Lansley’s central theme is that, for most of the past 200 years, Britain has been a high poverty, high-inequality nation, dominated by the richest, except for the period 1945-mid-1970s. Then it moved from one of the most equal to one of the most unequal of richer nations; and, by the early 21st century poverty, it reached levels comparable with the early 20th century, for similar reasons – above all, low pay and precarious work. Lansley seeks to describe and explain this history. He stresses that poverty and inequality are not the same, but they have followed a largely parallel path: we can only explain the history of poverty by examining the actions of the rich and their relationship with government and the wider society. Of course, over time the living standards of those defined as ‘poor’ have risen, enabling some to deny the existence of poverty in modern society; though it is internationally accepted that, as Lansley argues, ‘measured in relation to contemporary standards not much has changed’.
He describes how 19th century Britain became the first industrial nation initially through a free market in an undemocratic society dominated by the very rich taking advantage of a large labour force desperate for survival amid miserable living conditions. Poverty was blamed upon the fecklessness of the poor, a view embodied in the only public ‘welfare’ system, the Poor Law. However, it should be said, as Lansley does not, that some rich people felt an obligation to the poor – noblesse oblige, as it was known. They funded charities and introduced factory and public health reforms. He does describe how further improvements were stimulated from the later 19th century by popular movements and the gradual extension of voting rights. Still, in 1901 the wealthiest 1% owned 70% of all private property, the top 10% 93%. Wealth was gained from productive investment in trade and industry and from property.
Then the poverty surveys of Charles Booth and Seebohm Rowntree, both rich businessmen concerned about poverty, revealed that 30% of the population of London, 25% in York, lived in degrading poverty, mainly caused in both places not by idleness but by low pay for insecure work. This caused widespread shock. Governments considered moves to reduce poverty, driven by pressures from workers, including the new Labour Party, and liberal reformers; and fears that an impoverished population could not supply the healthy workers and soldiers needed to maintain British leadership in an increasingly competitive world. The result between 1906 and 1914 was the first modern ‘welfare’ legislation including the first state pensions, arrangements for minimum wages in some lowest-paid, mainly female, occupations and National Health and Unemployment insurance, plus modestly raised taxes on the rich to fund welfare and defence.
Lansley then examines the gradual expansion of state welfare, higher taxes and narrowing inequalities during World War 1 and between the wars, as the vote was at last fully democratized and high unemployment stoked protest. There was still wealth to be made from new industries, like motor manufacture, that grew in the Midlands and South while old ones declined in the North, and from finance and property development. In 1939 the top 1% owned 50% of total wealth, the top tenth over 85%, while poverty remained high.
Then came World War 2, bringing higher taxes, higher living standards mainly due to full employment, some narrowing of inequality and, as is well-known, proposals and demands for post-war social reform – in particular, popular support for the Beveridge Report of 1942. Lansley is better informed about economic than social policy, about how the rich became rich than about welfare for the poor. His brief account of the Beveridge Report repeats the view of some feminists that Beveridge advocated a ‘male breadwinner welfare state’ wherein wives received benefits as dependents of their husbands, not as independent citizens, and Beveridge believed that wives should not work for pay. As a feminist, I find that Beveridge actually proposed that wives should receive benefits by right, funded by their husbands’ contributions, as their partners, not dependents, because they ‘must be regarded as occupied on work which is vital though unpaid, without which their husbands could not do their paid work and without which the nation could not continue’, as many feminists believed at the time. He did not believe that married women should stay at home, but, realistically, that many of them did so, given the difficulties of combining work inside and outside the home, while the marriage bar, mentioned elsewhere by Lansley, excluded married women from many occupations. This mostly died out during the war, but this was not evident in 1942. Beveridge feared, presciently, that if wives’ benefits were funded directly by the state they would be denigrated as dependents upon hard-working taxpayers. He recommended that divorced or separated wives should have rights to benefits funded by their husbands. But this was dropped by the Labour government.
