Extreme Inequality

Part of the debate – in the Scottish Parliament at on 26 November 2014.

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Photo of Kenneth Macintosh Kenneth Macintosh Labour

Like many members in the Parliament, I have always thought of myself as a progressive politician. I was brought up in the expectation that progress—economic, social and political—was not just desirable but almost inevitable and that, with our advances in science and technology, our society would advance in mutual prosperity, understanding and tolerance.

I have not lost my optimism that we can make it so, but the evidence from the past 30 or 40 years has provided a salutary reminder that we have to choose to make it so. Yes, we are a far wealthier nation and, if we measure wealth in material goods—televisions, mobile phones, cars—it is clear that we have prospered. However, on so many other measurements, the gap between rich and poor, between the haves and have-nots, has increased.

Audit Scotland has pointed out that, while our overall life expectancy has increased over the past decade, the better-off have benefited most. The difference in average life expectancy between women living in the least deprived areas in comparison with women living in the most deprived areas has risen from approximately 6.5 years to approximately 7.5 years. Similarly, the overall death rate from cancer fell by 12 per cent between 2001 and 2011, but the gap between the most and least deprived areas has again widened.

It is not just on health that we have failed to make progress on tackling inequality. We are proud to have one of the most equitable education systems in the developed world, yet the findings of the 2007 Organisation for Economic Co-operation and Development report on the issue still hold true—in Scotland, who you are is far more important than what school you attend, so far as achievement is concerned.

The new campaign from Oxfam and the report “Even it up: Time to end extreme inequality” are a powerful and welcome reminder of the task that is before us. In fact, the report offers some consolation, in that we are clearly not alone in Scotland, but it is not the consolation that we might want to hear. As the report points out, seven out of 10 people on the planet now live in countries where economic inequality is worse than it was 30 years ago.

The report is full of evidence and research that fascinates and horrifies but which I hope potentially inspires us to action, too. To give just one example, members might be familiar with the line, “We’re all in this together.” It turns out that, as a statement of fact, those words are wider of the mark than even I suspected. Oxfam highlights that, since the start of the financial crisis, the number of billionaires in the world has more than doubled. Here we are, knee-deep in austerity and trying to do what we can to mitigate the impact of the welfare cuts and yet, with every day, the obscenely rich are getting obscenely richer. As a sobering contrast, how many members read the report from the Trussell Trust earlier this week that revealed that the number of Scots turning to food banks in the last year has also more than doubled?

I cannot do justice to the many juxtapositions between rich and poor that are illuminated in the report. However, the key point is not simply that such inequality is offensive and morally repugnant but that it is damaging to us all. It is damaging to poverty reduction, it stifles social mobility, it undermines economic growth, it holds us back in the fight against climate change and it compounds one of the most long-standing and deep-seated inequalities: that between men and women. Many of us have taken encouragement from the new First Minister’s implementation of a 50:50 approach to gender balance at Cabinet level but, as I reminded members last week, just as we slap each other on the back for our commitment to progressivism, the pay gap between men and women in this country is widening again. If we are not constantly aware of the hill that we are trying to climb, we will slip backwards.

Extreme inequality reveals itself in many destructive ways, from poor health and illiteracy to levels of violence, but I want to return, as the Oxfam report does, to the central issue of economic inequality. The global scale of the problem suggests that we need to take action at global level. Earlier this year, Oxfam and others reported that the combined wealth of the 85 richest people in the world is the same as the wealth of the poorest half of the world’s population, which is approximately 3.5 billion people. One answer that has been suggested by economists such as Thomas Picketty is a wealth tax. Oxfam has calculated that a tax of 1.5 per cent, for example, on the wealth of the world’s billionaires would raise £74 billion, which would be enough to get every child into school and deliver health services in the poorest 49 countries.

While supporting those global initiatives, we should look closer to home. In Scotland, three families have more wealth than the poorest 20 per cent of Scots put together. Another statistic that is also quoted by ministers is that fewer than 500 people own more than half the land in Scotland. A land reform bill will come before the Parliament in this session. Do we not need to ask ourselves how we can use that piece of legislation to tackle that particular inequality?

Poverty wages are clearly central to the issue. I doubt that I have to convince anyone in the debate about the importance of implementing the living wage, but what are we doing about wage differentials? We cannot address extreme inequality if we simply help those at the bottom—we need to look at the gap between what those at the top earn and what those same people pay their employees. When I proposed using the Procurement Reform (Scotland) Bill to minimise wage ratios between the highest and lowest paid, the then Deputy First Minister spoke warmly about such an approach and then promptly asked colleagues to vote against it. I will not pretend that there are easy answers to any of these complex issues, but the point is that we could take a different approach.

Here in Scotland for example, the finance secretary has imposed a wage freeze or a 1 per cent cap on public sector workers for each of the past four years, yet our university principals have enjoyed a median increase of more than 4 per cent on salaries that were already approaching or exceeding a quarter of a million pounds. Need I point out that our universities are the same publicly funded institutions that are currently employing staff on zero-hours contracts?

The Equality Trust has estimated that none of the large companies that bid for public service contracts pays its chief executives less than 59 times United Kingdom median earnings. We are using public money not to reduce inequality but to increase it. Is it really the case that we want one rule for the rich and another for the rest of us?

This is not about envy. It is not about suppressing ambition or capping aspiration. It is not even about blame. It is about balance and reasonableness. It is about ending exploitation. It is about recognising that our communal and individual wellbeing and prosperity depend on our taking action to reduce inequality.

We like to portray ourselves as a progressive country, but if we are truly to become the progressive beacon that we want to be, we need more than warm words and good intentions.

I could not wish for a more timely occasion to hold this members’ business debate than the day when the Government outlines its programme for government, because Oxfam has highlighted a programme to which we can all sign up. Here is a vision for Scotland that has the potential to unite us across party lines and that can unite civic Scotland, businesses, trade unions, churches and voluntary organisations. Now is the time to end extreme inequality in Scotland.

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Cabinet ministers are appointed by the prime minister and chosen from MPs or peers of the governing party.

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