For the last terrible three years we’ve heard David Cameron and George Osborne and every other Tory MP who’s given a chance to speak on TV blame the suffering they’ve brought to millions of us on ‘Labour’s legacy’ of profligate public spending. Even the lily-livered LibDems have echoed this mantra with enthusiasm. Even now, when the evidence against this ridiculous claim has been featured in the more enlightened press and even that neoliberal stalwart, the IMF, has warned Osborne to go easy on austerity, they persist with the myth. And sections of the British public, having heard the lie repeated so often, now believe its true. Meanwhile, instead of defending themselves, the Labour party , particularly Ed Milliband and Ed Balls, have preferred to hang their head in unnecessary shame whenever its hurled their way in Parliament, instead of nailing Cameron and his crew through the heart with the lie. It makes my blood boil!
Osborne’s priggish stubbornness in refusing to be diverted from his great Austerity Scam, however, has some very chilling echoes from the not so distant past. Margaret Thatcher was infamous for declaring that ‘there is no alternative’ when challenged about the cruel cuts she presided over when in power. And her words issued forth from the same moral high ground as Osborne’s, blaming the ‘immoral’ behaviour of the working classes for Britain’s failing economic performance. Just as she waged war on the workers by demonising trade unions and destroying the livelihoods of whole communities, so equally does Osborne. aided and abetted by Duncan Smith, whip up hatred for those whose only ‘sin’ is to have inherited the poverty she created, or to be sick and disabled, sometimes as a result of her social destruction.
We’re encouraged to have short memories by those currently in power over us. We’re encouraged to look no farther than the last few years before that power dropped into their pampered laps by a cruel fluke of a flawed electoral system that has allowed a party with only 37% of a diminished vote (how many stayed at home and refused to vote?) to dictate our non-futures. But there is a much longer history to this dire situation we find ourselves in now and its time we remembered it. Watch this video filmed in 1996, before the country elected New Labour in a desperate hope that things would or could change for the better. It will remind you of the real legacy we live with today. This Tory led-by-the-nose government is merely taking up where the last Tory governments were forced to leave off…
Earlier today I posted a summary of research into Unum and ATOS by Mo Stewart. Here are two further summaries she has sent me with permission to post on this blog.
Mo Stewart is a former healthcare professional, a disabled female veteran and, for the last 3 years, has researched the links between the DWP, Atos Healthcare & Unum Insurance. To date, the research evidence has been quoted during welfare debates in the House of Lords, the House of Commons and in Westminster Hall. Mo routinely shares all research evidence with academics, medical and healthcare professionals, frontline national charities, selected
politicians and service users.
Her most recent report has just been published by the Centre for Disability Studies at Leeds University.
Mo’s website, well worth a visit, is here
FROM THE BRITISH WELFARE STATE TO ANOTHER AMERICAN STATE
From The British Welfare State to Another American State © Mo Stewart 17th May 2013
From The British Welfare State to Another American State © Mo Stewart 17th May 2013
The ongoing welfare reforms have created an atmosphere of fear and despair within the British disabled community, that includes sufferers of chronic ill health and those with mental health difficulties. Claimants in receipt of the former Incapacity Benefit are being transferred to the Employment and Support Allowance (ESA) but, to retain this disability benefit, claimants are required to make themselves available for an ‘occupational assessment’, known as the Work Capability Assessment (WCA), as exclusively conducted by the private contractor Atos Origin IT Ltd Medical Services; better known as Atos Healthcare.
Since 2008 successive British governments have adopted the WCA with the intention of the Department for Work and Pensions (DWP) removing as many claimants as possible from disability benefit, to permit the long ago planned move from the welfare state to welfare funded by private insurance. During three years of detailed independent research, I exposed the links between the British government and the American healthcare insurance giant Unum (Provident) Insurance as first identified in the 2010 report: Atos Healthcare or Disability Denial Factories.(1) This report exposed the links between the DWP and the healthcare insurance giant, and also identified the fact that the WCA had been designed in consultation with Unum Insurance and was the realisation of the long ago planned ‘Thatcher Legacy’, which was the total destruction of the welfare state.(2) This foreign influence on British welfare reforms was to become the focus for the second year of my
research that culminated in the report: Welfare Reform – Redress for the Disabled(3) as first
quoted during the welfare reform debates in the House of Lords during September 2011.
Over time, this often disturbing research evidence was published across the Internet and was welcomed by various academics, a growing number of frontline national charities, medical and healthcare professionals and service-users. The interest was growing as the research exposed the fact that the DWP’s American corporate ‘adviser’ was identified as one of the most discredited health insurance giants in the world.(1)(3) By 2005, following copious numbers of successful legal cases throughout the USA, the California Department of Insurance Commissioner, John Garamendi, stated: “Unum Provident is an outlaw company. It is a company that has operated in an illegal fashion for years…”(4) By 2006, New York Attorney General Spitzer ordered Unum (Provident) Insurance to reconsider 200,000 previous claims, in a settlement benefitting 48 States, and also levied another $15 million dollar fine against the company in addition to the multimillion dollar fines already imposed over several years via successful litigation.(1)(3)(5) In 2007, the American Association for Justice identified Unum (Provident) Insurance as “..the second worst insurance company in the US.”(6)(7) To date, the company have not carried out the 200,000 reconsiderations, ordered in the 2006 multi-state settlement, as Unum Insurance does appear to
continue to be a law unto themselves. A name change to, simply, Unum Insurance has not altered this company’s long history of resisting payment to genuine health insurance claimants(8) as confirmed in a compelling CBS News interview.(9)
Yet this is the company chosen to ‘advise’ successive British governments since 1994 and this
American influenced system of disability denial was adopted by the DWP, using Atos Healthcare to conduct the WCA as a guaranteed method of reducing the welfare budget, regardless of the large amount of detailed evidence against it.(1)(3)(7)(10) Indeed, in America, Professor John Langbein of the Yale School of Law produced a paper identified as ‘The Unum Provident Scandal’ that exposed Unum’s policy of disability denial that continues to be referenced to this day.(10)
Not only was the Atos examination exposed as being ‘unfit for purpose’ by the President of the Appeal Tribunals,(11) but also most recently by the representatives of Britain’s doctors and nurses as the WCA was identified by both the British Medical Association (BMA)(12) and the Royal College of Nurses (RCN)(13) as being totally detrimental to the welfare of patients. DWP Ministers continue to disregard all reported evidence against the Atos assessment.
