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Inequality Under the Tories

02/07/2015 09:16 BST | Updated 01/07/2016 10:59 BST

An ex-Tory millionaire is pressuring George Osborne to reduce the highest rate of income tax to forty percent. If Osborne succumbs to the pressure, those earning £45,000 per year will pay the same percentage of tax as those earning £4,500,000. Lord Lawson justifies this ostensibly absurd call by suggesting that it will 'attract business'. Apparently, if you reduce tax on the wealthiest by five percent, hordes of businessmen will flock to the UK, pay incredible wages, help to alleviate poverty and will build Jerusalem in England's green and pleasant land.

In times of austerity, such policies inexorably exacerbate the already alarming issue of inequality. Britain is currently the only G7 country with wider inequality than at the turn of the century. Right now, the top ten percent own over fifty-four percent of Britain's wealth and Britain's five richest families own more wealth than the bottom twenty percent.

The Tories have a simple method for dealing with this issue: gloss over the facts, change the measurements and, ultimately, pretend that it doesn't exist. Unfortunately for them, other folks, particularly economists, are worried about inequality. Nobel Prize winning US economist Paul Krugman has argued for years that inequality has a negative impact not only for the net income of those at the bottom, but also for wider economic growth. Similarly, Joe Stiglitz, another Nobel Prize winning economist, has argued in several popular works - including The Price of Inequality - that inequality inevitably leads to slow economic growth.

Furthermore, Thomas Piketty recently released a hugely influential book exploring the historical causes of inequality and projected that, unless governments take serious measures, inequality will continue to grow. Piketty suggests that if the rate of return from capital (r) exceeds the growth of the economy (g), the gap between rich and poor will inexorably widen.

These theorists tackled economic issues and to some extent ignored the detrimental social problems caused by inequality. The most popular work focussing on the social problems emanating from high levels of inequality is Richard Wilkinson and Kate Pickett'sThe Spirit Level. Wilkinson and Pickett demonstrate through a vast collection of data that inequality leads to lower standards of healthcare, education, addiction and a range of other social ills.

Despite a surfeit of academics making the case for tackling inequality, the Tories remain reticent. Considering the Conservative's reluctance to address inequality, it is thus unsurprising that the gap between rich and poor is widening. Cameron, however, isn't simply failing to address the issue, he is actively promoting policies that have inevitably increased inequality.

As soon as he entered Downing Street, Cameron cut taxes for corporations and the top one per cent. He then decided it was essential to increase VAT- affecting every Briton regardless of their place on the income scale. He then cut welfare for millions of the most vulnerable, effectively reducing the net income and spending power of those at the bottom.

It seems Cameron will now take away tax credits - disproportionately affecting the poorest - and, perhaps for good measure, add a few more welfare cuts for the disabled, the unemployed and the sick. Then, if that all goes swimmingly, the top income earners will receive their much-deserved five percent tax cut.

All these measures are justified with some grand allusion to austerity. This austerity malarkey would be justifiable, perhaps, if the Tories took fair measures to tackle the deficit. They could, for example, tax the rich a little more and thus add essential revenue to the coffers. They could stop spending taxpayers' money propping up huge corporations. They could even fulfil their promise to tackle tax avoidance and amass the unpaid sum of roughly eighty billion pounds.

They haven't done any of these things. They won't tackle inequality because, apparently, inequality doesn't really exist. They prefer to simply gloss over the issue. Iain Duncan Smith, for example, has just announced changes to the way the UK measures poverty. The previous Labour government apparently measured it relatively: if the economy does well, then those at the bottom would have to sustain a relative income compared to wider economic growth.

This form of measurement, of course, does not bode well for the Tories: the economy is growing, yet the wealth of those at the bottom is shrinking. So, rather than advancing policies to tackle the issue, the Tories will simply change how poverty is measured - effectively alleviating a great deal of statistical poverty and not giving the poor a penny.

Such a move is emblematic of the Tories' wider position towards inequality. Instead of tackling the issue, Tories rephrase the question. They ensure that all appears well. They gloss over the widening gap between rich and poor. The best they can offer is new measurements and vague, empty rhetoric that makes Britain appear all hunky-dory. These measures are economically unsustainable and, more importantly, morally unacceptable.