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Mr. Streeter : It was important that family credit and other forms of social security payments were put in place by this sensitive and caring Government to ensure that every person and every family who can at present attract only a low-paid job have their income made up to a reasonable level by the taxpayer. I consider that to be a reasonable and right response, which is far better than the response at which the hon. Lady hinted, although she did not describe it clearly, of a national minimum wage. Opposition Members must begin to live in the real world. A national minimum wage would undoubtedly cause unemployment for thousands of people because employers could not afford to increase their wages to that extent.
I place on record my strong support for the outstanding speech by my hon. Friend the Member for Teignbridge (Mr. Nicholls). In many respects, it was the speech that I had thought about making myself. He spoke about the great inequality being perpetrated on the majority of people
Column 601by tiny minority interest groups. The tail has been wagging the dog for far too long. We are now entering a time when the dog wants to respond. Over the past 30 years, the pendulum has swung in favour of those minority groups, who are a tiny fraction of the nation. The pendulum has swung too far and will return with interest. Let us have no more empty rhetoric such as the motion. Let us have firm and constructive policies which seek to deal with some of the remaining issues. Over the past 15 years, our Government have a record of which we can be proud. Ordinary families on average earnings are now £83 per week better off than they were in 1978-79, after tax and inflation are taken into account. Real incomes are up sharply for vulnerable groups, including 40 per cent. real income increases for pensioners. As has already been said--this is important--the top 10 per cent. of taxpayers now account for 45 per cent. of the income tax take, compared with 35 per cent. in 1979. That is a record of which we can be proud.
The issues of inequality need to be addressed. I believe that the philosophical approach to the subject is as follows. We must put in place opportunities for people. We must remove barriers which might prevent access to that opportunity. We must encourage people to seize that opportunity, but then each one must decide for him or herself. We cannot live people's lives for them. What does this mean in practice ?
First, in practice, we are talking about access to decent education. The Government reforms of the past few years have been striving to create an improved education service and there are now many signs that this important policy reform is beginning to bear fruit. The national curriculum is now widely accepted as improving standards. We have stressed the importance of assessing pupils at regular stages and the importance of parental choice. We have pursued the popular policy of allowing good schools to expand. We have delegated to schools the way in which they spend their budgets through LMS--local management of schools. We have pursued the important policy of grant-maintained schools which allow parents, teachers, governors and headmasters far greater choice and a far greater say in how schools are run. Access to education is improving under this Government.
Secondly, our reforms of health care are designed to improve access to health care free at the point of need. They are beginning to work. Some 1 million more patients are being treated than ever before. We all know that there is no bottomless pit of resources, yet demand for increasing health care is infinite. The Government are responsible in seeking to bring to the surface the costs of various types of treatment and in seeking to improve efficiency in the health service. Those are very necessary reforms which guarantee the survival of the health service free at the point of need. To go blindly on pouring in more and more taxpayers' money without reforms of efficiency and careful costing would lead to the service's ultimate demise. The third point is access to a reasonable job. It is important for any Government to get the economic framework of the country right. How we rejoice, therefore, in the fact that, since December 1992, 300,000 people are now back in work. How important it is that the Government proceed with the reforms in industry and in business to deregulate, to improve competitiveness and to
Column 602continue the revolution with our supply side reforms. Those factors are important in creating jobs. Today, we can congratulate ourselves on our low interest rates, our low inflation and our competitive pound. We have in place an economic framework that is likely to produce the sustained economic growth which will be so important to people over the next few years.
Fourthly, there must be access to decent and affordable homes. Over the past three years, 170,000 new social homes have been created by housing associations. Housing associations are now the major provider of social housing and we are revitalising the private sector at the same time. For all those reasons, we have a record of which we can be proud in terms of offering opportunities to people. We have given them access to the things that they really care about--a job, a home, education for their children and health care in times of need. There is a whiff of hypocrisy in the air this morning. The motion, which calls for greater equality, simply does not ring true. There is not much equality in Monklands district council. There was not much equality for pensioners in the late 1970s when roaring inflation at 26 per cent. ate into their life savings, forcing many of them to live in abject poverty. There was not much equality of opportunity for council tenants when the Labour party fiercely opposed the right for them to buy their own council houses, which was a great success. There was not much equality of opportunity in access to health care when the previous Labour Government had to cut their
hospital-building programme when they ran out of money.
