‘Tackle equality gap by looking to the 19th century reformers’

Diane Coyle OBE, an economist and former member of the Competition Commission, told an audience in York last night that “substantial institutional reform” is needed to close the gap between the rich and poor.

Delivering the Joseph Rowntree Foundation Lecture, she called for acceptance that the UK is now in a “depression” with the downturn “far longer and deeper than in the first half of the 1930s”.

Ms Coyle said inequality in the UK is now comparable to countries like Albania, Mozambique and Kyrgyzstan and warned that “excessive” levels could work against future economic growth.

She claimed that the causes of inequality pre-date the current financial and economic crisis and can be traced back to the early 1980s.

Likely causes include a technological revolution which has seen humans replaced by robots, the growth in global trade and cross-border investment, over-reliance on less productive parts of the economy, the dominant political philosophy of individual enterprise, self-serving ‘rent-seeking’ behaviour by executives and emdedded social exclusion causing generations of joblessness.

Ms Coyle said: “It would be easy to be gloomy about future prospects from the depths of a depression, with unemployment rising and inequality at these Gilded Age levels.

“However, the example of an earlier generation of social reformers is inspiring.

“The late Victorian and Edwardian era also experienced dramatic technological changes, economic upheaval and a long trade depression, dreadful social conditions.

“Yet the same age brought massive investment in private and public goods such as schools, water and sewerage systems, bridges and railways, on such a scale and with such longevity that we are still reliant on them.

“The creation of a successful industrial economy involved radical institutional innovation both required by and enabled by technological change.

“The institutions created by those generations of political and social innovators served us until the technological basis of the economy changed again. It is an example we should keep in mind now, when looking for inspiration in anxious times.”

Ms Coyle said structural tensions between the production and distribution of goods and services can be resolved by institutional and political innovation, but warned that this is likely to be a slow and haphazard process. She highlighted the role that the third sector can play in reducing inequality.

“In addition to social enterprises, I would add, for example, unions, mutuals and co-operatives, families and faith or cultural groups, philanthropic foundations, some for-profit technology businesses or cultural groups, sports and arts clubs,” said Ms Coyle.

“The country is awash with organisations with a potential economic impact, some traditional but many much newer possibilities.”

Practical measures to tackle inequality include curbing executive pay and bonuses by insisting on non-executive-only membership of remuneration committees and greater transparency in reporting pay packages, she said.

Other measures are greater competition, fairer public spending, educational reform and more effective social policy targeting children at a pre-school age.

Ms Coyle was born and raised in the North West of England and educated at Oxford and Har- vard.

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