Overview and Introduction: Chapter 6

Inequality… income, poverty and wealth

Exercise

Read the article below then follow the instructions after it:

Adding up to much less

Paul Foot, Wednesday 26 November 2003, The Guardian

"On September 26 [2003], the leader of the House of Commons, Peter Hain, was on the BBC's Newsnight proclaiming the progressive reforms of New Labour. High on the list, he claimed, was the closing of the gap between rich and poor. "If you look at the figures," he said, "the bottom tenth of the population have seen their incomes increase by 15%, while the top tenth have seen their incomes reduced by 3%. That's redistribution."

This seemed so unlikely that I contacted the Office of National Statistics (ONS), now attached to the Cabinet Office. To my surprise, the figures it gave me confirmed what Hain said. The earnings of the poorest tenth, they revealed, had risen steadily since 1997, but, astonishingly, the earnings of the richest tenth, after growing even faster every year until 2001, suddenly and sharply went down in 2002.

I went back, twice, to the ONS, requoted the figures they had given me, expressed my doubts, and asked for an explanation. Back came the reply that the figures had been "double-checked" and were "correct".

No doubt about it, then. Peter was right and my scepticism was wrong. But wait. Early this month, the ONS sent me a new set of earnings figures, updated to 2003. They flatly contradicted the figures given to me previously. They showed a steady annual increase in earnings for both the poorest and the richest tenths at about the same rate from 1997 to 2003.

What was going on? I consulted Incomes Data Services, a specialist in such matters. Its explanation was rather shocking. "The ONS," it said, "has made a mistake. It has given you the upper quartile (quarter) figure for 2002 when it should have given you the highest decile (tenth)." The real figures for the richest decile showed a steady rise in earnings in every year from 1997 to 2003. So, under New Labour, the rich are getting richer and the gap between rich and poor is getting wider.

The ONS now admits its error, and has apologised to me. Where does that leave Peter Hain? His spokesman tells me that Hain's claim on Newsnight was based on a survey by the Institute of Fiscal Studies, whose press release concluded: "Focusing on (tax and benefit) measures that directly affect household incomes and spending shows a progressive pattern, varying from a boost of more than 15% to the incomes of the poorest tenth of the population to a loss of nearly 3% for the richest tenth". That says, vaguely and almost incomprehensibly, something rather different to what Hain claimed.

Much more specific and reliable are the latest figures from the Inland Revenue on the distribution of marketable wealth - which includes rent, dividends and other windfalls of capitalism. They show that the richest 1% of the population had 20% of the nation's wealth in 1996 and, thanks to Peter Hain and New Labour, 23% in 2001. This is a bigger, quicker leap in the booty of the mega-rich than anything achieved under any other postwar government, including Thatcher's. As for the poorest half of the population, they had 7% of the wealth in 1996. And after the first four caring years of New Labour, their share dropped - to 5%."

The newspaper article contains seven paragraphs, nine percentages, 13 dates and 538 words. Newspaper articles are often written 'from the top' so that the reader receives most information early on and need not read to the end. However, in this case, without reading to the end you cannot understand the beginning. Most readers do not read to the ends of most articles which they begin, especially ones which are complex, and this article is unusually complex although its author has written about as clear an account of events as is possible. Five people are involved:

  1. Paul Foot - journalist who specialised in exposing corruption in the UK.
  2. Peter Hain - MP and at the time Labour leader of the House of Commons.
  3. ONS spokesperson - nameless representative of the national statistics agency.
  4. IDS specialist - nameless 'independent expert' from a private company.
  5. Hain's spokesperson - nameless governing political party worker.

What do you believe motivated each of the actors in this story? To what extent are the various motivations a combination of overly suspicious minds, over-enthusiasm, incompetence, maliciousness, disingenuousness or other motives? For instance, does the rich becoming richer in terms of income necessarily mean that the gap between rich and poor is becoming wider? Does Paul Foot confuse income with wealth and with what significant implications, if any? With such questions in mind write a fictional letter to be published in the newspaper from the point of view of either Peter Hain, the ONS, the IDS or Hain's spokesperson either objecting to the piece or supporting it. Write the letter in pairs and then, as a class, act as the Letters Editor of the newspaper and select those three or four which read best for publication (vote on it). Remember that letters to newspapers tend to be very short and to the point. Now each write a fictional reply from the point of view of Paul Foot to one of the letters and select the letter that you think is most convincing as a group by vote. Finally, if you find this interesting, find out what has happened to trends in income and wealth in the UK since this article was written. If you can find this out, perhaps using the same methods which Paul Foot used, can you then write an article on it which is clear, well-written and could potentially be published?

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All available data and further material can be found in the Data section.