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Mr. Lilley: The hon. Gentleman is right. There are difficult areas, and that is one of the issues that we are trying to tackle on a cross- departmental basis. Permanent secretaries, with my endorsement and support, are ensuring that our policies are co-ordinated and that they reinforce each other, whether on the single regeneration budget, the expenditure of my Department, or that of the Department for Education. We have to do all in our power to help people in those areas and I accept the hon. Gentleman's argument.

I must dispose of some other misconceptions before we consider the causes and cures for the more fundamental problem that I dealt with in my Ulster lecture. The report highlights the fall in the wages of the lowest-paid group and states:

"After 1978 hourly wages of the lowest paid men hardly changed in real terms and by 1992 they were lower than in 1975."

That bold statement gives the impression that the least well-paid have not benefited under a Conservative Government.

I pondered the strange references and the switch from 1978 to 1975 and studied the chart in the report showing the path of wages in that period. It reveals that the only significant and substantial fall in wages--a sharp one--occurred between 1975 and 1978, under a Labour Government, and that wages have since recovered somewhat. Inequalities of income are not more marked in Britain than overseas. Again, the summary of the Rowntree report states:


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"the pace at which inequality increased in the UK was faster than in any other,"--

country--

"with the exception of New Zealand."

As is clear, that claim is based on comparisons of countries using different years.

A more relevant indicator might be the level of inequality and not the amount or the speed with which it changed. Volume 2 of the report makes it clear that the United Kingdom is in the middle of a league table of other developed countries for income inequality. The increase in measured inequality that occurred in this country only partly reflects the unwinding of the effects of the incomes policy since the mid-1970s.

A fourth claim must be rebutted--the presumption of much of the discussion that the widening of incomes recorded in the Rowntree report was due to the fact that tax changes allegedly made the tax system less progressive. The report is unequivocal about that and states:

"The tax system had much the same impact in reducing inequality in 1993 as in 1977."

Having dealt with some of the fallacies that have been worked up on the basis of this report, let us consider what is happening. A phenomenon of enormous significance underlies some of the Rowntree committee's concerns. As I said in my Ulster speech, the growing dispersion of earning power is probably the most significant social change affecting the United Kingdom and most other western countries. The earning power of brawn has not kept pace with that of brain. Some countries, especially the United States, New Zealand, Australia and the United Kingdom, have responded to that phenomenon, which affects all advanced countries, by allowing earnings to reflect the changing productivity of different skill groups. As a result, each of those countries has generally experienced a greater dispersion of earnings, but more job creation and a smaller rise in unemployment.

By contrast, other countries--notably on the continent--have endeavoured to prevent wages from reflecting the changing earnings potential of less skilled people as we increasingly compete with the far east and experience the impact of new technology. In those countries, growth in inequality is slower, at the expense of higher unemployment and fewer jobs. For example, the proportion of those of working age in work in the United Kingdom has risen since 1979 and is more than 10 percentage points higher than in the rest of the European Community. Whereas, on average, in other EC countries about 61 per cent. of people of working age are in work, we have nearly 72 per cent. in work, and the percentage has been falling throughout the rest of the EC during that time.

Our strategy is to improve incentives to work, raise training and education standards, increase the number of people who benefit and boost job creation and enterprise.

On the incentives front, we introduced the child care disregard for family credit--indeed, this Government introduced family credit--and promised the back-to-work bonus as part of the jobseeker's allowance, to encourage people to take part-time work as a stepping stone to full-time work and to give them a potential £1,000 credit when they return to full-time work. We strengthened in-work benefits, not merely by introducing family credit


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but by proposing a £10 supplement for those who work more than 30 hours a week. We are also carrying out a major pilot study to find out whether it would be effective to extend in-work benefits, equivalent to family credit, to those who have no family. In total, my right hon. and learned Friend the Chancellor of the Exchequer and I announced a £700 million programme of work and job incentives at the time of the Budget and the social security statement.

It is no secret that, for decades and probably for a century, Britain has suffered from two great weaknesses in education and training--a lack of vocational education and the low expectations of the least able, who represent the bottom third of ability in our schools. We introduced comprehensive reforms to try to cure and overcome those long-standing defects. We introduced the national curriculum and the Labour party opposed it. We introduced testing in schools and the Labour party opposed it. We introduced the appraisal of teachers and the Labour party opposed it. We introduced publication of results and the Labour party opposed it. It is no good Labour Members deciding when their children are of an age to go to secondary schools that they support those things that improve the quality of education, but which they opposed when we tried to introduce them.