For six years from 2003 Unum (Provident) Insurance funded the former DWP Chief Medical
Officer, Professor Sir Mansel Aylward, who retired from his role at the DWP to become the
Director of the ‘UnumProvident Centre for Psychosocial and Disability Research’ at Cardiff
University. During that time, Professor Aylward co-authored arguably the most damaging report in the history of British welfare as The Scientific & Conceptual Basis of Incapacity Benefits, TSO 2005(14) was, effectively, a blueprint for the introduction of the WCA.
The Green Paper: A New Deal for Welfare: Empowering people to work – 2006(15) was
subsequently exposed by the academic Professor Alison Ravetz, whose detailed independent
assessment identified the content of the Green Paper as leaving much to be desired.(16) It remains cause for concern that Professor Ravetz’s critical assessment of the Green Paper was provided as a contribution to the public consultation process; so the DWP accessed this disturbing evidence and then totally disregarded the significance of it,
“On closer examination, it appears that this entire body of work is largely self-referential – that is, it appeals for validation to itself and is framed within the same political and policy agenda. In practical terms, it means opting out by the state of responsibility for a large section – estimated two thirds – of those affected by illness or disability. In future, it will be harder to qualify for the benefit, while those already receiving it, in many cases over long periods will, despite assurances, have justifiable anxieties about their future benefit status UnumProvident, an American company, is involved in a number of lawsuits for ‘bad faith’ in refusing to honour disability insurance claims. This reinforces the caution against taking this apparently impressive body of work at face value. It is not research undertaken in the spirit of open enquiry. It is commissioned research and, as such, pre-disposed towardsideologically determined outcomes.”(16)(My emphasis. MS)
This statement was written by Professor Ravetz in 2006 and it has now come to pass, with the nation’s chronically sick and disabled benefit claimants living in fear of the arrival of their appointment for the WCA, as conducted by Atos Healthcare, and the endless incorrect decisions regarding future benefit entitlement by DWP ‘Decision Makers.’(17)
The main influence of the Green Paper content was The Scientific & Conceptual Basis of Incapacity Benefits, TSO 2005(14), as authored by Professors Mansel Aylward and Gordon Waddell and published by the UnumProvident Centre for Psychosocial and Disability Research, Cardiff University. Research evidence has confirmed the profound influence of a discredited American corporate insurance giant with the DWP since 1994 and the most damaging reports, used to influence and inform government policy on welfare, have been produced via a research centre who have adopted the Unum philosophy and cannot possibly be considered to be ‘independent’ research evidence.
On 17th April 2013 the United Kingdom honoured Baroness Thatcher with a ceremonial funeral at an admitted cost of £3.6million, to acknowledge the nation’s first female Prime Minister, whilst her lasting legacy to the British people will be the successful destruction of the welfare state.
From The British Welfare State to Another American State © Mo Stewart 17th May 2013
(1) Atos Healthcare or Disability Denial Factories: http://www.whywaitforever.com/dwpatosveteranssummary.html
(2) Margaret Thatcher’s role in plan to dismantle welfare state revealed:
(3) Welfare Reform – Redress for the Disabled: http://www.whywaitforever.com/dwpatosveterans.html#WRES
(4) Online Lawyer Source: http://www.onlinelawyersource.com/unum/complaints/
(5) State Insurance commissioners reach settlement with Unum Provident:
(6) Unum Claims Denial – Legal Help: http://unumclaimsdenial.com/2011/07/unum-ranked-2nd-worst-insurance-company-in-america/
(7) The Ten Worst Insurance Companies in America – The American Association of Justice
(8) Unum Lawsuit Plaintiff Wins Re-instatement of Unum Disability Benefits, MARCH 2013:
(9) Did Insurer Cheat Disabled Clients: CBS News interview: http://www.youtube.com/watch?v=gknSNvGoX-c
(10) John H Langbein – The Unum Provident Scandal & Judicial Review of Benefit Denials, Yale University School of Law: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=917610
(11) HH Judge Robert Martin: President of Appeal Tribunals, Report 2007-08:
(12) Scrap work capability assessment, doctors demand
(13) RCN Congress: http://www.rcn.org.uk/newsevents/congress/2013/agenda/1-disability-assessments
(14) The Scientific & Conceptual Basis of Incapacity Benefits, TSO 2005
(15) A New Deal for Welfare: Empowering people to work: 2006
(16) Green Paper: A New Deal for Welfare: empowering people to work. 2006
– an independent assessment of the arguments for proposed Incapacity Benefit reform http://disability-studies.leeds.ac.uk/files/library/ravetz-Green-Paper-IB-critique.pdf
(17) Unfit for Purpose: Citizens Advice Scotland: http://www.cas.org.uk/publications/unfit-purpose
GOVERNMENT USE MIGHT OF AMERICAN INSURANCE GIANT TO DESTROY UK SAFETY NET – UPDATE
Whilst the Prime Minister employs talented script writers, and waxes lyrically about the nation’s concerns for our most vulnerable people, the reality is that the medical tyranny used to assess anyone claiming sickness or disability benefits has, by the Department for Work and Pension’s(DWP) own admission, resulted in 1100 deaths between January – August 2011.** Significantly, more recent death totals are not yet available from the DWP…
These genuine benefit claimants were removed from Incapacity Benefit and placed into the ‘work related activity group’ following a ‘medical assessment’ as exclusively conducted by Atos Healthcare – a subsidiary of the IT giant Atos Origin, who were awarded the very lucrative IT contract for the recent Olympic Games. The ongoing human tragedy is that, regardless of diagnosis, prognosis or treatments, these victims were removed from the safety net of the welfare state by under-qualified DWP staff, following a totally inadequate medical assessment by Atos Healthcare, forced to prepare for work and then died trying.**
This ongoing, relentless sinister attack on the welfare state was planned by the Thatcher
government in 1994(1), with successive governments contributing to the fear now faced by over three million chronically sick and disabled people. The Prime Minister announced last year that disability benefits should only be available to those whose reduced health was due to ‘no fault of their own.’* Playing ‘the blame game’ whilst demonstrating his very dangerous lack of comprehension of the sinister implications of all serious addiction was thought at the time to be extreme comments by the Prime Minister, but it was only ever the tip of the iceberg. The reality is that every chronically sick and disabled person in the UK, in receipt of disability benefits, has learned to live in fear of their own government that is shared by the claimed ‘moderate’ political party; namely the Liberal Democrats.
