The British Academy debates

Democracy for sale COLIN CROUCH

Generations at warJAMIESHA MAJEVADIA

A helping hand to all JOE CERRELL

Inequalities

INEQUALITIESPROSPECT FEBRUARY 2017 3

Contents

3 Finding a balanceInequality—a vital subject for our timesJOHN BELL

4 The equalisersA report on the four British Academy debatesSAMEER RAHIM

8 The democratic defi citWe must ensure that politicians cannot be boughtCOLIN CROUCH

9 Generation vexedYoung people are worse off than their parentsJAMIESHA MAJEVADIA

11 The global challengeHow to help the world’s poorestJOE CERRELL

Liberal societies consider each individual to be of equal worth, whatever their background, tal-ents, beliefs or abilities. The purpose of society is to enable each person to fl ourish. Inequality is a potential threat to realising this project. The

quality of liberal society depends on other people being able to fulfi l themselves. It is not enough that I achieve my goals, if others cannot achieve theirs.

The British Academy Debates on Inequalities aim to examine the causes, effects and implications of the various kinds of inequality in modern society. Launched in 2014, the British Academy Debates show the humanities and social sciences “at work”—helping us to understand the challenges we face as societies, as economies and as individuals. They dem-onstrate how research generates new insights that can challenge existing assumptions, illuminate dilemmas, help make the complex intelligible—and push forward public debate.

In the fi rst debate, which took place at the Royal Society of Edinburgh, the panel examined ways to imagine the future development of the economy. The immediate questions might be: how have increas-ing inequalities impacted our economic model? Will the engine of growth be undermined by growing con-centrations of wealth and power at the top? The more developed questions are: how do we identify the kind of growth we want, and how is a move towards a high-value production and service economy compat-ible with social cohesion and wellbeing? We need to take more account of changes in people’s lives, such as the effects on health of job status, insecurity and self-worth at work and not simply unemployment.

The second debate in London examined how the liberal commitment to treating people as of equal worth can be realised in the political system. How will the growing power of the top 1 per cent affect the levels of trust and cohesion in society, and tra-ditional democratic and political structures? A highly

unequal society may not care about social solidarity. What happens to people’s sense of social responsibil-ity? Rising inequalities have important implications for politics and democracy with strong links to rights and justice agendas.

The third debate, held at the Royal Academy of Belgium in Brussels, focused on the changing char-acter of work across Europe. The economic crisis has been a pretext to roll back minimum labour stand-ards, on the assumption that lower wages and greater job insecurity will create a fl exible labour market. At the same time, cuts in public sector spending have shifted the burden of care work onto the family and particularly women, pushing them into precarious fl exible working relationships. The result has been to enhance inequalities, both in the quality of jobs and in pay. This has been aggravated by attempts to create a global market which, in the absence of basic mini-mum standards, risks triggering a race to the bottom. It is essential to investigate the role of labour law (and its relationship with other sources of regulation, such as immigration control, free movement of capital, tax and social security provisions) in structuring growth so that everyone can benefi t, social solidarity is enhanced and inequalities are addressed.

The fi nal debate in London looked to the intercon-nections between the developing and richer parts of the world. In a world where inequality is declining but in-country inequality in many middle-income coun-tries is increasing rapidly and the global 1 per cent are racing away from the rest, we need to create a vision for a more equal world, such as through the Sustaina-ble Development Goals. Understanding the processes behind these global inequalities and the pathways to a better vision are critical questions on which research-ers can support policymakers in shaping and deliver-ing that vision.

I would like to thank our partners—the Royal Society of Edinburgh and the Royal Academy of Bel-gium—and our media partner Prospect, in addition to all those who contributed to the debates and our wider Inequalities season, as planners, speakers and chairs. You can fi nd out more and watch videos of the debates online at www.britishacademy.ac.uk/inequalities

John Bell

Finding a balanceGrowing differences between rich and poor are damaging us all

John Bell, Professor of Law at Cambridge, is Chair of the BA’s inequalities debates steering group

INEQUALITIESINEQUALITIES PROSPECT FEBRUARY 2017PROSPECT FEBRUARY 2017 54

hours contracts or low pay so they are too tired to spend time with their children.” The question is: “What’s the economy for? Is it for the 1 per cent or the rest of us?”