The Labour party even opposed youth training, although the noble Baroness Shirley Williams considered such a programme and rejected it. We have encouraged sensible pay for apprentices and a new, improved apprentice scheme so that people are not priced out of training. We have encouraged businesses to accept that the onus is on them to improve the training of their staff and the private sector spends about £20 billion on training.

Mr. Dewar: I am sorry to interrupt the right hon. Gentleman, but he is giving us a remarkably complacent view of what has been happening. Will he say a few words about the training budget this year as compared to next, and perhaps during the past two or three years, and about the number of training places? I accept that the quality of training is important, but how many training for work places are there this year and how many will there be next year?

Mr. Lilley: Next year, we expect there to be twice as many training places as under the last Labour Government. Perhaps that is not the standard that we should allow ourselves to be judged by--the Opposition want to be judged by a higher standard than that.

Mr. Dewar: I understand that there will be 55,000 fewer training for work places next year compared to this year. That should be weighed in the balance against some of the right hon. Gentleman's comments.

Mr. Lilley: It does not in any way repudiate the argument that I have just made, or the disproportionate importance of private sector training in firms. To hear the Opposition, one would suppose that the only training that was important and valid was in the state sector, whereas about 10 times as much training takes place in the private sector.

Mrs. Teresa Gorman (Billericay): Does my right hon. Friend agree that, daily, thousands of people come into the country who do not have our language, who often lack skills, and who do not have capital, but who manage to find


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work and learn to support and help their families? If they can do that, does not it show that what one needs more than anything else is the will to work and the will to get on?

Mr. Lilley: That is crucial and, as I said, about 29 per cent. of people leave the bottom tenth of incomes and rise, not only to the next decile, but to the one above or higher still within a couple of years. People increasingly have that get-up-and-go in our society, and we encourage that by making--

Mr. Graham: That is sick, Minister: tell that to the people of Renfrewshire.

Mr. Lilley: I am sure that they have get-up-and-go in the constituency of the hon. Member for Renfrew, West and Inverclyde (Mr. Graham) as well.

Our strategy has been pretty comprehensively endorsed by the Organisation for Economic Co-operation and Development. Indeed, many of the measures that we have introduced have been endorsed by the Rowntree report.

The Rowntree report makes a raft of uncosted and often contradictory proposals. For example, it proposes that benefits henceforward should increase, presumably in line with earnings rather than prices. If we had done that last year only, instead of implementing the uprating of benefits costing £1.5 billion, it would have cost £3.3 billion. If we had reviewed all benefits and uprated them all in line with earnings, it would have cost about £35 billion. The impact that that would have had on the level of dependency would have been worse than the cost.

We believe that emphasis must be placed on getting people back into work. That is why we place emphasis on incentives and in-work benefits instead of complacently assuming that we simply have to make life ever more comfortable. I do not pretend that the present level of benefits is anything more than meagre in the long run.

Mr. Clive Soley (Hammersmith): I should like to give the Secretary of State some time to think about the matter, but why does not he at least cost one of the most obvious things that might be done, which is to change the earnings disregard rule so that people would be able to earn something as they went back to work, or to increase their own income? Everyone knows that it needs to be done. Has the Secretary of State costed it? If not, will he do so, and will he tell the House what it would cost?

Mr. Lilley: We have considered it. We propose to change it by the introduction of the back-to-work bonus, so that people will accumulate a credit when they work part time on benefit, rather than being able to stay permanently on benefit with a mixture of part-time work and benefit, which would be hugely expensive.

The Rowntree report proposes to double the disregard from £5 to £10. We propose to make it £10 for a couple instead of only £5 for a couple at present, but to retain the £5 for single people. The Rowntree disregard proposals would cost £20 million in themselves and probably more than £20 million additionally for the proposal to accumulate benefits.


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Mr. Soley rose --

Mr. Lilley: No; I have given way to the hon. Gentleman. It might have been more sensible for him to have found out whether the Labour party supported that proposal and was committed to it before he asked me.

