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Michael White's political briefing: The long battle against poverty is not over

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  • Michael White's political briefing: The long battle against poverty is not over


    News that a respected international analyst like the OECD had reported that inequality and poverty "fell faster in the UK" than in any comparable country in the first half of the decade briefly led BBC news bulletins yesterday before being blown away by August high jinks on Corfu.
    But the Watergate maxim "follow the money", which George Osborne invoked in his Corfu defence, also applies to poverty. Though few voters seemed to be listening, James Purnell, the works and pensions secretary, put out a statement claiming that the OECD's findings show "a real change for the better in reducing inequality" - thanks to progressive taxation, active efforts to get people back into work and the impact of redistributive policies on working families.
    In his decade as chancellor, Gordon Brown was as wary of using the "R for redistribution" word as he now is to use "R for recession"; hence the Tory "stealth tax" jibe. And the OECD verdict is not wholly flattering. Yes, income inequality rose in 2000-2005 in Canada, Germany, Norway and the US, where George Bush was cutting taxes for the rich, while it fell in Mexico and UK.
    Income poverty and child poverty fell. But the OECD, often critical of Britain's unbalanced, finance-driven economy, notes that it remains a country of low social mobility, highly unequal incomes and jobless households. All are bad for social cohesion, education and health.
    Did Labour miss a trick in not trying harder to trumpet this modest success all the same, perhaps because Brown has told Whitehall that the fight against global economic collapse is the only fight that currently matters? It would seem so. Mark Pearson, an OECD report author, calls the change "quite remarkable."
    Purnell's department knew the report was coming and now claims it proves that the UK is "in the forefront of the battle against poverty and inequality". An exaggeration, but OECD's emphasis on skills, education and jobs all chimes with Brown's agenda since 1997.
    But poverty analysts in thinktanks like the Institute for Fiscal Studies still urge caution. Brown has been very lucky in the OECD's 2000-05 choice of years, they say. In 1997, Brown stuck to inherited Tory spending plans, squeezing benefits and pensions while the stock market boom pushed up the incomes of the rich until the dotcom bubble burst.
    After 2000 his tax credits scheme came on stream. Together with the New Deal drive to get the long-term unemployed back to work it boosted the income of families with kids. After the 95p pension rise controversy, pensioners also got help. Tax revenues remained unexpectedly buoyant, helping to finance better schools and the NHS; they help reduce inequality too.
    So the poorest - those below 60% of the median post-tax household income (£19,646 in 2006-07) - gained ground on the middle class. The rich motored on. By general consent among experts, that modest progress has probably stalled since 2005 as those tax revenues faltered. Alistair Darling's 2008 budget was good for poor children. But the long battle against poverty is far from won.


    guardian.co.uk © Guardian News & Media Limited 2008 | Use of this content is subject to our Terms & Conditions | More Feeds

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