Editorial

A new report confirms that the pandemic is deepening structural inequalities

Two years ago, empowered by a new 80-seat majority in the House of Commons, Boris Johnson promised on the steps of Downing Street to “level up” the country. Since then, his government has laboured without success to offer definition and substance to a concept that, while giving off an egalitarian vibe, remains amorphous and elusive. The publication of the levelling-up white paper has been delayed until the new year, amid reported arguments over how much money the chancellor, Rishi Sunak, is willing to make available for the prime minister’s flagship political project.

While ministers prevaricate, the pandemic has ensured that pre-existing inequalities are deepening to an alarming degree. The latest confirmation of this came in an analysis published this week by the New Economics Foundation, which found that the poorer half of the population has seen its disposable income squeezed since the election of 2019, while the richest 5% are better off by £3,300 a year. The regional disparities which Mr Johnson has pledged to address have also worsened; the NEF found, predictably, that incomes in the south-east have risen far faster than those in the north. In general, white-collar workers easily able to work from home have saved and prospered, and seen the value of their property rise in the sustained house price boom. The continued growth in international stock markets has further benefited the asset-rich.Advertisement

At the other end of the spectrum, employees on fixed-term contracts and in precarious work have not been covered by furlough, while a miserably low level of basic social security support ensures that food bank usage remains well above pre-pandemic levels. Single parents, finds the NEF analysis, have been particularly hard hit. Inflation, rising bills, the cut to universal credit and next year’s scheduled increase in national insurance contributions risk tipping many more stretched household budgets over the edge.

Unarguably, Covid has widened Britain’s wealth gap still further, accelerating a divergence already in train for decades. The fortunes of the asset-rich have waxed while those of the asset-poor have waned. Any meaningful consideration of how to level up Britain in the wake of the pandemic must surely take account of this egregious reality. In a report on UK household wealth published in the summer, the Resolution Foundation thinktank noted that successive governments have stubbornly ignored the trend of rising asset prices, allowing tax revenues to stay constant despite more than a doubling in levels of wealth. This, it judged, was “unsustainable”, given the pressures on public finance. Yet Mr Sunak, determined to bolster his low-tax credentials, has just shelved proposals to generate £14bn a year by raising capital gains tax.

A national debate regarding fairer taxes on wealth is overdue. The rhetoric informing Mr Johnson’s levelling-up agenda has variously prioritised green investment in the north and the Midlands, the need to develop vocational skills and training, and the rejuvenation of public services. None of this can be done on the cheap. As the Omicron variant threatens the livelihoods and prospects of the economically precarious, it is time to link levelling up to a new fiscal settlement for post-pandemic times.

Read Full Article

Comments

0 Comments

Submit a Comment