Social contract killers

Politicians from all parties admit that Britain's social contract is broken; we need to rebuild it if we want a stronger economy and a healthier society

There’s a broad political consensus that Britain’s social contract is broken.

Last week, the Poverty Strategy Commission, chaired by the Conservative peer Baroness Stroud, published a report calling for “a new approach to tackle persistently high levels of poverty”. It argues that the collapse of the UK’s social contract is leaving millions of low-income families “surviving not living”, and called for the development of “a comprehensive, sustainable and fair social contract”.

In the same week, the Liberal Democrats put out a ‘pre-manifesto’ entitled For a Fair Deal. This opens with the observation that “people from all backgrounds and all walks of life are working hard, raising families, helping others and playing by the rules – but finding it harder and harder to make ends meet”, and then sets out five principles for a ‘fair deal’ that amounts to a social contract - and has a decent amount of read-across to The Fair Necessities.

Keir Starmer often talks about fairness and the social contract, despite their low billing in Labour’s Five Missions for a Better Britain (where they are relegated to a mission about ‘breaking down the barriers to opportunity’). And of course the Conservative government’s ‘levelling up’ agenda was a response to the reality that inequalities of opportunity and outcome across the UK could no longer be ignored.

It’s not surprising that everyone agrees, given where the numbers are.

We already know that Britain today is a deeply unfair society, where the social contract of the mid-20th century has broken down:

• People are unable to afford the basics (food, energy, housing, childcare)

• Success in life owes more to luck (such as whether you’re born into a wealthy family) than to effort

• Hard work no longer guarantees a decent standard of living, as many jobs are poorly paid or insecure

• Public services are crumbling while the wealthy aren’t paying their fair share of tax

• Some people play by a completely different set of rules, due in part to the influence of money on politics

We’ve updated the Fairness Index to include the latest statistics on fairness and inequality in the UK. We’ve also added a page comparing the UK to other countries in the OECD (which complements other international data sources, such as the excellent HRMI Rights Tracker). Many other OECD countries, facing similar challenges, have managed to keep inequalities lower and to build fairer societies. The UK has much more to do on the key international indicators:

• The poverty rate in the UK is 22% - the joint 5th highest rate in the OECD (2019)

• The wealthiest 1% of households in the UK own 21% of all wealth - the 5th lowest % in the OECD (2021)

• The top 1% of earners in the UK earn 13% of all income - the 14th highest % in the OECD (2021)

• Tax revenue is equivalent to 33.5% of GDP in the UK - the 17th lowest proportion in the OECD (2021)

• The UK’s ‘egalitarian democracy’ score (V-Dem) is 70.5% - the 16th lowest score in the OECD (2022)

But agreement about the problems isn’t enough - we also need a positive vision for the future, and a consensus about how to get there.

We need a new social contract for the UK, to ensure that everyone benefits from The Fair Necessities:

• FAIR ESSENTIALS: Everyone should have their basic needs met so that no one lives in poverty, and everyone can play a constructive role in society (guaranteeing economic security for everyone)

• FAIR OPPORTUNITIES: Everyone should have a decent chance to succeed in life, so we should remove the key barriers that prevent people from having equal opportunities

• FAIR REWARDS: Everyone’s hard work should be rewarded on the basis of their contribution to our society and economy

• FAIR EXCHANGE: Everyone should contribute to society by paying the taxes that they owe, and in return they should be supported by society when they need it (pooling risk across society more effectively)

• FAIR TREATMENT: Everyone should be treated according to need, enjoying equal respect and equal influence on decisions made in their name

A fairer society based on a new social contract is a prerequisite to building a stronger economy, a healthier society (in all senses), a deeper and more secure democracy and a sustainable environment. This new social contract should be designed around the core principles outlined in the ‘fair necessities’ above.

We will help to set out that vision, and to work towards a consensus on how to achieve it.

This autumn, we will continue to generate evidence of public concern about the issues and support for action to tackle them. To date we and our partners have shown that three-quarters of the public agree with our ‘fair necessities’, that 85% of Britons are concerned about inequality, that eight in ten Britons want the wealthy to pay more tax, and that there is a strong consensus of concern and support for action to tackle inequalities across party lines.

In the coming months we will:

• Analyse and publish the results of some polling that we’re carrying out at the moment on public attitudes to health inequalities

• Share our findings about how politicians have talked about fairness in parliament over the last 25 years, and how some have used fairness to divide people while others have used it to bring people together

• Look at how tackling unfairness and inequality is vital for delivering on the nation’s top priorities, such as boosting (sustainable) economic growth

• Talk to partners in the private sector about making the business case for action by government to tackle inequality, alongside the actions that businesses need to take themselves