Inequality unchanged – New Labour succeeds in keeping Thatcher’s wealth gap!

Another Blue Labour success story:

After 11 years of Labour government, the gap between the income of the richest and poorest households is unchanged, according to new figures.

Income distribution in the UK has not changed since 1991, the Office for National Statistics figures indicate.

Then as now, the top fifth of households have 42% of total disposable income, and the bottom fifth just 7%.

The lack of change is in spite of a raft of government policies aimed at narrowing the wealth gap in the UK.

Labour quietly embarked on a redistributive income policy after returning to power in 1997, with measures including tax credits for working families and pensioners, and increased income support payments for young mothers.

Inequality ‘unchanged’

Ed Balls, while Gordon Brown’s chief adviser, claimed in 2001 that Labour had adopted a “softly, softly” approach intended to redistribute “income and opportunity” towards the poorest people of Britain.

But the latest figures, issued by the ONS on Tuesday, suggest the effect of the policies has been at best minimal.

“You’ve had all these changes, but the overall effect is to end up exactly where you were, had these things not happened. You’ve kept income inequality at roughly the same place,” said Louise Bamfield, senior research fellow at the Fabian Society.

However, she denied that meant the government had failed, because income inequality would have been much wider without the changes.

“It’s like running up a down escalator,” she said. “The government is trying to counter market forces. Pay at the very top has been racing away.”

She said the top 1% of the population, about 500,000 people, had enjoyed “a very steep growth” in pay in recent years, fuelled large by huge bonuses paid to executives in the City.

Left behind

Meanwhile, household income at the very bottom of the league table has suffered, because the government’s tax and pensions policies have failed to benefit the lowest earners, single adults who do not work.

“The top 1% has been shooting away, the bottom 1% has been falling behind, but for the rest, in between, we are seeing an evening out.

“The government might well be disappointed, but if it hadn’t done these things, you have seen a much sharper increase in inequality,” Ms Bamfield said.

The pay gap between rich and poor is higher in the UK than most EU countries. The UK was the ninth most unequal country out of 27 member states, as measured by the Gini coefficient, according to a survey in 2006.

It widened significantly under the government of Margaret Thatcher, which reduced the higher rate of income tax from 60% to 40% in 1988 and the standard rate from 30% to 25%.

During her term as prime minister, the amount of disposable income received by the top fifth of all households increased from 36% to 42%. That percentage is the same today, 18 years after she resigned.

Royal Mail privatisation – Mandelson’s gift to media baron Rupert Murdoch?

In 2005 it was reported by the Sydney Morning Herald that:

Rupert Murdoch has linked up with another giant of Australian business, TNT, in its bid to compete with Britain’s state-owned postal service Royal Mail.

Transport and delivery company TNT has entered Britain’s letter market with its TNT Premier service which guarantees delivery in 48 hours and handles one million items a week.

As its service expands and the market opens up, however, TNT and other private mail providers have complained about Royal Mail’s “dirty tricks” and uncompetitive behaviour.

Murdoch’s pay TV network BSkyB is the latest of five major customers to defect from Royal Mail to TNT […]

BSkyB’s link with TNT strengthens Murdoch’s ties with the company.

TNT trucks are used by Murdoch’s News Limited newspapers in Britain and drove through the picket lines of striking printers in London during industrial disputes in the early 1990s. [Emphasis added]

Today it was announced by Lord Mandelson that the plans set forward in the “independent” Hooper report would be implemented, despite Labour’s manifesto commitment to retain public ownership of postal services.

The only company showing any interest in a possible 25-50% stake in Royal Mail is TNT, a Dutch rival to the publicly-owned postal service.

TNT was the postal company involved in last year’s data loss scandal, in which discs containing the private details of all families claiming child benefits.

Talk about rewarding failure.

RickB points out that Adam Crozier, Royal Mail’s chief executive was given a 26% pay rise last year – which means he’s paid £1.25 million to run postal services into the ground, cut provision, lay off workers, and close sorting and post offices.

But why is an established public service like Royal Mail being forced to “compete” with foreign companies anyway? Whose idea was this?

Well, the EU has issued directives ordering the “liberalisation” of postal services and the UK government was so keen went ahead a year early.

I imagine if Royal Mail is butchered for the benefit of TNT that Rupert Murdoch will be changing his mind about the EU. Not such a threat to him after all, and his papers might become pro-EU and pro-Euro in particular. Just as it’s argued Royal Mail must be destroyed because of economics, Murdoch’s papers might trumpet we must join the Euro?

The FT reports that there will be turmoil in the Labour party as a result of Mandelson’s decision:

the announcement provoked an immediate backlash from the unions and Labour MPs, who saw it as a betrayal of the party’s manifesto commitment to keep Royal Mail publicly owned. The Communication Workers Union, which is already threatening a strike later this week, stressed its “dismay” at the prospect of a move that would “open the floodgates for full-blown, damaging privatisation”.

A string of Labour MPs in the debate on the Commons statement made by Pat McFadden, the business minister, echoed this concern, in a clear signal the prime minister will run into a rebellion over the legislation to allow the partial sale. Gordon Prentice typified the anger, warning he would vote against the measure and attacking the “scandalous” way Royal Mail had been undermined by competition from rivals.

The Conservatives, who stopped short of privatising Royal Mail when they were in power, broadly welcomed the proposals. Edward Leigh, the rightwing Conservative MP, mischievously gave a “welcome [for] new Labour to the Thatcherite wing of the Conservative party”.

The decision by both main opposition parties to back the plans will allow the prime minister to drive the part-privatisation through parliament, in the teeth of opposition from his own party. But the political sensitivities are likely to delay any bill until after a potential spring general election. Mr McFadden told MPs: “We’ll be working up proposals to do this in the weeks and months ahead.” He dismissed backbenchers’ concerns that the move marked a “slippery slope” to full privatisation, saying the party would honour its manifesto commitment. [Emphasis added.]

Note the reference to a general election. Is this a way of buying the support of the Murdoch press for Labour in a snap election next year?

If so, New Labour have possibly lost the votes of thousands of postal workers. Millions of traditional Labour voters who have abandonded the party won’t be tempted to turn out for Brown if he plans to destroy a cherished public institution – and sell it to foreigners.

So much for British jobs for British workers! “British institutions for Australian capitalists” doesn’t have the same ring to it…

The Communications Workers’ Union has responded to the Lord of Darkness:

Billy Hayes, general secretary, said: “It is incredible that the British Government which has lead the world in overhauling banks need another European postal service to rescue the Royal Mail. Especially one which has already been disgraced by losing sensitive data disks in the mail.

“This was meant to be a report about competition but Mandelson has ignored the damage done through irresponsible liberalisation and advocates more involvement by private companies.

“We welcome the move to Ofcom which recognises both changes in the communications sector and the failings of Postcomm to manage the mail market effectively, however we look forward to receiving more information on future regulation.”

Dave Ward, deputy general secretary, said: “There is no need to seek private funding from outside companies in a joint venture. This would open the floodgates for full-blown, damaging privatisation. Post is a key public and business service which must retain the protection and guidance of Government for sustainable success.

“We welcome the fact that our campaign to get the Government to secure Royal Mail workers’ pensions has been successful. The news that the USO has been safeguarded is also very welcome.

“We will be studying the detail of the report closely over the coming weeks and will respond fully in the New Year.”