ANTHONY FREDAW

30 | NEW STATESMAN | 6-12 JULY 2018 THE NS ESSAY Peak inequality The gap between the very rich and the rest is wider in Britain than in any other large country in Europe, and society is the most unequal it has been since shortly after the First World War. But is great change coming? By Danny Dorling

here are many ways in which photocopier works, or who keep the com- is half as likely to die in childhood inequality can be felt and in- puter servers working night and day. as a child born today in the UK. There are numerable ways in which it can We live in times of peak inequality. It no causes of death among children that are be measured. However, it is an- pervades almost every aspect of our lives in significantly more frequent in Sweden than nual income that trumps all other Britain in ways that we now accept as nor- in the UK. By 2015 the UK ranked 19th out Tmeasures, because it is income that gives mal. Like goldfish in a bowl of dirty water of 28 in the European league table of neo- us respect and the freedom to do every- we have adapted to think that our tank is natal mortality: deaths within the first 28 thing from buying a bus ticket to securing a normal. But it isn’t. days of life. In 1990 we had ranked seventh. mortgage. We can only live how we live by Among all European nations we have be- Bulgaria ranks 27th and Romania 28th, but dint of the income we receive. come the most inequitably rewarded – we infant mortality in both is falling. Since 2015 Income inequality in the UK is higher are swimming in the dirtiest of fish tanks. we have seen a statistically significant rise than in any other European country, except The transition to this state of affairs came in infant mortality across Britain: no other occasionally one of the Baltic states (during slowly. In the 1970s we were living in the state in Europe has experienced that. And a bad year for them). All other European Un- second-cleanest large tank of all in Europe; this is despite, not because of immigration. ion countries enjoy greater income equality. only Sweden’s was cleaner. I say “clean” be- Immigrants, who are on average younger Because of this their citizens are freer to live cause as yet there is no evidence of any harm and healthier, are essential for the running where they wish, to mix equally, to go to coming from high levels of equality – once a of our health services. Their presence has school with each other rather than segregate basic level of affluent subsistence has been prevented overall life expectancy from fall- their children, as the majority of parents in achieved, there is no downside to being ing across the UK – though it is already now the top 10 per cent of income distribution in more economically equal. falling for many groups in many parts of the Britain feel compelled to do. Nowhere are the repercussions of living country. In everywhere else in Europe life Peak inequality is when the town you live with gross inequality more evident than in expectancy is rising faster than in the UK (it in is so segregated that the school-aged chil- health. The physical health inequalities that is rising fastest in Norway and Finland). Un- dren do not mix – not between schools, not come with tolerating the highest income in- til 2015 the UK had not experienced growth socially, not at all. Peak inequality is where equalities in Europe are not as extreme as the in numbers of grieving parents since during the best-off people in your workplace de- damage to our mental health (as document- the Second World War – when infant mor- mand “housing allowances” because they ed in Richard Wilkinson and Kate Pickett’s tality last rose for two years in a row. could not possibly live near those who clean new book The Inner Level), but they are After a time the statistics begin to turn

their workplace, or those who ensure the still shocking. For instance, a child born in you numb. You become used to bad news. t

