Mind the Gap

The Great Wealth Divide. Photo: BBC World Service

Updated: 06/02/2012

Last week I had the good fortune to stumble across a great little two-part radio documentary on the BBC World Service called The Wealth Gap: The View from London. The programme vividly brought to life how our lives are shaped by inequality. It also succeeded in conveying the complex nature of inequality and the challenge it presents to policy-makers wishing to take steps to reduce it. 

2012: a year defined by inequality?

Inequality and the widening gap between the richest and the poorest in our society has hardly been out headlines of late. Wherever you look, from the recent political jockeying over the size of Stephen Hester’s bonus to the ongoing high-profile protests organisers by the likes of Occupy movement and UK Uncut, it seems, at a rhetorical level at least, everyone is agreed that ‘something has to be done’ about inequality.

Throw in some added economic gloom for good measure and the timing of The Wealth Gap’s broadcast starts to look like an inspired move on the part of the BBC World Service (itself a victim of deep reductions in public funding).

The Wealth Gap: Economics with a Human Face

The Wealth Gap’s chief strength is that it succeeds in turning what could easily be a very dry discussion about economics and statistics into a gripping human interest drama with a satisfyingly complete three-act narrative arc. Well, not quite, but the producers of The Wealth Gap should be commended for bringing out the human impact of widening inequality without sacrificing the underlying substance.

The programme focuses on inequality through the lives of people living in London, one of the most-international cities and a magnet for many of the wealthiest people. At the start of the first episode we’re told that rising inequality is a global phenomenon, with statistics in both developed and emerging economies showing an increasing share of income and wealth is held by an ever-narrower elite. After that, however, we’re given the chance to focus on the lives of different people living in the capital and how they relate to inequality.

 

Home is where the heartache is 

The focus of the first episode is London’s over-heated housing market. We hear from a range of voices: an an estate agent who has witnessed first-hand the rise of ‘super-prime’ £5 million+ properties; a low income family with  young children experience over-crowding and a senior teacher who cannot afford to buy a property within commuting distance of her school. These voices bring to life what it feels like to live in a city where housing has become ever more expensive as people at the top end of the income distribution, whose earnings have outstripped those of the population as a whole over the past thirty years or so, continue to exert upward pressure on housing prices. 

Sufficed to say, after the first episode my moral indignation at rising levels of inequality was turned up to 11. What’s new, you might say? Luckily, episode two of The Wealth Gap came along an shook me out of my comfort zone by suggesting that inequality can also bring with it certain benefits and, gulp, maybe we should in fact show a little more gratitude for the super-rich and the jobs they support. 

Let’s hear it for the 1 per cent 

Making the case for inequality, we hear from management and shop-floor staff from a company that produces luxury £80,000 beds fit and another company that arranges bespoke experiences for super-rich clients. As unpopular as they may with the public at large, are the world’s super-rich an important source of jobs in London. Similarly, despite everything we know (and even more we don’t) about the consequences of tax avoidance and tax evasion. Paul Johnson, Director of the Institute for Fiscal Studies, tells us that the top 1 per cent of earners now contribute to around 28 per cent of all income tax paid in the UK, an increase from 11 per cent in the late 1970s. While Paul is quick to point out that this change reflects the extent to which incomes of the super rich have grown, it also shows the extent to which current levels of public spending are dependent on high levels of income inequality. 

Living with complexity 

Given the recent brouhaha over bankers’ bonuses and executive pay, there was something refreshing and daring about The Wealth Gap being prepared to make the case for the super-rich. While I remain unconvinced that the growing inequality we are experiencing in London is neither inevitable nor is it a price worth paying for the tax base and jobs the super-rich support, I feel I have a better appreciation of just how complex the issue is. As someone who is keen to see a progressive future I would have liked to have seen more attention given to the practical steps we as a society and through our individual actions can take action to manage and ultimately reduce levels of inequality but this is a huge subject in of itself.

If you hurry you should still be able to find both episodes of The Wealth Gap on BBC iPlayer. and as a podcast download.

