Gary Duncan: Economic view
Your last chance to get tickets to Top Gear Live
The ferment over Gordon Brown's plan to scrap the 10p tax rate has hit the Government hard. The fallout from the Prime Minister's latest self-inflicted political fiasco will be felt all the way to the next general election.
For the opposition parties, the opportunity will only be enhanced by the piquant coincidence of Labour MPs voting today to raise tax for the poorest just as The Sunday Times Rich List reveals that, under Labour since 1997, the wealth of the nation's 1,000 richest citizens has quadrupled. Talk about rich ironies.
Yet if we are truly concerned about inequitable taxation and social injustice, the question of the 10p tax is really a tuppenny ha'penny affair in the context of the Government's broader record.
You have to wonder if the Labour rebels who took a year to wake up to the implications of Mr Brown's 2007 decision to scrap the 10p rate have bothered to delve into the details.
The realities behind Mr Brown's rhetoric on poverty are a lot less impressive than his boasts of being the best friend of the disadvantaged imply. The stark truth is that after a decade of Labour Government, Britain is a nation of greater income inequality, in which the plight of the very poor has worsened. True, Labour has succeeded in lifting half a million children out of poverty since 1998. Yet the Government's figures are based on a poverty line drawn at 60 per cent of average incomes. If it is placed, instead, at 40 per cent - officially defined as “severe poverty” - the picture looks much bleaker, with the numbers of children in such dire straits no lower than in 1997.
The condition of poor adults is still worse, with more people in relative poverty now than since records began in 1961. Numbers in severe poverty multiplied drastically in the Eighties, peaking in 1997 at 8.8 per cent of households. The figure now is 8.7 per cent. And while in 1979 barely a fifth of those below the 60 per cent poverty line (18 per cent) were classed as in severe poverty, now the proportion has climbed to two fifths.
At the same time, the past ten years have been a golden decade for the affluent. The slice of the household income cake going to the richest 10 per cent is at levels not seen since the 1940s.
The widening gap between rich and poor in Britain over the past decade mirrors that across most of the developed world. Globalisation and technological advances have made these widespread trends.
Yet as an important new report from Reform, a centre-right think-tank, lays out, Britain is different in one crucial respect. Here, increased inequality has come with a fall in social mobility.
Where at one time Britain was a beacon for self-advancement, today it seems that, more than ever, to be born into poverty here is all too often a life sentence.
Studies such as a recent report for the Sutton Trust show that social mobility declined sharply for those born in 1970, compared with those born in 1958, and that there has been no improvement for people born in the present decade.
Here, the ladder of life chances for the less well-off looks to have grown a lot narrower and more rickety. All of this poses three big questions. Why should we care about diminished equality of opportunity? Why is it happening? And what - if anything - should be done?
The social and economic arguments that these trends matter are compelling. Socially, a more divided society that denies hope to the poor is not just a moral indictment, but will create what Reform calls a “why bother?” culture, nurturing seedbeds of crime that will affect us all.
Economically, the waste of talent as able but poor children are denied opportunity squanders potential income, innovation, investment and entrepreneurship and saps national prosperity. If Britain had the skills levels of the United States, for example, the benefit for the economy through enhanced productivity would total £32 billion, or £1,300 per family, Reform notes.
Why, then, is social mobility in today's Britain being stymied?
Reform rightly identifies two principal causes: the dismal record of the schools system in educating the poorest, and the malign effect of the tax and benefits system in undermining work incentives.
On the first, again the Government's preferred statistics mask reality. While ministers like to boast of rising numbers of pupils achieving five Grade Cs at GCSE, a study by the Conservatives' Bow Group last week highlighted how one million teenagers over the past decade have walked away from school without securing even five Grade Gs - the lowest grade considered a pass. An estimated 206,000 teenagers, meanwhile, are languishing as so-called Neets - not in education, employment or training. The unintended consequences of well-meaning welfare policies aimed at alleviating poverty also seemed to have nurtured the “why bother?” society.
The clawing back of benefits as people find better-paying jobs has undercut incentives for people to strive to improve their lot. Those moving from the minimum wage to pay of two thirds of average earnings can take home as little as 11p of every extra pound they earn as a consequence of the high marginal tax rates created by the benefits system.
So, what should be done?