Most civil servants and MPs are able bodied, with very few having any detailed personal knowledge about the vast subject of chronic illness or disability, so sweeping generalisations feed the national press whilst one particular man, with a past history in finance, was given unlimited authority. He was ennobled to permit his appointed to government, and he was never elected, but his opinions are never challenged by government so Lord Freud, as the Minister for Welfare Reform, enjoys unprecedented authority about a subject that he demonstrably knows nothing about. With a past history in the world of finance Lord Freud only knows about budgets, and he engaged with the insurance industry to reduce the burden of government funded welfare.(2) In his own words(3), Lord Freud admitted that he knew nothing about welfare or disability. Yet, three weeks following his
appointment, he produced a report that was adopted by government and now the weakest in society live in fear of frequent obligatory government medical assessments, as conducted by Atos Healthcare, that have been demonstrated to be totally ‘unfit for purpose’ by the President of the Appeal Tribunals, national front-line charities, welfare agencies and concerned high calibre professionals. The government ignores them all.(1)(4)(5)
Atos Healthcare (AH) are engaged to undertake all medical assessments on behalf of the DWP for anyone in receipt of Incapacity Benefit – now changed to the new Employment Support Allowance(ESA) – but the AH assessments remain totally free from all public accountability according to the General Medical Council and the Care Quality Commission.(1) Undeterred by public concern, the £multi million contract between the DWP and AH was recently extended(6), whilst countless numbers of our most vulnerable citizens testify to this bogus medical assessment, that remains as far away from genuine medical evaluation as it’s possible to be.(1) In reality, the Atos assessment is a limited non-medical assessment, that discounts all input from the patients’ GP and Consultants, and remains very high risk as it is based on the totally discredited Bio-Psychosocial Model(BPS) of disability(7) that totally disregards the diagnosis and prognosis of the benefit claimant.
However, behind the might of Atos Healthcare(AH) are government advisers Unum Insurance, introduced to the UK government in 1994 by Professor Mansel Aylward when Chief Medical Officer at the DWP, and who was to leave the DWP to become the first Director of the Unum Centre for Psychosocial Disability Assessment. Some years later, mounting public criticism forced the removal of Unum from the title of the Centre, but the Professor remains unrepentant. When known as Unum Provident Insurance, the company were identified as one of the most discredited corporate insurance giants in the United States(US)(8), and the ‘medical assessments’ undertaken by AH are alarmingly similar to those used by Unum for the assessments and denial of income protection insurance claims, as the Atos assessments also use the totally unacceptable and highly discredited BPS model of disability assessment.(8)
The US courts discredited Unum Provident’s “non-medical” model for assessing medical
conditions(8) yet successive UK governments adopted it to reduce the welfare budget, regardless of the human cost of this imported US medical tyranny. Now known as Unum Insurance, the company have rebranded periodically over the years, depending on the numbers of $multi-million fines imposed due to unacceptable medical assessment practice(9), and they offer income protection (disability) insurance but, as a company, have a disturbing past history of resisting paying out when an insured person hits hard times with illness, or the onset of a disability, and needs to make a claim.(8)(9)(10)(11)
Previously known as Unum Provident or First Unum, the company have been advising successive British governments since Thatcher was Prime Minister and this corporate giant, described as operating ‘disability denial factories’ inspired the research report: Atos Healthcare or Disability Denial Factories(1), as now accessed by welfare professionals throughout the UK. Indeed, Unum Insurance were identified in 2009, by the American Association for Justice, as being ‘one of the top two worst insurance companies in America’(8) yet have been involved, behind the scenes, with the DWP for almost 20 years.(9)(12)(14)(15)
Disturbing evidence of the eventual planned move from the British welfare state to the US style of welfare, to be funded by private insurance, was first exposed in the House of Lords during the welfare reform debates last year. Members of the noble House quoted from the detailed research report: Welfare Reform – Redress for the Disabled(9) as written at the request of noble members. Unsurprisingly, the government decided that all suggested amendments to the Welfare Reform Bill, hard won in the House of Lords, were to be disregarded due to the use of Financial Privilege(16) – an ancient authority of the House of Commons. Hence, this coalition government’s contempt for any challenge was complete, unstoppable, and demonstrably dangerous for the nation’s chronically sick and disabled population.(8)(9)
One of the reasons for Professor Aylward inviting the involvement of Unum Insurance was the DWP’s ultimate plan to follow the American lead in welfare, to identify such conditions as Chronic Fatigue Syndrome as a ‘psychological condition’ by using the BPS model of disability assessment and thus to, eventually, justify not funding welfare benefits for sufferers, as in the US.(17)(18)(19) Considering that, at the time of the introduction of Unum (Provident) Insurance to the British government by Professor Aylward, in 1994, Unum already had an atrocious reputation in the US for failing to fund payouts from the insurance policies they sold, one must wonder as to why their advice was so willingly accepted and adopted by all successive UK governments ever since… (1)(9)(17)(19)(20)
Within three months of leaving the DWP Professor Aylward, recently rewarded with a Knighthood for services to disability assessment, was appointed as the Director of the then named Unum Centre for Psychosocial Disability Research at Cardiff University and his appointment as the Centre’s Director led to the Professor’s appointment as the first ever Chair of Public Health in Wales.