Does the hon. Member for Garscadden propose to endorse that policy? Does he propose to reduce, as the Rowntree report proposes, the housing benefit taper, which would cost about £360 million to reduce by 10 per cent., or the family credit taper, which would cost nearly £200 million to reduce by 10 per cent? Does he propose to uprate all benefits, which would cost more than £1 billion extra in the first year and cumulatively increase to enormous sums? Does he propose to extend school meals to people on family credit, which would cost another £115 million?

The hon. Member for Garscadden is sitting there, almost uninterested in the concrete policies of the report that he spent half an hour endorsing.

Today's debate displays yet again the willingness of the Opposition to exploit the problems of less well-off people, while proposing no specific policies to help them. The Government have recognised the challenge posed by the dispersion of earnings power.

I have said that the purpose of my social security review is to focus benefits precisely on those who need them most. I have also described the importance that I attach to work incentives, and announced a package worth nearly £700 million last autumn. Meanwhile, the hon. Member for Garscadden opposes everything that we do, yet lacks the guts to commit himself or the Labour party to reversing it. He welcomes uncosted and costly proposals made by his friends on the Commission on Social Justice and on the Rowntree inquiry, but he will not say whether he accepts or rejects those proposals.

It is time for Labour to allow some light to escape from its own black hole. It is time for Labour to abandon the cynical politics of stooge and stealth, and recognise that our policies are those of compassion and commitment. [Interruption.] It is easy for the Opposition to call for policies to level down and policies that would trap people in dependency: that has been the cry of the left throughout the ages.

I invite the hon. Member for Garscadden to consider the saying of the famous republican orator in the Spanish civil war--it is now essential in the Cabinet to know a lot about Spain--who said, when there were demands to do away with the inequalities of Spanish society:

"If you want me to reduce the incomes of the rich to the level of the poor, I will do it in a fortnight. If you want me to raise the incomes of the poor to those of the rich, I will do it, but it will take us a lifetime."

We have a long-term strategy to increase incomes by opportunity, by help and by incentives for the least able people. The Opposition offer nothing.

4.56 pm

Mr. John Hutton (Barrow and Furness): The Secretary of State concluded his remarks to us this afternoon by saying that the Government had shown compassion and commitment to poorer members of our community. I have yet to notice any sign or evidence that those are the Government's policies. He also told us that Labour's


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motion was motivated by the politics of envy. I think that he completely and deliberately distorted the motion that we tabled. In essence, we shall not be able to build a society at ease with itself against the background of increasing numbers of economically disfranchised people, the grinding and relentless poverty that comes to the attention of all Opposition Members in their constituencies, the absence of employment prospects in many parts of the country, and a future, under the present Government, that will mean more of the same. The Rowntree report effectively highlighted that characteristic of a drawbridge society. It is simply not a sustainable model on which we can build a prosperous future for our country and our citizens.

As Britain heads towards the next millennium, social and economic inequalities are reverting to a more 19th century pattern. In too many situations, life choices are distributed not on merit but on where one happens to live, on who one's parents are and on ability to pay. Discrimination on the grounds of sex, race and gender remains widespread in our communities, and inequalities in health, to which the Secretary of State barely referred, are still with us. That depressing pattern of inequality is socially divisive and should therefore be unacceptable to any Government, of whatever political persuasion--especially as the Prime Minister, as recently as last week, confirmed that the Government accepted that tackling inequality was a duty of Ministers.

Inequality on the present scale is not only socially divisive but economically disabling, and therefore damages our future prosperity as a society. If millions of our fellow citizens are without jobs--as they are-- and millions of them are without the prospect of work, they cannot be consumers, so playing a full part in promoting economic growth. As a result, social security spending becomes inflated as taxpayers struggle to foot the bill for mass unemployment. In turn, that imposes a greater financial burden on those lucky enough to be employed.