It is important, first, to recognise the limits of government action. An important part of the problem is economic progress itself. In the Fifties and Sixties, as Britain became a modern, services-driven economy and as manufacturing shrank, a huge transformation led to a massive expansion of white-collar work that scooped up millions into the middle classes. This was a one-off shift that cannot be repeated.
Yet the scope for effective action that can strengthen the ladder of economic and social opportunity is equally plain. The education system can be reformed to equip all pupils, not just the children of the well-off. The benefits system can be overhauled to give the poorest a hand-up, not just a hand-out.
Why bother? Because it is right.
Explore your passion for food with the delights of Thai, Indian & Chinese cooking
In our new series, Tony Hawks takes a dry, wry look at modern life - junk mail, interminable meetings and snooty sales assistants
Read the training tips and advice that helped our London Triathletes
Read our exclusive 100 Years of Fleming and Bond interactive timeline, packed with original Times articles and reviews
The latest travel news plus the best hotels and gadgets for business travellers
Shortcuts to help you find sections and articles
2007
£30,000
2008
£44,990
2008
£48,489
Great car insurance deals online
c.£75,000
GlosFirstmeansbusiness
Gloucestershire
£32,795 - £41,545
Universitry of Southampton
Southampton
£
£32,795 - £41,545
Universitry of Southampton
Southampton
Competitive Package
Npower
West Midlands
Some of the finest Apts & Penthouses
Across London
Great Investment, River Views
Luxury properties within exclusive development in
Chislehurst Kent
A new experience in Luxury Living
Multi–Centre
from Only £829pp
With Ramblers Worldwide Holidays!
£POA
List your property with two leading travel websites
£POA
Great travel insurance deals online
Contact our advertising team for advertising and sponsorship in Times Online, The Times and The Sunday Times. Globrix Property Search - search houses for sale and rooms and property to rent in the UK. Milkround Job Search - for graduate careers in the UK. Visit our classified services and find jobs, used cars, property or holidays. Use our dating service, read our births, marriages and deaths announcements, or place your advertisement.
Copyright 2008 Times Newspapers Ltd.
This service is provided on Times Newspapers' standard Terms and Conditions. Please read our Privacy Policy.To inquire about a licence to reproduce material from Times Online, The Times or The Sunday Times, click here.This website is published by a member of the News International Group. News International Limited, 1 Virginia St, London E98 1XY, is the holding company for the News International group and is registered in England No 81701. VAT number GB 243 8054 69.
Bring back grammar schools - they enabled millions of the truly poor, but able, to get a high standard of education and corresponding employment. Ensure a high standard of alternative education for those who are not academic but need to develop the other skills needed by the labour market.
hw, london,
This is only the intrinsic slavishness of the UK electorate The political class is all the same Tory, Labour etc; Public Schoolboys who only represent industry & wealth. The poor remain poor & every few years we go thru the motions of an election, but in fact UK democracy means absolutely nothing.
Haseeb, London, UK
Provide an affordable and effective transport system, road and rail alike. Provide an honest state education so everyone is literate and functionally numerate and scientifically knowledgeable. With about 20 -25% of the adult population illiterate and functionally innumerate they have little chance.
andrew, Winchester, Britain
The Westminister system of government is creating more problems than it solves. Problem solution is post crisis not pre crisis, thus the future will continue to be a constant battle in every aspect of life in Britain and those nations that have the Westminister style of government such as Australia.
Jim Wills, Brisbane, Australia
The U.S. measures poverty on an absolute basis while Britain measures it on an relative basis (thanks socialism) which makes NO sense. if the rich get richer and the poor live off of the same level of benefits from the state...OF COURSE the income gap is going to grow and who's fault is that?
Alex, London, England
Redistribution is not a good way to fight poverty. It is better to see to it that people are fairly rewarded for they work. Most poor people do NOT want charity, they want what is fair. Redistribution is good for free-riders, not honest hard-working men and women.
Rui, Lisbon, Portugal
Polititions of all parties have managed to remove the rights and freedoms of the individual - this seems to be an on going and ireversible process. The removal of weath of the individual via taxation is just another means of erroding individual freedoms. New labour needs the poor to vote for them.
B clark, Redditch, UK
Gordon Brown's concept of tackling globilization is to throw money at corrupt African states. He did not have a clue and shows up just what the 'old boys network' is about. Self interest and retention of power. New Labour started to fail in 2000 - the third term is a disaster due to complacency.
