Provide an Example of a Recent Legal Change (legislative or Judicial) That Has Contributed to the Growth in Income and Wealth Inequality and Explain How It Has Done So
University of Bristol Law School
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Unit Code/Name | LAWD30017 Rich Law, Poor Law |
Assessment title/question | 3. Provide an example of a recent legal change (legislative or judicial) that has contributed to the growth in income and wealth inequality and explain how it has done so |
Submission date | 6 November 2017 |
Student name | Catherine Jones |
Date submitted | 6 November 2017 |
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Income inequality refers to the unequal distribution of incomes in a particular state. In the UK income inequality “fell during the recession and its immediate aftermath, and has remained broadly unchanged since then”[1]. An issue still remains that there are certain legislative changes, which are perpetuating the inequality faced by citizens, which tend to favour the top 20% of the wealthiest in society whilst neglecting the plight of the bottom 20%. Wealth inequality as another form of economic inequality but focuses on marketable assets, such as real estate and financial wealth (e.g. shares and bonds) as opposed to an individual’s earnings and benefits.
In this essay I shall demonstrate how the law can have a negative impact on economic inequality, using the Welfare Reform and Work Act 2016 (‘The Act’)[2] as an example. This Act was introduced by the Conservative Government following a manifesto pledge in the 2015 election[3]. It has, however, received strong criticism and has been described as ‘A Pandora’s box for Britain’s poorest families’[4].
Changes within The Act
Whilst there are many provisions contained within the Act which are likely to contribute to a growth in economic inequality, such as the freeze on social security benefits[5] which will ensure that payments aren’t kept in line with infation and a two-child limit for receiving benefits[6] which is likely to decrease the income the poorest families receive, I have chosen to focus on S.8 and S.9 which reduce the maximum benefit which people are entitled to. These sections have been commonly refered to as the ‘benefit cap’.
The chosen sections lower the annual limit to £23,000 for residents of Greater London[7] and £20,000 for residents elsewhere in the country[8].
Experts have warned “More than 116,000 of the poorest households in the UK will be hit by the extended benefit cap, putting many at risk of homelessness”[9]. Giving the poorest people less money to live on will drive up the economic inequality in society.
Austerity policies are those, which are implemented to reduce public spending to ensure that government goals of reducing public debt and the deficit can be met. Cutting back on benefits can be seen as a form of austerity since the Government will save a large amount of money in the payments, which they will no longer have to make. The reasoning of the Department of Work and Pensions (DWP) for introducing the cap is that it should act “as an incentive to get people into work because moving on to working tax credits gains an exemption from the cap”[10]. However, a study conducted in Oxford found that “the more income a person lost from changes to their benefit, the less likely they were to move into work”[11]. This suggests that the cap will have consequences larger than those, which the DWP had expected.