For the past 16 years, the Government's consistent response to that question has been the same: deregulation, a reduction in social protection and the laughably described "trickle-down economics". We now know that that grim experiment has been a resounding failure. Last week's Rowntree report, the central figures of which the Minister did not dispute, makes the scale of that failure extremely clear. Far from helping matters, Government policy has made matters substantially worse. Did not J.K. Galbraith describe modern Conservatism as an attempt to find a moral justification for greed? The Rowntree report confirms the accuracy of that description and shows that incomes became rapidly less equal in the 1980s. In 1984-85, the latest date for which figures are available, income inequality was as great as it was in 1949. Since 1979, the lowest-income groups have not benefited from economic growth, while better-off groups have enjoyed improved standards of living. Therefore, up to 30 per cent. of the population have not shared in the improvement in economic growth since 1979. Since 1977, the proportion of the population with less than half average income has more than trebled. As we all know, during the 1980s more people became dependent on means-tested benefits.


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That is a dismal catalogue of incompetence and indifference, of which we saw plenty of examples in the Secretary of State's speech today. A number of factors have contributed to that catalogue of incompetence. First, the Government have been prepared to tolerate levels of unemployment that would have been unthinkable even 20 years ago. Unemployment averaged about 300,000 throughout the 1950s, less than 500,000 throughout the 1960s and about 1 million throughout the 1970s. Throughout the 1980s--the period of Conservative Government--it averaged 2.7 million, and long-term unemployment remains a problem. A third of unemployed men and a quarter of unemployed women have been out of work for more than 12 months. The comparative figures in the United States are 8 per cent. and 5 per cent. respectively. We have a huge burden to shoulder because of the incompetent way in which the Government have managed our economy since 1979, and the consequences of their failure are becoming daily more visible.

Unskilled workers have borne the brunt of the Government's callous tolerance of mass unemployment. Less than 20 years ago, nine out of 10 men who had left school without qualifications were in employment. Today, the figure is seven out of 10 and is still falling. Secondly, the Government's education reforms have failed to improve education standards for the majority of our children. For example, we have the lowest under-fives provision in the European Union alongside Portugal, and far lower numbers-- although they have increased in recent years--attending university than Japan, Germany and France. Thirdly, the Government have refused to listen to anyone who has drawn attention to what has been happening in our society. The Secretary of State's speech this afternoon was another example of that. Instead, the Government have chosen systematically to ignore the growing evidence that things are going badly wrong for a growing number of our fellow citizens.

A fourth factor which explains the mess that we are now in is the combined effect of the Government's tax and benefits problems. Over the past decade, the poorest 10 per cent. of households have lost £156 a year in higher VAT, national insurance and other taxes. By contrast, the wealthiest 10 per cent. have gained £1,612 a year as a result of income tax cuts alone. The biggest gains of all have gone to the top 1 per cent. of the population --those with average incomes of more than £120,000 a year--for whom the cumulative gain from tax cuts since 1979 has been a staggering £75 billion. That is almost the equivalent of the entire annual budget of the Department of Social Security. When all tax policies over the past 15 years are taken together, the poorest 10 per cent. of the population now pay a higher proportion of their income in taxes than the richest 10 per cent.-- 43 per cent. and 32 per cent. respectively.

In Cumbria, the position has substantially deteriorated over the past 10 years. The most disadvantaged wards in the county of Cumbria had a lower measure of economic prosperity in 1991 compared with 1981. Over the same period, the extent of economic disadvantage in those wards increased. Most of the deprivation in Cumbria can be found in Carlisle, along the county's west coast, and in the Furness area. However, much of the economic disadvantage in Cumbria is concentrated in my constituency, which includes four of the five most deprived wards in Cumbria.


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Present Government policies are simply inadequate to deal with the scale and extent of that disadvantage. If the Secretary of State wants examples, he should attend some of my advice surgeries on Fridays and Saturdays, when he could see the real position at first hand. It is not as he described to the House this afternoon, when he said that growing prosperity was shared among all income groups and across every community in the country. In my constituency, the position is close to a crisis.

Unemployment lies at the background of many of those problems. It is extremely high in many parts of my constituency, where more than 10,000 jobs have been lost since 1990. There is growing evidence of low pay in Barrow and throughout the north. The problem of unemployment particularly affects women in Cumbria, whose average earnings are 11 per cent. lower than nationally. More than a third of Cumbrian women are on low wages, compared with a national average of only a quarter.

Health indicators in my constituency and the north paint an extremely grim picture. In 1992, the northern region had the highest mortality rate in England and Wales, as measured by the standard mortality ratio. The death rate in the northern region was 13 per cent. higher than the average in England and Wales. In

Barrow-in-Furness, that rate is 15 per cent. higher than the national average. Those are not bogus or fabricated statistics; they are Government statistics.