Paul, London, Canada
I think poverty of spirit is a bigger threat to our society than material poverty. Until we all become less materialistic and teach our children the true values of life eg family, friends and involving oneself in the community we are at risk of knowing the cost of everything and the value of nothing
Anne hampson, Helston, England
relative poverty is defined as a percentage of median income, not the average i.e. the middle point along the income distribution in the country. so for example, if everyone earned the same, relative poverty would not exist (no one would earn 40/60% of the median). extreme example!
martin, glasgow,
I echo Gavin's comment - how can poverty be "made history" if it is defined as a % of income! Hopefully this helps to prove to the doubters out there that there is a good argument for the "political elite" not really wanting to eliminate poverty as it gives them a reason to exist!
Sam, London,
As a single mother with an 18mth old son, I have looked into going back to work. However, a full time minimum wage job will only bring in an extra £46 per week.
Given the amount of effort involved in working full time and bringing up a young child, why would I bother for £46?
Morag, Edinburgh,
How could this article be written without mentioning inheritance tax? Want a way to address inequality and improve people's marginal incentive to work? Lower the threshold on inheritance tax and invest the proceeds in reducing marginal tax rates for those with low income. Why not?
Tom, Bristol,
If the rich are getting richer it follows that average income will increase and therefore a greater number of people will earn below a threshold defined as a percentage of average income. This is a test of statistical distribution not poverty isn't it? Agree with the sentiment though.
Rob, Warwick,
When peoples industry (i.e. employment or entrepreneurship) is taxed (i.e. income tax and business tax) there is LESS incentive to work or start a business. Abolish these taxes and bring in land value tax which would instead take money from landowners who make windfall gains from doing nothing.
Ann M, bristol, england
This is an excellent analysis of Brown's social policy. I have no doubt that if you treat the poor poor they'll stay poor. Even the minimum wage gives employers the excuse of paying low wages resulting in no competition or incentives for employers to raise wages above the minimum wage.
mike lincoln, Wakefield,
As has been said, the great expansion of education of the 50s and 60s cannot be repeated. This was the freeing from lack of opportunity of the genes of the clever poor held in labouring jobs in previous generations. There are exceptions of course but by and large "job done". Not popular, but true
D.L Stephens, York, England
Radical egalitarianism/individualism are the causes. Hedonism and nilihism are the result. Welfare to have inlimited kids and rent-free houses. Contempt for what were contemporary mores. Elites running the shop. No-one is responsible for anything. The suprise is anyone is suprised.
Desmond Taylor, Houston, USA Tx
My kids went to Hargrave Park primary, Islington in the early 80's, a rich/poor catchment. The head, an enlightened and generous man, inspired parents and pupils alike. He was hounded out by Islington's Socialists who accused him of giving 'poor' pupils unachievable aspirations. I left for Cambridge
Lou, London, UK
The wealth of the top 1000 has NOT quadrupled if you look at individuals. Most of those on the top 200 list in 1989 aren't there any more. The average wealth of the 1000 wealthiest has increased because they're different people this year. Very wealthy people have chosen to live here, that's all.
Tim, London, UK
Secondly, bring back selection in State education - you need to lift the clever ones out of the mass to allow them to move forward. Social mobility is relative to others - if everyone moves up at the same rate then of course everyone is stuck relative to each other.
Tim, London, UK
Go out there and make your own luck. I travelled overseas on more than one occasion and now back here in London, run a business. It was difficult, ugly and rough but I'm doing well. I only went to a bog-standard high school - not a 'posh' one!
Go to it..........
John, London,
"the cult status of overpaid celebrities and illiterate footballers have led to a dumming down of society," - Peter Fieldman, Paris.
Evidently so.
Thomas, London,
Volkan, London,
"I genuinely believe if someone truly has the desire, ambition and drive to make something of themselves then the opportunities are out there."
A brilliant assertion, but can you prove it. Where are the opportunities of which you speak?
Morvan, Saulieu, France
If people are poor they should stop having children and expecting the state to pay - why should I pay for a woman to have 7 children by 5 different fathers
- the poor could get off their backsides and get a job - I had to have 2 jobs to get my children through uni - no benefits and on my own!