Lansley also criticizes Beveridge for focussing on poverty and ignoring inequality. However, the Report comments that ‘want’, as he always called poverty, could have been abolished before the war if the government had been willing to redistribute from richer to poorer. He argued more strongly in later unofficial works on full Employment and Voluntary Action for government ‘to correct inequality of wealth’ through taxation or ‘provision for the poor’ and end ‘the pursuit of gain as the guiding force in society’. It is important to present Beveridge’s ideas accurately because they are widely referred to and widely misunderstood.
Lansley blames Beveridge for the inadequacy of the post-war benefits. He shares the widespread failure to recognize that Labour scaled back their welfare ambitions because they prioritized economic reform. Since its foundation Labour had argued, like Beveridge, that the best means to raise living standards was full employment at decent pay, with welfare for those unable to work. Hence Labour prioritized continued rationing, price and wage controls, the highest income tax levels of the century and nationalization of key industries to achieve economic revival and full employment, successfully as Lansley recognizes, while paying the costs of war, for defence commitments and developing an independent nuclear weapon. They still achieved impressive welfare reforms, especially the NHS and universal benefits; but could not afford to build schools or hospitals, built fewer houses than they hoped and paid smaller pensions, family allowances and other benefits than Beveridge recommended. He wanted them to fully cover essential costs of food, housing, clothing etc. He did not suggest precise amounts because in 1942 he did not know when they would be implemented or at what price level. He was not consulted by Labour and was very disappointed. Labour aimed to fulfil their welfare ambitions when the economy fully recovered, but they narrowly lost the election of 1951 to the Conservatives. They achieved lasting improvements in six years, but less than they hoped.
As Lansley rightly emphasizes, Labour set on course the only period of narrowing inequality and control of extreme wealth accumulation in 200 years. He describes the period of Conservative rule from 1951-64 as one of ‘shallow consensus’. They were less hostile to Labour’s social and economic policies than some of their successors, though some party members were, but they cut taxes and did little to expand state welfare. Living standards rose, mainly due to Labour policies. Lansley repeats the well-known claim of PM Harold Macmillan in 1957, ‘Let’s be frank about it; most of our people have never had it so good’, without the next, less familiar, sentences: ‘What is beginning to worry some of us is “Is it too good to be true?” or perhaps I should say “Is it too good to last?”’. For the economy was flagging against its competitors.
Partly in consequence, Labour narrowly won the 1964 election. Their leader, Harold Wilson, again prioritized economic reconstruction and completing the welfare state. But Labour inherited an unexpected large deficit due to Conservative tax cuts and pre-election spending. Lansley does not mention this but recognizes that Labour still did much to stimulate technological innovation, control prices and wages, raise taxes and introduce much-needed management training, sustaining full employment. In 1965 researchers Peter Townsend and Brian Abel-Smith ’rediscovered poverty’, revealing unexpectedly high levels of poverty, by ‘relative’ modern standards, in the 50s and early 60s, particularly among children and low-paid families. This put Labour under pressure to expand welfare but again it prioritized the economy. It raised family allowances, pensions and other benefits, introduced comprehensive schools and the Open University and liberal reforms including legalizing abortion. But, again, it lost office in 1970 before completing its programme.
Edward Heath’s Conservative government had the advantage of inheriting a large surplus, which they devoted to cutting taxes, wage and price controls and benefits, shifting to a free market without evident benefit to the economy. It was further undermined by the international rise in oil prices and trade union resistance to the resulting fall in real wages. Unemployment rose for the first time since 1945 and they narrowly lost the 1974 election.
Labour raised benefits and services to their peak of the century, with high taxes and wage controls. Trade unions reached their peak membership and gained higher wages. The economy revived and living standards improved. In the mid-1970s incomes reached their most equal point of the century, though poverty and unemployment remained. The 1970s also saw the international spread of a commitment to the free market, labelled neoliberalism, a reaction of the rich and powerful against controls. In Britain an increasingly right-wing press created a lasting, misleading image of the 70s as a dismal decade of conflict and decline blamed on Labour and the unions, which contributed to Labour’s defeat in 1979.
