The Tory best equipped to tackle inequality is no longer in office

No Government can sit on its hands and hope an economic boom will magically solve the problem – it needs leadership

"Describing poverty as being 'not only about empty pockets', John Major described current Britain as one in which the lifespan of the poorest in some major cities was 20 years shorter than those of the most wealthy." (Stefan Rousseau/WPA Pool/Getty Images)

When Dr Philip Beresford first started compiling the Sunday Times Rich List in 1989, he reckoned he would have been “lucky to have found 1,000 people in Britain worth more than £5m”. Today, he says, “there are 20,000 or more with assets of £20m, and that does not include the value of their homes.”

Throw in that last bit and the total is far larger. According to Barclays, if people’s homes are taken into account, there are 715,000 millionaires in Britain today.

More and more people are getting rich, which means the inequality gap is growing at an alarming rate. Arguably, it is the biggest socio-economic problem we face – the yawning chasm between those with health, opportunity and choice and those with none. It’s one that could lead to rioting and blood on the streets if we continue to do nothing to solve it.

Already, in preparation for what could be coming, those with wealth are taking steps. Gated communities, virtually unheard of back in the 1980s, are now commonplace. The smartest districts in our cities are patrolled by private police forces. Home security is among the fastest rising of business sectors.

Politicians of all hues are increasingly edgy and uneasy. The latest to join the call for action is the former Conservative Prime Minister Sir John Major. Delivering a Hinton lecture entitled “A nation at ease with itself?”, Major said he had begun to reflect more and more on inequality as he grew older.

In a country now immensely more wealthy than the one in which he grew up, Major said that life was still not easy for many. He added: “Even in areas that are recognised as wealthy there are families or individuals who have fallen behind. Policymakers must understand how hard it is to escape from such circumstances. It is not inertia that keeps the unemployed immobile: it is simply that, without help, they are trapped.”

Describing poverty as being “not only about empty pockets”, Major described current Britain as one in which the lifespan of the poorest in some major cities was 20 years shorter than those of the most wealthy. “I have no doubt that much of this disparity is caused by poor lifestyle, poor choices, poor diet,” he said. “But poor environment, poor housing and poor education must surely be contributory factors. Whatever the reasons, this is a shocking situation in 2015.”

Major defended the benefits system, as did another ex-PM, Labour’s Gordon Brown. Also speaking yesterday, Brown urged the Government to abandon cuts to tax credits completely, warning that to press on would lead to “one of the biggest poverty problems in the western world”.

A cynic might say that Major never did much to bring rich and poor closer together when he was in office. He did, though, concentrate on righting the public finances – arguably something that must occur in order to generate the economic growth that could then reach the poor. Brown’s tack on the other hand was to preside over an explosion in directed measures aimed at aiding those on low incomes – among them a huge increase in tax credits – while the public finances slipped. George Osborne’s approach is not dissimilar to Major’s – he’s attempting to eradicate the budget deficit, to balance the books, undoing the over-spending of the Brown regime, and putting the economy on a positive path.

If pushed, Osborne would doubtless say he’s a “One Nation” Conservative, something Major heavily implied about himself in his choice of language. To his credit, Major acknowledged he did precious little about the problem when at Number 10. Now, though, he is setting out a shopping list of better education, improved infrastructure, affordable housing, and greater philanthropy and contributions from the private sector.

For that to occur in a meaningful manner, Osborne would have to tear up his own rulebook. He’s not prepared to do that, putting his faith in boosting the economy and achieving wider redistribution of wealth.

The one time in the 20th century that inequality was reduced was during the immediate post-War era, when a Labour Chancellor, Sir Stafford Cripps, clobbered the rich, accompanying higher income tax with restrictions on what the wealthy could claim against tax. If something similar were attempted now, it would be howled down in the media. It’s inconceivable that Osborne, a Tory Chancellor with one eye of the prize of party leader, would even try it.

So we’re stuck. The economy shows signs of growth but not much, and certainly not enough for its benefits to make a difference to the poorest. Osborne has promised investment in better transport links, in HS2 and the Northern Powerhouse. But these and others of his policies are not likely to bridge the wealth gap.

It’s unfair. For that reason alone, government must do more. It cannot sit on its hands, it should not punish people who rely on tax credits, it must not hope an economic boom will somehow magically disappear the problem. Government could provide a massive fillip to increase the number of affordable homes; it could provide more resources for education; and it could release more billions for infrastructure improvements, and ensure they are built more quickly.

All that would cost money and Osborne’s bottom lip would tremble, but it need not empty the public purse. Tax collection should be made more efficient; charitable-giving should be simplified and incentivised (and the charity regulatory system overhauled) and the living wage should be increased again so that it really is a living wage. We cannot go on like this; we have to admit what is staring us in the face. Major is correct in what he says: we must act before it really is too late.