Margaret, Bristol, UK
Poverty! Duncan and most of the western world just don't know the meaning of the word. It makes me sick to read such tripe. Not one child ib Britain need go hungry or have clothes on its back. Poverty means in Britain not having the latest Vidio or computer games. There is no poverty in Britain
Kenneth Wheatley, St Pée sur Nivelle, France
I qualify as an architect this year at 24 earning £14k after I+C tax. I am not rich. Recently the labour gov doubled the interest on my loan and propped up ludicrously high house prices. Six years of hard study + a massive £30k debt. Brown talks of a highly skilled workforce! How has he helped me?
Nick , London, UK
The poor people of 50 years ago worked long hours at low-paid jobs, developing the habits of work that would lift them up when society became wealthier and better-paying jobs became available. Today's poor are non-workers, and their children are starting to not work as soon as possible.
Jonathan, NYC, USA
Short term economy. 'You've weakened the people to such a degree they can't even feed their families.'
The governments of the last 20 years have failed to anticipate the effects of the globalized economy. White collar jobs have/or are in the process of being shipped oversea's. What next???
Paul , birmingham , England
Immigration, Immigration, Immigration...
NJSS, Kingston, UK
Until wisdom is taught in schools in the UK alongside the proper use of education, the poor will get poorer, while intellectual cleverness of the few deceives the masses.
Michael Levy, Fort Lauderdale, USA
I am not sure this is just Labor's fault. I hear the same complaints (an increasing gap between the classes and decreasing social mobility) of Germany and the USA. Some (not all) of the causes seem to be more cultural than economic. - If Britain finds a solution, we would be all happy to copy it!
Wolfgang, Boulder, CO, USA
I worked in some 40 schools from Portsmouth to Hastings in the Labour Years as a Supply Teacher - there was never any observable improvement. The only gain resulted from Jamie Olivers TV campaign
Chris Stuart, Carentan, France
If you read this with Trevor Phillips' article in yesterday's Times, you get a clearer view of the problem. Immigrants are being preferred over young white British males because the educational system fails the Brits who are then dumped into the welfare system and forgotten.
Maureen, London, UK
relative poverty is a meaningless concept. Only when statistics are produced covering 'absolute' poverty, will I start paying attention. The means are in place for genuinely talented people to succeed. Free education for all etc. OK it's not perfect, but I'd say 80% end up in the right social strata
andrew, cirencester, uk
Relative poverty in the UK is just that - relative. The poor in the UK get to eat, use the NHS and go to school. Tell them to stop whinging and get a job.
Jimmy, London, UK
It is disturbing that the number of children living in "severe poverty" is no lower today than it was in 1997. It is equally disturbing that more adults are living in relative poverty now than since records began in 1961. Gordon Brown's career will soon resemble Jack McConnell's.
Des, Edinburgh,
Dominic, Manchester, UK, Cynical, but essentially correct I'm sad to say. The most compelling evidence is the balloning welfare budget, why else pay people to sit at home, other than secure your re-election.
Brian Roberts , Plymouth, Devon
The politically correct education on offer at my children's comprehensive school focuses more on reflecting social disadvantage than on transforming horizons and lives. The school, and system, fails pupils who don't come from families with the cultural and educational wealth to make up for this.
Elsa H., London, UK
Let's not confuse wealth and money - "the wealth of the nation's 1,000 richest citizens has quadrupled" - the Bank of England printed many more bank notes from year to year over the last decade(s) and we are surprised that each £ is worth less - come on!!!
Sam, London,
Let's not confuse poverty and inequality either! Wind down the welfare trap; stop giving special govt favours to big business and let the real wealth creation begin. That's the fastest way to eliminate poverty.
Sam, London,
Education, education, education. NuLabour is still hobbled by its past and will not accept any meaningful reforms to the school system it set up in the 1960s. Our education system has been slipping behind those in other countries for decades.
Frank Upton, Solihull,
I've just finished my 1st year at ucl. I went to a state comp, but I always felt angry at the lack of provision for kids who want to really do well. Resources were always low, for example we couldn't afford enough paint, science equipment or print paper, yet we got unwanted interactive whiteboards.
wiltshire wurzel, swindon,
My children go to a grammar school, the alternative being independent schools, certainly not the nearest comprehensive which seems to consist of gangs of swearing children. Labour has destroyed social mobility by introducing comprehensives.
David, London,
It seems to me that the British school system is designed to produce cannon fodder and factory workers. All with degrees in media studies of course.
Simon, Hamburg, Germany
I genuinely believe if someone truly has the desire, ambition and drive to make something of themselves then the opportunities are out there.