Fine words are simply not enough. What is important is that any Government run their economy efficiently and competently, creating access for their people to opportunities of housing, jobs, education and health care. In all those areas, the Government can be proud of their record. We, at least, have practical policies to enable our citizens to gain access to opportunity. How much more they respond to that than to the empty, meaningless platitudes which drift across the Chamber from Labour Members.
Mr. Donald Dewar (Glasgow, Garscadden) : I congratulate my hon. Friend the Member for Gateshead, East (Ms Quin) on moving the motion. There is no doubt that it raises issues of genuine importance which are, to be fair, although one would not guess it from some of the speeches, of concern to the whole House and, indeed, to the country. My hon. Friend the Member for Gateshead, East put her points with clarity, ability and sound sense.
The distinguishing feature of some of the speeches is their sense of unreality. There has been a lot of charging at windmills ; setting up targets which are purely imaginary. I ought to make it clear that very few Labour Members--I shall not be dramatic and say none, but few individuals, certainly not the party as a whole--believe, as Conservative Members seem to think that we do, that we should have equality of income. Of course, there is no question that the Government should regulate everyone's wages so that everyone was paid the same or that that should even be the theoretical, desirable end to our economic life. There is no question of that at all. Similarly, it is sometimes suggested that we do not believe in the importance of individual initiative or the duty of individuals to better themselves and, in doing so,
Column 603to help better society as a whole. Of course that is important, but we argue--it is closely related to poverty--that, if one looks round our community, one sees that we have created circumstances, and the situation has worsened greatly in recent years, whereby people cannot exercise individual responsibility because they are trapped, either financially or, very often, socially, in situations which literally destroy life chances. That means that people of genuine ability and aspiration cannot make progress in society. It is not an abstract argument about salary levels or resources in that narrow sense ; it is an argument about opportunity in society and what happens when that opportunity is left to the unregulated market, when people cannot better themselves. I want people to better themselves. I am consciously struck almost every time that I am in my constituency by the number of people who do not have that opportunity, and it is against that lack of opportunity that myself and my hon. Friends are protesting.
Mr. Duncan : One of the concerns among Conservative Members is that the well-meaning beginnings of the hon. Gentleman's thinking convert into a practice which ends up malign. A fine example of that is in Labour- controlled local authorities, where one sees his kind of dogma put into practice. Would he therefore comment on today's Evening Standard , which cites an example of that dogma put into practice, about which the social services inspectorate has said :
"Children in care"
the sort of people that the hon. Gentleman most cares about "were prey to paedophiles, pimps, pornographers and drug-pushers because of the political dogma"
in the local authority of Islington?
Mr. Dewar : No, I would not care to comment in any way on a caried story in the Evening Standard , which is a synopsis of a report I have not read. Of course, if there is abuse in any part of the public service, it is a serious matter and ought to be eradicated. On the statement on the health service and the complaints procedure yesterday from the ombudsman, the Prime Minister fairly said that if there are problems and there are feelings, we ought to address them. The same applies in any other part of the service. In my local authority--it is typical of many--the struggle is not to create inequality, but to try to overcome it. It is a matter of trying to provide participation, mixture of tenure and opportunity for people who live not only in houses in the public sector, but often in poor housing conditions in the private sector.
I turn briefly to some of arguments that have been adduced. As the hon. Member for Rutland and Melton (Mr. Duncan) has intervened, may I say to him --no, it was not him ; I apologise. He will be terribly insulted and I fear that I shall him hurt him terribly because I have confused him with the hon. Member for Teignbridge (Mr. Nicholls).
It seems to be important to make the point that the fact that the present Prime Minister came from modest financial circumstances or that exceptional people in exceptional circumstances can move to the top is not a complete answer to the problems that I have been outlining and,
Column 604therefore, it is irrelevant to the main thrust of the argument. I do not want the debate to sink in a welter of statistics. To the credit of some Conservative Members--the hon. Member for Teignbridge is an example--who have spoken, may I say that there has been no real attempt to say that the gap between rich and poor has not been widening in recent years. That gap is self-evident to anyone who looks at the facts--and, strangely enough, there are people who still try to do so.
I remember a report of an interview in the Glasgow Herald on 4 March 1992 given by the Prime Minister. It lives in my memory and I have used the example on a number of occasions. He was asked specifically about poverty in Scotland, although no doubt his reply would have been the same about every part of the country. His reply was "Poverty, what poverty ?" He went on to say--I hope that I am not presenting the argument unfairly--that, of course, poverty was relative, that the definition of poverty was shifting and that, as the Government increased income support and benefit rates, they increased the number of the poor. Therefore, the Prime Minister said that it was unfair to charge them with growing poverty levels because they were, in that sense, the victims of their own generosity. I do not accept that argument.