6-12 JULY 2018 | NEW STATESMAN | 31 t Year after year the number of children the equality that was coming. They re- punish the miners who had been on strike. waking up in shabby temporary accommo- sented the good-quality comprehensive The southerners did not triumph until dation rises. It now does so with each pass- schools that began emerging in that decade; Thatcher’s election in 1979 – but they had ing Christmas Day. A record 130,000 chil- the decent housing; the full employment begun their fight in the autumn of 1974. dren were living in bed and breakfasts over that allowed people to tell their boss where The British establishment had almost no Christmas 2017. to stick it; the growing lack of deference for idea of how economically reliant it was on You become used to hearing that ever the old rich, from the publication of books the empire. Almost all leading Conserva- greater numbers have recourse to food that a man would never wish his wife or his tives, most Liberals and a significant section banks (1.3 million parcels were given out servants to read (Lady Chatterley’s Lover in of the Labour Party had come to believe that in the year to April 2018), to such an extent 1960) through to “God save the Queen/ running the empire was the white man’s that you almost forget that as recently as the The fascist regime” (the Sex Pistols, 1977) – burden, a great sacrifice – something they 1990s there were no food banks in Britain. by which time it was too late. The political did at a loss even. There was no need for them, before inequal- shift towards greater inequality had been The pound had been falling in value ity reached its new peak – just as there was made in 1974. against the dollar since at least around a time when the soup kitchens of the 1930s The swing of votes towards the Tories in 1910. By the 1960s Conservative politicians all disappeared once equality rose high the second general election of that year was blamed immigrants from the Caribbean, and then the trade unionists at home. They blamed the miners in the early 1970s and We were so equal by the 1970s that then the few socialists in government dur- ing that decade. Britain joined the European we were most similar to Sweden – we Economic Community in 1973 in search of a solution to its economic woes. At no point, could have been Scandinavian ever, did the British contemplate how the centres of all former empires, from Otto- man to Hapsburg, from Rome to Lisbon, enough. When the income share of the bot- abrupt: ’s Labour Party won had suffered in the immediate aftermath of tom 90 per cent is used as the comparator, but with an overall majority of only three the loss of empire. today our levels of inequality are the same seats. In 1975 the Conservative party itself Soon the British became used to inequal- as in 1930. That is why the soup kitchens took an abrupt jump to the right with the ity rising with each year of Mrs Thatcher’s and feelings of hopelessness have returned. selection of as its new government, before stuttering during John leader. In 1976 Jim Callaghan gave a speech Major’s rule (1992-1997) and rising sharply ow did we get here? What at Ruskin College, Oxford, that showed the again under ’s New Labour. went wrong? Equality for the tone within Labour was changing, too. We reached an inequality high point in bottom 90 per cent peaked in This did not happen because of the 2007 when the bottom 90 per cent only 1978 when they took home oil crisis, Nixon abandoning the Bretton took home 57.4 per cent of all income, the 72.2 per cent of all the income Woods monetary system, or any other in- least they had taken since, tellingly, 1929, Hthere was to take that year. This high point ternational event outside the UK’s control. the year of the Wall Street crash that began had followed us reaching a slightly smaller It happened because of a very British prob- the Great Depression. (and almost always ignored) peak of 71.5 per lem. Britain differed fundamentally from Tony Blair was the king of income in- cent in 1968. Between those two dates we other countries in Europe in the 1960s and equality. No British prime minister since stumbled along a ridge of high equality and 1970s because its wealth had been built on Stanley Baldwin had seen the bottom 90 we could have chosen to go even higher. In a huge empire. And now the loss of our em- per cent take so little as they did under New hindsight, it is far easier to see. At the time, pire meant we were forced to get used to Labour. Under the share of no one in Britain had a clear idea of just having less. the bottom 90 per cent rose slightly but so what a momentous period the late 1960s In October 1974 the south of England ef- did the share of the wealthiest 0.1 per cent. and early 1970s were. fectively voted to abandon the north of Eng- During ’s coalition govern- We could have followed the paths later land and the rest of the British Isles and to ment inequalities rose again, but not to the taken by the Netherlands, or France, or heights of the Blair era. Germany. In fact, we were so equal by the Today, with in charge, the early 1970s that we were most similar, as a statistics are no longer released. Under the society, to Sweden – we could have been Conservatives’ austerity regime, HMRC has Scandinavian! We could have had a sov- not received funding rises, despite the obvi- ereign wealth fund – one based on oil, like ous benefits of better-regulated taxation in Norway’s. We could have been leaders in helping reduce the deficit. The Conserva- technological and scientific innovation like tives also appear to have instructed HMRC Finland. We could have been as stylish as not to make the publication of income in- the Swedes and as laid-back but also as envi- equality statistics a priority. Resolution ronmentally conscious as the Danes. Foundation researchers have complained The equality of the early 1970s was held about the lack of good inequality data from up by quicksand. It was not something that HMRC. However, the fact that FTSE 100 was being slowly built upon a strong foun- chief executive pay has fallen recently sug- dation – of having all been poor before, and gests that we have reached peak inequality. all now being in it together. Those who had History may never repeat, but inequalities

been exceedingly rich in the past resented always eventually hit a high and then fall. SCOTT MASEAR

