This essay, on the failure to tackle inequality, was my Observer column this week. It was published on 10 January 2020, under the headline “Lives are falling apart. Enough talk about inequality, it’s now time to act”.
Inequality. Everyone agrees it’s bad. Everyone agrees that the pandemic and lockdowns have exacerbated inequality. And everyone agrees that something must be done to reduce it. So, what has been done? Nearly a year into the pandemic, and at the start of the third national lockdown in England, the answer is very little.
Consider one of the most basic issues in a pandemic – sick pay. Decent sick pay allows those who may be ill to take time off work without having to worry about their next meal or being forced to carry on working to make ends meet. Those in lower-paid jobs are the least likely to be able to work at home and therefore most likely to catch the virus and most in need of decent sick pay.
The UK has among the meanest rates of statutory sick pay in the developed world. At £95.85 a week, it is significantly less than the national minimum wage. The average mandatory paid sick pay among OECD countries stands at around 70% of an employee’s wage; in Britain, it is around 25%.
In one of the most absurd anomalies of our benefit system, two million people who earn less than £120 a week earn too little to be eligible. Those who most need sick pay are barred from receiving it – because they are too poor. The self-employed, another group particularly dependent on adequate statutory sick pay, are also ineligible.
Most workers rely on employers to top up state provision. This skews inequality even further – three-quarters of managers receive employer top-ups; barely a third of manual workers do.
Half of all OECD countries have raised statutory sick pay during the pandemic. Not so Britain. The Resolution Foundation has suggested a simple solution – to allow employers to use the Job Retention Scheme for workers who are ill or need to self-isolate, giving them 80% of their previous earnings, as well as an extension of the Self-Employment Income Support scheme to cover short periods of illness.
Equally importantly, though, is a long-term solution that raises sick pay to a decent level – the kind of level that most rich countries already pay.
If sick pay is an issue on which the government has refused to meet the challenges of the pandemic, homelessness is one in which a model scheme piloted last year has been abandoned. Last March, in the first national lockdown, the government launched its “everyone in” programme to provide housing for all rough sleepers. More than 15,000 people were placed in hotels, student accommodation and B&Bs. It was, said Matt Downie of the charity Crisis, “one of the most extraordinary things to have ever happened in homelessness in this country”.
The scheme was ended in May. Last week housing minister Robert Jenrick urged local councils to “redouble their efforts” to house rough sleepers. But while the government has made various pots of money available, including £10m last week, funding remains inadequate. Not only are many of the homeless now back on the streets but job losses due to Covid and lockdowns have created a new generation of rough sleepers. In London alone, figures suggest there were 4,200 more rough sleepers from April to June last year, an increase of a third on the same period the previous year and of nearly two-thirds on 2018.
Then there’s the issue of inequalities exposed and exacerbated by school closures, especially the “digital divide”. It’s one reason the government was desperate to keep schools open. However, there was no adequate plan for doing so safely, nor alternative plans in case schools were forced to shut down, as has now happened. The number of laptops the government promised for disadvantaged pupils has already been slashed by 80%. Pupils who cannot adequately access online learning can physically attend schools. This means that students and their families in poorer areas will be exposed to coronavirus in a way that those in more affluent parts will not be.
Tackling poverty and inequality costs money, of course. The Resolution Foundation calculates that extending statutory sick pay to the 2 million people who earn less than £120 a week would cost around £200m. That’s around half the money spent just on consultants for the derisory test-and-trace scheme. The cost of increasing statutory sick pay to £160 a week, to cover on average 50% of a claimant’s wage, would be around £2bn annually. On a monthly basis, that would be less than a quarter of what the Treasury spent on the “Eat Out to Help Out” scheme – which lasted 28 days.
The issue is less about money than about priorities. What kind of society do we want? What are the values that will define it? Whose lives matter?
There is also an increasing amount of online literature regarding the negative relationship between inequality and economic growth.
The main argument being that high inequality reduces investment in human capital, which your article highlights.
However, the elephant in the room is who is going to pay for the much needed financial transfers. When is the middle class affluent Left going to step up and actively call for tax increases on themselves.
Here shows that the middle class are paying disproportionately less tax in relation to their income share.
Unless this socio economic group steps up within the Left then there will be no movement on the Right despite all the procrastination about poverty and the harmful effects of inequality by this very same grouping!