiet crisis that is unfolding day-by-day in kitchens and living rooms in every town, village and city up and down this country.

 “The root causes lie in long-term changes in our economy. Over the last few decades less of what our economy produces has been paid out in wages – and more in profits.”

“ The gains in productivity we have seen have not been reflected in earnings.

 “ But this is only part of the story. There has also been growing inequality in earnings.

 “Since the late 1970s wages have grown almost twice as fast for the top 10% as they have for those in the middle. 

 “Since 1979, 22p of every extra pound earned has gone into the pockets of the best paid 1%. 

 “This tiny fraction of the workforce now takes home more than 14% of all earnings.

 “ Our economy has become progressively less fair and the losers have been those on middle and low incomes.”

Tackling inequality means reconnecting middle and lower income families with a fairer economy.

Ed Miliband’s  proposals appeal to people’s sense of fair play and they include :

* The electricity and gas price freeze that means standing up to the rich, powerful and hugely unpopular energy giants; 

*Dignity at work with an end to zero-hour contracts that exploit the vulnerable

*More and better pre-school provision to end the unfairness of much of  working mothers’ earnings paying for their children’s childcare.

*Better paid, better skilled, more secure jobs replacing the self-defeating” race to the bottom” where low skills and low wages win the work.   

One of his proposals is to “make work pay” by promoting and expanding the benefits of the Living Wage set at  £7.65p per hour.

Many people in work earn insufficient money to live on.

The campaign for the voluntary Living Wage addresses the problem of low pay that is hurting many families who are struggling to achieve an adequate standard of living.

Paying the Living Wage makes good business sense.

The benefits are having a more motivated workforce with better  morale, and higher prospects of recruitment and retention of staff.

Ed Miliband is offering tax breaks for firms who sign up to pay the Living Wage rate to their employees.

In the Dundee East UK Parliamentary constituency an estimated just over 25 per cent – 1 in 4 - of all employees – receive less than the Living Wage. 

However, while Labour has been presenting its case for a better standard of living for middle and lower income families, the Tory Government predictably took another step to increase inequality.

The Tory government cut the top rate of tax for those earning over £150,000 a year.

The drop in tax from 50p to 45p was driven by their habitual , unsupportable scare , that, unless this tax was cut, talented people would be forced to live abroad and economic growth would suffer.

Increased inequality is driven by calls from the Right for “less“ government at national and local level, and for reduced taxation on the wealthy.

However, by contrast,  Labour’s instinctive approach will remain the use of government as an instrument of reform, to reverse the growth in inequality that has signified Tory failure, and to work in the interests of the many, not the few.