For my next trick (part two)

Richard Garside
Monday, 15 February 2010

In a previous post I highlighted the selective reworking of a graph on inequality by the government. Now it’s the turn of the Conservative party to pull the same trick, in their new report, Labour’s Two Nations.

The Conservatives have already had to deal with an embarrassing mix-up over decimal places in the report. I do hope George Osbourne is better at maths. That error could be put down to an honest mistake by a tired researcher. But what to make of the report’s presentation of trends in inequality?

The report points out that income inequality has grown during Labour’s time in office. The following graph, on page 10 of the report, is used to illustrate this point.

The source for this graph is listed as Poverty and Inequality in the UK: 2009, produced by the Institute for Fiscal Studies (IFS). Flick through the IFS report and you do find a graph showing trends in income inequality. It’s on page 23 and it looks like this:

The start year for the Conservative graph is 1997. The IFS graph begins in 1979. The Conservative graph also uses data on income after housing costs (AHC) are deducted, presumably drawn from this IFS dataset. The IFS graph uses data on income before housing costs (BHC) have been deducted. This is a bit of an anorakish point. The inequality trends are similar whether AHC or BHC data is used. However, the AHC data do result in a higher overall figure for inequality. This is because housing costs take up such a high proportion of disposable income, particularly for those on low incomes. This allows the Conservatives to emphasise just how bad income inequality is under Labour.

Which of course is the name of the game. By starting the graph at 1997, rather than 1979, the Conservatives can present the problem of inequality as a Labour problem. In reality the Blair/Brown governments – and the Major government before them – have merely managed the high levels of income inequality that emerged during the 1980s. Given the broad consensus on economic policy between Labour and Conservatives it seems unlikely that income inequality will fall in the coming years, regardless of which party wins the next general election.