From the TUC

David Cameron’s Big Society Speech

11 Nov 2009, by in Politics, Society & Welfare

David Cameron’s Hugo Young Lecture is the closest any Conservative has come to explaining how they expect reactionary methods to achieve progressive ends. He fails, but the speech should not be written off and it shows that he has – at least rhetorically – broken with the Conservatives of the 1980s and 90s, who didn’t give two hoots about inequality.

In the past, presented with the evidence of a massive increase in inequality and relative poverty on their watch, Conservative politicians reacted by defining poverty out of existence. In 1989, John Moore (who was the Secretary of State for Social Security in the Conservative Government) argued that absolute poverty no longer existed in Britain, and that relative poverty was just another name for inequality, which was the engine of capitalism, delivering higher living standards for all.

From the perspective of a follower of Hayek or Ayn Rand, this is still a perfectly reasonable position. What is genuinely interesting and encouraging is that this is not what the Conservatives say today. Iain Duncan Smith’s Centre for Social Justice has explicitly criticised Moore’s speech, criticised the “outdated Tory nostrum – that poverty is absolute, not relative” and presented a clear Conservative case for focusing on relative poverty:

In an age when absolute poverty a real danger for millions of people, the safety net represented an enormous advance. But in our own age, our ambitions should be higher. As individuals we should all have the chance to move forward and as a nation we should move forward with a sense of cohesion.” (The State of The Nation Report- economic dependency, Centre for Social Justice, 2006, p 4.)

This report was produced by a working group whose deputy chair was Debbie Scott – welcomed to the Conservative front bench in David Cameron’s speech. This is not an isolated example: when he was the Shadow Minister for Charities, Greg Clarke repeatedly announced that the Conservatives have abandoned Moore’s arguments. Indeed, if you Google for Moore’s speech you will find that most references to it in the last two or three years are from Conservatives eager to show what they no longer represent.

That new line of thinking is well represented at the start of Mr Cameron’s lecture. He quotes the research by Richard Wilkinson and Kate Pickett on the negative effects of inequality – and does so accurately:

“So the best indicator of a country’s rank on these measures of general well-being is not the difference in wealth between them, but the difference in wealth within them.”

Note that David Cameron is talking here about inequality of outcome, not of opportunity, or life chances or any of the other formulations that have been used as cover for abandoning equality. One has to admire the way Mr Cameron has burned his bridges; it will be very difficult for future Conservative politicians to escape criticism by defining poverty out of existence. And this change of approach has been welcomed by anti-poverty groups like Oxfam.

Criticisms of the Government

David Cameron’s discussion of how a Conservative government would go about reducing poverty and inequality is much less satisfying.

His first step is to point to “Big Government Failing”. Immediately, however, he faces a difficulty because he cannot claim that the current Government has failed to make any difference to the numbers in poverty. As the Households Below Average Income statistics show half a million children have been taken out of poverty and (depending on the measure you use) either 200,000 or 900,000 pensioners.

Some of the facts Mr Cameron uses to make his case open up difficult questions for the Tories. He rightly points to the bottom ten per cent of the distribution, whose incomes have been falling, and to the growing numbers in severe poverty. The difficulty is that a large proportion of them are people with no children at home and no paid jobs so they have been left behind by the Government’s anti-poverty strategy of getting people into jobs and only offering higher benefits to those with children. Those of us who have been campaigning for higher benefits have a right to point to their plight; the Conservatives have never said that out-of-work benefits are too low.

Mr Cameron points to the slowing down of social mobility as revealed in research for the Sutton Trust. This is true, but it is difficult to blame the Government for this and the most recent evidence for the Trust found  that, after a period when social mobility declined, “changes in social mobility may well have flattened out”.

But what are they going to do?

In the past, Mr. Cameron has signed up to the Government’s objective of ending child poverty, though he has added the rider that the Conservatives would not necessarily be bound by the timetable of achieving this goal by 2020. Some people are worried that David Cameron did not repeat this promise last night – on the grounds that you can’t trust a politician’s promise that is more than 6 months old.

I may be naïve, but I’m a little less concerned. The Government is enshrining the objective in the Child Poverty Bill,  which means that a change of policy would require the Conservatives either to oppose the Bill or to include a pledge to repeal it in their manifesto. Both would cost Mr. Cameron political support and I don’t think he is in the business of throwing away votes when he doesn’t have to.

Mr. Cameron says that reforms in three areas will give this country “some prospect of standing up to those powerful global forces that lie behind rising inequality”: families, schools and welfare. Again, he is probably right, reform of the welfare state is vital to lifting people out of poverty, longer term reforms affecting families and schools are essential if we want to stop people falling into poverty.

But the nature of his reforms is unconvincing. In each area he wants to promote responsibility, encourage activity by civil society and reduce the role of the state. He repeatedly attacks the idea that redistribution is the answer, though he never shows how this element of the ‘Big State’ increases poverty and inequality.

Now, pointing to public sector blunders is easy enough. What David Cameron fails to do is to show that, if the state is smaller, if there is less redistribution, the end result will be not only fewer blunders but also greater equality.

The first point I’d bring forward is that restrictions in access to benefits and reductions in their value will hit the poor hard. Tax credits and benefits make up a majority of the income of people at the bottom end of the income distribution:

Proportion of the gross income of non-retired households with children that came from tax credits and other cash benefits, by decile groups, 2007/8 (source)

Decile Gross income from tax credits and other cash benefits
Bottom 59%
2 49%
3 35%
4 18%
5 15%
6 9%
7 6%
8 5%
9 4%
Top 2%

Unless something else happens at the same time, cuts in benefits and tax credits will drastically reduce the incomes of the poorest.

Secondly, redistribution makes a huge difference to the degree of inequality in this country. As we showed in our last Recession Report, before taxes and benefits are taken into account, average income in the top decile is more than seven times that in the bottom decile, but this ratio is halved when benefits are taken into account. Lower taxes and reduced spending on benefits and services will increase the level of inequality.

Thirdly, David Cameron’s argument rests on remarkable optimism about how likely it would be that the retreat of the state would leave the field open to more effective action to reduce poverty and inequality by non-state actors. To the extent that civil society organisations fulfil welfare state functions at present, they do so on the basis of massive state subsidies. There is no significant representative of the third sector calling for a reduction in these subsidies, and none of the organisations that provide services believes that they could do so on a large scale without state funding. Mr. Cameron likes the idea of ‘nudges’ from the Government to encourage ‘big society’ to take over the load, but it is hard to believe that voluntary activity would ever make up for massive reductions in state activity.

Haven’t we tried this before?

If Mr. Cameron were asking us to have faith in a revolutionary new way of organising economies and societies it would be hard to agree. In fact, this is an approach that has already been tried. Benefits and services were repeatedly cut in the 1980s and the end result was a massive increase in inequality:

Inequality (Gini coefficient) 1979 – 2007/8

gini

It was the same story for child poverty:

Number of children in poverty (millions)

cpoverty

As Inspector Frost would say, the Conservatives have got ‘previous’ on poverty and inequality. If they want us to believe that they are actually reformed characters they need to change their modus operandi.

One Response to David Cameron’s Big Society Speech

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