Leading Article: The nation is wealthy, but the gap between rich and poor is too great

Published: 19 May 2007

Vivian Imerman has proved himself a hard-nosed operator over the years. But the employees of Whyte and Mackay will no doubt be raising a glass to the South African entrepreneur. Mr Imerman, who sold the whisky distillery this week for a fat profit, announced yesterday that he will be awarding all his workers a bonus equivalent to three months' salary, all paid for out of his own pocket. This will, according to Mr Imerman, be a fair compensation for their efforts in turning around the fortunes of the company he bought four years ago. "The 20 or so people at the top have been handsomely rewarded," Mr Imerman said, "but I wanted to reward everybody."

It is a refreshing gesture. But there is also something symbolic about this bucking of the "winner-takes-all" mentality of our economic system, coming, as it does, as Tony Blair's premiership gives way to that of Gordon Brown. The social context for Mr Imerman's act of generosity is depressing. Britain is richer than ever. The economy is growing healthily. But the distribution of the rewards has been uneven. The Office for National Statistics revealed this week that income inequality has shown a small increase of late. Moreover, since 1997 there has been no real sustained reduction of inequality, despite New Labour's muted attempts at redistribution. This sad state of affairs is made worse by the fact that Britain does not have the American tradition of philanthropy. The two richest individuals in the US, Warren Buffet and Bill Gates, are giving away their fortunes to charitable institutions. Which British-based billionaire would do the same?

Income inequality is just one gauge of a society's health. Another is social mobility. And in Britain that seems to be declining too. The best state schools have been colonised by the middle classes. Fewer working-class children are going to our elite universities, Oxford and Cambridge. A child's life chances may no longer be dictated by their social class - but this dividing line is being replaced by the size of the parental wallet.

It would be wrong to ignore how difficult it is to combine an open and growing economy with reductions in economic and social inequality. Few countries have been successful in marrying the two. But such is the scale of the problem that reducing inequality cannot but be an important political battleground in the coming years. All the political parties are beginning to wake up to the necessity of doing something about it. And Mr Brown will not want to be outflanked on an issue that has always been close to his heart.

In fairness, the Government has done decent work in reducing income differentials, such as the introduction of the minimum wage and a focus on training. Without such things the gap between rich and poor would have been even greater. The use of the tax and benefit system to this end has been less effective. Tax credits have helped to lift many families out of relative poverty. But they are biased towards the working poor. They do comparatively little for the very poorest - those who cannot, or will not, work.

This is not simply a question of boosting incomes. Any government that is to have a hope of tackling inequality will have to confront the new scourges of our society: drug and alcohol abuse, family breakdown, poor housing and inadequate education. It will also have to be steadfast in confronting the vested interests of a larger middle class, particularly in education.

After a decade, the impression is of a government that has merely been treading water with respect to this problem. Mr Imerman has done his small bit - and it is an example that should be followed by other wealthy people - but ultimately it is the job of government to turn the tide against inequality.