Professor Sir Mansel Aylward is also a Director of the Health Claims Bureau(13), a private company involving Unum Insurance with the ‘medical assessment’ for claimants of income protection or disability insurance for industry. Yet, this assessment is virtually identical to the tyranny used by Unum (Provident) Insurance, as exposed by the Yale School of Law(21) when identified as the Unum Provident Scandal, and now copied by the UK government to remove helpless victims from State financial support.
To guarantee that Atos Healthcare remained confident about their purpose, Unum’s former Chief Medical Officer Mike O’Donnell crossed the Atlantic Ocean and was appointed as the new Chief Medical Officer for Atos Healthcare but, of course, both companies deny that there is any professional relationship between them.
None of this news will disturb a UK government that has now been warned against more benefit cuts by the United Nations(22) and who appear to be trying very hard to be removed from all responsibility under the European Court for Human Rights(23). Meanwhile, the Professor recently denied any knowledge of this medical tyranny when confronted by disability activists outside a lecture hall where he had been advising representatives from the insurance industry…..(24)
When previously known as Unum Provident Insurance, this US corporate insurance giant were actually banned from 15 States in America and 6 countries, worldwide, until 2008(1), when they again changed their name to become known simply as Unum Insurance. Someone, somewhere surely now needs to be asking the question as to why was this highly discredited corporate insurance giant ever invited to advise the British government about welfare reforms….?? Someone, other than investigative TV journalists(25), needs to be asking what was the ultimate goal, and who were to be the undoubted beneficiaries of this government funded medical tyranny, imported from America, against the most vulnerable people in our society?
Unum’s unacceptable influence with successive UK governments was recently exposed at the
Liberal Democrat Conference by the courageous young Mr George Potter.(26) If only the political leaders of the Liberal Democrats enjoyed some of the courage displayed by George Potter, millions of chronically sick and disabled people would no longer need to live in fear of this coalition government, that has totally failed to protect them, despite claims by Liberal Democrat leaders.
Copyright: Mo Stewart 27th October 2012
(**) 32 die a week after failing test for new incapacity benefit:
(*) PM vows to get addicts into work: http://www.bbc.co.uk/news/uk-politics-13152349
(1) Atos Healthcare of Disability Denial Factories: http://www.whywaitforever.com/dwpatosveterans.html#docs
(3) Welfare is a mess, says adviser David Freud: http://www.telegraph.co.uk/news/politics/1577313/welfare-in-a-mess-says-adviser-David-
(4) CAB evidence on ESA work capability assessment: NOT WORKING: http://www.citizensadvice.org.uk/not_working
(5) Disability test a ‘complete mess’ says expert: http://www.guardian.co.uk/politics/2011/feb/22/new-disability-test-is-a-complete-mess
(6) Atos wins £400m deals to carry out disability benefit tests: http://www.guardian.co.uk/society/2012/aug/02/atos-disability-benefit-tests
(7) A Tale of Two Models: http://www.leeds.ac.uk/disability-studies/archiveuk/jolly/A%20Tale%20of%20two%20Models%20Leeds1.pdf
(8) The Ten Worst Insurance Companies: The American Association for Justice (UNUM is listed as 2nd WORST insurance company in America) http://www.Denied-disability-claim.com/media/2009/02/tenworstinsurancecompanies.pdf
(9) Welfare Reform – Redress for the disabled: http://www.whywaitforever.com/dwpatosveterans.html#docs
(10) Memorandum submitted to Prof Harrington: http://www.whywaitforever.com/dwpatosmemowcayear3.html
(11) Unum and Business: http://www.whywaitforever.com/dwpatosbusinessunum.html
(12) Mutual Benefits: Private Eye Issue 1301: http://www.private-eye.co.uk
(13) Health Claims Bureau Directors: http://www.hcbgroup.co.uk/pages/aboutus
(14) UNUM advises gvt: http://www.publications.parliament.uk/pa/cm200203/cmselect/cmworpen/401/3021203/htm (Dec ’02)
(15) UNUM advises gvt: http://www.publications.parliament.uk/pa/cm200506/cmselect/cmworpen/616/616we37.htm (Mar ’06)
(17) Unum influence in the UK continues to wreck havoc: http://lindanee.wordpress.com/2011/10/24/unum-influence-in-the-uk-continues-towreck-
(18) Downgrading disability: http://www.ekklesia.co.uk/node/17021
(19) Welfare reform tyranny direct from the USA: http://lindanee.wordpress.com/2012/07/18/welfare-reform-tyranny-direct-from-the-usa-bymo-stewart/
(20) New evidence of corporate giant’s influence on welfare reform:
(21) The Yale School of Law: The Unum Provident Scandal & Judicial Review of benefit denials under ERISA:
(22) Budget cuts could downgrade UK rights watchdog’s UN status:
(23) The Equality and Human Rights Commission is being destroyed
(24) An academic responds with disbelief to Aylward’s denial of responsibility:
(25) Disabled or faking it? http://www.bbc.co.uk/iplayer/episode/b01lldrc/Panorama_Disabled_or_Faking_It/
(26) Liberal Democrat Conference: Party votes to review impact of welfare reform:
And here’s George Potter speaking out at the LibDem Conference last year. I’m not a supporter of the LibDems but I take my hat off to him for having the bravery to criticise his own party at their own conference.
