Welcome to the sixth Fair Comment.
This week we’re taking a longer look at the cost of living crisis, and thinking about what it tells us about the lack of fairness in our society and economy.
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The cost of living crisis is a crisis of fairness
Inflation, and especially rocketing gas and food prices, are pushing many more people in poverty. People who until recently were donating to food banks are now reliant on them for food. An additional 1.1 million households will be in fuel poverty when the new energy price cap rise comes into effect on 1 April, taking the total in fuel poverty to 22% of all households in England (around 12.5 million people), despite the government’s planned measures to offset the impact.
But these shocking statistics aren’t just the result of rising costs. There is a danger that we ignore the other side of the ledger - the chronically low incomes that leave millions vulnerable, so that increasing expenditure tips them into poverty rather than just forcing them to scale back on discretionary spending. 3.6 million people were in low-paid and insecure work when the COVID pandemic broke out. Many millions more are reliant on increasingly inadequate benefits payments. And, of course, some costs of living have been unacceptably high (and out of reach for too many people) for years, such as housing and childcare.
Why didn’t we see food banks during the ‘stagflation’ of the 1970s? Although inflation in the early years of that decade was around 20%, wages grew over the same period by 35%. By contrast, today’s relatively low inflation rate of 5% is much more damaging to people’s livelihoods because real wages haven’t risen since 2008.
What this all adds up to is the re-emergence of poverty on a vast scale as our society becomes ever more unequal (and while those with assets have seen their wealth shoot up during recent economic and health crises, as a direct result of the fiscal measures that were taken to protect the economy from those crises).
While governments of the day take measures to curb the most severe symptoms of this inequality whenever they threaten to bring down the economy or destroy the social fabric, they rarely try to tackle the underlying causes. Even the recent levelling up white paper failed to diagnose the true drivers of inequality in Britain.
It would be wise for politicians to pay more attention to the underlying causes, since they lie behind many political upheavals of recent years, including the Brexit vote and the collapse of Labour’s support in ‘red wall’ seats. The anger that fuelled those upheavals has its roots in unfairness.
Unfairness manifests itself in five ways (we think). Let’s consider each of them in turn.
- Firstly, people’s circumstances have a huge impact on the opportunities available to them. People living in certain parts of the country find it harder to get (or get to) decent jobs, while people in other areas can’t afford decent housing. Children’s life chances are influenced to an unacceptable degree by their family income, their ethnicity, their gender and whether or not they have (or acquire) a disability.
- Secondly, too many people are denied their basic needs. If people don’t have equal opportunities to succeed, then they can’t be held equally accountable when they fall into poverty. So it stands to reason that society should ensure that no one has to live in poverty, and that everyone’s basic needs are satisfied.
- Thirdly, some people enjoy huge rewards while others are inadequately compensated. Key workers, without whom our society and economy would grind to a halt, are poorly paid and are too often denied contractual security and decent working conditions. Meanwhile, top executives have seen their salaries and bonuses reach excessive heights, regardless of whether they have done a good job.
- A fourth type of unfairness is that people’s legitimate expectations of ‘give and take’ are routinely dashed. Many contribute less (in tax) to society than they should - either lawfully (because wealth is not taxed enough) or unlawfully (because they avoid or evade tax). Meanwhile (and not unconnected to this), millions find that, when they need support from the state, such as in the provision of decent social care, it is lacking.
- Finally, to the unfairness that has caused the most anger with politicians in recent weeks - one rule for them and another for the rest of us. The lack of fair process isn’t just about lockdown parties, though. It can ruin people’s lives in all sorts of ways. Consider some of the racial inequalities in healthcare that are laid bare by a report that is due out this week.
All in all, it’s clear that we live in a very unfair society. There is perhaps no more damning evidence of this than the ten-year gap in life expectancy between people in the most and least deprived areas of the UK (see last week’s chart of the week). Unless politicians of all stripes focus on redesigning our economy and society so that fairness is ‘baked in’, they will only ever be fire-fighting, while all around them the inferno blazes more intensely.
Chart of the week
Education disadvantage gaps
The Education Policy Institute’s report on the disadvantage gap in education has found that the gap in grades between poorer 16-19-year-old students and their better-off peers widened in 2020, as disadvantaged students were less likely to take the qualifications with the largest grade increases.
Poll of the week
Should the government introduce more price caps in response to the cost of living crisis?
Recent polling has suggested that 70% of voters would support price controls on food, as well as finding strong support for price caps on other goods and services such as housing, transport and clothing. Do you agree with them?
Last week’s poll asked whether the levelling up white paper had diagnosed the problems and the solutions correctly. Three-quarters of you thought that it had identified the wrong set of problems, while the other quarter agreed with the problems but disagreed with the solutions. Not a single person thought that both the problems and the solutions were correctly identified...
Reads of the week
Vicky Spratt in the i has responded to the furore caused when property “expert” Kirstie Allsopp told The Times that young people would be able to afford to buy a house if they were prepared to move somewhere cheaper or give up on luxuries like gym membership or foreign holidays.
Haroon Siddique has made a compelling case in The Guardian for more to be done to tackle racial health inequalities in the light of the findings of the NHS Race and Health Observatory.
Kate Anderson has argued in The Conversation that the UK’s 'work-first' approach to benefits hurts mothers, and “mothers need specialist support in obtaining paid work that fits with their caring responsibilities and is helpful to their long term financial security”.
Anvar Sarygulov has written a report for Bright Blue on social security, which details how benefit claimants experienced challenges to their financial, social, and mental wellbeing just before and during the first year of the pandemic.
The abrdn Financial Fairness Trust has launched a new podcast, with the first episode featuring Alistair Darling talking about the government’s financial response to the Covid-19 pandemic.
Professor John Curtice has written in Progressive Review about public attitudes to the size of the state, finding greater support for higher taxation and spending now than following the financial crash of 2008.
The Resolution Foundation has estimated that an ageing population and more expensive healthcare are set to increase public spending by £76 billion per year by the end of the decade, and has argued for new approaches to raising revenue, including by taxing wealth more effectively.
The Public Accounts Committee has published a damning critique of HM Revenue & Customs in a report on Covid-related fraud, alleging that “HMRC’s unambitious plans” for recovering a total of £6 billion it estimates it spent incorrectly in COVID-19 support payments – whether through fraud or mistakes - could lead to “government writing off at least £4 billion” of taxpayers’ money.
Fairness Foundation updates
Late last year we published The Fair Necessities, which proposes five ‘fair necessities’ as the foundations of a fair society (proportionality, equal opportunities, reciprocity, basic needs and equal treatment). Have we got them right? If not, what could we change? With those questions in mind, I’ve put together a very short survey asking for comments on each of the five ‘fair necessities’ and on the overall approach. Any feedback, however short, is welcomed. I’d be really grateful if you would consider either filling it in yourself or sharing it with colleagues or partners. This is a great opportunity to influence our thinking and our priorities in our first full year of operation. We’d appreciate any responses by the end of February.
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