Tag Archives: equality

Why Zoe Williams’ tale of Tesco subsidies only tells half the story

Zoe Williams makes a good point in the Guardian when she questions why the taxpayer effectively subsidises companies like Tesco by paying out tax credits which would be unnecessary if they paid decent wages, whilst executives reward themselves massive bonuses from the profits they make as a consequence. There is clearly something wrong here.

But she only tells half of the story.

Yes, allowing highly “profitable” companies pay low wages is a scandal, but so is artificially increasing those wages by imposing income taxes on low incomes. This is effectively a dead weight cost on labour; neither the employer or employee benefits from it. It artificially raises the minimum wage which, in turn, strengthens the hand of those who would have you believe that the national minimum wage is an unacceptable burden on employers. And it undermines Zoe’s argument; that subsidy she alleges is at least in part coming out of the very low wages she is so critical of.

For this reason, it is absolutely crucial that personal allowance is raised to ensure that, eventually, no one on a living wage should be paying income tax. The coalition government has already made a start on this, and should be encouraged to move as swiftly as possible.

It would be nice to think that such a policy measure would be entirely uncontroversial; sadly it is not. In 2010, Left Foot Forward teamed up with the Fabian Society to produce a series of articles designed to prove that such a policy was one of the least fair and most regressive policies ever devised. On the narrow point about higher income earners gaining more from the policy than lower income earners, they had a point – although their manufactured outrage rings hollow in light of the new Labour orthodoxy about sticking up for the “squeezed middle”. In any case, this could e easily solved merely by lowering the higher tax rate bracket by the same amount as the personal allowance increase, which is indeed what George Osborne has done.

But it represents a wider failure of imagination on the part of Labour thinkers; that is to restrict their definition of fairness to purely one of income distribution. I strongly agree this is an important factor, but it would be a profound mistake to make this the only fairness test in public policy. Any tax policy which has the effect of making it more affordable for employers to pay people a decent wage should be championed; the public purse should indeed be used as a safety net, but it is simply madness to create a system such as the one built by Gordon Brown in which money unduly paid out on low incomes is recycled to top up the pay of people on low incomes. This is Alice in Wonderland economics – and that is even before you consider the billions in unclaimed benefits that this shockingly complex system effectively deprives people of each year. Surely even the most staunch statist cannot rationally argue against the inland revenue butting out at this point?

In short, we have a right to expect corporations like Tesco to pay decent wages to their employees – but Tesco have a right to expect the state not to have policies in place which actively discourage them from doing so. Both the government and corporate sector need to take action here, while Labour needs to decide which side they are really on.

More BBC pro-Labour propaganda

John Rentoul is outraged that the BBC have chosen to cover the publication of the government’s new report on equality with the headline “Rich-poor divide ‘wider than 40 years ago’.” He is of course correct to point out that the main increase in inequality over the past 40 years took place during the Thatcher years.

But the Harriet Harman approved wording that he picks out of the report’s executive summary is equally misleading:

The large inequality growth between the late 1970s and early 1990s has not been reversed.

It certainly hasn’t been reversed, but that suggests that it has at leasted been reversing. The reality is somewhat different.

I would refer you, dear reader, to page 9 of the report which has a handy graph showing both the Gini coefficient and the 90/10 factor from 1961 to 2007. What this graph shows is that both measures of inequality peaked in 1991, dropped a bit as we came out of recession and then hovered around the same level in the years following. Indeed, while the 90/10 scale shows a slight dip in inequality since 1991 (to 1989’s levels), the Gini coefficient was at an all time high in 2007.

Since 2007 of course, we have had a major recession. Inequality spiked in 1991 for this reason and so we have every reason to believe it will have spiked again between 2007 and 2010. It is quite possible that both scales will exceed the 1991 levels.

So not only have Labour failed to reverse Thatcher’s increase in inequality, they’ve failed to make any impact on it at all.

The BBC should indeed change their headline. I would suggest that it reads “Rich-poor divide ‘wider than 1997′”. John Rentoul won’t like it but it would accurately reflect the real failings of this Labour government.

Why the Conservatives have been making class an issue

David Cameron and his party have been bending over backwards to tell us how petty and spiteful it is to bring class into politics.

