The economic crisis has seen the government act with a boldness of which many doubted it was capable. Similar boldness is now needed to confront damaging systemic inequalities, which have contributed to the crisis and which New Labour has all too often sidestepped or papered over. The underlying structural weaknesses of high risk, bonus-crazy capitalism have been exposed. At last, ministers are extending the language of irresponsibility, so often used to try to change the behaviour of those at the bottom, to nail those at the top for their culpability.
As we face recession, rising unemployment and economic uncertainty, Labour must now use what may well be its last chance to reassure and inspire with a concrete vision of the good society and a clear explanation of why building it must be a priority.
Equality, combined with ecological sustainability in an agenda for environmental justice, has to be the central leitmotif of this new social, economic and democratic settlement. The immediate target must be to reduce the gap between rich and poor by the next general election. Despite the improvement since 2000 identified by the OECD, the gap is still wider than in 1997 and than in three-quarters of OECD countries. This means urgently stepping up action against poverty at the bottom while, at the top, a more fundamental assault is required on the huge disparities of rewards than is involved in merely depriving (some) bankers of their bonuses.
At a time when many more may have to turn to the safety net of the benefits system, it is more urgent than ever to strengthen it so as to ensure an income that enables people to live decently and with dignity in keeping with human rights principles. There could not be a worse time to wield new sticks to push jobless people into a shrinking labour market, as envisaged in the welfare reform green paper. A large-scale green reconstruction programme, as recommended in A Green New Deal, could spearhead a new environmental justice initiative.
With public spending and borrowing under pressure, part of the cost of protecting the poorest victims of the crisis, should be met by the wealthy fulfilling their responsibilities to society through more progressive taxes. Exceptional times call for exceptional measures we are told. So, it is legitimate for the government to renege on its manifesto pledge not to raise the higher rate of income tax. The case for a higher rate of 50% for high earners still stands. If applied to those earning over £100,000 per year, it could raise nearly £8bn, more than twice the minimum needed to meet the next child poverty target, even allowing for any behavioural changes in response to the tax increase. Such changes could be minimised through much tougher action on widespread tax abuses. The money is more likely to boost the economy in the pockets of low income mothers than the bank accounts of high earning men. Inheritance tax must also be reformed to reduce wealth inequalities.
In July, a man on incapacity benefit wrote to the Guardian that he and his wife "sit destroyed by poverty … I can speak but have no voice, and those claiming to represent me have failed me. As the gas and electric prices rise for all, they may also become out of reach for many. Now I fear the winter and hope for nothing". Hope not fear is what the government must now provide for him and millions of others.
"After New Labour", the second debate in the "Who owns the progressive future?" series, organised by Comment is free and Soundings journal, will take place in London at Kings Place on November 3 at 7pm. Guardian readers can obtain tickets at a special rate of £5.75 by phoning Kings Place box office on 0844 264 0321 and quoting "Guardian reader offer". For full details click here.
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