Can reversing inequalities revive politics?19th October, London

“A democracy where every vote is equal co-exists with a marketplace in which every pound is equal.” This might sound strange, said Prospect Editor and Chair of the event Tom Clark, but it has been the consensus for a long time. While there has always been a remarkable amount of inequality, recently there has been a feeling that it has begun to corrode parliamentary democracy.

Colin Crouch, Professor Emeritus at the University of Warwick, argued that liberal democracy and capital-ism are supposed not to interfere with one another but in practice, we know, “it doesn’t work like that.” There are ways to manage the tension: rules limiting how eco-nomic resources can be used politically, for example, which we have in Europe.

Over the years, taxes on the rich have declined sharply. You can reverse this trend but it requires politi-cal will. And given, in Crouch’s words, “the transfera-bility of political and economic resources,” rich people can donate to political parties and get greater access to decision makers. Therefore “inequality reinforces itself.”

Fraser Nelson, Editor of The Spectator, challenged the contention that inequality is getting worse in the UK. Since John Major became prime minister 25 years ago, every inequality metric has shown the level stabilise. America has a problem, he said, but “it’s a very different

one from the one in Britain.” Nelson cited the Brexit ref-erendum vote as evidence that the economically disen-franchised can still have a political effect. “Those were the kind of people who never voted because they felt it would never change anything. Now that has changed.”

But while fi nancial inequality is always empha-sised, continued Nelson, other kinds of inequality are just as important. Inequality of educational provision for example. In the state system, rich kids are three times more likely to get good results than poor children. “Is that because we think the poor kids are thicker than the rich kids?” asked Nelson. “Of course not.” But only bashing the rich is in vogue.

Anne Phillips, Professor of Political Science at the London School of Economics, countered Nelson by saying the wealthy live “increasingly cordoned lives,” and are able to “buy themselves out of shared experi-ences and shared provision.” This makes it easier, said Philips, to look at those at the poorer end of the spec-trum and not “think them your equals.” She said: “The heart of the argument is that we should all be of equal worth.” For that there have to be limits to inequality and greater public provision of services—buses, librar-ies, public amenities. When public provision decreases, our empathy also retreats.

Zoe Williams, a columnist for the Guardian, took issue with the idea that only the disenfranchised voted for Brexit. Williams said that on the issue of inequality, the huge range of problems it causes is pretty well estab-lished. But statistics can be misleading.

A better way of talking about it, said Williams, is to examine how inequality makes your life worse. “As prof-its go more towards capital and less towards labour,

Inequality: good for the rich, bad for the economy? 4th October, Edinburgh

“Without justice, society must immediately dissolve.” The words of Scottish philosopher David Hume were quoted by academic and public servant, Stewart Sutherland, Chair of the British Academy debate organ-ised in partnership with the Royal Society of Edinburgh. Sutherland asked what “justice” might mean in a mod-ern meritocratic society.

Richard Blundell, Director of the Centre for the Microeconomic Analysis of Public Policy at the Insti-tute of Fiscal Studies (IFS), said that there is “a growing consensus that something is going on,” and that “some-thing must be done.” According to the IFS, those born in the 1980s in the UK were the fi rst post-war generation not to enjoy higher incomes than those born in the pre-vious decade. “The Gini coeffi cient,” a common meas-ure of inequality, “has moved 10 points from 0.25 to 0.35” in the last 30 years. “We have moved from a Gini you would typically fi nd in Scandinavia [or] Germany to a Gini that you would fi nd in North America.”

It is true, Blundell said, that increased globalisation and free trade have helped countries like India and China to grow richer. But opening up trade also means people in developed countries suffer. The incentive to innovate doesn’t just come from fi nancial aspiration: it needs a good family background and safe neighbourhoods, and it relies on the economic circumstances of your parents. “Excessive inequality in income and wealth is not, in my view, inevitable and may even inhibit growth.”

