Equality under Blair

What has been Blair's impact upon income equality? This little table, taken from this pdf, gives the answer.
It shows that very little has changed. The Gini coefficient for post-tax incomes has fallen just two percentage points. But at 36%, this is higher than it was between 1980 and 1987. Inequality, then, is greater at the end of Blair's premiership than it was under most of Thatcher's premiership.

What's more, all the fall in inequality since 1996-97 was due to a fall in "original" (market) incomes. State intervention today cuts the Gini coefficient by 15 percentage points, exactly the same as it did in 1996-97.
Why has there been so little movement? It's not, perhaps, for want of trying. In this speech, Blair declared:

Our goal is a Britain...in which we continue to re-distribute power, wealth and opportunity to the many not the few, to combat poverty and social exclusion,

And many policies - the minimum wage, the pensioners' minimum income guarantee, tax credits - have been aimed at cutting inequality.
Nor is it because the Gini coefficient mismeasures poverty. The share in post-tax incomes of the bottom quintile has not changed since 1996-97, at 7%.
Could it be instead that managerialist efforts to redistibute income are doomed to fail, because they retain a big state and fail to argue explicitly for overtly redistributive taxes? Or that there's an inherent trade-off between democracy and income equality? Chapters 9 and 12 of a certain book discuss this in more detail.
Shouldn't one lesson of the "Blair era" be that conventional efforts to increase income equality (assuming this to be a desireable goal) will fail?

Comments

[Mark Wadsworth]

In reply to your last question, yes.

What cheers me up even more is the fact that net incomes are rising by 3.6% and RPI is running at 4.8%, so on average people are a bit worse off every year. And those who weren't on the "housing ladder" by the turn of the millenium are right royally screwed.

Bravo Nulab! Well done! What a legacy!

[Matthew]

The ONS suggest the 2% fall in original income inequality was in part due to the introduction of the minimum wage, so the "overt" intervention is hiding other, more successful, intervention.

On the other hand it also says the gini would be 0.4% higher if water charges still counted as taxes, not services.

[john b]

Mark: err, no. GDP growth is quoted in real terms - i.e. after the impact of inflation.

[Mark Wadsworth]

John B, I was talking about net-income after-tax-growth, not real GDP growth, which is a tad less than 3.6%.