The Inequality Election

Politics is fragmenting and it seems another inconclusive election is before us. The established Westminster parties have failed to find an answer to public disenchantment, as people say ‘you’re all the same’. But this year the choice between a Labour or Conservative government could not be more stark.

The dividing lines boil down to one word: inequality. Under Conservative plans Britain will become far less equal. Under Labour, there is the chance of a different path. Fabian research published in February provides the backdrop, showing that if politicians do nothing inequality and poverty will soar.

But the Conservatives don’t even plan inaction, they seek to actively widen the gap. Already, five years’ of austerity have hit the living standards of the poorer half of society, while leaving most in the top half untouched.

Now the Conservatives proudly promise more of the same. They will strip £12bn from the incomes of the bottom 50 per cent, through benefit cuts, while simultaneously giving away £7bn to the top half in income tax cuts. This is not a dirty secret, hidden away in the Tory small print. It is front and centre of their election campaign.

By contrast, Labour presents its most egalitarian platform for a generation. Ed Miliband has pitched himself on the side of ‘the many’, standing up to vested interests and powerful elites. He has set out radical ambitions to reduce levels of low pay and said that his economic goal is to raise typical family incomes not GDP, adopting a 2014 Fabian proposal.

And the party has not abandoned its commitment to eradicating child poverty, although after the election it will need to set an achievable target date now that Gordon Brown’s original deadline can no longer be met.

Nor is Labour simply willing the ends. The party has a radical package of egalitarian policies. Market inequalities will be addressed by workers on boards and employee ownership, a revolution in non-graduate skills, a big push for the living wage and a much higher minimum wage.

Labour has also changed its mind on the role of tax in tackling inequality. The mansion tax, the 50p top rate and reform of pension tax relief are all ways to diminish soaring inequality. These are policies which will redistribute money from those with the broadest shoulders, but economists reckon they will also change incentives and so reduce inequality in the market.

The missing piece of the jigsaw is an affordable strategy for benefits and tax credits. This is not just for a few at the bottom: middle income families will only see their living standards rise to reflect economic growth if social security becomes more generous.

Ruling out savage new cuts is an important start. But the new Fabian research shows it is possible to raise benefits, especially for children, without borrowing more; by recycling the tax revenues generated from improvements to the labour market back to households.

Labour’s challenge now is to set out its stall and show more clearly what is at stake. It must convince voters that it is not just a party of good intentions, but answers that really work.

Inequality is the defining issue of our times. And only Labour can ever put it at the heart of our politics. The party has the ambition, it has the policies. It must find its voice.