Monday, 29 March 2010

Rich hit hard by Labour budgets

13 years of Labour budgets have hit the rich hard, while the poorest tenth are the beneficiaries according to the Institute for Fiscal Studies: Wealth

Yet one of the Conservative posters mocking Gordon Brown that was launched yesterday states 'Vote for me. Under me, the richer got richer and the poorer got poorer.' The Gini coefficient, which measures the distribution of income in a society, started to deteriorate in the Thatcher years so that Britain became one of the more unequal advanced industrial countries. It has remained stubbornly resistant to Labour's efforts to create a less unequal society.

There are structural forces at work. Unskilled jobs are shrinking because globalisation transfers them elsewhere or brings in migrants to undercut local workers. If it hadn't been for the measures Labour had taken, things would have been even worse. What remains an open question is whether the latest measures are undermining incentives and making Britain less competitive by encouraging people and firms to locate elsewhere.

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