I heard the Prime Minister repeat that argument on "Channel 4 News" on--I think--8 June. It was put to him by the interviewer that, under his Government, the rich had got richer and the poor poorer and it was suggested that that was an inescapable conclusion from the facts. The Prime Minister showed every wish to try to escape from that conclusion and, indeed, described the evidence for such an assertion as very suspect. I have a little passing sympathy with that because, of course, most of the evidence comes from Government statistics. However, on the whole, I am prepared to accept them.
The Under-Secretary of State will be familiar with, for example, the annual survey of households with below average income, which his Department produces, which suggested that, if one took the bottom 10 per cent. of households--I am sure that he will deal with it and put his gloss on it-- there was some evidence to suggest that there has been an income fall in real terms for the bottom 10 per cent. of households since 1979 after housing costs. It was a much more modest fall, but still a fall, if one takes the income figures before housing costs.
My hon. Friend the Member for Gateshead, East properly referred to the evidence produced by the Institute for Fiscal Studies. It suggested that there had been--the word is fairly used--a "dramatic" increase in the number of families whose income is less than half the national average. Even if we move away from the dramatic edge of poverty to mainstream Britain, that suggests that there are many people who have fallen back and are in a much less comfortable position than before.
If Conservative Members were defending a situation in which the gap between rich and poor had opened because of a genuine free market--for example, if individuals had shown exceptional ability and had capitalised on it without any artificial aid or assistance and had pulled away from the ruck--that would be one state of affairs, although we might wonder about the desirability of it. That, however, is not the state of affairs. The reason for many inequalities is the Government's deliberate fiscal policy.
We are talking about something that has been created as an act of policy and not as the natural order of events. Fiscal traffic has been moving in the wrong direction. That
Column 605suggests an indifference to the distribution of income at best, or possibly a malevolent interest in it. That is unfortunate. I shall not engage in a volley of statistics, but if we consider the direct and indirect tax take from the wealthiest 10 per cent. of people since 1979 as a percentage of gross income, it is clear that it has fallen. As for the bottom 10 per cent., the take has risen quite sharply.
It is right that income tax as a percentage of income has fallen, but that is not true in terms of total tax, even before the big hike of recent times --the dramatic reversal of election promises. Even before that hike, the tax burden as a whole had increased under the Government. It has increased disproportionately for those who were already at the bottom of the heap. That is unfortunate. That is not the natural order of Adam Smith economics ; it is the result of a social policy that has had unfortunate consequences. That is why Opposition Members are entitled to protest.
Mr. Evans : No. As I understand it, as a matter of income tax revenue, the top 10 per cent. of income tax payers are now contributing more revenue as a proportion of income tax to the public purse. Does the hon. Gentleman agree that it would be self-defeating for any Government of any political persuasion to increase the 40 per cent. tax band ? If he does not agree, will he explain why ?
Mr. Dewar : I am much more interested in what we do about the bottom than about the top. The gap is an important factor, and I am interested in the social consequences of it. We should be worried about the additional burdens which have had to be faced by those at the bottom of the heap.
I have not heard the hon. Member for Monmouth (Mr. Evans) speak before, except for his interventions this morning. I suspect that he is interested in marginal tax rates. He will know that in 1993-94, according to the Department of Social Security, there were 230,000 lone parents in work and 270,000 married couples who were paying 75p in the pound or more as a marginal rate in tax deduction and benefit loss. If I were to suggest that we should introduce a top marginal rate of 75p in the pound, I suspect that the hon. Gentleman would be burning the pews in the Chamber and declaring the proposal to be one of the greatest political outrages committed by doctrinaire socialists that there has ever been. He is happy, apparently, to live with a system that imposes such a rate of taxation on some of the poorest in society as a disincentive to bettering themselves, which we all want them to have the chance to do. Perhaps the hon. Gentleman should worry slightly more about that.
It is not the Labour party alone which is worried about these matters. I do not know the reading habits of the hon. Member for Monmouth, but I would guess--this is to his credit--that he reads the Financial Times fairly regularly. If so, I recommend to him Tuesday's leader--he may have read it- -which was headed, "The wages of inequality". It refers to an excellent piece of research work that was undertaken by the Institute for Fiscal Studies. I apologise for the technical talk, but the institute took the 90th
Column 606percentile of the distribution of income and compared it with that of the 10th. It was found that the gap between the two had widened significantly.
