One by one, individual policies have been brought into the light of public scrutiny and debated over by the great and the good: a cut to the 50p tax rate for those earning over £150,000, regional salary rates for public sector workers, and a freeze in the minimum wage for those under 21.
The expected budgetary measures conform to the Coalition’s guiding mantra that we must all share the burden of reducing the deficit. However, take a closer look at what is being proposed- and the spin doled up by the press- and it becomes clear that this budget is a recipe for making the poor poorer and the rich richer.
Reducing the top-rate of tax for the top earners in this country benefits the 275,000 tax payers who earn over £150,000 a year. It is true that those living on an income at the lower end of this spectrum are not the ‘super rich’, and that many are professional men and women like doctors and business executives who power the economy and serve society. However, it is also true that an income of £150,000 a year is seven and a half times greater than the median wage earned in this country (£20,801, calculated in 2009). To put this another way, anyone with a disposable income of £1million (approximately 13,000 Britons) has the funds available to furnish 48 individuals with the median salary for an entire year. The tax cut will pump anything from 2.4 to 6 billion pounds back into the pockets of this wealthy elite. The rich will get richer.
Meanwhile, the proposed measures to alter the wage rates of public servants depending on where they work will affect millions of workers in the North-East, North West, York & Humber, and Midland regions, where take-home pay is between 9% to 15% less than the UK average. A quick exercise in basic reasoning suggests that if you further reduce the earnings of people living in the poorest regions in the UK, they will have less money to spend on goods and services in the region, further depressing economic growth. The poor will get poorer.
Freezing the minimum wage for workers under 21 will have a similar effect. Young people will have to subsist on a poverty wage of £4.98 per hour while the costs of education and transport continue to spiral upwards. The minimum wage already does too little to provide workers with a decent standard of life- by making it discriminatory to the very section of the population suffering the highest level of unemployment, the Coalition is sending a strong message that it does not have a place for young people in its recovery programme.
What is interesting is that the press and the government seems to be continually siding with the rich over the poor, presenting strong arguments to abolish measures ‘oppressing’ the 1% of the workforce while rubbishing claims that this budget will persecute the 21% in the public sector, or the hundreds of thousands of economically active young people.
Why is this? Maybe it’s because we are pre-programmed to affiliate with the rich rather than the poor. After all, they’re the successful ones we all want to emulate. They’re the ones living the lives we so desperately strive for.
Adam Smith, enlightened political theorist and darling of liberal economists the world over, recognised this ‘natural’ affiliation himself, stating in his first work, The Theory of Moral Sentiments:
“When we consider the condition of the great…it seems to be almost the abstract idea of a perfect and happy state. It is the very state which, in all our waking dreams and idle reveries, we had sketched out to ourselves as the final object of all our desires. We feel, therefore, a peculiar sympathy with the satisfaction of those who are in it. We favour all their inclinations, and forward all their wishes. What a pity, we think, that any thing should spoil and corrupt so agreeable a situation!”
Smith recognised that, as bizarre as it sounds, that people are attuned to pity the rich- because we sympathise with them. Their successes are our successes. Their struggles are our struggles.
The plight of the poor is shuffled out of public view because we do not want to feel the guilt that comes from observing their sorry situation. We don’t want to feel bad- and that’s natural. Unfortunately, it also means that we’re far more willing to back calls to take the boot off the neck of millionaires than ask for similar respite for those earning the median wage or less.
It doesn’t matter if you agree or disagree with Smith’s theory. What matters is that there are many people out there happy to side with the rich over the poor. It will take intensive advocacy and determined campaigning to reverse this trend, but the struggle will be worth it if we can change the headlines to champion those who are truly in need.
Louie Woodall is Assistant Editor of the Young Fabians Blog