The Conservatives are for wealth redistribution…back to the wealthy

Statistics are handy resources. In the hands of chancers and cynics they invite game-playing with inevitable winners and losers. One of the great chancers and cynics of modern politics is George Osborne who was a whizz with statistics. We’ll see in a moment. First, a statistical taster just to illustrate.

When I worked in UNICEF we used two distinct measures of child malnutrition: wasting which compares weight with height; and stunting, which compares height with age. In each country or region the UNICEF office could use either (or both) measures. Since each measure inputs different variables the results are different. If you want to argue for more resources from UNICEF-centre and the national government you pick and choose which measure to use. A country in Central America, for example, which had a high proportion of its population of indigenous people who are genetically short on global comparisons would opt for the stunting measure. Another country with a different demographic (say, the UK, which suffers poverty-based obesity) might choose wasting. How were we to generate authentic global data on child malnutrition? I never argued with this. After all, whatever it takes to push for more resources for vulnerable children is legitimate in my book. 

But let’s look closer to home, where such statistical game-playing is not so kind to the poor and vulnerable. In Britain, inflation is typically measured in two ways: the Retail Price Index (RPI) and the Consumer Price Index (CPI). Each is calculated by reviewing price changes of around 750 goods and services typically used by a population of individuals and families. The main difference between the two is that RPI includes housing costs, while CPI does not. In fact, the RPI is being replaced by a measure called the CPIH – Consumer Price Index + Housing. In both cases, the typical ‘basket’ of goods used to measure price fluctuations varies each year – according to public use and taste. For example, coal has recently been removed from both (little used for heating nowadays) while meat-free sausages have been added, reflecting the shift to vegetarianism and veganism.

For the most part, RPI calculates inflation higher than CPI. This is partly due to its including housing costs (eg. mortgages) as a proportion of family budgets. 

Okay – stick with it – here comes George, and a bit of background.

George Osborne, one of history’s Olympian cynics in the post of Chancellor of the Exchequer (2010-16), had the dubious virtue of being true to his principles – ‘dubious’, that is, if his principles are repugnant to you. Well, they are to me. The central tenet of his principles is that the properly balanced society has a wealthy class whose privileges are defined by the existence of a poverty class who, whether for evolutionary or merit reasons, should have no access to wealth. In operational terms this meant reversing years of wealth distribution and pro-poverty legislation and returning to some modern version of the Victorian fragmented society so reviled by Charles Dickens. 


Well, the core strategy was (and remains for his evil progeny) austerity. This is based on the insistence that the country is living beyond its means and must reverse its priorities, which can no longer be afforded – ie. priorities like local democratic governance, NHS, schools, policing and other public services. In a blog to follow this I will show the lie that this entails, but for Osborne it was a Platonic lie – an ethical lie made by the elite in the interests of the people – he was, as I said, a man of (repulsive) principles. The lie persists, of course, under Jeremy Hunt, who is equally cynical and duplicitous, albeit lacking the creativity to have dreamed up the magical illusion of austerity in the first place. (More of him, in due course, too!)

So, here we are, with a public sector (health, transport, policing, courts, social care, schooling) looking like a Jenga construction precariously poised for the final block to be removed. But I want to focus in on just one minor aspect of this catastrophic game which is redolent of the cruelty and cynicism it takes to be a master player, which George clearly is.

One of Osborne’s measures for redistributing wealth back to the wealthy was to juggle RPI and CPI – much like the malnutrition indicators. So, Public Utilities (‘private’ utilities like water, gas and electricity) and rail, for example, were permitted price increases in line with inflation measured by the higher RPI. Pensions and benefits rises were linked to the lower CPI. Quite apart from the absurdity of this, since privatised companies do not have housing costs but the poor and the pensioners do, this means that, structurally, people pay more and more with less and less. Rail company dividends go up, while household disposable income for the poor goes down. Neat. Barely noticeable. And a source of massive wealth redistribution back to the wealthy. 

This RPI/CPI game has metastases. Corporation tax allowance are rated against RPI, personal tax allowances, against CPI; taxes on cars, alcohol, petrol, air passengers and tobacco are based on the higher RPI, while student loans and all pensions and benefits are based on CPI. Business rates were based on RPI but in 2018 switched to CPI. See the bias? See how we pay more and more with less and less.

The courts have occasionally done their best to slow down this juggernaut of inequity and iniquity – for example, it denied BT the luxury of such a switch in favour of its shareholders. But the policy is intact and devastating. The scale of wealth transfer is massive. It is just one unspoken element or the current protests among public sector workers. Their wages have been held back and eroded by wage-regulation (unbalanced with price regulation) but also by this regressive wealth distribution measure. And so the game goes on…for those who have the stomach for it.

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