The following article written By Howard Reed last month for The Fabian Society is a shocking indictment of a Cameron-led government and their relentless programme of austerity for the poor. Using the now discredited and tired excuse that the previous Labour government ‘got us into this mess’, they have managed to create a low wage economy increasingly characterised by zero hours contracts and have callously denigrated the disabled and the poor, forcing many people who were just getting by before onto the breadline. Ministers, such as Iain Duncan Smith, have shown no compassion whatsoever for the thousands of people who now suffer a precarious existence and sometimes die under their regime of work capability assessments and forced workfare. And it seems there are even more cuts to welfare to come.
In statistical jargon welfare recipients are classed as being in the 1st decile whilst millionaires like Cameron, Clegg and Osborne are in the 10th decile. The huge gap in terms of wealth between these two extremes can be seen on the graph above. According to Howard Reed’s research the gap really began to open up after Thatcher came to power in 1979 and it widened dramatically during her eleven years in power. It levelled off for a while during New Labour’s reign but began to take off again in 2010 when the coalition took over. Reed shows that on Cameron’s watch inequality became turbo-powered.
David Cameron, in my view, is no intellectual. In fact he’s a bit of an air head who never gets drawn into honest debate but simply parrots Tory sound bites. I’m sure Ed Milliband could wipe the floor with him if he wanted to. Sadly, though, the Labour opposition are giving the impression they agree, on the whole, with Cameron’s policies on welfare cuts. They’ve not shown much enthusiasm for standing up for the people who are really suffering the brunt of Cameron’s attack. Neither has Ed Milliband made any real attempt to defuse the constantly repeated myth that they were responsible for a wrecked economy despite there being plenty of hard evidence this was not the case. For three years Milliband has allowed Cameron to belittle Labour on this issue at every opportunity without defending himself. As a result of his failure and the perpetual repetition of the myth by every LibDem and Tory MP at every opportunity its now firmly fixed in the mind of the public as unquestionable truth and has done untold damage to Labour’s credibility as a safe guardian of the economy. Why on earth has Milliband stood by and let this happen? Its high time the Labour Party took back a little self respect and spoke out for the people its supposed to support – the working class – who are being bullied into poverty and despair by the Coalition.
The Inequality Boom
22 July 2013
Howard Reed finds that the impact of the coalition’s tax and benefit measures could end being as bad for inequality as the Thatcher government’s record. Turning the tide needs to be at the heart of Labour’s strategy for government
Concern about the extreme inequalities of incomes produced by capitalist societies has traditionally been a central component of left-of-centre politics, and the progressive taxation systems and redistributive welfare state put in place by the 1945 Attlee government was at least partly motivated by a desire to reduce inequalities. But how unequal is Britain now, 35 years after the Thatcher government and the end of the post-war consensus? What are the consequences of the current policies of the coalition government for inequality? And how much might impact on inequality might a Labour government expect to make if elected in 2015?
Inequality from 1961 to 2012
Inequality in the distribution of incomes is the result of a combination of two factors. One is the distribution of gross market incomes, ie income before taxes or transfer payments. The largest component of gross incomes is earnings, but the distribution of incomes from investments and (private) pensions, and property income, are also important. The other main factor determining the distribution of net income is the extent of redistribution by the government through the form of taxes and transfer payments (eg benefits, tax credits). Inequality can rise thanks to increasing dispersion of gross incomes, a reduction in the extent of redistribution, or both. Thanks to household surveys conducted on an annual basis from 1961 to the present day, we now have around half a century of data on the UK income distribution on a reasonably consistent basis. Figure 1 is based on analysis of this data by the Institute for Fiscal Studies (IFS) and shows the evolution of inequality in disposable income since 1961. The measure of disposable income used is net household income before housing costs, adjusted for family size. The figures go up to the 2011-12 tax year which are the most recent figures currently available.
The measure of inequality used is the Gini coefficient, which is a number between 0 and 1 showing the extent of inequality in a distribution of incomes. A Gini of 0 would correspond to a situation where every household had the same net income, whereas a Gini of 1 would correspond to a situation where one household had all the income and the rest had nothing. Hence, the higher the Gini is, the greater is inequality in incomes. The figures are for Great Britain (including England, Scotland and Wales but excluding Northern Ireland) because the Family Expenditure Survey, which was the survey used to measure incomes until 1992, did not cover Northern Ireland but data for the whole UK from 1993 onwards using the Family Resources Survey (which does cover Northern Ireland) show a very similar picture.
Figure 1. Inequality of household incomes Before Housing Costs, 1961 to 2011/12
Source: Institute for Fiscal Studies, http://www.ifs.org.uk/bns/bn19figs.xlsx
Broadly speaking, the evolution of inequality in Britain over the past 60 years comprises three distinct phases:
- Between 1961 and the late 1970s, inequality was roughly stable, with a Gini coefficient in the range 0.24 to 0.27.