David Bell, Professor of Economics, University of Stirling, agreed with Blundell. “Economists have long recognised that the free market does not neces-sarily produce just outcomes,” he said, but it is only in the last couple of years that economists such as Tony Atkinson and Thomas Piketty have become well known for their work on inequality. Recently even the

Organisation for Economic Co-operation and Devel-opment (OECD) has argued that inequality has a negative impact on growth. “Low incomes affect edu-cational opportunities and lead to poor social mobil-ity,” he said. Their proposals to remedy this include enhancing women’s participation in economic life and better early years education.

Another serious issue, said Bell, was health inequal-ity. In the most deprived decile in England, male life expectancy was 51.7; in Scotland, in the same decile, it was 47.6. The average in England was 70.4.

Chris Giles, Economics Editor of the Financial Times, stressed the complexity of the issue. Theoretically speak-ing, if we had absolute equality then throwing in a bit of inequity would be good for the rich and good for the economy—“creating incentives to innovate and making the country a better place.” On the other hand, if one per-son had all the wealth in a country that would be bad for society—and that rich person too, “because we all know what happened to Marie Antoinette.”

Recent research from the OECD and International Monetary Fund (IMF) says that income redistribution and higher growth are linked. It would be wonderful if that were true, said Giles, but the quality of evidence is weaker than the headlines suggest. Those organisa-tions, like many others, tend to follow prevailing intel-lectual winds. In reality, the trade-off between effi ciency and justice still exists. How much distribution do we want? Is redistribution going to harm the economy? We might conclude it won’t do signifi cant harm, so we can get on reducing inequality.

Kate Pickett, Professor of Epidemiology at the Uni-versity of York, argues that, “Inequality is bad for the economy, but it is also bad for health and wellbeing.” Social mobility is lower in unequal societies because a huge swathe of human talent is wasted. Sweden, once a byword for democratic socialism, has seen its inequality rate increase in recent years, said Pickett, and children’s wellbeing has as a result declined.

Pickett said that tertiary intervention by health visi-tors or teachers was not the answer. Instead the prob-lem needs to be tackled at source. “We need to fi x working conditions so people don’t have to work two jobs to make ends meet, don’t have to put up with zero-

Sameer Rahim

The equalisers A report on the British Academy series of public debates on inequalities

Sameer Rahim is Arts and Books Editor of Prospect

PROSPECT FEBRUARY 2017 5INEQUALITIES

David Bell, Professor of Economics, University of Stirling. Far right: Anne Phillips, Professor of Political Science at London School of Economics

INEQUALITIESINEQUALITIES PROSPECT FEBRUARY 2017PROSPECT FEBRUARY 2017 76

then working conditions have become more precarious because people haven’t got enough bargaining power. Unions have declined, hyper-surveillance has become the norm, working conditions declined further. An imbalance of power intensifi es the vicious circle.” At the Labour Party meetings Williams attends, she says they always ask these questions: Why isn’t there anybody on a zero-hours contract here? Why isn’t there anybody dis-abled here? The answer, she said, was that if you’re on a zero-hours contract you probably work long hours. “The problem with socialism is that it takes a lot of evenings.”

In the audience Q&A, Ruth Lister, a Labour peer and Emeritus Professor of Social Policy at Loughbor-ough University turned on Fraser Nelson. “When Fraser talked about rich bashing, well, what I have seen is poor bashing over the last generation or more. It’s only really since the crisis that we’ve started to get a bit of critique of the people at the top.” She added that it is neces-sary to factor in the big increase in inequality during the Thatcher years.

Decent wages, decent work: how can we improve job quality in Europe? 8th November, Brussels

On the evening on 8th November, while Americans were going to the polls to elect Donald Trump, the Brit-ish Academy in partnership with the Royal Academy of Belgium, held a debate in Brussels about the danger of economic polarisation between low and high-skilled workers. Bea Cantillon, Chair of the debate and Profes-sor of Social Policy at the University of Antwerp, said that there “is a lot of evidence that Trump and Brexit voters are low-skilled and without work.” In that case inequality of job prospects is having a profound effect on western democracy.

Marianne Thyssen, European Commissioner for Employment, Social Affairs, Skills and Labour Mobility, said that “we are giving meaning to social fairness as a political priority of this Commission.” Youth unemploy-ment across Europe is at 20 per cent. Even those with jobs sometimes struggle on low wages. “We need to be open to new forms of work,” she said, “but also be sure that these jobs are good jobs with decent protection.”