Volkan, London,
The good lord will help those who help themselves.
To live on benefits is nothing more than laziness, unless of course you have a disablilty of some kind. The government provides further education and training for all. It is for the individual to better themselves and progress.
Delbert, Cwmbran, UK
the benefits for babies culture is one of the causes of the poverty 'problem'. What hope do children, say born to a single mother of 7 children with 5 different fathers have?
Encouraging poor people to have children they cannot afford any exacerbates the problem
H Horse, Jersey,
You can't lower poverty by using the benefit system, if you rely on the state for your income, rather than working, then you'll always be poor.
Does anyone else find " 60%of average incomes " a strange way to calculate poverty ?
Gavin, London, UK
The reason is quite simple; the destruction of the Grammar School, all the rest followed.
Morvan, Saulieu, France
Raise the minimum wage to a level where jobless people will aspire to work. Let's say anything over £7.20.
Increase the number of nurseries.
Get the failed teachers out or reduce the number of students to a level they can manage!
We the taxpayers have to pay for it if we really want to help.
P Darlington, Southampton,
British society risks breakdown: tabloids, TV shows, the cult status of overpaid celebrities and illiterate footballers have led to a dumming down of society, immigration has not led to integration, religion and class perpetuate division and the distribution of wealth is manifestly inequitable.
peter fieldman, paris , france
I despair at the waste of talent and lack of opportunity for ordinary kids subjected to the educational system. Commonly pregnancy is now a career choice for girls, together with a 16 to 25 underclass of white boys and increasingly prevalent gang culture. We are failing our youth.
A Jeremiah, Telford, Shropshire
Bring back grammar schools. It doesn't fit the ideology of what I will call the left but since their demise social mobility has declined.
i.e., Norwich, England
Labour was run by an opportunist who used the party as a conduit to the top. In the long run we will find out that his policies have been detrimental to us all (bar a few) and I hope the next party in power will have learned this lesson. In the meantime society will pick up the tab.
Esther Phillips, Leatherhead,
Want more irony.The newly appointed advisor to Gordon Brown for "social mobility " is non-dom for tax purposes.
If you want to improve the lot of the poor give them all citizenship of Jersey, or the Isle of Man.
Sympathy from China.Thank you Tian.
robert everitt, wolverhampton,
The Labour Government are "making poverty permanent" by their education and welfare policies. There should be selection in the state system, which in practice would benefit the bright disadvantaged. A benefits system that rewards mothers for the number of children they have encourages the feckless.
Mac, Barcelona, Spain
State teaching is underpinned by a self-defeating old-Left philosophy that prohibits competition (should someone have to bear the pain of failure at school rather than later, in life) and perpetuates dismal expectations of poor and working-class pupils. Sensible parents opt out.
Nancy, London,
The problem is that this definition of "poverty" belies common sense. Without wishing to dismiss the concerns of the genuinely disadvantaged, everyone today is housed, clothed, educated, trained, treated, and even entertained by the state. To compare that to real poverty is a nonsense.
Alex Johnson, London,
The assumption being the government wants the poor to improve themselves.
It doesnt
What does a Labour want more than a cadre of badly educated drones reliant on the government?
The tax and education systems arent failing to pull people out of poverty, they are designed to keep them there.
Dominic, Manchester, UK
The tragic irony of our current situation is that the electorate has no real alternatives to vote for.
None of the electable parties will do anything effective to change things (although of course they'll promise to before the next General Election).
Things can only get worse.
Paul S., Bristol, UK
The slogan "make poverty history" was ill thought out. The slogan should have been "make poverty the future."
Sustainable living, on a planet of dwindling resources means we must conserve and recycle in perpetuity we have to be less materialistic. We have to "make do and mend" and need less.
keith bentham, wigan, Lancashire
Codswallop - its always been the case !!!!!
Ian Payne, WALSALL,
I used to stay in Britain for one year during which I really felt most British people lived much harder life than that of Chinese counterparts.Ordinary British people worked as hard as machines for just getting enough money for their basic needs. Neither of the parties have the poors in mind.
Tian Qingyou, Tianjin, ChinaI
Religion is still a great barrier to social improvement. We have essentially a caste system in the UK where if you believe in the right kind of sky fairy and say the right words concerning the said sky fairy then a way is eventualy made for you to surivive if not prosper.
kevin, Lincoln, UK