For many people the next decade was far more dismal. Thatcher’s neoliberal government reversed the post-war gains, promoting free markets, low taxes and personal wealth accumulation as the way to a prosperous society, while ‘rolling back the state’, slashing benefits, privatization of services and harsh treatment of claimants. It was undeterred when by 1981 unemployment reached a level unseen since the 1930s, where it remained. Poverty also rose though the government refused to believe in relative poverty and Thatcher banned the use of the word. Manufacturing declined and government made no effort to revive it, preferring to encourage expansion of services, many of them low-paid, and finance which flourished. Trade unions were attacked and dwindled. Wages and demand declined, debt rose, business and finance were deregulated, top incomes soared exceptionally, along with tax evasion. Homelessness grew as council houses were cheaply sold and not replaced and rent controls abolished. Through the 80s and 90s ‘The state became an agent of inequality’ as Lansley describes, returning to the ‘predatory and extractive capitalism’ of the 19th century, unconcerned about workers’ conditions. Wealth was gained from monopolies, takeovers and loans, not from production. Far from flourishing, the ‘free’ economy slipped further behind European rivals.
Labour substantially defeated the Conservatives in 1997. Tony Blair’s vision for ‘New Labour’ was ending poverty without seeking to end inequality, free markets or extreme wealth, telling the BBC he wanted ‘Levelling up, not levelling down’. His key to ending poverty was work – an ‘old’ Labour view though he did not recognize it – and revival of welfare benefits and services. This he and Gordon Brown achieved without substantially raising taxes or regulating capital. Unemployment fell. Blair introduced Britain’s first minimum wage, but it was low. Low wages were raised through a means-tested Tax Credit supplement, which subsidized employers as well as workers. Work conditions improved. Pensioner poverty was alleviated with a larger means-tested supplement and additional benefits. Demand grew but there was no fundamental structural change. Low incomes rose; top salaries, tax evasion and inequality grew, more slowly than before or after.
Gordon Brown’s period as Prime Minister 2007-10 was dominated by the financial crisis. He raised top tax rates and did much to ameliorate the effects of the crisis, but it was the major reason for his losing the 2010 election. International governments bailed out the banks which had largely caused the crisis. The megarich were initially hit but soon recovered. Lansley points out that the combined wealth of the richest global 1000 rose by more than half 2009-11.
He describes growing international criticism of the effects of neoliberalism. In 2013 the head of the IMF stated that ’excessive inequality is corrosive to growth’. Leaders of the ILO and OECD agreed that the dominance of small elites diverted resources from essential needs like health care and decent housing to luxury goods. In London a rising share of new homes were built for the super-rich, often left empty, with booming profits for developers and growing homelessness. Inequality grew under successive Conservative-led governments. Large firms spent their profits on huge pay and bonuses for their leaders and returns to shareholders rather than on work conditions or pay, which deteriorated, unregulated, into what was labelled the ‘gig economy’. Taxes fell, benefits were severely cut and made increasingly conditional and punitive, inefficiently administered by ill-qualified private businesses at excessive costs. Conservatives raised the minimum wage, renaming it the ‘living wage’, which it was not. Giant companies took over public services, running everything from prisons to school meals, often so much less efficiently than the public sector that some, like Carillion, went bust. Consumption fell with benefits and wages and the economy flagged further.
Poverty, ill-health and crime rose, life expectancy declined. Governments increasingly blamed family breakdown and bad parenting among the poor, not the real causes: low pay, insecure work, high rent and inadequate benefits. They still rejected the notion of relative poverty, which revealed greater poverty in Britain compared with other high-income countries. Acute social divisions were increasingly visible. When housing developers were required to provide a proportion of ‘social’ housing – not by central government but by local authorities: especially in London under the Labour mayor, Ken Livingstone, until he was replaced by Tory Boris Johnson. The ‘social’ housing was segregated: with separate ‘poor doors’ and even separate play spaces.
The National Audit Office criticized the high cost and inefficient administration of Universal Credit. Charities did their best to help the poor. Respected independent institutions, including the institute for Fiscal Studies and Rowntree Foundation, revealed (relative) poverty levels comparable with those of Booth and Rowntree and with the same causes: primarily poorly paid, insecure work. The government boasted of unemployment at levels unseen since the 1970s, but not that pay and conditions were massively inferior to the 1970s, while employers’ incomes rocketed. Food-banks – barely heard of before 2010 – grew hugely, along with homelessness. In 2018 the UN Special Rapporteur on Extreme Poverty and Human Rights, Philip Alston, toured Britain and delivered an excoriating report on severe poverty in a wealthy country. The government ignored it.