The reality of this is more diffi cult to manage than ever. “Today,” she said, “more Europeans work in cas-ual jobs under atypical contracts. New technologies transform the way we work.” Under these changed circumstances, “how can we ensure that everyone in work will benefi t?”

Duncan Gallie, Professor of Sociology at University of Oxford, said the problem concerning the low-skilled was

“not just that they’re in poor jobs, in terms of work and conditions, but that they’re trapped: they’re locked into this kind of work.” Looking at recent EU-wide fi gures, he said, 57 per cent of people in managerial positions had received training in the previous 12 months; the fi g-ure for low-skilled workers was 12 per cent. In the UK, men in low-skilled jobs have a seven-year shorter life expectancy than those in managerial jobs. “When peo-ple face high work pressure—which is rising for all skill levels—where people have low control over their work, they have higher risks of depression and heart disease.”

All this has a wider psychological impact. “Job inse-curity is destructive of self-confi dence and motivation needed for the low-skilled to improve their occupational position.” We shouldn’t despair though: policies can make a difference.

Bruno Van der Linden, Research Director of the National Fund for Scientifi c Research, said that although the low-skilled will not disappear, machines are rapidly replacing jobs. People often don’t like the work they are doing, but will continue to do it because it gives them access to certain social benefi ts. “Life in the labour market for the low-skilled is full of shocks. So insurance is important.”

Thiébaut Weber, Confederal Secretary, European Trade Union Confederation, started his contribution by reiterating that “inequality is very important.” The fear of being excluded, he continued, “has created a crisis of mistrust in Europe and the US. It’s a driver of populism and xenophobia.” He said he supported Thyssen in her work on employee directives. But more “concrete action” needed to be taken. Europe cannot only be seen as a “bad cop” imposing austerity, which has led to “long-term unemployment and precariousness.”

Second, we need sustainable growth, and “more investment” at the European level, particularly in “social investment.” Instead of being the “bad cop,” we “need Europe to play the role of the good cop, who says “OK, in the long term we will not only set the minimum wage in different EU countries, but we will also ensure wage convergence as a European project.” That should come back to the EU agenda. We also need new protections for atypical workers—for these new forms of employ-ment where digitalisation plays a strong role.”

Reducing global inequality: how can we achieve a fairer world? 29th November, London

This debate concerned the effectiveness of the UN’s Sustainable Development Goals (SDGs): a list of 17 objectives aiming to transform the world for the better by

2030. The Chair Eliza Anyangwe, writer and founder of The Nzinga Effect, asked: “Do the SDGs offer a trans-formative agenda for addressing global inequality?”

Joe Cerrell, Managing Director of Global Policy and Advocacy at the Bill & Melinda Gates Foundation, addressed whether the UN’s vision is achievable. “It is hard to argue with the central aim of the SDGs,” Cerrell said, “which is to eradicate inequality in all its forms and all its dimensions.” But though this aim is ambitious, there is plenty of evidence to suggest that if we follow a “robust implementation plan,” it will be possible to con-tinue the progress of the Millennium Development Goals (MDGs) and “ensure no one is left behind.”

The MDGs have contributed to a number of impres-sive feats. In 1990, 12.7m children below the age of fi ve were dying from preventable causes. In 2015, that number had fallen to less than 6m: a drop of more than half, despite population growth. MDGs also helped to pull people out of poverty: “We have now reached gen-der parity in both primary and secondary schools glob-ally.” SDGs therefore provide a “co-ordinated agenda,” he said, which will allow the “international community” to address global inequality.

Jan Vandemoortele, Co-Architect of the UN Millen-nium Development Goals, argued for a more localised approach. “Global inequalities cannot be addressed at a global level,” he said, “only at a country level.” This

means also prioritising inequality above poverty on the UN objectives. “You can’t talk about inequality if you don’t cover the entire spectrum of your distribution,” said Vandemoortele.

Sonia Bhalotra, Economics Professor at the Univer-sity of Essex, argued that policy design must be inno-vative and evidence-based. “Spending money isn’t enough. We need causal evidence of what works.” There is clearly a need for policy innovation, particularly for women’s issues including maternal mortality, mater-nal depression and the share of women in parliament. “Maternal mortality is still high, and women’s parlia-mentary share, though it has risen, is still low.”