Conservative Members may say that that does not matter, but the Financial Times believes that it does. I suspect that the Government are beginning to have some conscience about it. If so, that is to be welcomed. The Financial Times is suggesting that steps must be taken to do something about that problem. No doubt the hon. Member for Monmouth enjoyed the point made in the Financial Times that, in those circumstances, the Labour party's minimum wage proposals might become defensible. Perhaps we had better do something about the problem before the hon. Member for Monmouth has to embrace the minimum wage as a means of dealing with the issue. I know that the hon. Gentleman would find that ideologically uncomfortable, to say the least.
Mr. Duncan : The hon. Gentleman made an appeal to the House as though the Financial Times was some great Tory capitalist paper. He may recall that, at the last general election, the Financial Times called on people to vote Labour. It is not only pink in colour ; it is often pink in its views.
Mr. Dewar : I am glad to know that the hon. Gentleman, who I am sure reads the Financial Times , does that only to know what the enemy is saying. His was an interesting theory. Whatever else the Financial Times is, it is a sensible and sophisticated commentator on such issues. I merely pray it in aid to suggest that the problem of the growing gap, and possibly even the growing absolute poverty, in this economy is not something which sensible people want to sweep away in the way suggested today.
The gaps are not just appearing in work. There is undoubtedly evidence, which I welcome, that retired people are on average now enjoying many more resources and a higher quality of life. That is largely because of the maturing of state earnings-related pension schemes and occupational schemes and because of such things as approved private pensions. It is not happening because of direct help from the Government.
As the Minister is aware, the basic state pension, as a percentage of average male earnings in November 1979, was 20.4 per cent. It was 15.9 per cent. in April 1993 and it is probably below that now. Even if there has been a general increase, sadly a large number of pensioners, probably about 1.6 million, are having to depend on income support, a means-tested benefit which is often resented, as a means of keeping body and soul together.
I sometimes think--and this may be a comment on me--that I have never had to do what so many of my constituents whom I meet have to do, and that is hope that I do not have an unexpected bill of £30, £40 or £50. My constituents just cannot find such sums. That is an inhibition and a cause for worry, the like of which I have been fortunate enough never to experience. However, I am aware of the fact that things that I would take in my stride as a minor inconvenience or irritant become towering problems for a large number of my constituents who are living, in that practical sense and applying that practical test, in the very shadow of poverty.
Lady Olga Maitland : Would the hon. Gentleman be kind enough to give us a benchmark to show what he means by poverty, bearing in mind that, up and down the country, people living on income support and benefits still
Column 607have microwaves, televisions, freezers and so on in their homes ? Does he agree that it is a problem not so much of people living on a set income, but of how they manage their budgets ? A person in one flat may manage perfectly adequately while someone else may not. Surely we need to teach people the art of household management.
Mr. Dewar : The hon. Lady cannot rely on the fact that some people are feckless and do not manage a low income skilfully or that they are not graduates of the Micawber school of economics in the way that the hon. Lady would like.
I accept the point made by the hon. Member for Sutton and Cheam (Lady Olga Maitland) that one could refer to a range of benchmarks, some of which are open to counter attack. We could refer to income support level and then say that we could raise income support which would bring more people into poverty. We could refer to half national average income, but national income changes and shifts and may be too generous. The hon. Member for Sutton and Cheam may think that this is odd, but I like to consider the drift. We must consider the problem in social terms.
With regard to income support levels, for a husband and wife with two children under 11, if we consider income support levels as a percentage of average earnings in this country, that family would be living on one percentage point above one third of average earnings. I believe that the figure is 34.2 or 34.3 per cent., according to the latest parliamentary answer that I have seen. The figure has been declining because, of course, it has been tied to the retail prices index and not to average earnings, which, on the whole, have been out-pacing it.
More than 15 per cent. do not reach income support level because they are repaying social fund loans or for a variety of other reasons. In my experience, that is a very tough level at which to live ; it leaves very little room for comfort.
One worry--I am sure that the hon. Lady will worry about this matter when she thinks about the figures--is that several things that the Government are doing will make the situation worse for people who are living on benefit. One simple headline figure is incapacity benefit. Of course, some savings will come from excluding from benefit people would have received invalidity benefit under the old system. Even those who climb through the hoops and jump the hurdles and receive the new benefit will find that they have a much lower income level than they would have had in the old days.
