Four locked doors
What it will take for the Burnham government to build a fairer Britain
Last week I wrote about the three types of policy responses to wealth inequality – redistribution, predistribution and putting guardrails in place to reduce its spillover impacts on our economy, society and democracy. But how can the Burnham administration overcome some of the barriers to change that have stymied previous attempts to tackle inequality, in some cases before they have even been drawn up?
In this post I’ll look at four such barriers – four locked doors – and discuss where governments can find the keys that open them. In doing so I’ll be previewing some of the arguments in the final section of my forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen.
On his first day in Downing Street, Andy Burnham gestured at the famous black door behind him and said that his first instruction as Prime Minister would be to end rough sleeping. That was canny. It was concrete, it was human, it was achievable yet also sounded ambitious. But of course rough sleeping is the visible tip of the much bigger problem of homelessness, and homelessness itself is a symptom of a society marked by huge levels of economic inequality in which what you own matters more than what you earn. Tackling these more systemic problems is a much bigger challenge, not because we don’t know what to do (see previous post), but because of a set of structural barriers to making progress on inequality that have repeatedly stymied attempts made by recent governments to do anything even remotely meaningful.
The first barrier is vested interests. Let’s take one example. Labour’s 2024 manifesto promised to close the carried interest loophole, which allows some private equity fund managers to pay lower rates of tax than their cleaners. Under pressure from the private equity industry in the period leading up to the 2024 budget, ministers blinked, and a few thousand fund managers kept around £500 million a year between them. “I don’t often drink these days but a few of us did go out for drinks to celebrate,” one private equity boss said afterwards. Vested interests rarely self-describe as such, presenting themselves instead as apparently reasonable and deeply well-informed concerns about unintended consequences for efficiency or growth, or the difficulty of implementation. But history often shows us that those concerns were misplaced, wilfully or otherwise. Much of the panic about capital flight that greeted non-dom reform was overblown and contradicted by the evidence. Britain has the third-largest lobbying industry in the world and one of the most opaque. Introducing a statutory register with teeth and tackling the revolving door between politics and industry would make a big difference. So would a cap on political donations, in a country where nearly a quarter of party nominations for peerages between 2013 and 2023 went to people who had collectively given over £58 million to those same political parties.
The second barrier to change is that ministers are waiting for permission from the public that will never arrive. When I spoke to Sir Vince Cable about the mansion tax that the Lib Dems tried and failed to get past its Conservative coalition partners, he was clear that the decisive obstacle was not so much pushback from wealthy donors as concerns over the depth of public feeling about taxing property. Even though most people will never own a £2 million home, many still saw the proposed mansion tax as an attack on their own aspirations to become wealthy and to attain financial security. But this is a constraint on how a policy is designed and communicated, not on taking action. Sam Freedman described to me the feedback loop by which politicians, fed an image of the conservative average voter by the right-wing press, pander to it, harden it, and then treat the result as proof that they were right. Tony Blair was willing to sell policies to voters and argue with them when necessary; the Starmer government preferred to ask them what they wanted. Research by Sarah Kerr and Michael Vaughan at LSE suggests that people are more supportive of redistribution when the very wealthy are seen to behave anti-socially, through tax avoidance, or buying political influence, or profiteering. Politicians can call out this wealth extraction, naming the behaviours rather than necessarily blaming the wealth.
The third barrier is that we do not treat inequality and other big structural problems as a strategic risk to the UK. On the morning of 7 July 2005 I was two weeks into a civil service job working on emergency preparedness when the bombs went off, and I spent the following three days in COBRA collating casualty numbers. What I took from those years of working on national resilience is that we are fairly good at planning for acute risks, but hopeless at thinking about chronic ones. Wealth inequality is a chronic risk in its own right and, worse, a risk driver: it increases the likelihood and impact of social unrest, climate inaction, economic stagnation and democratic decay, while corroding the societal resilience that we need to respond to each of those risks. The government’s recent Chronic Risks Analysis is a step forward, but even it mentions inequality only obliquely. Even KPMG stated in 2022 that social inequality can destabilise supply chains, trigger political instability and jeopardise a company’s social licence to operate. What would it look like to join up work across government on inequality with work on risk and resilience and on strategic policymaking?
The fourth and final barrier is short-termism. Burnham has promised a ten-year national plan, which is more ambition than we have seen in a while, leaving aside Starmer’s missions. However, even ten years is little more than an extension of the present, a time horizon that stop at a point when today’s leaders might theoretically still be in office. Wales passed its Wellbeing of Future Generations Act in 2015, and former First Minister Mark Drakeford told me that the legal duty to weigh every Welsh government decision against its impact on future generations has changed both the culture and the practice of politics there, and that the effect would be greater still in Westminster, where ministers change jobs more frequently and the pressure to prioritise short-term needs is even greater. A Future Generations Commissioner, reporting to a parliamentary committee for future generations, would be a sensible first step with a long reach.
We’ll get a sense of how seriously this new government is thinking about tackling these barriers when the next budget is unveiled on 28 October. Burnham’s signals so far have been mixed. On taxing wealth, for example, he is open to revisiting capital gains tax, has seemingly ruled out reforming stamp duty, and isn’t prioritising a wealth tax. And the new Chancellor John Healey has been playing his cards close to his chest. Let’s hope that they choose to act, and to tackle the barriers to progress, remembering Thomas Piketty’s line that inequality “is neither economic nor technological; it is ideological and political”. Tackling inequality will ask something of more than just the top 1%: many of us in the wealth-owning half of Britain, myself included, have done nicely out of rising asset prices and will have to give something back. It would be better for our political leaders to say as much, and to make a compelling argument, than to pretend that the bill will fall entirely on someone else. Our leaders need to show real political courage; our job is to hold their feet to the fire.
This article previews the final section of my forthcoming book, The Fair Necessities: Why We Need a Fairer Britain and How to Make It Happen, which is out on 8 September with Policy Press; you can pre-order a copy and sign up to a launch event using the link.