In this article, Charlie Elphicke describes how Gordon Brown has presided over 5 years of flat earnings and how he has crushed the poor. Charlie sets out a vision for Moving Britain to Go - how we can all be richer and how to improve the lot of the least well off.
Labour crush the poor
Under Gordon Brown, the division between the haves and have nots that New Labour promised to cure has not reduced. The richest fifth of the population still earns sixteen times more than the least well off. Official figures from the ONS show that some 5 million households have earnings of just ?81 a week, while the richest fifth of households earn ?1,321 a week.
To add insult to injury, the least well off fifth of households pay a higher proportion of their income in tax than any other group. ONS research tells us that the least well off fifth pay an effective tax rate 36.4%, compared to the most well off fifth’s effective tax rate of 35.1%.
How can this be justified under any concept of fairness in a decent society? Some might argue that this division would be justified if we lived in a true meritocracy. And yet that avenue is increasingly closed off as social mobility has fallen under Gordon Brown. Under Labour if you are born into poverty you are more likely now to live and die in poverty than before.
This would be a disgraceful record for any Government – and responsibility lies at the door of Gordon Brown. For his are the stealth taxes - like Council Tax and fuel duties - which fall hardest on those who can least afford to pay. His is the system of benefits that blunts aspiration and discourages striving for success. He is the Sherriff of Nottingham of our times.
Not all right jack
Think all this doesn't apply to you? Think you're all right jack? Think again. The poor may have been crushed by Brown, but the rest of us are not doing so well. The nation's households have hardly had a pay rise in the last five years. ONS figures show that household earnings grew by just ?16 in real terms, rising from ?600 in 2001/02 to ?616 in 2005/06. Disposable income grew by just ?9 a week in real terms over the same period, rising from ?491 to ?500. And the earnings trend is downwards, so expect last year and this year to offer little joy. Worse, cost of running a home rose nearly 50% in the five years to the end of 2006. So after housing costs, we're all worse off.
But, you may think, it doesn’t matter since our houses have gone up in value. I’m rich! No not really, unless you plan a future living in a shack, on the street or in the Outer Hebrides, because we all have to live somewhere. More worrying still is that this belief in housing wealth has prompted a doubling of borrowing in the last few years that will all have to be paid back and we will still need to live somewhere when we make the repayments. Rising interest rates and turmoil in the markets means that things could get sticky on the money front.
Labour and Brown’s record in Government has been dismal when it comes to our pocket books. The nation deserves a pay rise, the least well off should be paying less in tax and deserve a fairer crack. It falls to us to offer a prescription for growth.
Moving Britain to Go
In the game Monopoly, there is this wonderful chance card that moves you past Jail, past Super Tax, past that expensive house you can no longer afford on Mayfair and straight to Go. A Conservative Government can and must Move Britain to Go. It can and must make our country richer, more vibrant and exciting.
Trade
We need to improve social mobility. This is oiled by growth. Real growth, not the sort of growth we’ve seen in recent years which comes from more people having come into Britain. From an economic point of view, it seems obvious that we should aim to increase trade with the higher growth territories of India, China, the US and the Far East. When they grow, we grow. The flipside is that our links with slower growth countries should be less of a priority. Most EU countries are slow growth.
More success and prosperity
The hard evidence of what countries need to do to ensure success is becoming difficult to ignore. Studies by the international money experts at the OECD show time and again that faster growth results from better transport infrastructure, greater success at research and development, a more flexible job market, lower taxes, and critically better education and greater skills. Just looking down this list, you can see why we have not done as well as we should have done in the last ten years. This is why the recent report by John Redwood is so important - his prescription embraces this major levers to greater growth.
Better education means better paid jobs
But it is the field of education and skills where the Blair-Brown years have really sabotaged our country’s future. Education should be a key component in any Conservative growth plan. It is the golden flower in the money garden. A person with qualifications is much more likely to have a job. OECD figures show a 89% employment rate in the UK for a person with a higher education qualification, 79% for upper secondary education but only 53% for those below these levels. A more qualified person in Britain gets more pay too – in relative terms, higher education means ?158, upper secondary means ?100 and below upper secondary ?67.
We do well as a country, yet we are not yet achieving our full potential. Our achievements have not been helped by the level of the skills and knowledge we have. Britain lies in the middle of the OECD tables for educational qualifications. 30% of our population have few or no qualifications. 40% have some qualifications, yet could benefit from higher and stronger qualifications.
In this, our schools have an important role to play. Yet so too does the Cinderella of vocational education. Vocational education can be about learning for its own sake - yet the focus of this arm of the education system is to provide the skills required to get a well paid job. Vocational education should be a key element of the Conservative knowledge revolution.
A Conservative knowledge revolution
We should have a revolution in apprenticeships, making diplomas work, increasing autonomy of colleges and setting vocational qualifications with employers in the driving seat. When it comes to skills training, that training must be aimed at what employers want, or the training will be ineffective. Scholarships for all students in vocational education will enable more flexibility and equalise opportunity. These scholarships would be for fully accredited courses and carefully designed to avoid the problems of the Individual Learning Accounts fiasco. This is especially important where financial circumstances would make it extremely unlikely that a skill would be developed to realise maximum potential. Vocational education shadow minister John Hayes MP has been developing this area with gusto and should be encouraged to go further.
With a knowledge revolution, there should be a real incentive for courses to be organised for what students need, around when they can fit courses in. For many have to be able to keep down a job while raising skills. The current system is based on what Government thinks should be provided which is just not good enough in a fast changing world. There needs to be a greater emphasis on education when students want it. And in many cases, courses could be made shorter and more concentrated.
Why this matters
Some would say that we are rich enough already. That none of this is needed. That we should concentrate on healing our broken society. Why are these things discussed as though they are mutually exclusive? For me, greater prosperity for the nation will help strengthen the broken society. We have a real problem with inequality. We have a real problem with stagnating wages. And we have a real problem with the amount of tax paid by those who can least afford to pay.
We are not going to solve this by bashing the well off with more taxes and less public services. That’s been tried in recent years by Labour and it has not been helpful. We can solve it by seeking to level up the least well off and to accelerate the growth and prosperity of the nation. We should seek real opportunities and tax reductions for the least well off. If we can make more chance to work and follow the path to greater prosperity, together we can move Britain to go.