- Inequality rose consistently from 1979 onwards, with the Gini moving above 0.27 in 1985. By 1990, the Gini had reached 0.34 – a rise of 0.07 in just five years. The 1980s were a period of persistent rises in inequality.
- From 1990 onwards, inequality stabilised at a Gini of around 0.33 to 0.36 and has remained at that level until the present day.
In terms of the relationship between inequality and UK politics, it looks like the period of Margaret Thatcher’s premiership (1979-90) was very different from Labour or Conservative governments before or after it. Mrs Thatcher’s tenure in Downing Street coincided with a massive increase in inequality of household incomes in the UK. What caused this rise in inequality? Research by Stuart Adam and James Browne of the IFS shows that between 1978 and 2008, reforms to the tax and benefit system increased the Gini by around 0.034 compared with a situation in which the 1978-9 tax system had been kept in place and uprated according to the uprating rules in place at that time. This increase in inequality appears to result mainly from two reforms undertaken by the Thatcher government: firstly, the reduction in income tax rates, with the top rate of income tax falling from 83 per cent in 1979 to 40 per cent in 1988; and secondly the decision to uprate means-tested benefits in line with price inflation rather than earnings, which (given that this was a period where average earnings were growing by about 2 per cent above inflation every year) meant that incomes for poorer families who were dependent on benefits for a large proportion, or all, of their net income lagged behind working families.
Thus, changes to taxes and benefits under the Thatcher government account for around half the overall increase in inequality seen between 1978 and 2008. The rest of the increase in inequality can largely be explained by two factors: firstly, increasing dispersion of earnings, with growth in earnings for top earners far outpacing average or low earners; and secondly a shift in the distribution of national income from wages to profits (income from profits is far more unequally distributed than income from wages).
The record of the Labour governments between 1997 and 2010 on inequality is also worth commenting on here. New Labour was much more concerned with reducing poverty, and child and pensioner poverty in particular, than with reducing inequality per se. However, there is an obvious link between poverty and inequality in that redistribution via the tax and benefit system from richer households to poorer households – aiming to reduce poverty by increasing the net incomes of the poorest families – will tend to reduce overall inequality in net incomes as a by-product. Overall, the IFS research by Adam and Browne shows that New Labour made the tax-benefit system more redistributive (as a result of increased benefit payments for poorer pensioners and tax credits for low-income families with children). However, inequality in gross incomes continued to increase over this period. Overall, the two effects more or less cancelled each other out, meaning that inequality in 2010 was almost unchanged from its 1997 level.
The impact of coalition government policies on inequality
Figure 2 presents a breakdown of the distributional effects of most of the reforms made to the tax, benefit and tax credit system over the course of the current parliament using a tax-benefit micro-simulation model constructed by Landman Economics for the Institute for Public Policy Research. The analysis divides families in the UK income distribution into ten equally sized deciles ranging from decile 1 (the poorest) to decile 10 (the richest). The line in the graph shows the overall impact of reforms to the tax, benefit and tax credit systems as a percentage of disposable income, averaged across all families in each decile. Overall, the reforms introduced by the coalition are regressive across most of the distribution – the poorest families lose over 12 percent of their net income on average, compared with only around 3 percent of net income for families in the ninth decile. At the very top, the reforms are slightly progressive, with the top decile losing a slightly higher percentage of their income than the ninth decile; this is mainly due to increases in national insurance contributions and below-inflation increases in the higher rate income tax threshold.
The main factor driving the regressiveness of tax and benefit reforms between 2010 and 2015 is cuts to benefits and tax credits, particularly for working age families with children. The generosity of working tax credit, in particular, was cut back severely over this period. Furthermore, the uprating regime for working age benefits and tax credits has been changed from the retail price index (RPI) to the consumer prices index (CPI), and as annual CPI increases are typically smaller than RPI, this means that households reliant on benefits and tax credits lose out increasingly as time goes on. The decision in the 2012 Autumn Statement to limit working age benefit and tax credit increases to 1 per cent in nominal terms – well below CPI inflation – exacerbates the regressiveness of the reforms to social security. Meanwhile, coalition reforms to income tax and national insurance contributions during this time – principally the above-inflation increases in the income tax personal allowance and the lower thresholds for national insurance contributions – help families in the middle of the income distribution more than the poorest families, most of whom were not earning enough to pay income tax or national insurance in the first place.
Figure 2. Impact of Coalition Tax and Social Security Reforms introduced in 2010-15 Parliament, by income decile
Source: author’s own calculations using IPPR/Landman Economics tax-benefit model and Family Resources Survey data for 2010-11
The impact of the total package of tax and benefit reforms between 2010 and 2015 is to increase the Gini by 0.018 points – more than half as much again as the total increase in the Gini which arose from tax and benefit reforms over the period 1978 to 2008. There are additional reforms that it is not possible to model due to insufficient data on benefit claimants in the UK Family Resources Survey (such as many of the changes to housing benefit, and the replacement of disability living allowance by the personal independence payment). However, if they were added in to Figure 2, it is quite possible that the impact of the coalition’s tax and benefit measures would be as bad for inequality as the Thatcher government’s record, despite the fact that by 2015, David Cameron will have been prime minister for less than half the duration that Margaret Thatcher was. Looked at in this way, the coalition government’s tax and benefit reforms are like a speeded-up action replay of Thatcherism. This may come as a particular shock to Liberal Democrats in the government, many of whom spent the 1980s railing against the kind of increase in inequality which I forecast to occur as a direct result of policies introduced in this parliament.
