Andrew Wilson: This review may bring real answers on tacking inequality

The National, by Andrew Wilson
16.05.19

IN most countries, but certainly in the UK, politics struggles with the long-term, seemingly intractable issues. Budgets are set every year in one of the most partisan and political events on the calendar.

Politics gets lost in the froth and the noises of the waves, hollering into a wind that can change direction in an instant. The egos of individuals too often trump the general interest, as any cursory examination of Twitter would show.

The Brexit impasse is an obvious example of the cultural inertia in British politics that seems almost irredeemable. A 1970s political system unable to cope with the nuance, pace and challenges of 21st-century life. And one that is proven to be ludicrously inadequate for forging agreement on the biggest constitutional challenge of the moment. Too many games are at play: leadership ambition, party electoral ambition, splits within parties, a ferocious media, unchecked and unpardonable populism.

Throw all of that into the pot of Westminster, apply the lens of unflinching scrutiny and the system, the actors, the officials, the way we have governed ourselves for decades and more is left bereft, incapable, wanting. And the electorate can sense it by smell, taste, sight, sound and touch.

And that, remember, is with a deadline to meet and a referendum result to act upon. But because of the dishonesty and shallowness of the referendum itself (with no prospectus on what would happen) its result that “must be followed” now carries no majority in parliament or in the country for any road ahead. Utterly risible. So, what chance then the inter-generational challenges we face on climate and inequality? Both threaten the fabric of society in an existential way. The first could destroy us all. The second is destroying us now, in real time.

It was therefore cheering, to me at least, to hear of this week’s initiative by the Institute of Fiscal Studies (IFS), funded by the Nuffield Foundation, to launch a five-year review described by its chair as “the most comprehensive scientific analysis of inequalities yet attempted”.

Sir Angus Deaton is a remarkable person. Born in Edinburgh, he has a stellar international academic record in the field of economics. In 2015 he won the Nobel Prize for his attempt to enhance the understanding that economic policy to reduce poverty could only be designed once individuals’ consumption choices were understood.

Responding, Deaton said he was just “someone who’s concerned with the poor of the world and how people behave, and what gives them a good life”. So, even if you knew nothing of his track record, that quote alone offers a clear perspective.

The review’s mission is a colossal and inter-generational one.

I would encourage them to consider many updates along the way with milestone reports, interventions, observations and comment. Policymakers across the UK would do well to follow this in great detail.

When the First Minister’s new Social Justice and Fairness Commission is launched, I would encourage it to watch the Deaton Review closely as it progresses. The problem it is tackling is as plain as the nose on your face to anyone who spends any time in the non-metropolitan communities of Britain and the disadvantaged areas within the metro areas. Poverty and inequalities.

The facts: the UK is near the top of the international league on income inequality and is riven by generation, geography and gender, by birthplace, education; wealth and inequality have changed little in a quarter-century, following a rapid deterioration in the 1980s.

London has boomed, this much we know, but through its magnetic pull on workers from outside, not because of productivity. Real output has grown twice as fast in London as in other regions in the past 10 years, but output per worker in London actually fell. So those arguing that trickle-down from London’s great engine is good for the UK overall? Well, they are not keeping up with the evidence.

In launching the review, Deaton identified the chasm of returns between corporate profits and labour wages and salaries. This has meant the economy has grown overall while real after-tax income has been flat and falling for the vast majority.

Writing in the Financial Times, he said that the work would “draw on a wide range of views from economics to demography, history, philosophy, politics, epidemiology and sociology”, as well as from other countries around the world. Excellent. It seems certain the review will tell some home truths to policymakers based on hard facts. There will be controversy, this much seems certain, because anyone taking on the status quo meets with the fire of vested interests. But it will also be modern, forward-looking and nuanced.

It is unlikely to look to historic dogma for its solutions, especially where history has proven them to be worthless in the face of the realities of life and human nature. So, all in all, this process gives me heart that the game can be raised on the most important human issues of the day.

An equivalent review of UK taxation was undertaken by the similarly wonderful late Sir James Mirrlees, another Nobel Prize-winning Scot, for the IFS in 2010.

It claimed the system was inefficient, complex and frequently unfair. Not much has been done to resolve that by UK policymakers since, which, of course, is the big risk of any initiative such as the Deaton Review.

Which brings me to my inevitable political point. The governing system that is failing in real time with Brexit has been failing for a long time on inequalities, taxes and myriad other issues.

The challenge for all policymakers is how to resolve this. Scotland has its own government and parliament and we should not wait for Westminster to get better on these issues, just as we have not on the climate emergency.

And in the meantime, all parties in Scotland must find a way to step out of the hollering partisan noise to listen to initiatives like Deaton and Mirrless, and figure what might be done now, no matter how far along the road you wish to see Scotland’s story travel.

The case for Scotland to take full responsibility for all its own affairs, along with a prospectus for handling the transition, is now clearer than ever before. What is missing is any prospectus for what the UK status quo offers. It just didn’t exist. All the energetic and well-funded pro-Union campaigners bring is criticism and cant while the reality of the system they remain wedded to burns.