The impact of the pandemic has been worsened by, and in turn worsened, many forms of economic and social inequality. In Solidarity 578 I summarised evidence from the Marmot and Deaton reports.
As the Marmot report puts it: “mismanagement during the pandemic, and the unequal way the pandemic has struck, is of a piece with what happened in England in the decade from 2010 [i.e. the period of ‘austerity’]… Since then, with the Covid-19 pandemic, the world has changed dramatically. But in England the changes have been entirely consistent with its existing state when the pandemic hit…”
Even the Deaton report, produced by the conservative Institute for Fiscal Studies and advocating no specific policies, concludes: “We have to learn from the policy failures of the last decades. And we must build on what could be a once-in-a-generation opportunity to tackle the disadvantages faced by many that this pandemic has so devastatingly exposed.”
The leftish Marmot report is more insistent: “The enduring social and economic inequalities in society mean that the health of the public was threatened before and during the pandemic and will be after. Just as we needed better management of the nation’s health during the pandemic, so we need national attention to the causes of health inequalities... During the pandemic this has become even more clear.”
What kind of policies do we need?
The Marmot report concludes with 88 policy recommendations — divided between short-, medium- and long-term, but not explaining what kind of timescales it has in mind. The thrust is rebuilding public services and the welfare state, boosting living standards and reducing inequality (summarised by Michael Marmot in the Guardian).
Some of the recommendations seem vague — like “invest in good quality active labour market policies” or “improve prevention and treatment of mental health problems among young people”.
The report does call for: a target of cutting child poverty from 30% to 10%; removal of the two-child limit and the cap on benefits; making the £20 a week increase to Universal Credit permanent and removing the five-week wait; ending benefit sanctions and reducing conditionality; increasing furlough to cover 100% of wages for low-paid workers; eradicating food poverty and ending reliance on food charity; and restoring funding for schools to the real-terms 2010 level.
Many recommendations amount to different angles on “more funding”, specifying a range of areas including local government. For some reason the demand used on school funding (reversal of cuts since 2010) is not repeated more generally.
Oddly, the Marmot report does not contain anything about sick pay or isolation pay.
The Rowntree Foundation’s report on “Destitution in the UK” makes similar proposals, though focused more tightly on mitigating severe poverty. It calls for making the £20 increase to Universal Credit and Working tax Credit permanent, and extending it to pre-UC “legacy benefits”; ending the five-week wait; more funding for councils to support poor households and renters at risk of falling into arrears; and extending “employment rights”.
A serious assault on poverty needs to be both more concrete and more sweeping. We should argue for policies such as:
• In addition to immediate changes to Universal Credit and legacy benefits, a rapid increase in all benefits to a liveable level. The TUC’s figure for the basic rate of UC, £260 a week, would be a good short-to-medium term goal.
• Continuation and strengthening of the furlough and self-employment support schemes, and their extension to those not currently covered.
• The right of all workers to isolate on full pay, and decent sick pay for all, with 100% of normal wages for at least a period.
• An immediate and significant increase in the minimum wage, at the very least to £10ph, and abolition of exemptions and differentials.
• Banning zero hours contracts.
• To underpin a wide range of policies: a clear, short timetable for reversing all cuts to all public services since 2010, then increasing funding beyond that.
• A comprehensive drive to reverse privatisation and outsourcing, most urgently in health and social care.
• A mass council house-building programme, quickly reaching at least 100,000 homes a year, with adequate central funding for councils.
• Creation of millions of secure, well-paid, public jobs in services and green industry.
Where’s the money?
The Marmot report indicates that “as a result of Covid-19, inequalities in wealth will widen even beyond their high pre-pandemic levels”. People on low incomes have mostly found it harder to make ends meet, and many on high incomes have been able to amass greater wealth because they spend less working from home. The data in the report which illustrates or explains this trend concern mainly inequalities within the bulk of the population that is not extremely wealthy. The very rich, and even more the capitalist ruling class, are harder to see in the statistics.
