20 August 2010

‘Fairness’ in a time of public spending cuts

This week we have seen the debate about fairness in a context of spending cuts step up a notch.

On Tuesday [17 August 2010] the Chancellor gave a speech in which he said that "fairness and growth" will be the principles guiding the Government's decision-making about spending cuts. For the Chancellor, fairness means fiscal responsibility because "governments that lose control of their public finances are the most unfair and unprogressive."

And yesterday the Deputy Prime Minister, announcing his new role championing social mobility, reiterated the commitment to fairness as a driving force in the coalition government, defining fairness in another way: "Fairness means everyone having the chance to do well, irrespective of their beginnings … In other words, fairness means social mobility."

Yet at the same time charities, unions, and opposition spokespeople are up in arms about the impact of the cuts on the most vulnerable. Just two weeks ago the Fawcett Society announced that they are taking the Government to court for failing to assess the impact of the budget on women, a budget their Chief Executive describes as "blatantly unfair".

What's going on?

Well, apart from anything else, fairness means different things to different people and in different contexts. Our research on attitudes to economic inequality shows the problems this can cause. Some people see redistributing income to close the gap between the rich and poor as 'fair', some feel that 'fairness' means allowing everyone to keep the fruits of their own labour, but most feel that both things are ‘fair’, despite the fact that they are contradictory.

So where does that leave us in a debate about fairness when public spending cuts are happening? Perhaps the answer is to lose the rhetoric about fairness, and concentrate on real world impacts.

Before the prospect of spending cuts, before the Budget, even before the recession, we already had some serious problems. The numbers of people out of work and looking for a job had been rising since 2005, and the percentage of unemployed 16- to 25-year-olds was already more than twice that of other working-age adults. Despite huge strides in skills and education, the pay gap between women and men, and between white people and those from minority ethnic communities, remained stubbornly high.

And now, reeling from the impact of a recession, we are contemplating the prospect of massive cuts to public services. Public services by their very nature give the most support to those people and places at the bottom of the pile. Calculations of the 'social wage', the in-kind value of public services, show that for people in poverty, this forms a significant part of their household income, and that health, education and particularly social housing are all 'pro-poor' services.

So if public services are a vital part of poor households' income, and we cut them, what happens? Analysis commissioned by the TUC shows that the effect of changes to the tax and benefits system combined with the projected cuts to public services are likely to result in an annual loss of income and services of £1,514, or 21.7 per cent of household income, for the poorest tenth of households. This compares with £2,685 or 3.6 per cent of household income for the richest tenth.

Public spending cuts are going to happen, but whether you think it's 'fair' or not, cutting public services is likely to make the lives of people struggling most to get by even harder. And that should be the real test for deciding where proposed cuts should fall.