Interestingly, Bhalotra’s research discovered that both increasing employment for women, and equal-ising property rights for men and women were not always effective. It suggests that legal reform, if it clashes with social norms, can be destructive. “In data collected from 300,000 women across 23 countries, we saw that variations in labour market conditions which favoured women resulted in more domestic violence,” Bhalotra said. We must be careful to take these social issues into account when implementing progressive policies.

Naana Otoo-Oyortey, Executive Director of cam-paigning group Forward UK, also drew attention to the important role of gender parity in combatting global inequality. The SDGs have a “stand-alone goal on the empowerment of women.” They not only talk about gen-der-based violence, but look at specifi c examples—such as FGM (female genital mutilation) and forced marriage. The SDGs also encourage discussion about sexual health. Yet in order to ensure these issues are brought to the fore, Otoo-Oyortey said, what we fi rstly need is “gov-ernment co-ordination,” as well as better policy, frame-work and enforcement of laws and practices.

The fi nal speaker, CEO of Oxfam Great Britain Mark Goldring, concluded the discussion. “Let’s celebrate that over 20 years, a billion people have been lifted out of extreme poverty,” he said. But he also called on us to recognise that though the world is now more equal as a whole, the inequality gap is wider within countries. We need to consider what role the concentrated accumula-tion of wealth plays in keeping people in poverty, and what effect poverty has on inequality.

“The recent consensus is that with the speed of eco-nomic development in the world at the moment, unless we can reduce inequality substantially, we will not hit the SDGs.” Though they are a valuable resource, and will make a real difference to the most disadvantaged and to women’s rights, they won’t make a “blind bit of difference” when it comes to targeting top earners. “The thing that will, will be political will.”

INEQUALITIESPROSPECT FEBRUARY 2017PROSPECT FEBRUARY 2017

“not just that they’re in poor jobs, in terms of work and conditions, but that they’re trapped: they’re locked into this kind of work.” Looking at recent EU-wide fi gures, he said, 57 per cent of people in managerial positions had received training in the previous 12 months; the fi g-ure for low-skilled workers was 12 per cent. In the UK, men in low-skilled jobs have a seven-year shorter life expectancy than those in managerial jobs. “When peo-ple face high work pressure—which is rising for all skill levels—where people have low control over their work, they have higher risks of depression and heart disease.”

All this has a wider psychological impact. “Job inse-curity is destructive of self-confi dence and motivation needed for the low-skilled to improve their occupational position.” We shouldn’t despair though: policies can

Bruno Van der Linden, Research Director of the National Fund for Scientifi c Research, said that although the low-skilled will not disappear, machines are rapidly replacing jobs. People often don’t like the work they are doing, but will continue to do it because it gives them access to certain social benefi ts. “Life in the labour market for the low-skilled is full of shocks. So insurance is important.”

Thiébaut Weber, Confederal Secretary, European

Eliza Anyangwe, writer and founder of The Nzinga Eff ect

INEQUALITIESINEQUALITIES PROSPECT FEBRUARY 2017PROSPECT FEBRUARY 2017 98

There is a prevailing narrative that baby boom-ers (those aged between 52 and 70 years old in 2016) have benefi ted from free edu-cation, generous pensions and the housing boom, while millennials aged between 16

and 31 years, face greater challenges with home own-ership and saving for retirement.

While the issues are more complex than the generalisations above, the data does tell us that until the late 1950s each generation (or cohort) has experienced higher average incomes than the cohort born 10 years earlier had at the same age, as a result of eco-nomic growth. For exam-ple, at around the age of 50 median income for those born in the 1950s was more than 20 per cent higher than for those born in the 1940s when they were the same age. The 1940s cohort experienced a similar rise compared to the 1930s cohort.

However, this is not true for those born in the 1960s, 1970s and 1980s; their incomes are no higher than their prede-cessors born 10 years earlier experienced at the same age. For those born in the 1960s and 1970s, the lack of income growth was mitigated by the fact that they did have higher average incomes in early adulthood. But those born in the early 1980s started working-age life with no higher incomes than those born in the previous decade.

