Labour Should Raise Income Tax

New Statesman (1996), August 9, 2004 | Go to article overview

Labour Should Raise Income Tax


During its seven years in office, new Labour has transformed the terms of public debate so that poverty and inequality are no longer unmentionables. It has also brought to a near-complete halt the Thatcher revolution, which saw dramatic increases in poverty and inequality throughout the 1980s and early 1990s. Is that enough, in the eyes of the left, to redeem a government that looks un-Labour on, for example, trade unions and public ownership, illiberal on civil liberties and crime, and thoroughly bellicose in foreign affairs?

An audit of social justice in Britain, from the Institute for Public Policy Research, suggests not. Since 1997, the richest 1 per cent of the population have continued to get richer, with their share of national income rising to 13 per cent. The distribution of wealth (shares, houses and so on) has also become more unequal, with the wealthiest 10 per cent owning 54 per cent of the nation's wealth in 2000. Though Britain no longer has the highest child poverty rate in Europe, nearly one child in four still lives in poverty, against only one in eight in 1979. In Denmark, it is only one in 20. Persistent poverty--citizens who have been poor for at least three of the past four years--is above the EU average.

Moreover, some public services appear not to make an adequate contribution to the achievement of a more equal society. Primary schools with high intakes of deprived children made less progress between 1999 and 2002 than those with fewer such children. Children from the highest social classes are still twice as likely to get top GCSE grades in five or more subjects as those from the lower social classes. Though children from poorer homes have an improved chance of getting to university, those from affluent backgrounds have seen their chances improve even more. The tax and benefit system also seems to have less impact than it should: despite good Treasury intentions, it doesn't redistribute wealth even to the limited extent it did when Labour came to power, perhaps because of the growth of unclaimed means-tested benefits. …

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