We are not talking about pennies, as the hon. Member for Sutton and Cheam will know. There will be savings of £415 million in 1995-96, £1.2 billion in 1996-97 and £1.7 billion in 1997-98. Those substantial sums are being taken out of the limited pool of resources for helping those who are not in work and who are certainly living in poverty. That is of considerable concern for me as a constituency Member.
Mr. Dewar : I shall press on because I must stop very soon. My concern is not about playing the numbers game--many ingenious people play it better than I would and with considerably more staying power--but about the social fallout that I see around me. I pray in aid as evidence a speech that was made by someone whom I do not normally
Column 608call to my help on such occasions, the right hon. Member for St. Albans (Mr. Lilley), the Secretary of State for Social Security.
Mr. Dewar : I hear loyal noises from the Conservative Front Bench about the right hon. Gentleman's excellence and worth. The hon. Member for Bury, North (Mr. Burt) might have been present when the Secretary of State spoke at the Birmingham diocesan conference on 20 June. He talked about social instability, in particular the breakdown of marriages, a subject in which he is particularly interested and about which he is particularly concerned. He picked out as the main economic cause of the problem the low wages that are now being earned by unskilled workers. Even people in work are now being forced on to a wage which I would regard as a very good definition of poverty if one of the consequences of it was that it produces such stresses and strains that it threatens the stability of marriage and of the family unit.
I cannot think of a better definition of damaging poverty than that if one is in full-time work and earning so little that it is reasonable to think that one will find it difficult to sustain one's family and the personal connections that are such an important part of a family unit. That is what the right hon. Member for St. Albans said at the diocesan conference in Birmingham the other day. It is remarkable testimony to the difficulties that we are in. They are not people on income support or benefit ; they are above that, but are still in that position. Conservative Members have said what a wealthy society we have. That we have people in that situation tells us something about the social damage that has resulted from our fiscal and social policies.
I have with me a newspaper cutting--it is perhaps a little out of date-- which I came across by chance when I was cleaning out some papers, and, knowing that I would speak in this debate, I kept it. It is a report in The Guardian of 6 January 1993. I do not necessarily endorse it, but again I remind the House of what others think. The article stated that Professor Brian Robson
"The Government's leading adviser on urban policy warned yesterday of a nightmare scenario' in which inner cities became ghettos of poor and disadvantaged people guarded by armed police while better-off neighbourhoods hired their own armed guards."
I do not endorse the language. If hon. Members say that when people like me draw attention to social dangers we are exaggerating, they should think of statements such as those made by impartial figures who are considered worthy of being placed in positions of importance and being made consultants by the Government.
Mr. Clifton-Brown : When the hon. Gentleman is devising his future benefits policy, will he target what will inevitably be limited resources specifically at groups in society who need those resources or spread them thinly among every conceivable group ?
Mr. Dewar : I have made it clear in the past that I recognise that targeting is bound to be part of social policy. We cannot implement the policy in any other way. There are certain sectors where one does not target, except in a narrow sense--clearly, child benefit is targeted because people have to have children before they can receive it, but that is playing with words. I defend the principle of child benefit. I defend the principle of a universal state pension
Column 609as the foundation on which we should all build for security in retirement. If the hon. Gentleman is asking me whether I would target for other special interest groups, of course I would. It would be silly not to do so. It is attractive to talk about a basic income for every citizen, but the arithmetic is harsh, and I do not think that many hon. Members would see that as a practical proposition. Exciting changes are on their way, we understand. I suppose that it would be too optimistic of me to think that the Under-Secretary of State might give us a glimpse into the future. A barrage of briefings is taking place among the heavy press. The Secretary of State for Employment is committing the Government to full employment--a plank of policy that has been derided over the past few months when it has appeared on Labour party platforms. Last Sunday, The Sunday Times said that the policy was purely in response to the Labour leadership contest. If so, it shows that democracy in the Labour party has desirable spin-offs in other places.
