Child poverty costs everyone in the UK £600 a year according to new TUC research published on the eve of its annual Congress. Government can find the money to meet the £4 billion cost of meeting its pledge to halve child poverty by 2010 by closing the tax loophole that allows many of the super-rich to avoid tax by closing non-domiciliary status. With a new group of the super-rich floating free from the rest of society, Britain needs a new modern politics of equality that recognises that both middle and low income Britain are paying the price for a growing wealth gap.
Speaking at a press conference in Brighton Library on the eve of the TUC Congress, TUC General Secretary Brendan Barber said:
'Today I launch a new TUC campaign to cut the costs of inequality.
'Headlines in recent weeks have been dominated by the size of top directors' pay and pensions, and the astronomical size of city bonuses.
'Union campaigning has dragged the murky world of private equity into the spotlight. We have exposed the tax loopholes that mean many private equity chiefs hardly pay tax.
'Meanwhile - despite welcome government action - we still have one of the highest rates of child poverty in Europe.
'The top three per cent of the population own three times as much as the whole of the bottom half of the population.
'And if you come from a poor background, you now have less chance of escaping it than you did a generation ago - an appalling legacy of the 'greed is good' 1980s.
'The old debate was mainly about whether this was morally right - or just the politics of envy. Many hard working middle-income earners feared that they would have to pay for any moves to narrow the gap between rich and poor.
'But today's debate is different.
'Today a significant group of super-rich float free from the rest of society, and think that tax is for the little people.
'Today the rest of society pays a heavy price for the wealth gap - whether middle, low or no income.
'The super-rich distort the housing market - with house prices following top pay not average pay.
'Mortgage rates are higher than they should be to curb these inflationary pressures.
'The result is that many would-be first time buyers and vital public service workers can't get a foot on the housing ladder and even chronic housing need is no guarantee of decent social housing.
'The gap harms social cohesion - and without joining the moral panic about crime rates in the UK, it's noticeable that many countries with a fairer distribution of income have lower crime rates.
'And far from being an engine of economic growth, inequality holds us back. Eleven out of twelve of the OECD or EU countries that are richer than us are more equal.
'That's because there's a price to pay for poverty too. The new report on child poverty we publish today shows that child poverty costs everyone in the UK more than £600 a year - or an astonishing £40 billion across the economy
'Using careful and conservative US research this estimates two kinds of cost.
'First are the direct costs to society. There is the extra health care and the extra benefits paid to people who suffer poor health. While the majority of the poor are perfectly law abiding and it's no excuse, poverty does lead to increased crime rates. This too has a direct cost.
'Second is the lost economic output that flows from the underachievement, low skill levels and shorter working lives caused by a poor start in life.
'This is why the TUC is one of the strongest supporters of the government's commitment to end child poverty. It's both the right - and the prudent thing - to do. And is perhaps the most radical policy pledge for a generation.
'But while there will be long-term savings there are shorter term costs. Meeting the pledge to halve child poverty by 2010 becomes increasingly difficult each day poor families do not get the extra benefit and tax credits required.
'It does not come cheap. Most estimate £4 billion a year. Once the only option would have been to bump up middle class tax rates.
'But today this amount could easily be raised by closing the tax loopholes of the super-rich. Ending the widespread abuse of the non-domiciliary tax break by the super rich, and replacing it with a proper test of residency, on conservative estimates, can easily raise £4 billion a year. And ending the private equity tax dodges we outline in our other new report today would contribute even more.
'There is therefore no need to increase the tax burden on middle or low-income earners to pay for it - no cap on aspirations - and much for us all to gain - as society becomes more cohesive and the economy more productive.
'This is why we say that this is a key part of a new modern politics of equality.
'It's the best way to respond to the pressures of globalisation. We can't say - 'stop the world I want to get off' - but we can say that some of the undoubted extra growth that flows from globalisation should be used for the benefits of society as a whole. That is the way to stop it becoming an engine of inequality - as well as one of growth. And it is more obvious every day that in a globalised world our country cannot afford to let anyone underachieve or fail to reach their full potential.
'But this is not just a series of demands to make to ministers, though of course the more government action the better.
'Instead we recognise our responsibility as a trade union movement to build support for a new progressive consensus of equality and redistribution - not based on the old politics of envy but on a new politics of cutting the costs of inequality.
'The more popular these policies become, the more government will be prepared to do.
'That is why today I signal union support to build popular support for a generation long commitment to narrow the gap between the super-rich and the rest of us - and to lift every child out of poverty.
'Why not a new standing government backed, but independent, Commission on inequality?
'And the labour market must be fair and free from exploitation too. We want to see more protection for vulnerable workers and better enforcement of their rights. We want to see a single equality law that deals with current loopholes and weaknesses. We need a strong, vibrant and growing trade union movement - a core ingredient in almost every fairer society. All crucial ingredients in a fair jobs market.
'We need action to provide more affordable housing to rent and to buy. We need decent well-funded public services with a new remit to tackle inequalities in health and education. It's time to talk again about the importance of the social wage.
'It's an exciting - indeed an inspirational - agenda. It's ready to provide a new focus for progressive politics in the UK.'