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Miliband’s Bad History

John Rentoul

gini1 Milibands Bad HistoryEd Miliband has an article in The Guardian this morning, which sets out the themes on which he will elaborate in a speech to Progress shortly. It sets out, in stream-of-cliché form, the leader’s strategy. It is to “chart the future” by being “the optimists, the party with a positive, patriotic mission for our country”.

All one can say is that his minders are doing the best they can with the material available.

The article is, unfortunately, based on one important mistake and one minor one. Miliband says:

People see a growing inequality between those at the top and themselves.

Well, they may do. But they would be wrong. New figures produced by the Office for National Statistics this week (pdf, graph above) suggest that overall inequality has been unchanged since 1990 (the higher the Gini coefficient, the more unequal the distribution of incomes).* Miliband goes on to say:

This new inequality may be getting worse under the current government, but it began long before.

It “may” be getting worse now, but we do not know. It did begin long before, though, as the graph shows. It did not begin under New Labour. It happened in the 1980s.

This is not just a historical point, because Labour’s record matters – especially if Miliband wants to repudiate it. A different set of figures published last week by the Institute for Fiscal Studies suggests that inequality rose slightly under New Labour. But the vital point is that, on the IFS’s calculations, the gap between rich and poor would have widened twice as much had it not been for Labour’s tax and benefit changes:

This increase in inequality since 1996/97 came about in spite of reforms to the tax and benefit system which mitigated underlying increases in inequality. Recall that inequality measured by the Gini rose from 0.33 to 0.36. Had there been no tax and benefit changes we estimate it would have risen to over 0.39 (if the 1997 tax and benefit system had simply been uprated in line with prices). Under Labour, spending on benefits and tax credits rose from 12% to 14% of national income. This extra spending slowed the growth in inequality – and was the main reason for the cuts in child poverty.

I do not see how accepting that inequality rose under Labour, when the evidence is mixed, makes political sense. What matters is how much more unequal Britain would now be if it hadn’t been for Labour policy.

The Miliband article ends by celebrating Labour’s “great victories – in 1945, 1964, 1997″. Harold Wilson’s majority in 1964 was four. His “great victory” came two years later, when he increased Labour’s majority to 96.

Update: In the speech itself today, Miliband does recover some ground, saying: “In power after 1997 we did something that few countries managed to do – stem the rising tide of inequality.” That should have been the starting point.

*The income of the top 0.1 per cent has increased in relation to the median, but the Gini coefficient measures the degree of inequality over the whole distribution.

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  • hunfred

    What is it with Mr Rentoul ,why cant he write a coherent article?And, I cant recall Mr Miliband ever calling Rentoul incompetent,(he is more than that,he is bias)so what gives him the right to slag him off all the time.”Minders” what the heck is that when its at ome?”It may be getting worse but we don’t know”?You mean,you don’t know!You see how easy it is,and you get payed for writing this crap?

  • Guest

    “the optimists, the party with a positive, patriotic mission for our country”.

    Talk of patriotism from a zealous euro-socialist really does stick in the craw.

  • Whyshouldihavetoregister

     So when Bill Gates moves to Britain, I get poorer because the gap between rich and poor widens? Or is it that when Bill Gates moves to Britain, we’re all better off because the average income per capita rises? Or is socialism crap?

  • http://cocklesniff.blogspot.com cocklesniff

    Scientists reveal that we cannot warm to Ed Milliband because he is a Golem forged from his brother’s discarded Mini Baby Bell wax wrappers. 

  • Kylo8

     so everyone here’s just going to ignore the facts, that things would have been much worse had the welfare reforms not been made. That what we would be facing now without what Labour did is not only a financial disaster of unprecedented scale, but a social disaster at the same time. Labour were far from perfect, but the Tories would have done all of the bad but none of the good. Instead of spending the money on people they would have spent it on cutting taxes which would have benefited some, but mostly it would have benefited the rich while the poor wallowed and became poorer. The deregulation of the markets would have gone further so the financial bubble would have grown anyway, perhaps bigger. Meanwhile our cities would not have got any attention from Government so the re-vamp of parts of London, Cardiff, Newcastle, Manchester and Liverpool would have been minimal at best. Businesses care little for the quality of public spaces. Admittedly not all of the money was spent wisely, and for that they deserved to suffer but having grown up and seen the transformation of Cardiff from a run-down mess into an attractive modern city there is a lasting legacy there. Perhaps the south of England feels aggrieved at being neglected, but that would be foolish, money was spent, it just doesn’t go as far there. I know that as i have now lived in the South for quite some time, everything is expensive. The lie that has been spread about Labour over-spending is becoming preposterous, there is a case for Labour miss-spending but not over-spending. When you look at the figures Britain was in surplus i.e. spending less than it earned all the way up to 2005, and even then there was a modest increase. Giving labour an over-all spending surplus of 0.1% between 1997 and 2008, something Thatcher never managed. As for our national debt, again, between 1997 and 2008 it remained below 40% of GDP (Thatchers target) the entire period, dipping to 29.33% by 2002 then rising to 36.25% by 2008. Compare that to the historical high of 237.12% of GDP in 1946 and things dont look so bleak.

  • coventrian

      Guess what! From the Mail…
    Sir John Scarlett, who helped draw up the so-called ‘dodgy dossier’ which accused Saddam Hussein of possessing weapons of mass destruction which could be deployed within 45 minutes, has been hired by Norwegian firm Statoil as a ‘strategic adviser

  • http://Firebird.com JunkkMale

    One rather suspects measures have been, are, and will be in place to ensure that some are, as always, a bit more equal than others.

    You could write a book about it.

  • http://twitter.com/AlfTupperDarlin AlfTupperDarlin

    The rise in inequality seems to date from the abolition of grammar schools. Shock! Horror! Who’d have thought it?


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