We are also told--perhaps the Under-Secretary knows about this more directly--that, at a cost of about £1 million, family credit is to be extended to childless couples and single people. We are told that there will be wage top ups and wage subsidies. We are told that there will be changes in the national insurance contribution system that will do something about the weighting in favour of those who are better off currently built into the banding of the system. Those changes are designed to help those at the bottom of the scale. Judging from what I have heard this morning, I know that such changes will come as a deep shock and will be anathema to Conservative Members. I hope that what we have heard is true, not because I endorse the proposals in principle and detail now--I do not know exactly what will be produced--but if the proposed changes constitute moves to tackle the sort of problems that my hon. Friend the Member for Gateshead, East has properly drawn to our attention, I welcome them. I look forward to receiving further details, and perhaps a few more tasters and trailers, from the Under-Secretary over the next few minutes. The subject is of great interest to us. I am not concerned with deciding whether Mr. X, Mr. Y or Mrs. Z gets so much money. I want to get away from a definition of poverty that destroys life chances and leaves people with self-fulfilling prophecies of failure in terms of education and employment and which, on occasions, literally shorten life expectancy. It is no exaggeration to say that.
The hon. Member for Sutton and Cheam may be interested to know that a year ago--the picture has not changed--a report from the Greater Glasgow health board, in whose area my constituency falls, stated that the mortality rate for males between 16 and 64 years of age in Glasgow was 20 per cent. worse than the Scottish average. The Scottish average is considerably worse than the British average. That is an historic fact, but we still have to live with it.
I found it startling that the chief medical officer was predicting that those differentials would continue to increase for the foreseeable future. We now have figures that we used to imagine would exist only in the old eastern Europe. The chief medical officer said that the figures were caused by deprivation, poverty and the financial climate in
Column 610which families had to live. I am tired of seeing such effects in my constituency. I am tired of kids--who I know are as able as kids who live two or three miles away down the road who, due to their economic circumstances and the encouragement that they receive, will go to university--leaving school at the first opportunity, never entering university and perhaps never even entering the job market. If there are signs that the Government are beginning to catch up with some of those problems, I shall be delighted. I hope that the debate will encourage the Government in doing that. However, I am cautious in my expectations because I have looked at the record and seen just how disappointing and perverse it has been over the past 15 years. 12.49 pm
The Parliamentary Under-Secretary of State for Social Security (Mr. Alistair Burt) : I have enjoyed the debate so far because the subjecwas well raised by the hon. Member for Gateshead, East (Ms Quin), whom I congratulate on her choice of motion. Inequality genuinely concerns all of us. I am grateful for the speech made by my hon. Friend the Member for Teignbridge (Mr. Nicholls), the sensitive contribution of my hon. Friend the Member for Plymouth, Sutton (Mr. Streeter) and for regular interventions from other hon. Friends. I am also grateful for the speeches that we have heard so far from Opposition Members. Some I had slightly more sympathy with than others.
I shall deal with some of the comments made by the hon. Member for Glasgow, Garscadden (Mr. Dewar). He rightly identified the dilemma not only for us in Britain but, I suspect, for many countries around the western developed world. In the midst of industrial progress, which has been remarkable in the 20th century, there are still in many countries which count themselves as wealthy, the leaders of which are meeting today in Naples, pockets of deprivation which are almost the same as 100 years ago, certainly in location if not in intensity. I listened with sensitivity to what the hon. Gentleman had to say.
The hon. Member for Rotherham (Mr. MacShane) raised his banner for the industrial north. I am glad to support him in that. Rotherham and Bury have many connections, mainly through tremendous battles in the 1960s between our respective football clubs. Trips to Millmoor or Gigg Lane regularly resulted in scores of 4-5, 5-4 or 4-all draws. Tremendous stuff. My father and I and many people in Bury remember those matches well.
The hon. Member for Rotherham called for me to set up a conference in Rotherham. I am ahead of him. Part of my remit in the Department has been to look after matters related to low income and poverty. I have been as connected as I could be to Poverty 3, the European anti-poverty programme, and with anti-poverty groups working in the United Kingdom. My Department sponsored a seminar held in Manchester in March this year to consider the effectiveness of those strategies. I attended a similar conference in Bath two or three weeks ago at which we discussed with the statisticians how we might draw some better conclusions and targets for that work in the future. The problem with Poverty 3 and probably the reason why it has not yet been extended into Poverty 4 is ensuring that it does a worthwhile job. The aims and aspirations are entirely well meaning, but, as several of my colleagues
Column 611have said, we need to do more than that. The conference was designed to do that. I have no doubt that, in due course, I will be back in Rotherham at some stage. It was kind of the hon. Gentleman to make the offer.