Those are the consequences of Tory economic mismanagement combined with incompetent social and taxation policies, which have demonstrated consistent disdain for those of our community who are forced to live on benefit. I am sorry that the hon. Member for Billericay (Mrs. Gorman) has now left the Chamber. She expressed the view, which is commonly shared among Conservative Members--perhaps not by all those present, but we have certainly heard it before--that the solution to unemployment is to get tough with the unemployed because they are to blame. The theory is that, if the Government prod unemployed people harder and harder, they will find jobs. The truth is that the jobs are not there. They do not exist in my constituency-- [Interruption.] If the hon. Member for Twickenham (Mr. Jessel) would like to come to my constituency, he would discover that 4,500 unemployed people are chasing 230 job vacancies registered at the jobcentre. There is simply no credible or logical strategy in forcing our unemployed constituents into a fruitless search for jobs that simply do not exist. Moreover, they constantly face the prospect of losing benefit because they are deemed not to have complied with rules set by the Government.

Unemployment is central to the topic of today's debate. It underlines a clear pattern in the growing inequality of deprivation across the country; in pockets, it is now completely unacceptable, both morally and economically. The solution lies with a policy designed to secure full employment, which recognises that full employment is a responsibility of Government. The damage to health caused by mass unemployment is clear. Unemployed people are much more likely to suffer a chronic illness or disability. For example, a middle-aged man who is made redundant or takes early retirement is twice as likely to die within five years as a man who stays in work. Unemployment can also have a devastating effect on


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psychological health. That has been confirmed by recent research in Edinburgh and Oxford. Unemployed men are between 10 and 15 times more likely to attempt suicide than employed men. That is the reality; it is not as the Secretary of State described to us tonight. It is also clear from the Rowntree report that urgent action is needed across a range of Government Departments if we are to tackle the distorting effects of growing inequalities in Britain. We need a national debate about how we can bring about a sense of national renewal with full employment, a fair tax system and a modern welfare state as essential preconditions for any return to decency and sanity in our society. Bringing about such a transformation will be Labour's big ideal when we resume responsibility for the government of Britain into the next century.

5.10 pm

Mr. Patrick Nicholls (Teignbridge): One of the reasons why these occasions are invaluable is that they give me an opportunity to debate with the hon. Member for Glasgow, Garscadden (Mr. Dewar). I have enjoyed debating with him before, but this is not one of his better efforts. Although no one can doubt the sincerity of what he said, it seemed to me that he was fixing on a prescription and a definition of poverty that simply do not exist. One cannot begin to get to grips with a problem unless one knows what one is talking about in the first place.

There is no doubting the sincerity of the hon. Member for Garscadden or the hon. Member for Barrow and Furness (Mr. Hutton), but they were defining poverty in terms of the gap that exists between the rich and the poor.

It is easy to fall into sloppy language and sloppy thinking, but sincerity does not justify that sloppy thinking. It is completely ridiculous to define poverty in terms of the gap between the rich and the poor. It is tantamount to saying that people are better off in countries where the living standards of the poor are lower, but the gap is narrow, than they are in countries where the gap is wider, but the living standards of the poor are improving. That is the reality of the language about gaps. Frankly, it is complete nonsense. The hon. Member for Garscadden talked about seeing people in his surgery and wondering how they survived under strains and pressures that he had never understood. I quite understand the sincerity of his feelings and his compassion for those people, but perhaps he should talk a bit more to them. Perhaps after a period of Labour Government he should tell them, "Guess what? You are much better off now because the gap is narrower." What help is such language to impoverished or unemployed people? They cannot pay their bills with a gap or take it along to a building society and say, "The gap has narrowed, therefore I must be better off." They cannot pay the milk bill with a gap. The gap itself means nothing whatsoever. What is relevant is the money that the poor actually have. Opposition Members should also remember that the lowest standards of poverty in Britain would be regarded as well beyond most people's dreams in other parts of the world.