New research from the Resolution Foundation (loosely associated with the Labour right, but generally advocating leftish policies) discusses the changing distribution of wealth in the UK, including the share in the hands of the rich and super-rich. That wealth should be targeted to fund policies to tackle the crisis - both because it is “where the money is” and because reducing inequality and the power of the rich is necessary and desirable in itself.
In 1900, more than 90% of wealth was held by the richest 10% of households and more than 70% by the richest 1%. From around 1910 the figures began to fall; by 1980, after many decades of up-and-down but fairly sustained working-class struggle and other changes, they were down to under 50% and under 20%. Since then, according to the Office of National Statistics’ Wealth and Assets Survey (on which more below), they have levelled out then drifted up.
This wealth is distributed very unevenly across various social divisions. It is heavily concentrated among those aged between 50 and 70. This is not just a result of “life cycle” effects where people amass wealth as they get older, but of “cohort” effects where the old are much less likely to have lost out financially since 2008 than the young.
Large wealth is more concentrated among men than among women. It is more concentrated among white and Indian people than other ethnic groups, and least among black Africans.
The Resolution Foundation highlights just how wealthy the top 1% in particular is. Average net wealth per adult in the 91st percentile of wealth is £0.8 million, rising to £1.7m for the 99th percentile. For the 100th percentile — the richest 1% — the figure is £5.1 million, 60 times that for the average adult.
It also highlights that “financial wealth” is much more prevalent, and “business wealth” far more prevalent, among the richest 10% than in other groups, whose wealth is mainly in private possessions, housing and pension rights. Among the top 1% this must be true to an even greater extent. This different kind of wealth is, in large concentrations, what gives the capitalist class its power in society and over the mass of the population.
Under the headline “The Missing Billions”, the Resolution Foundation suggests that the wealth of the rich has been significantly underestimated. Based on figures from the Wealth Tax Commission integrating the ONS Wealth and Asset Survey with the Sunday Times Rich List, it estimates an “extra” £800 billion of wealth that the ONS missed — almost all in the hands of the very rich, and predominantly the super-rich.
This means that the shares for the top 10% and 1% tick up more definitely after 2015. For the richest 1%, it means an estimate today of not 18%, but 23%. Excluding pensions, the estimates would now be 61% and 31% — up from more like 51% and 21% a decade ago.
As the Resolution Foundation argues, all this further strengthens the case for taxes on wealth. The Wealth Tax Commission estimates that a one off wealth tax, payable on all individual wealth above £500,000 and charged at 1% a year for five years, would raise £260 billion. At a threshold of £2 million it would raise £80 billion. An ongoing annual wealth tax of 0.6% levied above £2 million would raise £10 billion a year.
The Wealth Tax Commission organisers, no radicals (the foreword to their report is written by Lord Gus O’Donnell, former head of the civil service), are much less supportive of an ongoing wealth tax. Their reticence makes the case for us: “An annual wealth tax would only be justified in addition to these reforms if the aim was specifically to reduce inequality by redistributing wealth. We do not take any position on whether the government should use tax policy actively to reduce wealth inequality... proponents should be clear that this is their aim”.
The labour movement needs an urgent programme to take control of at least a good chunk of the wealth capitalists and the rich have piled up over the last decade — including clear campaigning proposals on a wealth tax, capital gains tax and corporation tax, as well as tax on very high incomes. It should also fight for public ownership and democratic control of key concentrations of wealth, including the banking and financial sector. (None of these are socialism but they can be steps towards winning it.)
Who will do it?
The labour movement is almost entirely absent from the reports I have reviewed. That must reflect both the nature of think-tank and academic research and our movement’s failure to assert itself enough.
We will not win radically different policies, or seriously shift the distribution of wealth, without aggressive class struggle. Two crucial axes for developing social force to secure the kind of changes discussed here are:
• A unionisation, workplace organising and strike drive. In terms of policies a government can carry out, the most important one is repealing all laws hindering union organisation and industrial action.
• A fight within the unions and, crucially, the Labour Party to win policy and political campaigning around radical demands.