The UK must do more to reduce inequality between and within countries

8 July 2019
Author: Chiara Mariotti

This year, economic inequality is back on the centre stage of the global development discussion: it was the leading theme of the European Commission’s European Development Days in June, it’s the priority of the Biarritz’s G7 Summit in August, and it will be the focus of the UN’s High-level Political Forum (HLPF) in June, which will review global efforts in achieving Goal 10 (reducing inequality between and within countries).

Goal 10 in the 2030 Agenda reflects the widespread recognition that inequality is one of the critical challenges of our times and that each country carries responsibility for tackling extreme economic inequality, both at home and globally.

Inequality is bad for economic growth, undermines a country’s social contract, fosters instability and violence, and hampers progress on health. It is also a major obstacle to addressing the other great challenges, including gender inequality, climate change, the crisis of democracy and work-displacing technological progress.

Weak global progress in Goal 10

World Bank data shows that even with double the current rates of economic growth, about 3.7% of the global population will be living in extreme poverty (on less than $1.90 a day) in 2030 unless inequality is reduced.

Four years after the adoption of Agenda 2030, the inequality crisis continues unabated. Despite all this year’s high-level global chattering, Goal 10 has no dedicated agency or mechanism for its implementation. Goal 10 also fails to capture the defining feature of the current inequality crisis – the widening gap between the rich and the poor – and focuses instead on the poorest 40% of people.

Despite its commitment to “leave no one behind”, the UK government has so far not done enough to achieve Goal 10, neither domestically (see the analysis in UKSSD’s report), nor globally (see Bond’s report on UK’s contribution to the SDGs and Oxfam’s analysis).

The role of UK aid

The government has taken action in some policy areas that can contribute to achieving Goal 10 globally, including leading the international agenda with the Disability Summit and the Addis Tax Initiative (ATI), which requires donors to raise support for domestic resource mobilisation (DRM), a cornerstone in the fight against inequality everywhere.

Despite the commitment to double UK aid spending for DRM by 2020, from £25m per year in 2014, spending only amounted to £27m in 2017. A significant improvement would be the implementation of the £47m package of support for improving tax systems in developing countries announced in February 2019.

There has also been a decline in UK aid for public spending in health and education, which are critical in the fight against inequality, as recognised by the IMF. At the same time, an increasing amount of aid funds for social spending are delivered through the CDC Group, which implements health and education programmes that charge fees for patients and pupils. User fees make these services unaffordable for poor people and contradict SDG targets 4.1 (ensure free primary and secondary education for all girls and boys) and 3.8 (guarantee universal health coverage).

None of the top 20 country recipients of UK aid in 2017 (for which we have data) achieved inclusive growth as defined by target 10.1 (income growth of the bottom 40% of the population faster than the national average). In fact, they experienced an increase in inequality.

In 2020, the SDG “decade of delivery” will commence. The UK government should resume the leadership role that it played in the design and adoption of the 2030 Agenda, recognising that Goal 10 is essential to the whole agenda.

Following the example of the World Bank, which in 2013 adopted two new goals to guide its work, ending extreme poverty and boosting shared prosperity, the UK government should rethink aid and foreign policy, so that it contributes to tackling extreme inequality as well as poverty.

Read Bond's report on the UK's global contribution to the SDGs.

About the author

Chiara Mariotti

Chiara Mariotti is a development economist working at Oxfam GB as policy manager on inequality.