Poverty is an absolute measurement. One cannot talk about it in terms of gaps. A few moments ago, the hon. Member for Barrow and Furness equated the language of


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the gap with saying that the rich have had tax handouts. Let us get it clear. The rich have not had handouts from the Government; the Government have simply taken less money from them than the previous Government did. It is about time that the Conservatives had the courage and confidence to say that, whether a taxpayer earns £10,000, £100,000 or £1 million, every single penny--100p in the pound-- belongs to him. The Government give nothing; they simply take away. The idea that the poor have been prejudiced because the Government have given money back to the taxpayer--although one does not doubt the sincerity of the language--is sloppy thinking and sloppy thinking does not help the most vulnerable.

I accept that--it will be common ground on both sides of the House--we have to consider those who have to pay tax. On the one hand, if we tax people 100p in the pound, they will do no work; on the other, if we tax them zero pence in the pound, we will raise no tax. Obviously, somewhere between those two extremes there is a level of taxation that will provide the money that the Government need to discharge the functions that are necessary to help those who cannot look after themselves and will enable them to provide enough incentive for those people capable of earning greatly to make them continue earning and paying tax.

When I first started work as a solicitor's clerk in the 1960s, I remember trying to retain a particular barrister who was very popular. I telephoned his clerk in chambers and he said, "Is that a case for a Thursday? Counsel does not work on a Thursday." I said, "Surely the courts sit on Thursday." The barrister's clerk said, "Obviously, you do not understand. Counsel works on Monday, Tuesday and Wednesday, but have you not heard that the tax rate is 89p in the pound? He does not work for the rest of the week. It is not worth his while." That was the position under the Labour Government. Where is that ideal tax line? It is known in economic terms as the Laffer curve.

The hon. Member for Birkenhead (Mr. Field) understands the debate and I wish he were here today. In 1986, he asked a parliamentary question about taxation. In addition to having prodigious knowledge and talents, the hon. Gentleman has a keen sense of humour and one never quite knows whether the answer to his question was a surprise or something that he had expected. He asked the Treasury to provide a calculation of the proportion of the total income tax that was paid by the rich under the Conservatives and the proportion of the tax take that they had paid under the Labour Government.

Those who talk about giving money to the rich and the gap between rich and poor would assume that if the tax rates came down, the amount of money that the rich contributed to the welfare of others would also go down--not a bit of it. The answers to the questions from the hon. Member for Birkenhead revealed that, as tax rates had come down, the amount of money that the rich contributed had gone up. That is an inconvenient piece of thinking for the class war worriers who talk about gaps and think that people can pay their bills with gaps. It produced an answer that they find difficult to accept. When the Government leave the rich with more of their own money, there is more money to spend on those who need it. Indeed, we have seen a hint that behind the Follettised exterior lurks a Stalinist soul and the idea that at the end of the day there is not an ever-growing cake; there is a fixed cake out there


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and the question is how to slice it up. The marvellous thing is that behind the designer suits are the same old prejudices. Where does one go from there? We had the fact that the rich are contributing more. I am surprised that Sir Iain Vallance has not been mentioned here today.

Mr. Denis MacShane (Rotherham): We have mentioned him.

Mr. Nicholls: I am pleased about that and I am quite happy to mention him again. I understand that he earns £1 million a year. That has two advantages. First, it enables me to do income tax calculations on my feet and, secondly, it enables me to talk about the contribution that Sir Iain Vallance has made to the poor of the country. Even under the present Government, he will have paid approximately £400,000 into the national coffers to be used in ways of which Opposition Members would approve.

In the bad old days, what happened to people who earned that sort of money? Either they simply stopped work on Wednesday, like my barrister colleague, or they fiddled or went into various schemes which existed to exercise an accountant's ingenuity but really were to save tax. Ultimately, they went abroad. These days, they are here paying their tax. Coupled with that, the idea that we are giving handouts to the rich and the question of the gap become relevant. The final nonsense which I expect the hon. Member for Rotherham (Mr. MacShane) will stand up and justify in a moment is that poverty can be defined by the level of benefits. It really is profound cheek for Opposition Members to urge at every turn an increase in benefits and then, the moment there is an increase in benefits, to turn around and say that there must be more people in poverty.

