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So, The Spirit Level is back in the news again, although not for reasons that its authors would have wanted. The pre-election consensus over the book's conclusion that financial inequality is bad for all of us has quickly broken down, and its evidence and analysis has been attacked from a number of quarters.

We shouldn't be surprised by this – an idea with such real and far-reaching implications for social policy was unlikely to transcend ideological divisions for long. But it would be unfortunate if future discussion of the concept of inequality were to be dominated by wrangling over national-level statistics, because that seems to me to overlook an important aspect of the question.

What about inequality at the local level? Richard Wilkinson and Kate Pickett argue that comparing one's possessions and status with those who have more in life leads to stress and a greater propensity to violence, and that many of the damaging effects of inequality flow from there. If that is the case, shouldn't people be worse off in areas where affluence and disadvantage sit side by side, where evidence of inequality can be seen every day? Or is there some potential benefit to be derived from this situation – could close proximity to people with more be of help to people with less, or even vice versa? Or, perhaps, do the haves and have-nots just ignore each other, having little impact for good or ill?

These questions matter, because local inequality can be found all over the country, not least in London. The area covered by the Connected Communities project is a case in point. It focuses on New Cross Gate, which looks up (topographically and figuratively) to the more affluent conservation area of Telegraph Hill. There is currently little interaction between the two neighbourhoods; despite the fact that they live almost on each other's doorsteps, and may well use some of the same facilities, the residents look in different directions and live separate lives.

There is plenty of evidence to show that people feel happier living 'among their own' than they do in more mixed (and less equal) communities; but there is also evidence that this type of homogeneity is less useful when it comes to finding a job or getting access to people in power. So would greater contact between New Cross Gate and Telegraph Hill improve the lives of people at the foot of the hill, or would it simply highlight the inequalities between them? And if it would be helpful to increase contact, how could people at the top of the hill be encouraged to come down and what effect would it have on them?

If the issue of inequality gets mired in arguments about national-level taxation and redistribution, we should not forget the local angle and its potential effects for better or worse. One of the tasks for the Connected Communities project will be to understand those effects and develop ways to harness them for good.

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