Justin Welby (left) and John Sentamu: The Archbishops should have addressed greed in the City instead of dubious claims about inequality (Christopher Furlong/Getty Images)


Some 30 years ago, under the auspices of the then Archbishop of Canterbury, Robert Runcie, the Church of England published a book, Faith in the City, which caused something of a stir as a result of its somewhat intemperate and economically illiterate attack on the economic policies of the Thatcher government. As Chancellor of the Exchequer at the time, I remember it well.

A new book has now emerged, On Rock or Sand? Firm Foundations for Britain's Future, edited by the Archbishop of York, Dr John Sentamu, explicitly harking back to the earlier one. Regretting, in his own words, that "on facing savage attacks [on Faith in the City] not only by those in the government of the day but also by other powerful figures in society, the Church leadership then lost its nerve and moved on to internal ‘churchy' matters", he presents the new book as the Church of England having regained its nerve.

On Rock or Sand? (SPCK, £9.99) may not be quite as bad as its predecessor, but Archbishop Sentamu's contribution, the lengthiest in the book, is fundamentally flawed. His overriding concern is with inequality, of the extent of poverty in what is, overall, a relatively prosperous society. The flaw—surprising in one who originally hails from overseas—is that he presents this solely as a British phenomenon, seemingly unaware that studies by the International Monetary Fund and others have clearly shown that, throughout the developed world, inequality (as officially measured) has been gradually rising for the past 30 years or so, under a wide variety of governments and policies.

So there is nothing unusual about the British experience, nor can it be attributed to the policies of the present UK government. Indeed, the most recent official figures suggest that, over the past few years, income inequality in the UK (unlike in most other countries) has lessened slightly. There are clearly larger forces at work affecting us all, of which modern technology and globalisation are two of the most important; and most people, sensibly, would not wish to turn their backs on either. It is, of course, understandable that at a time of recession inequality causes more resentment than it does when overall prosperity is growing—which, happily, in the UK it now is. It is also understandable that at a time of recession there is increased resentment at the extent of tax avoidance by the rich. But that is a separate issue.

According to the leftist French economist Thomas Piketty, who has written a best-selling (if little read) big book on the subject, the explanation of growing inequality worldwide is that the return on capital exceeds the rate of economic growth. This dubious generalisation is not only based on flawed statistical evidence but ignores the extent to which the return on capital reflects risk. Be that as it may, his proposed remedy is a swingeing tax on high incomes, worldwide. My own experience is that, when as Chancellor I sharply reduced the tax on high incomes in the late 1980s, the yield actually rose, giving me more scope for helping the poor through public expenditure. The only sufferers were the accountancy firms and tax lawyers, who had been doing very well advising the rich how to reduce their tax bills. Needless to say my heart bled for them, but I felt they would survive.