17 March 2008

How Inequality changed under Blair, Major and Thatcher.

This was in response to a comment by Snafu in the previous post about the 2008 budget. Add in the extra spending on health, education and public transport by Labour - increasing each by several percentage points of GDP, and we can see how Labour has easily helped the poorest by over £100bn since gaining power.

The figures are taken from page 25 of the Institute of Fiscal Studies report on UK inequality (pdf).

Just to note, the only reason Major's figures are not much worse is that his period is overshadowed by the serious recession of the early nineties where growth in everyone's earnings were hit - the gap between rich and poor was contracted due to the recession. It is much more difficult to reduce inequality during a period of growth.

2.8% p.a growth in earnings over 10 years amounts to around £300bn extra, of which the poorest quintile would have received around £50bn. The extra Labour spending over 10 years on the NHS, education, public transport, social services and tax credits, new deal etc - which disproportionately helps the poorest quintile, amounts to around £1000bn. So we can see how those on the lowest wages have easily been helped by over £100bn.

1 comment:

  1. Neil, first of all, thank you for honouring me with a post all about me!

    How do increases in spending on health, education and public transport mean that the poorest are better off by £100bn? Everyone has access to poor quality healthcare, education and public transport...

    I have no problems with the statistics that you highlight, especially those during the eighties if hard work, ambition and risk are rewarded at the expense of the idle.

    Don't forget that you want to encourage people to move out of the bottom quintile and focus on achieving that rather than rewarding those who remain there.

    If you look at the clips of where Shannon Matthews lives in Dewsbury, they look no richer now than a couple of years ago...