Chancellors debate promises policies for wealth inequality

Wealth inequality looks set to become an election issue, according to comments from the shadow chancellor, George Osborne, and Liberal Democrat treasury spokesman, Vince Cable, on Monday night.

Their comments will be taken as a validation by One Society and The Equality Trust, which argue that many social problems can be tackled by addressing the unequal distribution of income within society.

In a live televised debate on Channel 4, Osborne and Cable agreed with the chancellor, Alistair Darling, that they want a fairer society. Osborne and Cable then went on to cite wealth inequality specifically as a factor behind their policy ideas.

Cable outlined several policies aimed at tax fairness and the financial services industry. “You have to reduce wealth inequality,” he said.

Osborne pointed to falling social mobility and increasing child poverty, saying: “The gap between rich and poor makes a society weaker. A fairer society is an objective of government.”

Darling did not mention wealth inequality during the debate but noted that his one-off bankers’ bonus tax had raised a lot of revenue. “Fairness must be central to government,” he said.

Progressive tax policies topped the list of ideas. Cable said he would increase the income tax threshold to £10k to benefit the least well off, part-funded by a mansions tax and by closing tax loopholes for the rich.

Osborne said the Tories would leave the government’s 50% higher tax rate in place and remove child tax credits for richer families. He would aim any tax cuts at middle income earners, for example through National Insurance Contribution cuts.

Darling allowed last week’s budget to speak for his tax plans (which are as progressive as the Tories apart from NICs) and mentioned again his desire to help SMEs, which would assist many middle-income families. Last week, Darling also outlined universal bank accounts for the financially excluded and measures to help shareholders tackle high executive pay in the financial services sector.

All three denounced banker bonuses underwritten by the public. “They shouldn’t get away with it,” said Cable, who branded bankers that threaten to leave the UK as “Pinstriped Scargills” for trying to hold the country to ransom. Osborne said bonuses underwritten by public money were “immoral”.

The debate revealed little new detail about spending cuts, other than an agreement that public servants would lose some of their generous pension entitlements. All agreed that cuts would have to be deeper than in Margaret Thatcher's government.