In addition to this stagnation in incomes, there are other reasons why younger generations will struggle to accumulate wealth as they age.

Over the last 20 years, private pensions have

become much less generous, largely as the result of the closure of most private-sector Defi ned Benefi t (DB) pension schemes. Private-sector employees born in the 1970s and early 1980s were much less likely to be active members of a DB scheme in early adult-hood than those born in the 1960s—about 10-15 per cent compared with 40 per cent. The shift from DB to Defi ned Contribution (DC) pension schemes has also shifted risk from the employer to the employee. On the other hand, younger cohorts are more likely to have at least some workplace pension, due to the auto-enrolment policy introduced in 2012. However, current average contributions are below 5 per cent,

Jamiesha Majevadia

Generation vexedYoung people are less well-off than their parents—and that’s a problem

Jamiesha Majevadia is PublicPolicy Adviser at the British Academy

Inequality has started to worry economists because growth is threatened when an increasing proportion of consumption is absorbed by the very richest. But inequality is also a threat to democracy. Unless signif-icant regulatory measures are taken, there is no way

to prevent wealthy interests from converting economic into political resources. Crudely, it is possible to “buy” politics—by spending money on lobbying, by buying organisations to work for your cause, perhaps by owning newspapers. The political infl uence purchased helps the wealthy to become more wealthy, which in turn enables them to buy more politics, and so on. We are not talk-ing here of the overall distribution of income and wealth across the population, but of the growing concentration in the hands of a small group at the top.

We can see the effects of this infl uence in many areas. Across the world’s richest countries the high-est income tax rates declined from 66 to 42 per cent between 1981 and 2010. The bottom 90 per cent of the income distribution receive between 70 and 85 per cent of their income in the form of wages and salaries; the top 0.01 per cent receive only 40 per cent of their income in this form, the majority coming as corporate income, dividends and capital gains. These kinds of income have increasingly been taxed more lightly than wages and salaries.

These changes have taken place during a period when pre-tax income inequality was increasing. In the face of growing pre-tax inequality a democratically responsive fi scal regime might be expected to redress the balance by taxing large incomes more heavily than low ones, while one caught up in mutually reinforc-ing inequalities of economic and political power would reduce taxes on the rich and increase those on the less well off. The fi scal changes of the past three decades have been consistent with the latter situation.

A major new fi eld has opened for the exercise of cor-porate political power with the privatisation and out-sourcing of public services. Social Enterprise UK, a body

Colin Crouch

The democratic defi citIf the rich can buy access to politicians then we will always remain unequal

representing fi rms and charities engaged in social enter-prise, has produced a highly critical report on the way in which outsourcing is being conducted in the United Kingdom in the new market in children’s services. Three fi rms dominate this and many other outsourcing mar-kets in the UK: G4S, Capita and Serco. Three fi rms are never enough to form a true market. It is impossible to exclude tacit collusion among such a small number, or close interaction between them and government’s con-tract negotiators. Social Enterprise UK commented that the fi rms involved in winning contracts to run British public services had become “too big to fail,” so central had they become to providing Britain’s public services and infrastructure.

That fi rms so successfully develop contracts across fi elds where they had no prior expertise is explained by the fact that their core business is not a particular fi eld of activity, but knowing how to win government contracts: how to bid, how to develop contacts with offi cials and politicians. On that basis they can undertake contracts across virtually any fi eld where government has decided to outsource.

This process has been greatly aided by the growth of new public management theory (NPM), which has led to a relaxation of earlier strict rules about the rela-tionships that politicians and offi cials may develop with fi rms with whom they do business, on the grounds that this would enable private business think-ing to percolate into government. A core feature of this is the “revolving door” between public offi cials and the key outsourcing companies.

On leaving offi ce politicians and civil servants are permitted to join fi rms that they had been involved in regulating; fi rms are permitted to second staff to min-istries with which they are negotiating contracts. Find-ing out these connections does not require extensive research. No one is concealing them, because it is part of NPM that such links are to be encouraged. Whether or not actual corruption is involved is beside the point; corruption is unnecessary when inter-lock-ing interests of this kind can operate brazenly. The revolving door is just one part of the spiral whereby economic and political power reinforce each other in a spiral of growing inequality.