I enjoyed the speech of the hon. Member for Gateshead, East. Her concern is plainly honest and sincere. Her rage at inequality arouses passion, but, ultimately, like my hon. Friend the Member for Sutton, I was left dissatisfied. You know me, Mr. Deputy Speaker. I hope that my concern about the issues that have been raised this morning matches that of any Opposition Member. I read New Statesman and Society , I am a member of Amnesty International and I am still a communicant member of the Anglican church--three institutions which are slightly leftward-leaning to a greater or lesser degree. I lean leftwards to a tiny degree within the Conservative party, but I am not a socialist, partly because of speeches like that of the hon. Member for Gateshead, East. Having been led so far up the hill, ultimately there is nothing there.
The hon. Lady did not give solutions to the problems. She dare not give the solutions because, although there are answers, they are not socialist answers.
The hon. Member for Gateshead, East spoke of wage inequality, but dare she go further and commit herself--not her Front Bench or party, because I understand the position--to a minimum wage, and say how much it should be ? She spoke of the link between pensions and earnings. Dare she go further and commit herself to a restoration of that link ? I am afraid that unless one follows up one's concerns, one is left very much up in the air with the rest of us.
I am tempted to say that the policies of the hon. Member for Gateshead, East are rather like some of the lists that one occasionally sees in Private Eye . For example, "Labour policy on inequality : No. 1, become aware of inequality ; No. 2, talk about fairness ; No. 3, spend money ; No. 4, er . . . ; No. 5, that's it." Until we get a little more, that remains the feel.
The hon. Member for Gateshead, East dealt with a broad sweep of economic and social policy and covered some other items. She clearly feels that income inequalities are a bad thing. But one man's income inequalities are another man's pay differentials. We used to hear a lot from the Opposition Benches and the trade unions about the need to preserve pay differentials and reward skills. At what stage does recognising one man's difference in ability stop being a good thing, which is a differential, and become a bad thing, which is inequality ?
Bill Jordan, the president of the Amalgamated Engineering Union, has made it clear that his union would oppose any "squeeze on differentials". He said :
"if the price of a minimum wage is wage restraint for higher paid workers, then our answer would be no".
I suspect that there is a measure of realism in that remark, as there was in the remarks of the hon. Member for Garscadden when he dealt with the subject. That demonstrates how hard it is to be precise and to tackle inequality realistically, and it is why our more practical approach is better.
Much was made of the report, which was published at the beginning of June by the Institute for Fiscal Studies, under the programme of studies on the distribution of income and wealth sponsored by the Joseph Rowntree Foundation. It examined changes in the distribution of incomes between 1961 and 1991. The House will not be surprised if I make a few comments on that and try to
Column 612provide, not a gloss, as the hon. Member for Garscadden suggested, but some greater clarification of statistics that are difficult to interpret.
Alongside that report, Dr. Stephen Jenkins of Swansea university published a further report on income in the 1980s. Both studies draw on the same data as the Government statistical service report on "Households below Average Income", published in July last year and covering the years 1979 to 1990- 91. As the Central Statistical Office announced on 30 June, the new edition of those statistics will be published next week, on 14 July. That brings the comparison up to 1991-92.
The Institute for Fiscal Studies report indeed describes a widening of the gap between the top and the bottom of the income distribution in the last decade, as compared to previous decades, and discusses the factors behind it. The general thesis is not new, although the IFS has provided some useful new insights into what has driven the changes. Members on both sides of the House have given their views at length.
To my mind, the key finding in the report is not the change in income share of different population groups, but the massive increase in average earnings in the past decade, compared with the preceding 20 years.
Page 19 of the report shows that, in 1961, the average household income was £140. In the 10 years to 1971, it had crept up to £165--a growth of 18 per cent. In the decade from 1971 to 1981 average income, on that measure, grew even more slowly--by 13 per cent. From 1981 to 1991, however, average income soared to £258--a growth of no less than 39 per cent. in a single decade. Put another way, the report tells us that average incomes grew by more in the past 10 years than in the whole of the previous 20.
That is a significant achievement--the product of successful economic and fiscal policies. It is the context in which all the study's findings on changes in income distribution have to be seen. During a time when there was such a dramatic rise in average income, it should come as no surprise that the income of different groups grew at different rates. The Government make no pretence of that fact and do not try to hide it.
