Inequality and the State

Inequality and the State

Inequality and the State

Inequality and the State


Since the late 1970s, Britain has become a more unequal society. This book analyzes the dramatic widening of the income distribution, the growth of poverty, and the factors that have driven them. It examines how government spending and the taxes that pay for it affect people's incomes, why they take the forms they do, what we think of them, how things have changed since New Labour came to power in 1997, and the future pressures that any government will face as the population ages.


The evidence and research presented in this book bear on questions that are—or certainly should be—at the centre of politics, not just in Britain but in other industrialized countries. How society's resources are ultimately distributed, and how collective decisions through the state affect that distribution, are very big issues. Even in a country such as the UK with relatively low social spending, a quarter of all of national income is channelled through public spending on services such as health care, education, and social security. Policies related to such spending, now two-thirds of all government expenditure, increasingly dominate domestic politics, especially since many macroeconomic decisions are now taken by independent central banks or are subject to predetermined fiscal rules (such as the 'golden rule' in the UK or the constraints of the Stability and Growth Pact for members of the Eurozone). The other side of the coin—who pays the taxes to finance this and other spending—is of equal if not greater importance, affecting as it does nearly two-fifths of national income in the UK and a greater proportion in most other European Union countries.

The book describes and analyses one of the biggest social changes in Britain since the Second World War: the dramatic widening of the income distribution since the end of the 1970s, the growth of poverty, and the factors that have driven them. It examines how government intervention through social spending (the 'welfare state') and the taxes that pay for it affect this distribution, and why they take the forms they do. Each part of the discussion is set in the context of public attitudes as revealed by the rigorous and long-running British Social Attitudes survey (for details see the appendices to the annual volume published by the National Centre for Social Research, such as Park et al. 2002).

Against this background, the book analyses changes in policy since New Labour came to government in 1997 and evidence on their impacts. It then looks at the constraints and pressures on future policies, concluding with a discussion of the dilemmas facing policy-makers as they try to meet competing aims in terms of reducing poverty and inequality, growing demands on social spending, and the constraints and opportunities created by public attitudes.

The book brings together new analysis carried out by the author and colleagues at the ESRC Research Centre for Analysis of Social Exclusion (CASE) at the London School of Economics since it started in 1997. This includes material on topics such as income dynamics, the relationship between public and private welfare provision and finance, the distributional effect of government spending,

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