Colin Crouch is Professor Emeritus atthe University of Warwick

here is a prevailing narrative that baby boom-ers (those aged between 52 and 70 years old in 2016) have benefi ted from free edu-cation, generous pensions and the housing boom, while millennials aged between 16

and 31 years, face greater challenges with home own-ership and saving for retirement.

While the issues are more complex than the generalisations above, the data does tell us that until the late 1950s each generation (or cohort) has experienced higher average incomes than the cohort born 10 years earlier had at the

higher than for those born in the 1940s when they were the same age. The 1940s cohort experienced a similar rise compared to the 1930s cohort.

However, this is not true for those born in the 1960s, 1970s and 1980s; their incomes are no higher than their prede-cessors born 10 years earlier experienced at the same age. For those born in the 1960s and 1970s, the lack

Young people are less well-off than their parents—and that’s a problem

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If you give birth to a child in the UK in 2016 you might have a number of hopes for their future: a successful education, a place at university, a career, a family of their own. But if your child were born in one of the countries where 1bn people who still live

on less than $1.25 a day reside, your hopes would be different. Instead you’d be hoping for basic healthcare, vaccinations, food and clean water.

Eradicating this geographic lottery of birth is the criti-cal challenge of our age; and to meet that challenge we need to start with women and children.

Investing in women is crucial for reducing global ine-quality because of the knock-on effect it has for all of society. When we invest in a woman’s health it has a ripple effect on her life, her economic future, and the lives of all those around her. When a woman has access to contraceptives she is more likely to survive childbirth and have healthy babies. She also invests in her chil-dren’s health and education through childhood and ado-lescence. When we invest in women, we invest in the people who invest in everyone else.

Immense progress has been made. Since 1990 maternal mortality and global under-fi ve mortality have both been cut nearly in half. The overall global gender disparity in primary and secondary education has been eradicated. And extreme poverty has been halved.

But a great deal more remains to be done; and with a $33.3bn funding gap for reproductive, maternal, new-born, child and adolescent health in high-burden, low- and lower-middle-income countries, a new model of funding is required.

“Every Woman, Every Child” is the global move-ment set up to meet that challenge head on. The UN’s Global Strategy for Women’s, Children’s and Adoles-cents’ Health is the plan, and the Global Financing Facil-ity (GFF), a promising new funding mechanism.

Together this trio of interventions aims to ensure that no woman, child or adolescent should face a greater risk of preventable death because of where they live.

Led by national governments, the GFF is trying to ensure smart, scaled and sustainable funding, con-necting governments with the public and private sec-tor organisations that have the expertise and funding to help. In so doing countries can plug the funding gap that currently exists.

This isn’t just about fi nding the money however. It’s also about using that money in a smart and sustainable way. The GFF helps ensure that the money is used in the most effective way on the things that work. And by empowering national governments to create solutions that are sustainable, it allows countries to take advan-tage of the increased prosperity that comes from guar-anteeing that every woman and every child has access to basic healthcare.

In Cameroon, for example, the GFF is helping to improve childhood nutrition, including through promot-ing exclusive breastfeeding for the fi rst six months of a child’s life. Breastfeeding helps optimise nutrition and improves health and development. If used exclusively for the fi rst six months, it can also act as the fi rst vaccine a baby receives. It provides nutrition, and cells from the mother’s gut are transferred to the child providing vital protection. Increasing breastfeeding globally could pre-vent over 820,000 child deaths each year. This is just one example of what can happen when resources and evidence are used at scale to target a specifi c need.

And in Kenya, another country targeted by the GFF, great strides are being made with sexual and reproductive health through innovative incentive schemes. The Performance Based Financing scheme encourages mothers to give birth in clinics and sub-sequently have access to vital maternal care. Clinics, health workers and mothers all receive incentives. One clinic in Samburu County has seen the num-ber of births that take place in the clinic each month rise from 62 in 2010 to 249 in 2014. The incentives also encourage mothers to continue receiving treat-ment from the clinic and vaccinate their children. This not only saves lives, but gives each life a much better chance of fulfi lling her potential.