The report by Professor Stephen Jenkins, published alongside the IFS report as part of the same research programme, goes into more detail about incomes in the 1980s. It shows that average incomes grew in real terms for all types of family in the population. Growth was not confined to particular groups. Couples with children saw their income rise 34 per cent, while that of pensioners went up 38 per cent. The hon. Member for Gateshead, East was asked by one of my hon. Friends whether she really believes that pensioners were better off in 1979 than they are now. Loyally, she said yes--but in her heart, she knows that she is wrong. On average, pensioners as a group are 42 per cent. better off in real terms, and 54 per cent. better off after housing costs, than in 1979. Sixty one per cent. of all pensioners and 69 per cent. of recently retired pensioners have an income from occupational pensions. The life of pensioners has changed. One has only to travel around the country to see some of the things that pensioners are now able to do.
More telling is the fact that the bottom decile of income distribution 20 or 30 years ago included a fair whack of pensioners, but today they are moving out of it. That is not to deny poverty, but whereas 20 or 30 years ago we thought of the pensioner as a single unit--always poor and in difficulty--that is no longer true. That group has changed
Column 613dramatically and the distribution of wealth within it has grown significantly. Pensioners are a key group in terms of the past 20 to 30 years.
Unemployed families saw a growth in their income of 30 per cent. I repeat that last point. The independent research found that the incomes of families with no full-time worker rose 30 per cent. The incomes of less well-off pensioners and those in work with relatively low levels of pay have also gone up in real terms. An unemployed couple on income support with two children are better off in real terms by £22 a week than with equivalent benefits under the previous Labour Government.
I will expand on other aspects of the IFS report which the hon. Member for Gateshead East did not emphasise. The report is clear about the importance of the social security benefit system in reducing inequalities in income. It shows that the social security system in the 1980s contributed more greatly to reducing inequalities than in previous decades.
The report also recognises that information about incomes at the very bottom of the income scale is uncertain. I hoped to provide that clarification to the hon. Member for Garscadden, with whom I discuss so much. I am sorry that he is temporarily absent, but no doubt he will read my remarks and we shall discuss them next week. The difficulty of interpreting statistics at the bottom decile is at the heart of the argument. Determining the living standards of that group is particularly difficult, and there is some reason to believe that those low incomes understate true living standards. We have been making that point for some time.
Income alone is not an accurate measure of living standards. As the official "Households Below Average Income" statistics show, between 1979 and 1990-91 the possession of consumer durables among the least well-off increased dramatically--nearly three quarters have central heating, more than half have video recorders and almost one half have cars.
Both the HBAI and the Institute for Fiscal Studies point out that self- employed people who report nil incomes or losses are a significant factor in widening inequalities because they are heavily represented in the bottom decile. They also reduce the apparent level of income in the bottom 10 per cent of the population. If the self-employed are excluded, the income of the bottom decile is raised 8 percentage points.
The numbers in that group have risen dramatically since 1979 because of changes in employment, but the majority of that growing group with apparently no available cash are still able, on expenditure measures, to spend more than the national average. The picture is distorted. If one sets up a business, one may declare no income the first year, so the statistics show no income--but one's expenditure continues through normal drawings and everything else. Who are the people in the bottom 10 per cent ? Earlier this year, the authors of the IFS report gave a lecture brilliantly and imaginatively entitled, "Why Peter Lilley Was Right". [ Hon. Members-- : "Hear, hear."] I commend that sentiment to the House. In that lecture, they gave illuminating figures about the occupations of people at the very bottom of the income scale. They showed that more than 100,000 of them were farmers, 40,000 were taxi
Column 614drivers and an amazing 12,500 were chartered accountants. That is just fantastic. It shows that if we extrapolate numbers from a small sample and multiply them across the country, we get the sort of distortions I mentioned. The figures for low income and their composition must be treated with caution. The one factor that people in those occupations have in common is the ability to control the presentation of their income.
The clear message in all the income analyses is that the vast majority of people in the United Kingdom have enjoyed dramatic increases in their incomes since 1979. Incomes have grown at different rates, but that is consistent with a society that rewards individual endeavour and where everyone has the opportunity to do well.
There are some extreme examples of problems with that. The hon. Member for Gateshead, East referred to water board officials and one or two other cases. I do not like what happened. That is my personal view and it may not be shared by my colleagues. Some things give a sense of aspiration a bad name. Sometimes, something is seen to be so chronically unfair that it is hard to justify. That does not mean that a market society is wrong ; that people should not have legitimate aspirations to do well ; or that people in business, who sometimes operate under a high degree of risk, should not prepare a secure future for themselves and their families. Nevertheless, there are sometimes sets of figures that just do not make one feel right. I do not know much more about the case raised than what I have read in the newspapers, but it made me feel uncomfortable.