Mr. MacShane: I am grateful to the hon. Gentleman for giving way and telling us again the pet theory of the Laffer curve which no economist takes seriously any longer. Is it better to have Sir Iain Vallance earning £1 million and paying £400,000 in tax than some of the 50,000 people he sacked earning £10,000 or £20,000 and all paying tax? In other words, perhaps we should consider the labour market policies of Japan, Switzerland, Germany or northern Europe, rewriting the whole tax base, rather than hoping that a handful of the rich will throw some crumbs to the poor via the Treasury.

Mr. Nicholls: The kindest thing that one could say about that intervention is that it was completely daft. The idea that there is some correlation between a multi-billion-pound business which has to decide whether it needs a particular staffing level and saying that if Sir Iain Vallance received a smaller salary more people could be employed is ridiculous.

The hon. Member for Rotherham confirms either that that is ridiculous or that he is daft--I am not sure which, but it matters not. The logic of the hon. Gentleman's argument is that everyone could do Sir Iain Vallance's job and therefore everyone should be on the same sort of salary. It is a profoundly silly argument. The idea that efficiency will be increased by imposing penal rates of taxation on those who are truly talented and by overburdening businesses through overmanning is the product of a bygone age. I am surprised that the hon. Gentleman should advance that argument today.


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Having disposed of the language of gaps and handouts--the idea that the rich are in some way the problem whereas, in terms of the money that is needed, they are part of the solution--it is worth while examining what the real problem can be. The cause of poverty, and the breakdown of family life which goes with it, is not that the level of benefit is not sufficient but that the level of benefit is too great.

The American sociologist, Charles Murray, has done some work in this area-- both to the right and to the left academically. The breakdown of society in parts of this country is similar to that which occurred in America. The state is no longer the father of last resort; it has become the father of first resort. What does it do to the confidence and moral well-being of a family unit when, at a stroke, the state is prepared to maintain the wife and the children of a union at a greater level than the breadwinner could expect to maintain them himself? That undermines the social fabric and increases poverty dramatically.

The figures speak for themselves. We do not have time tonight to examine Charles Murray's work and statistics. However, a report which appeared in today's Daily Mail illustrates my point. The article is entitled "Who needs work?" and refers to a family of five who are living on benefit and netting about £18,500 per year. In a phrase which I think sums up the situation very well, a family member says:

"Wages are disgusting at the moment".

I think that quite a few people would retort, "She would say that, wouldn't she?" That family receives take-home pay of £18,500 a year gratis by virtue of the taxpayer.

What would people have to do to earn wages of that sort? Firefighters do not earn that much money, nor do ambulancemen, midwives, metal workers, prison officers, senior computer operators, classroom teachers, Army sergeants, junior doctors, first-year registrars or ward sisters. Speaking personally, perhaps the good news is that it is £3,000 a year short of what a Member of Parliament earns--but perhaps that will alter in due course.

Why should people work in accordance with their own skills and abilities when someone can sit at home and net that sort of money at taxpayers' expense? That is not about the alleviation of poverty; it is about the creation of poverty, because it impoverishes people's ambitions and desires and their ability to work.

In addition to that sum, the Department of Social Security made the sort of mistake that it is easy to make--it popped a cheque of £6,000 extra into the post. To be fair, the mistake was discovered 10 days later, but by then it was too late. What had happened to the money? About £1,000 had been spent to buy mountain bikes for the children for Christmas, £600 had been spent on a fitted kitchen and hundreds more pounds had been spent on new furniture. None of the money was spent to clear the £1,000 in rent arrears which had resulted in the family's eviction from a previous council house. The article goes on to say that the couple concerned

"are trying to persuade Wolverhampton Borough Council to allocate them a three or four-bedroom house".

That encapsulates what the problem of poverty is really all about: the state has gone so far down a particular road that, instead of encouraging people to stand on their own feet, it mocks their efforts by completely undermining


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their ability to do so. In the end, it is not enough to say that that is the way in which the scales are balanced, the scales have been applied by Parliament and the adjudication officer can always challenge the outcome. We have to look beyond that argument. We have to ask whether the benefit rules should be changed drastically. We have to ask whether, having served due notice, we should tell people that the maximum benefit that they can obtain for themselves and their families is the regional average for a person without skills and experience. If we do not do that, we will undermine the position of those who think before they have children about whether they can measure up to their responsibilities. We will undermine the position of those people who come to my surgery and tell me that they cannot get a council house because they do not have enough children, but that they do not want to have more children until they can bring them up in a safe, secure environment. If we do not address that problem, we will create poverty.