What did you think of the programme? Do you think rising levels of inequality are a fact of life? Would we be better off spending our time focusing on other matters? Feel free to get in touch and share your thoughts and experiences of inequality.

What London’s B&B bill tells us about the housing market

Sign of the times:  Councils’ use of Bed & Breakfasts as temporary accommodation remains high. Image: TripAdvisor.com

Yesterday I found myself working for thinkpublic on a research project exploring people’s experiences of homelessness. It’s still early days for the project so I can’t say too much about the fine-detail of the project. I can however share with you my thoughts on a an interesting (by Policy standards, anyway) fact I learned.

Fact of the day

I learned that one London local authority spent approximately £300,000 last year on nightly paid or ‘Bed & Breakfast’ temporary accommodation for homeless people. If this sounds like a lot of money that’s because it is. And yet compared to neighbouring boroughs, this authority is actually pretty good at placing its homeless residents in more appropriate and more cost effective forms of temporary accommodation.

High times living in the city

The high figure for Bed & Breakfast payments is, in large part, an expression of the pressures the London housing market is under. It doesn’t take a genius to work out that demand for housing in London vastly outstrips supply. This means private landlords can nearly always find people with jobs ready to snap up their rental properties. Local authorities are finding it increasingly difficult to persuade private landlords to lease their properties on a long-term basis for use as temporary accommodation. Consequently, local authorities are finding that the feel there is no other option available to them other than to rely on more expensive, short term Bed & Breakfast accommodation.

Re-framing the problem: a nation of Bed & Breakfast guests?

At this point  in a post the optimist in me would normally swing into gear and begin to talk about the opportunities which undoubtedly exist for local authorities to improve the way they purchase and manage temporary accommodation to both reduce costs and improve outcomes for individuals and families (Bed & Breakfast accommodation has long been recognised as being a less than ideal option for families, due to the disruption it causes and often the lack of adequate space/facilities for children and, indeed, the previous Labour Government introduced a target to end the placement of families in this this form of accommodation.. While it is very important we take action in this area, I’d like instead to leave you with some thoughts on what I feel the £300,0000 Bed & Breakfast figure says about our housing market as a whole and the need for radical change.

1. Although the £300,000 figure for Bed & Breakfast is attention-grabbing, it is largely a predictable, market-forces driven response to the chronic over-demand/under-supply of housing rather than an operational issue. The same is true of the eye-watering amounts spent on Housing Benefit. These figures show that the failure of the housing market exacts a cost on us all, whether or not we are in direct housing need.

2. The Coalition’s policies are, in my view, primarily focusing on attacking the symptoms rather than the underlying causes of the housing crisis. Putting aside ethical concerns over the impact on families and communities, in the long term measures such as reducing the amount paid in Housing Benefit and plans for a cap on the total amount of benefits any one family can receive may begin to exert some downward pressure on costs. They will not, however, address the fundamental problem of a lack of supply.

3. Instead of responding to the figure of £300, 000 for Bed & Breakfast by demanding immediate cost costing, we should be spurred on to think radically about how we meet people’s housing needs in future. Particularly in London, we cannot simply build our way out of the problem. Even if there was political and public consensus on the substantial investment required, we would quickly run up against physical limits on building more houses. Recognising the limits of traditional approaches, we can begin to explore new ways of living that reflect the realities of our society. I’m not going to pretend that this will be easy but, in the same way that there have been pubic conversations over retirement and social care, I think we need to have a more open discussion on housing and ‘the art of the possible’.

Overcoming the online echo chamber

I read the other day an interesting article on Slate which explored the belief that the Internet can create an online echo chamber, with us increasingly only hearing the views of people similar to us. In the interests of avoiding this, I’d be keen to hear your thoughts on housing, particularly in London.
 
Do we need to re-think our housing expectations? In response to the pressures on housing is it time to think radically about how we design and allocate housing? Or maybe you think we’d all be better off if we embraced B&B accommodation?

You can comment below or get in touch by email: clarke.francisg@gmail or on Twitter: @francisclarke