Rich get richer under Labour according to new figures


  By a Newsnet reporter
Following Johann Lamont’s recent denunciation of Scotland as a “something for nothing” culture, and her announcement that Labour would establish a commission to determine whether universal benefits are affordable, SNP Linda Fabiani MSP has highlighted figures showing that during Labour’s 13 years in power, the gap between rich and poor in the UK grew wider.

The SNP say that targetting universal benefits will adversely affect those families who are struggling on income levels just above the poverty line, and risks bringing those families into poverty. 

Meanwhile Labour has turned a blind eye to rising income inequality.  Ms Lamont’s speech made no mention of the fact that in the UK, the richest receive an ever growing slice of the national income pie.

Ms Fabiani slammed Labour’s record in office as UK government statistics showed that the real-terms gap in incomes between the highest and lowest earners grew by a staggering £237 per week between 1997 and 2010.  Ms Fabiani believes that the figures prove that although Labour in opposition claims it will introduce measures to reduce and ameliorate social inequalities, Labour in office does the exact opposite.

The Households Below Average Income Survey, published by the Department of Work and Pensions, shows that the incomes of the poorest 10% of UK households grew by just £24 per week in real terms over Labour’s 13 years in power.

By contrast, the income of the top 10% of households increased by ten times that figure, going up from £897 to £1,153 per week (an increase of £256).

The UK is one of the least equal societies in the developed world.  During Labour’s tenure in office income inequality in the UK continued to rise at an alarming rate.  Professor Danny Dorling of Sheffield University identifies a clear correlation between high levels of social and income inequality and the highest rates of poverty, crime and imprisonment, drug and alcohol abuse, teenage pregnancies, and ill-health.

Professor Dorling, professor of human geography at Sheffield University, recently published a study charting the share of all income going to the richest 1% over the course of the period since the end of World War I until 2005. In 1979 when Margaret Thatcher’s Conservatives came into office, the richest 1% earned just over 6% of all income.  By 1997 when a Labour government was returned, the richest 1% were receiving approximately 12.5% of all income.  

Although Labour in opposition had campaigned to reduce social inequality, by 2005, after 7 years of Labour government, the richest 1% received 16% of all income, and the proportion was increasing rapidly.  More recent estimates suggest that income inquality has dramatically worsened since the financial crash of 2008.  Income inequality is now at the same level in the UK as it was just after WW1.

The richest 1000 individuals have done even better. This tiny segment of society saw its wealth increase on average in 2010 by £60m. That was a 20% gain over 2009, following a gain of 25% during 2009 over the previous year.  

In 2010, chief executives of the 100 largest companies listed on the London Stock Exchange saw their incomes rise by 49% over the previous year – in the midst of the worst recession since WW2 – giving them an average annual pay of £4.2m, 145 times the average pay of their employees and 162 times the British average wage.

In another measure of inequality, the ratio of income to consumption, in 2010 the top 10% of wage earners in the UK received on average 13.8 times the income of the poorest 10%.  Amongst the world’s richest 25 countries included in the study the UK had the greatest income equality in Europe after Portugal.  In the Netherlands the richest 10% earned just 9.2 times the poorest 10%, while in France the figure was 9.1 times.  In Scandinavian countries, the richest 10% earned between 5.6 and 6.2 times the amount earned by the poorest 10% of wage earners.

In a report Mind the Gap, Labour’s Legacy on Child Poverty published by the Child Poverty Action Group in 2010, Professor Dorling sharply criticised the Labour government’s record on income and social inequality, saying:

“Labour introduced and continued to extol a populist and punitive approach, labelling benefit claimants as potentially feckless. Permitting rising inequality and stoking the prejudices of the poor sets a precedent for the next government which heavily outweighs the many gains made.”

Commenting on the figures, Ms Fabiani said:

“Following Johann Lamont’s establishment of the Labour Cuts Commission to attack universal benefits, these figures serve to confirm that Labour has lost its way on social justice a long time ago.

“Ms Lamont’s remarks about Scots living in a ‘something for nothing country’ represent a new low for a party that once prided itself on representing hard working people.

“But in their 13 years in power at Westminster the gap between rich and poor actually grew.

“Labour in Wales is not going to change their policy on free prescriptions – and are even committed to it in their next manifesto. But in stark contrast, Labour in Scotland is in thrall to the party leadership in London, and their ‘ruthless’ approach to cutting public spending.

“No wonder Labour members in Scotland are now looking at the merits of voting Yes in the independence referendum and have formed the ‘Labour for Independence group’.”

Meanwhile the Liberal Democrats have been criticised for their plan to remove the Scottish Parliament’s power to freeze council tax.  Under the Lib Dems’ plan, Scottish Governments would lose the power to offer additional funding to local authorities in order to keep council tax frozen.

SNP MSP Kevin Stewart who convenes the Local Government and Regeneration Committee, said that the Lib Dem proposal was “the last thing that struggling households need”.   

Since it was first frozen by the SNP Government the average band D household has saved over £500 on its Council Tax bill, at a time when the economic downturn means that household budgets are often stretched to the limit.

Commenting, Mr Stewart said:

“If the LibDems really believe that the best way to stop their rapid collapse into an electoral irrelevance in Scotland is to land households across Scotland with increased bills, then it is no wonder that their support has evaporated.

“It is difficult to see where they are coming from when they want to prevent the Scottish Government offering councils financial assistance to keep household bills down. Ending the council tax freeze would be the last thing that struggling households need.

“The council tax freeze has saved hundreds of pounds for households across Scotland, helping people manage stretched household budgets.

“It is an important part of the social contract that supports people in these difficult times and it says it all about how badly wrong their priorities are if the LibDems think attacking the policy will revive their fortunes.

“It could not be clearer just how badly out of step with the Scottish electorate the LibDems are, so it is little wonder that a recent poll put their support at just 6%.”