We can examine the amount of money which the Government have devoted to addressing poverty at the taxpayers' expense. For all Labour Members' sincerity, it is easy to expose the nonsense of the idea of relative levels of poverty, benefits equalling poverty, and so on. If we do not address those vices, the situation will become a powder keg. I hope that the debate tonight will stimulate the thought process and we will begin to address those issues.

5.26 pm

Mr. David Chidgey (Eastleigh): I pass on to the House the apologies of my hon. Friend the Member for Rochdale (Ms Lynne), who is unable to attend the debate as she is serving on the Committee which is examining the Disability Discrimination Bill. She asked me to mention that she would have been here if she had not been otherwise detained.

The aim of any civilised and democratically governed country must be that its citizens should be free from the spectre of poverty. I have listened to most, if not all, of the speeches this evening and I think that all hon. Members agree on that point--that people can be enabled to develop their skills and their talents fully; that they can be engaged in worthwhile employment to the benefit of themselves, their families and our society.

It must be a priority to develop and implement policies which enable citizens to live and to work in healthy surroundings, motivated to contribute to our society. A prime function of Governments must be to provide a ladder of opportunity to those who slide down into poverty and despair through unemployment. Let us not forget the scale of unemployment and the way it has grown in this country in the past four decades. The figures are quite staggering. In the 1950s, the unemployment rate was 386,000 per year. By the 1970s, it was some 976,000. Today it is about 2.5 million, counting only those claiming benefit.

Mr. David Lidington (Aylesbury): That is appalling.

Mr. Chidgey: Indeed. Unemployment is linked inextricably to poverty. In 1979, some 5 million people were living on incomes which were less than half the national average wage. About 58 per cent. of that number


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were unemployed. By 1991, 13.5 million people were living on less than half the average income, of whom some 78 per cent. were unemployed.

We have heard it argued that that is the result of a general rise in incomes and that, on average, we are all better off. However, it is important that the House should not deny the outcome of the Rowntree report. The Minister said that he was cognisant of it and that he set great store by what it said. We may argue about the statistics, but let us not forget the report's underlying theme. Income inequality in this country has grown faster and gone further than in any other comparable industrial country. The poorest 20 to 30 per cent. of the population have not benefited from rising national prosperity. Since the 1980s, the incomes of those who are dependent on social security benefits have fallen further behind the incomes of those who are in work.

Just as poverty is linked inexorably to unemployment, so is poor and degenerating health. Unemployed people are less healthy, both physically and mentally, than those who are in work. As the hon. Member for Barrow and Furness (Mr. Hutton)--who has unfortunately left the Chamber--pointed out a few moments ago, unemployed middle-aged men are twice as likely to die within a decade as those who are employed.

The long-term unemployed have weak social support systems and they tend to congregate with other unemployed people. They tend to have a poor social structure which leads to the breakdown in family life. It is interesting to note that divorcing couples are twice as likely to be unemployed as those who are in stable marriages. The mortality rate of children under four years of age is three times higher in the lowest income group than in the highest income group. Deaths from asthma and from similar ailments among children under 14 is twice as high in the lowest income group as in more affluent families. It is a stark reflection on the division between the poor and the mainstream in our society that Oxfam, a charity established to provide aid and support to impoverished peoples in the third world, is actively considering projects targeted at poverty in the UK. It is against the backdrop of unrelenting long-term unemployment, increasing poverty and widening division in our society that I believe that the Government's policies must be tested.

What, for example, has been the record of the training for work programme? A major stumbling block has been that it has not targeted the long-term unemployed. Those out of work for more than 12 months occupy a minority of places on those schemes--some 42 per cent. last spring. That is broadly in line with the proportion of long-term unemployed within the overall jobless figures. There is little incentive within the schemes for training and enterprise councils to target the long-term unemployed.

TEC schemes concentrating on the long-term unemployed find it more difficult to meet the Government's targets for "outcomes". Less than one third of those out of work for between one and two years entering a training for work scheme end up with a continuing job. For those who are out of work for more than two years, the record is even more disturbing. Less than one in five ends up with a permanent job. Overall, of those entering training for work schemes, more than


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