They have a point, up to a point. Certainly the Crewe and Nantwich by-election was a dreadful miscalculation by Labour – who, let us not forget, were treating the constituency as an hereditary seat and the idea of someone with the privileged background of Ed Balls claiming to be some kind of latter-day class warrior is just stupid. But regardless of how weak Labour are on the issue, the fact remains that it is primarily the Conservatives who have been making an issue of class in politics in recent years

Where do I start? Clearly there is that single, emblematic tax cut they want to give to all those who stand to gain from hereditary wealth, and in the last week there has been the eye-watering way in which Zac Goldsmith has sought to belittle his own bit of local difficulty by shrugging off a tax saving of £10,000 as if it essentially the same thing as a tenner he might lose down the back of a sofa. This was a highly charged political statement. What he was saying was: “I’m safe and I feel confident enough that I can rub my wealth in your face. What are you going to do about it?” If that isn’t making class an issue, what is?

A few weeks ago, Cameron made the highly controversial statement that what mattered was not the widening gap between rich and poor but the gap between the poor and the “middle” – if that isn’t a statement charged with class consciousness, what is? Again, the fact that Peter Mandelson has been saying essentially the same thing for the past decade and a half, doesn’t exactly help Labour provide a counterpoint to this.

The fox hunting ban is not something I feel particularly strongly about – I view anyone who takes pleasure out of the killing of a wild animal with contempt but there are good reasons for keeping the rural fox population under control and it is an issue that would be better regulated at a local government level in my view. I also feel that the ban hasn’t really worked and that for a lot of the Labour MPs who pushed it through, it really was a class issue. Rather than responding in kind, the Tories tack is instead to emphasise that this is not a class issue but a civil liberties one, whilst simultaneously announcing an intention to limit the right to protest. It is hard to see how legislating on fox hunting could be a priority for any government over the next decade, yet Cameron is determined to do so whilst simultaneously trying to mask it as some kind of march towards freedom. If they weren’t preoccupied with class, it is hard to see why they would be so determined to scrap the ban or to pretend it is about something it blatantly isn’t.

And then there’s this obsession that the Tories have had over the past decade with the social class of John Prescott and Michael Martin. The latter has been particulary interesting. All the time the Tories have been chuckling about the ineptness of “Gorbals Mick” it has emerged that the real Speaker Martin has been bending over backwards to defend the entrenched privilege of MPs – especially the wealthy ones – to trouser hundreds of thousands of pounds in public money in the form of “expenses.” He’s been their most faithful servant, and yet they have bullied him and hurled the most appalling insults at him. It is hard to look at this and not see a resemblance to arrogant Eton schoolboys behaving not like elected politicians but like people who have been born to rule. The only people who turned the expenses issue into the class issue have, consistently, been the Tories and their supporters.

And now we see Eric Pickles entering into that bear pit which is the Conservative attitude to class. Whatever you might think about Pickles, he is a politician with a track record in his own right. Yet what has happened to Pickles under Cameron? Well, he’s reinvented himself as the Tories’ answer to John Prescott. In doing so, he has adopted an avulcular, parodic working class persona which seems to have been plucked wholesale from the Beano circa 1959. Let’s be under no illusions here – this performance has precisly nothing to do with attracting the working class vote. You won’t see him playing up to the camera and mugging about his “chums” on Question Time or the Today Programme. No, it is about giving the party faithful what they want to hear on his regular emails and “war room briefings” in his role as Party Chairman. As far as they are concerned, the acceptable face of the working class appears in charming Ealing Comedies, not on housing estates. The fact that Pickles feels he has to transform himself into some kind of clown in order to keep the party masses happy speaks volumes about the view of class within the Conservatives. Frankly, I await the day before Pickles starts one of his war room briefings with an establishing shot of him showing his prize pet ferret around CCHQ, with all the bright young things around him cooing and stroking the creature. It is only a matter of time, trust me on this.

In short, the one party still obsessed with class in this country are the Conservatives. Frankly, it would be nice if there were a bit more class consciousness within the other two main parties.

(On a personal note, it isn’t that I don’t want to live in a classless, divided society, I really do. It’s just that it is painfully obvious to me that I don’t live in one and that we need to be talking about this much more.)