32 | NEW STATESMAN | 6-12 JULY 2018 buy property with cash). They (assuming OECD COUNTRIES RANKED IN TERMS OF INCOME INEQUALITY a household with two adults and two chil- Country Gini Coefficient, 2015 dren) have a post-tax total annual house- Mexico 0.459* hold income of £75,000 to £200,000 a year. Chile 0.454 This is the group that Thatcher looked after Turkey 0.398* but that Tories have since taken for granted United States 0.390 on the grounds that they had no one else to Lithuania 0.381* vote for if they wanted to protect their ac- Russia 0.376* crued wealth, primarily their house prices. 0.360 But then, following the financial crisis, Israel 0.360 even the majority of the top 1 per cent began Latvia 0.350* to lose out. (These are households that earn New Zealand 0.349* about £200,000 to £400,000: they are very Estonia 0.346* wealthy but not in the top 0.1 per cent.) The Spain 0.344* income share of this group peaked in 2008, Greece 0.339* at 9.6 per cent of all income; by 2014, it had Portugal 0.338* fallen to 8.4 per cent, according to the World Australia 0.337* Income Database. We are now back to in- equality levels for this group last reached Japan 0.330* immediately before the Second World War, Italy 0.326* just before the advent of the welfare state, Canada 0.313* after which their share of income continued Netherlands 0.303 to decline. The precedents are all stacking Ireland 0.298* up for a period of great change. Poland 0.298* There are certain changes that happen in Switzerland 0.297* all affluent states when inequality falls. If France 0.297* we have just passed the peak, we can ex- South Korea 0.295 pect to see the wealthy begin to have less 0.289* Germany and become less able to separate themselves Hungary 0.288* from the majority of society. Fewer peo- Luxembourg 0.284* ple have the income needed to pay for pri- Austria 0.274* vate school places for their children. State Sweden 0.274* education becomes better funded as the Belgium 0.266* will of the majority becomes more power- Finland 0.260 ful when the majority are not so poorly off. Czech Republic 0.257* Housing regulation increases and landlords Norway 0.257* are given less freedom in setting the rent Denmark 0.256* and evicting tenants. Jobs become more Slovenia 0.251* secure through the introduction of better Slovak Republic 0.247* *Starred statistics are from before 2015 as 2015 data legislation. Taxation overall increases, but Iceland 0.246* was not available in 2018 especially for the rich. Standards of living

GRAPHIC LEON BY PARKS. OECD, SOURCE: HTTP://WWW.COMPAREYOURCOUNTRY.ORG/INEQUALITY?&LG=EN rise, especially for the poorest but also for the median household. he American geographer Waldo more and more. More money was trickling The wealthiest members of society dis- Tobler once told me that income down from within the upper levels of the cover that they have not greatly lost out. inequality in the US was stacked bottom 90 per cent. The top of the sand pile like a pile of sand. We were near was still solid but slowly becoming under- his home close to Santa Barbara, mined. The income share of the next 9 per Inequality in Britain TCalifornia, where the sand cliffs are cut cent above the bottom 90 per cent peaked rose with each year of steeply by the Pacific and where income in 1993, at 28 per cent of all income; by 2014, inequalities hit their West Coast summit it had fallen below 25 per cent, according to Thatcher’s government (beneath the Neverland Ranch). He ex- the World Income Database. This is the lat- plained that with a pile of sand there was an est figure we have. They still live at the “best” addresses, but angle that could be maintained. Cut away Equalities are still rising within the bot- more often in apartments created from the sand from the bottom of the pile after that tom 90 per cent. Those in the top 10 per division of single grand houses (some of steep angle has been attained and soon the cent but not in the top 1 per cent – crucially, which had been subdivided during previous whole collapses. a group that traditionally votes Conserva- periods of greater equality). And the rich The income distribution pile in Britain tive – have been losing out relatively for 25 do not have to fear the poor so much. The began to be cut away in the early 1990s years to those both better off and worse off wealthiest people in more equitable Euro- under . Back then a pseudo- than them. This is the group that struggles pean countries – France and Germany and equality began to rise. If you ignored the to find money for private school fees, that especially Scandinavia – live longer and top 10 per cent, then within the bottom 90 uses private health care if it can and that happier lives than the best-off in Britain. per cent you could begin to see equalities takes out huge mortgages (because these The irony is that greater equality helps the

increasing, even as the top 10 per cent took people are not quite rich enough simply to rich as well as the rest. t