Reducing inequality is about allowing everyone to have the same aspirations. To do this we must focus on every woman and every child.

Joe Cerrell

The global challenge Children should have the same life-chances no matter where they are born

Joe Cerrell is Managing Director,Global Policy and Advocacy, Bill & Melinda Gates Foundation

There is no clear-cut solution to the issues raised. For example, we may want to accept that homeowner-ship will decline and society moves towards more con-tinental-style renting with an increasingly regulated private rental market that encourages better quality housing, longer leases and rent controls. Addressing issues related to the polarisation of the labour mar-ket must be a component of any new polices such

as a new industrial strategy or skills strategy. If people are living longer, the working life

may need to be more fl exible so peo-ple can accumulate wealth over

a longer period.Inherited intergenera-

tional cash transfers are another way of passing income between genera-tions for wealth accumu-lation; although this raises issues for those families

where this is not an option. Families themselves often

step in, using private inter-generational transfers to ame-

liorate the worst effects of housing scarcity. But this brings with it seri-ous questions both of equity and social mobility, and of how long

we can rely on the Bank of Mum and Dad.

While by no means exhaus-tive, the issues raised during the seminar and within this article are critical challenges, and they are ones that we too

often fail to understand fully. No one knows what the future

will bring, but even in optimistic scenarios it looks likely that the mil-

lennials will record much lower generational pay progress than their predecessor generations did. And under the pessimistic but plausible scenario in which factors including Brexit and the structural pro-ductivity slowdown impact on earnings growth over the longer term, millennials face becoming the fi rst generation on record to achieve lower lifetime earn-ings than their forebears.

This article resulted from a roundtable on 17th October 2016, at the British Academy, with the Institute for Fiscal Studies. Data taken from the IFS Briefi ng Note: “The Economic Circumstances of Different Generations: The Latest Picture”

ket must be a component of any new polices such as a new industrial strategy or skills strategy. If

people are living longer, the working life may need to be more fl exible so peo-

ple can accumulate wealth over a longer period.

Inherited intergenera-tional cash transfers are another way of passing income between genera-tions for wealth accumu-lation; although this raises issues for those families

where this is not an option. Families themselves often

step in, using private inter-generational transfers to ame-

liorate the worst effects of housing scarcity. But this brings with it seri-ous questions both of equity and social mobility, and of how long

we can rely on the Bank of Mum and Dad.

While by no means exhaus-tive, the issues raised during the seminar and within this article are critical challenges, and they are ones that we too

often fail to understand fully. No one knows what the future

will bring, but even in optimistic scenarios it looks likely that the mil-

with just 2.9 per cent coming from employers. In the absence of signifi cant improvement in these fi gures, millennials face much more fi nancial uncertainty when reaching retirement.

At the same time, home ownership rates are lower for younger cohorts—only 45 per cent of those born in the early 1980s owned their own homes at the age of 30, compared to 55 per cent of those born in the 1970s, and 60 per cent of those born in the 1960s. This decline in home ownership has been accompanied by a sharp increase in pri-vate renting among younger groups and a divergence in the costs paid by renters and homeowners. When in their late 20s, rent-ers born in the early 1980s spent nearly 30 per cent of their net income on housing costs (largely rents) on aver-age, compared to 15 per cent for homeowners (largely mort-gage interest). At the same age, renters and homeowners born in the 1960s both spent around 20 per cent of their income on housing costs on average. The rise in income expenditure on rent is partly due to a general rise in costs, but also due to the number of people renting from private landlords rather than from councils or housing associations, as with previous generations.

Why does this matter and are there solutions?

Intergenerational inequality matters for a variety of rea-sons. Lower average incomes are creating a stagna-tion in wealth not seen in previous generations. Asset ownership—in cash savings or possessions—pro-vides a source of stability that helps individuals to deal with the inevitable challenges life throws up, and cre-ates a platform for risk-taking and entrepreneurialism. Crucially, wealth also makes a big difference to living standards in retirement, with implications for individ-uals and for the state, if the individual has no source of private support. The fact that those aged 65-74 now hold more wealth than the entire population aged under 45 (a group more than twice their size) is there-fore a matter of concern.

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