Following his vivid description of the fall and rise of poverty and inequality, Lansley suggests solutions. One is a collectively owned citizens wealth fund created by government, financed by issue of long-term government bonds and increased tax on wealth, paid out as a regular ‘citizens’ dividend’ that could be linked to a basic income scheme, which he also favours. A similar fund has run successfully in Alaska, created from oil revenues, as the UK could have done from North Sea oil. In the 1980s the Shetland Islands council created a charitable trust from annual payments by oil companies which was used to fund social projects including support for older people. He sees signs of hope: since 2020 more companies have committed to socially and environmentally responsible investing, and there have been legal judgements against the gig economy; but no sign of government action.
Ideally, he concludes, we need a government plan to tackle inequality, to switch demand from luxury spending and cut financial speculation, aiming for greater economic stability. This would have a target to lower inequality – of wealth and income, of life expectancy, educational achievement and much else – and to balance profits and wages: monitored by an independent, permanent commission including experts, practitioners and ordinary citizens, with feedback from regular citizens’ juries; drawing on the models of more equal societies including Finland, Iceland, New Zealand. It should develop existing effective public institutions including the NHS, child benefit, national minimum wage, and introduce new ones: a non-means-tested social minimum to lift the lowest incomes, a more progressive tax and benefit system, greater emphasis on universalism and free services including child-care, without conditionality and coercion. He would fund the reconstruction of poorer areas and promote business models – partnerships, mutually owned and social enterprises – that create wealth, improve well-being and distribute economic gains more equally; and encourage common ownership of resources through national and local citizen-owned wealth funds, creating a more socially responsible model of capitalism. He also advocates global effort to tackle tax havens and structures of global corporate power: ‘A new age of global co-operation and common purpose, a Bretton Woods for the 21st century’. He recognizes the proposals are ‘challenging and would need to be introduced in stages’ but offers little hope of realization.
Covid descended as Lansley was completing the book and presented new challenges: which he discusses in an Afterword. He judges that its impact was initially ‘galvanizing’, generating demands for reform. It exposed flaws in the social protection system and showed which workers were most valuable – often the lowest paid. The UK government responded with welcome measures: furlough, £20 Universal Credit uplift, driven by the need to prevent economic collapse. But they were temporary, withdrawn before the crisis was over and poorly targeted. 4m people lost income but received no government support. Sickness and out of work benefit remained among the meanest in Europe. 45% of government support went to the rich to save their businesses, without conditions.
He points out that the pandemic magnified and exposed inequalities and their impact on health and well-being, on education, between those working from home and those who could not, mostly low-paid and insecure, and by age, ethnicity, income, wealth, gender and region. The numbers claiming Universal Credit shot up still further, alongside food banks and homelessness. It could have been an opportunity to build a more socially resilient and just society, as in the war, but there was no long-term plan. The rich were gainers. The wealth of the world’s top billionaires reached a new peak. Big banks and tech companies’ profits surged. The government gave vast sums to large private companies, some with close ties to Ministers, to conduct tasks essential to control the pandemic, including procurement of essential equipment, for which they had no experience. They failed at operations which could have been successfully performed at much lower cost by public agencies, as vaccination was. It can only be called corruption.
In January 2022, after publication of this book, 102 international millionaires and billionaires wrote an open letter calling on governments to introduce ‘permanent wealth taxes on the richest’ to reduce ‘extreme inequality and raise revenue for sustained, long-term increases in public services like healthcare’ for ‘few if any of us can honestly say that we pay our fair share of taxes’. There was no sign from the UK government or other sources of a response likely to challenge Lansley’s conclusion that covid will leave a shrunken, more fragile, economy, a huge hike in the national debt and more hardship and uncertainty. He asks, ‘Will Britain return to the pre-crisis norm or go in new directions around a different set of values – or some fudging of the two?’. His survey and analysis of 200 years of inequality is impressive, but it offers little hope of return to the brief redress of the post-war years.