6-12 JULY 2018 | NEW STATESMAN | 33 t he sand of Britain’s income UK INCOME INEQUALITY 1910-2014: % SHARE OF FOUR WEALTHIEST GROUPS distribution has kept on fall- ing away from higher up the cliff, approaching the top. By 50% 2013, the income of the top 0.1 47.5 The top 10% The top 0.1% per T cent (excluding the top 0.01 per cent) The top 1% The top 0.01% 45 had peaked at 5.8 per cent, or 58 times mean average incomes (and many multiples more 40.0 of median income). The next year it was 40 down to 5.5 per cent, a point last attained in 1927 (after which it fell almost every year for 35 50 years to reach 1 per cent in 1977 – or ten times mean average incomes). We do not 30 yet have statistics from 2015 onwards. But 27.8 based on the trend, we can speculate that 24.7 income peaked for the top 0.01 per cent of 25 highest earners in that year, for the top one in 100,000 in 2016, and the top one in one 20 million in 2017. And then, in 2018, the in- come of the very highest-paid person of all 15.1 in the UK fell when Martin Sorrell stepped 15 down from WPP because of allegations of misconduct. In April 2018 we reached the 10 first inequality peak since 1913. (Thank- fully it was well below that previous peak 5.9 – a high point only attained by owning the 5 largest empire the world had known.) Sorrell shows us what income inequal- 0% ity means and achieves. The advertising 1910 1915 1920 1925 1930 1935 1940 1945 1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 GRAPHIC LEON BY PARKS. PEAK SOURCE: INEQUALITY DORLING DANNY BY

industry he worked in displays the econom- same in his village in the West Riding. He ics of inequality at play: convincing those told me of the crash of 1929 and how the with less to buy more of what they did not Americans sacked the men who counted need to enrich those already best off. Look at unemployment and so never knew how how badly he has taken his demotion, how high it had risen. He showed me his diary determined he says he is to rise again, if you entry for the date that Hitler became chan- wish to see the energy of those widened in- cellor: it was just another normal day in equalities laid bare. Sorrell is the poster boy 1933, but economic inequalities were then for British inequality. He owns that brand. reaching new heights in Germany (and Ja- pan). He told me that his generation would o what’s next? There is no guaran- never again trust those who had allowed tee that this is the peak. What looks two world wars to take place. He told me like a peak is often a false summit. how, after 1945, he watched as decade af- But the signs are there in so many ter decade after decade almost everything other indicators: health, housing, got better, until at the end he would sit on a Svoting, education, Brexit. The signs are so bench in early retirement and wonder at the strong that I am calling peak inequality this variety of colour in the clothes that people time. And I have never called it before. walking past him now wore. And of how Will we allow economic inequalities to little most of them knew of suffering, or climb yet higher again? Or will we vote for , or unemployment, or fear over the the alternative? For the first time in four doctor’s bill or the pit owner’s cruelty. And decades in Britain we are being offered a then he watched us throw it all away. viable mainstream European social demo- It is too late for me. But my children cratic socialist alternative. The choice is no could see what he saw during his lifetime if longer to be the most economically unequal we now ensure that the peak of inequality country in Europe, with all that entails. has been passed – and we start on the long My grandad was born in 1916. Before road down. l he died in 2013, he told me of the remark- Danny Dorling is Halford Mackinder able changes he had lived through. He told professor of geography at the University of me what he saw during the general strike Oxford and author of “Peak Inequality: of 1926, and of how everyone dressed the Britain’s Ticking Time Bomb” (Policy Press)

34 | NEW STATESMAN | 6-12 JULY 2018