The actual increase in inequality, as measured by the Gini coefficient, over the period 2010 to 2015 is likely to be more than 0.018 because of the continuation of the trends which contributed to increased inequality in gross earnings between 1980 and 2010. While earnings at the top of the distribution are continuing to increase, real wages for low-to-middle earners have been falling behind inflation for at least the last five years. And the most recent available data shows the share of wages in national income continuing to fall, to 53.7 per cent of GDP in 2011 (down from 59.2 per cent in 1980).
Reducing inequality in the future
How should a future Labour government respond to these trends? Discussion of the role tax and benefit measures to reduce inequality – or even to reduce poverty – after 2015 (should Labour emerge victorious at the next election) has not figured highly in policy discussions over the last three years. To a large extent, Labour seems to have bought into the argument of the right-wing media – trumpeted loudly by coalition politicians – that redistribution through the welfare state became increasingly unaffordable under New Labour. This is despite the fact that in 2007-08 – the last year before the Great Recession – total spending on benefits and tax credits as a share of gross domestic product was 11.4 per cent, compared with 11.9 per cent in 1996-97, just before Labour came to office.
But with the Labour leadership seemingly insistent that the poor state of the public finances rules out further action to reduce inequality through the tax and benefit system, attention has shifted to what the political scientist Jacob Hacker has called ‘predistribution’ – measures to make the distribution of gross market incomes more equal, thus reducing the pressure on the tax and social security systems to do the ‘heavy lifting’ of reducing inequality. This would be a big change in policy away from the New Labour years, where the market was more or less left to ‘let rip’ in delivering increasing inequalities in gross earnings and investment incomes, with the tax and social security systems having to do more and more redistribution to hold after-tax inequality constant.
There are several policy options for more equal predistribution of earnings, mostly focusing around changes in wage determination, bargaining structures and trade union representation, particularly in private sector industries and services, as well as upgrading skills and improving employment and job progression opportunities for the lowest paid.
But while measures to equalise the distribution of gross earnings would be most welcome, they would work best in conjunction with a more redistributive tax and benefit system, rather than one being a substitute for the other. Many features of the current tax and benefit system are needlessly regressive; for example, council tax, which on average charges low-to-middle income households a much higher percentage of their disposable income than the richest households. There is plenty of scope for major reforms of the UK’s tax and social security systems to increase their progressiveness and reduce net income inequality, at the same time as simplifying the system and raising more money to help balance the public finances.
At the same time, a lot of the inequality in incomes from investments is a function of vast inequalities of wealth and assets and therefore it would be necessary to redistribute wealth – perhaps via radical measures such as land value taxation – to equalise the distribution of investment income significantly.
Whichever set of policies Labour chooses in 2015, it will be important for inequality reduction to be at the heart of the party’s strategy for government. As Richard Wilkinson and Kate Pickett show in their book The Spirit Level, there are clear links between lower inequality and a range of better social outcomes (eg lower crime, increased levels of trust in society, and greater social mobility). For Labour to enter government with a mindset that inequality doesn’t matter would be a serious mistake. Instead, it is to be hoped that despite the difficult economic circumstances which the next Labour government is likely to inherit, they can nonetheless place a clear focus on getting UK income inequality down to the levels which prevailed before the Thatcher revolution of the 1980s.
 Prior to 1993 the annual surveys used to obtain data on the income distribution were conducted in calendar years; from 1993-94 onwards they changed to fiscal years.
 Stuart Adam and James Browne, Redistribution, Work Incentives and Thirty Years of Tax and Benefit Reform, IFS Working Paper 10/24. http://socialwelfare.bl.uk/subject-areas/services-activity/poverty-benefits/instituteforfiscalstudies/132531wp1024.pdf
 Both these trends, and the reasons behind them, are examined in more detail in Jacob Mohun Himmelweit and Howard Reed, Where Have All The Wages Gone? Lost Pay and Profits Outside Financial Services, TUC, 2012. http://www.tuc.org.uk/tucfiles/466.pdf
 For more discussion of how to reduce gross earnings inequality see Stewart Lansley and Howard Reed, How To Boost The Wage Share, TUC, 2013.
 The bare bones of such a reform package are Richard Murphy and Howard Reed, Financing the Welfare State: Towards a Full Employment Economy, Centre for Labour and Social Studies, 2013. http://socialwelfare.bl.uk/subject-areas/services-activity/employment/centreforlabourandsocialstudies/1464492013_Policy_Paper_-_Richard_Murphy__Howard_Reed_(Social_State_-_Idleness.pdf
 Several options for introducing a wealth tax in the UK are looked at in Kayte Lawton and Howard Reed, Property and Wealth Taxes in the UK: The Context for Reform. Institute for Public Policy Research, 2013. http://www.ippr.org/publication/55/10503/property-and-wealth-taxes-in-the-uk-the-context-for-reform
At a time when more and MPs and Ministers seem to be involved in corrupt practices and apparently prepared to twist statistics to lie to us, even in the House of Commons I’ve become less and less confident in our political system as a means to represent the interests of ordinary folk. Accountability seems to have become a thing of the past. This post on skwawker’s blog is a ray of hope. If you want to hold your MP accountable and if your MP is a Conservative or a LibDem then please take the time to read this and follow skwawker’s advice. Then share this with others who might do the same.
There has been a big response from readers to the two recent posts (here and here) on the response of Tory MPs to questions from their constituents about the government’s blatant abuse of statistics (i.e. lies, since they continue to repeat them even after the UK Statistics Authority rebuked them and told them not to repeat the claims).
In particular, the fact that most MPs who bothered to respond had clearly simply cut and pasted their response from a Conservative Central template, as the wording was identical, and the fact that even this response completely failed to address the questions raised, caused much outrage.
