The United Nations has warned British Finance Minister Gordon Brown that in Labour’s third term he will have to levy taxes on the better-off if the government is to meet its ambitious goal of halving child poverty by 2010.
In its flagship annual study charting progress in tackling poverty, the UN highlights Britain as a country where inequality has put the brake on development and said there would need to be a complete reversal of the pro-rich bias of the 1980s to eradicate the legacy of Margaret Thatcher.
The UN’s human development report (HDR) praises Labour for its efforts to tackle child poverty since 1997, but says a cash-strapped Brown needs to go further in his coming budgets and contemplate politically sensitive increases in taxes to maintain the progress made in the past eight years.
”If the next 10 years did for the poor what the 1980s did for the rich, that would bring the United Kingdom within touching distance of the child poverty goals,” the UN said.
The report singles out Britain and the United States as two wealthy countries where a growing gap between rich and poor has emerged in recent decades, leading to a greater incidence of child poverty and big discrepancies in health outcomes.
Overall, the UN said the world was making faltering progress towards meeting the millennium development goals (MDGs) set by every nation in 2000. These include cutting by 50% the number of people living on less than $1 a day, reducing infant mortality by two-thirds and putting every child in school.
”There is little cause for celebration,” the report concludes. ”Most [poor] countries are off track for most of the MDGs. Human development is faltering in some key areas, and already deep inequalities are widening.”
In Britain the incomes of the richest 10% rose by 3,7% a year on average from 1979 to 1990 compared with a 0,4% average increase for the poorest 10%. Taxes on top earners were cut from 83p to 60p in the first Conservative budget in 1979 and from 60p to 40p in 1988.
The UN said that if the incomes of the poor rose by 3,7% and those of the rich rose by 0,4% until 2010, child poverty would be cut from 23% to 17%.
The UN said Labour’s untrumpeted tax and benefit changes since 1997 had resulted in the incomes of the poorest fifth of the population rising by 20%.
But the report argues that more needs to be done to load the tax and benefits system in favour of the less well-off, to make it easier for parents in poor families to find work and to make ”fundamental changes to the underlying distribution of earnings and income”.
The UN, using data provided by Britain’s Institute for Fiscal Studies, said there was a limit to what Brown could do in his budgets to meet the goal established by Prime Minister Tony Blair of cutting child poverty in half by 2010 and eradicating it within a generation.
”Meeting the 2010 target [of halving child poverty] will require more redistribution, a change in working and employment patterns among parents and more fundamental changes to the underlying distribution of earnings and incomes.”
The HDR — published each year since 1990 — concentrates on the problems of poor countries, but a central theme of the report is the negative effect of inequality in both high-income and low-income countries. It highlights how countries with low per capita incomes are often doing better than countries with higher incomes in meeting human development goals because they are pursuing pro-poor policies.
Noting that the US has a worse infant mortality rate than Malaysia, the report says: ”Some countries that spend substantially less than the US have healthier populations. US public health indicators are marred by deep inequalities linked to income, health insurance coverage, race ethnicity, geography and — critically — access to care.”
The report also criticises two of the world’s leading developing countries — China and India — for failing to turn stronger growth into better health outcomes. — Â