The UK spends more than anywhere else in Europe subsidising the cost of structural inequality in favour of the rich, according to an analysis of 23 OECD countries.
Inequalities of income, wealth and power cost the UK £106.2bn a year compared with the average developed country in the Organisation for Economic Co-operation and Development (OECD), according to the Equality Trust’s cost of inequality report.
When compared with the top five most equal countries, however, inequality costs the UK £128.4bn a year in damage to the economy, communities and individuals.
Fixing the NHS crisis, including funding the maintenance backlog, hiring more staff and increasing wages, would cost about £66.7bn over 15 years.
“Inequality has made the UK more unhealthy, unhappy and unsafe than our more equal peers,” said Priya Sahni-Nicholas, the co-executive director of the trust. “It is also causing huge damage to our economy: we have shorter healthy working lives, poorer education systems, more crime and less happy societies.”
Britain in the 1970s was one of the most equal of rich countries. Today, it is the second most unequal, after the US.
Sahni-Nicholas said: “There is a direct financial cost to inequality: the consequences of structuring society to allow for massive profiteering for the richest at the expense of the rest of us have been enormous.”
Overreliance on financial systems that allow for massive profits and wealth-hoarding has hollowed out our infrastructure, she added, encouraging massive regional disparities and leaving the UK vulnerable to shocks and recessions.
The report found that the richest 1% in the UK are the most expensive top 1% group in Europe, paying the lowest taxes of such a group in any large European country. The benefits of allowing this to continue are “almost impossible to defend”, said Danny Dorling, the author of Inequality and the 1%.
“Inequality is more than just economics: it is the culture that divides and makes social mobility impossible,” he said. “The mere accident of being born outside the 1% will have a dramatic impact on the rest of your life: it will reduce your life expectancy, as well as educational and work prospects, and affects your mental health. The cost of the super-rich is just too high for the rest of us. We must urgently redress the balance.”
Stewart Lansley, the author of The Richer, the Poorer and The Cost of Inequality, said it was “an acute paradox of contemporary capitalism that as societies get more prosperous, rising numbers are unable to afford the most basic of material and social needs”.
He said: “In Britain, child poverty has doubled in 40 years. Yet few modern tycoons go without private jets, luxury yachts, even private islands.”
Lansley blames the way the gains from growth have been increasingly colonised by a small group of financial and business magnates – a process he says is facilitated by state policy.
“Many of Britain’s deep-seated problems – a broken economy, hollowed-out public services, static and falling living standards, the doubling of child poverty since the late 1970s, and the fall in social resilience – can be traced to the way the economy has been turned into a cash cow for the already rich,” he said.
Too much of today’s economy involves unproductive activity geared to personal reward, a far cry from the culture of entrepreneurialism promised by Margaret Thatcher and Tony Blair, Lansley adds.
Several factors account for the further enrichment of the already wealthy, says Lansley, “none of them serving much social purpose”, with nine-tenths of all national assets and infrastructure are now privately owned making Britain one of the most heavily privately and narrowly owned economies among rich countries.