I would therefore like to enlist your help to send a letter or email to every coalition MP that cuts out – or at least renders overtly embarrassing – the option of doing the same thing in response. Hopefully, the wording of this new…
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Unions who represent millions of people in the UK are planning to confront the Tories over privatisation of the NHS at this year’s Conservative Party Conference to be held in Manchester on September 29th.
The three biggest unions in the country – Unite, Unison and the GMB – have announced that they will be at the forefront of community protests to highlight the public’s increasing concern at the piecemeal dismantlement of the NHS for the benefit of companies, such as Virgin Care and big US private health provider HCA.
They want to make it clear to the public that this year’s Conference is being bankrolled by the very private healthcare companies that stand to benefit from Andrew Lansley’s Health and Social Care Bill 2012 and will be demanding an immediate halt to the handing out of contracts to these companies who put shareholders before patients.
In a joint statement calling for the mass rally, the Unite general secretary Len McCluskey, Unison general secretary Dave Prentis and GMB general secretary Paul Kenny said,
“The people of this country do not want a health service run by the same global boardrooms that have brought misery to every other public service, such as the energy industry, that they have got their hands on.
“We pay for this NHS to be different; to serve the public, and to ward off the twin fears of illness and poverty. There is simply no place in our health service for business to profit from the misfortunes of others. This is the message that will ring around Manchester on 29 September.
“We will be demanding that a future Labour government repeals the act as a top priority – and this should be a warning to potential private companies not to bid for contracts.
This issue will haunt this government all the way to the ballot box in 2015 when voters will see through the false promise that David Cameron made in 2010 that the NHS would be ‘safe’ in Tory hands.”
The unions say that they will work with the Trades Union Congress and its affiliates to ensure the full weight of the trade union movement stands squarely behind this landmark event.
Neither the Tories nor their Liberal-Democrat co-conspirators declared their intention to privatise the NHS in their 2010 general election manifestos a fact that has angered millions who see it as an attack on democracy.
We’ve been promised a referendum on EU membership should any significant treaty changes occur yet NO opportunity whatsoever to vote on the fundamental changes happening to the most important public organisation in Britain, the NHS, on which every man,woman and child in this country relies for their health and well-being.
“We will be demanding that a future Labour government repeals the Act as a top priority – and this should be a warning to potential private companies not to bid for contracts. It’s equally important that Labour isn’t let off the hook either. Much of the demolition programme for the health service started under the last government and has been seized on by the Con-Dems.”
Geoff Martin Pro-NHS campaign Health Emergency chairman also warned Labour to take the issue seriously and not simply resort to playing political games,
“Grandstanding on the back of public outrage at the attack on the NHS would be pure political opportunism” he said.
Lets make it one he’ll never forget!
During the 2010 election campaign Nick Clegg made the controversial claim that if the Conservatives scraped through to power and adopted a ‘slash and burn’ austerity programme then the British people would be rioting on the streets like the Greeks in Athens.The reporter in the newsclip shown above reminded viewers of the 1990 Poll Tax riots during Thatcher’s reign of terror by way of precedent. Little did Clegg know at that time that his prophesy would come true during the August 2011 riots, which while allegedly triggered by a controversial police shooting, nonetheless have since been attributed by several social commentators and academics in no small measure to youth unemployment and austerity-for-the-poor policies. And since Mr Clegg has been complicit in supporting Osborne’s savage slashing of budgets I imagine he’ll want to forget he ever made such a prophesy.
In a pre-election interview with Jeremy Paxman, shown in the video above, Clegg was quizzed about what the LibDems would do in the event of them having to form a Coalition government with one of the other main parties. Towards the middle of this clip Paxman asks him if he and his party would vote for the kind of ‘savage cuts’ being promised by the Tories. After a bit of the usual waffling he said that ‘self evidently’ given their election manifesto promises which did include cuts in spending but not immediate or savage:
“We will not support cuts driven by political dogma” AND “of course I’d vote against a budget of cuts that would destroy any chance of sustainable recovery.”
When asked if he’d ‘serve in’ a government led by Gordon Brown he laughed then explained he was laughing at the idea of ‘serving’ in a government led by another party. He emphasised that any coalition he entered into would be on the basis of getting together to form a ‘sane’ government in which LibDems would play a ‘responsible role’ and ‘fight for our policies’.
Well, we all know now what a load of bullshit that was.
So what other policies has Clegg criticised in the couple of years leading to the 2010 election giving us all the impression his party wouldn’t dream of doing? Watch the following short videos and you’ll see the extent of his U turns. He must be feeling very dizzy by now.
Here he is taking Gordon Brown to task on child poverty, youth unemployment and freezing pensioners…
And here he has another go at Brown over…I kid you not…housing benefit…
And here he gets angry about people having to pay back tax credits they couldn’t afford to pay back and being sent threatening letters from government leaving them ‘terrified’ …..a bit like the current DWP sanction letters do today…
Last but not least, he even gets self-righteous about tax breaks for the rich…
So as you can see, anyone watching his performance over the last few years and listening to his election manifesto couldn’t be blamed for expecting his party to avoid or reverse the policies he was so loudly and publicly denigrating. If they decided to vote for his party on the strength of all this they could rightly expect him to deliver on it. We all knew from experience what the other two main parties were all about but the LibDems were virgin territory and all we had was their word to judge them by.
They’ve been a massive failure and in my view have let down those people who voted for them in good faith far more than the other parties have done precisely because with those other parties we more or less knew what we’d be letting ourselves in for.
This next video illustrates just how let down one long standing card carrying LibDem voter feels…
The ex LibDem voter in the video above reminds Clegg what it says on the party’s membership card. In future I suggest they change it so we all know exactly where Clegg and Co. are coming from. It should now read:-
“WE’RE ALL NEOLIBERAL “DEMOCRATS” NOW”