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Column 884waiting for wealth to trickle down. They must take action to attack poverty and inequality at their source, which must mean dealing with long-term unemployment and low pay.
Not only are the Tories a divided party with a divided Cabinet presiding over a divided nation, but some of them seem to be divided even in their own minds. For instance, the Secretary of State for Social Security clearly has two voices inside his head. The one we heard tonight tells him that everything is fine, but the other tells him that the earnings gap is growing. In a speech that he made in Ulster, which was very different from what he told the House tonight, he said:
"Over the last couple of decades, although average earnings have grown strongly, the differentials have widened.
This widening of earnings differentials lies behind or is intertwined with many of our social problems . . . the break up of families, the growth of lone parenthood and a growing welfare dependency."
He went on:
"It may even play a part in explaining delinquency and crime". Outside this House, he can accept the facts of growing inequality and recognise the social and economic consequences of growing inequality, but he will do nothing about them, because the Tories are locked into an ideology which, even where it does not prevent them from observing the problems, prevents them from doing anything about them.
The divisions were spelt out in the Joseph Rowntree Foundation's chilling report. Those problems demand action. Those on low pay struggle to survive, working harder and harder just to stand still. The experience of millions of families is summed up by the words of a man to whom I spoke in Islwyn:
"We feel like we are running up the down escalator . . . every time we try and get ahead . . . we are pulled back down"
or the woman in my constituency of Peckham, who said:
"My husband works all hours that God sends . . . he's always exhausted but we've still got no money at the end of the month." Does the Minister accept that low pay is a problem for those people?
Low pay is a problem for people trapped on benefit who cannot go out to work, because the only job that they could get would make them worse off than if they stayed on benefit. It is also a problem for the public purse. As my hon. Friend the Member for Rotherham (Mr. MacShane) said, employers who pay low wages leave the taxpayer to pick up the bill in family credit and housing benefit.
I challenge the Minister to admit, when he winds up the debate, that, according to his figures, 75,000 people receive less than £1.50 after an hour's work. I shall give way to him if he will seek to justify the fact that, in this country and this day and age, people work for £1.50 an hour or less.
Mr. Oppenheim: The hon. Lady should bear it in mind that, although the £2 a hour she quotes is low, only four workers in 1,000 get paid less than £2.90 a hour. We would all like people to be paid more, but it has to be sustainable and based on the productivity and efficiency of the economy. Unfortunately, just to impose a minimum wage by political diktat would merely replace low pay with no pay for hundreds of thousands of people.
Column 885that £1.50 is acceptable, and he has suggested that all the Tories can offer is the choice between £1.50 or no job. What a testimony to economic failure that is.
Ms Harman: I was expecting the Secretary of State to get up and ask that. [Hon. Members:-- "Answer the question."] If hon. Members will get back into their prams for a moment, I shall reply. The difference between us and the Conservatives is not that we want one level of minimum wage and they want another, but that we consider that low pay is a disgrace, and that there should be a floor under wages.
When Ministers tell us what the level of national insurance will be after the next election, if they win it, or the level of taxes or other benefits, it will be reasonable for them to ask us what the minimum wage would be. It is a sign of their desperation that the only way to avoid justifying their figures and their appalling record is to continue asking us questions that we have said we will decide at the time of the next election.
Low pay is a problem, and it is getting worse. There are now more people on low pay than there were in 1980. While the gap between the low-paid and the rest has been getting smaller in many other European countries, here in Britain the gap between the low-paid and the rest has been growing.
Mr. Alan Howarth: I am grateful to the hon. Lady, and I agree with her that low pay carries with it enormous problems for households and for the public purse. If she believes that there is a minimum wage that in principle would be high enough to alleviate poverty satisfactorily and to attract people into work who at the moment are discouraged from working, but not so high that it would discourage employers from offering jobs, I do not ask her to tell me what it is, let alone what it will be when the next general election comes, but on what principles and by what methodology she would establish what it should be.
Ms Harman: We see the minimum wage as part of our welfare-to-work strategy, so that there is a floor under wages and the in-work benefits are used to top up wages as an incentive for people to go from benefits into work, whereas at present in-work benefits are being used to top up the bottomless pit of low wages.
Of course it is possible to have a floor under wages, and it has been done in every other country. Britain is the odd one out. Other countries have been able to have a minimum wage, and better records of job creation.
The Government are against a minimum wage, because they do not care about low pay, and they are crying crocodile tears when they say that they are worried about the effects of low pay. While we condemn the growing divide, the Tories excuse it. Sir Iain Vallance, the chairman of British Telecom, earns at least £180 a hour, following the privatisation of BT, while a security guard in Rotherham earns £1.80. [Hon. Members:-- "So what?"] Conservative Members say, "So what?", but they always excuse top pay and perks. They never condemn them or act to stop them. They are always on the side of privilege and never on the side of people.
Column 886As for young people at work, there is no evidence that the low pay they receive will improve as they get older. They are stuck in a low-skill, low-pay trap with no prospects.
Professor Patrick Minford, spokesman for the Tory right, was on the radio again this morning. He was echoed by the hon. Member for Finchley (Mr. Booth), who spoke earlier in the debate. Professor Minford said that inequality does not matter-- [Hon. Members:-- "Hear, hear."]--and Government Members agree. According to Professor Minford, all that matters is keeping people out of absolute poverty and deprivation. But that is not all that matters. Society must work together so that everyone has a stake in the future and is part of future economic prosperity.
My hon. Friend the Member for Birkenhead (Mr. Field) made that point very powerfully, using the analogy of society as a moving train. He said that the fourth carriage has become unhitched from the rest of the train and is being left behind. Society is not working if thousands of people face only worsening prospects while others are better off. As my hon. Friend the Member for Bristol, East (Ms Corston) showed in her forensic dissection of the Government's figures, absolute poverty matters as much as relative poverty. The plight of the poorest 10 per cent. of the population is worsening. Professor Minford and Government Members ask why we are against huge pay rises and perks. Professor Minford says, "Why not reward success?" He says that we should reward those who bring joy into our homes. But the directors of privatised utilities do not bring joy into our homes. What is he talking about? As the constituents of my hon. Friend the Member for Southampton, Itchen (Mr. Denham) recognise, their only achievement is to award themselves millions of pounds in pay and perks, while telling those who work for them that they have to "act responsibly" and see their pay fall or lose their jobs. We believe that there must be fair taxation. Why should company directors receive thousands of pounds by way of executive share options, while everyone else pays more tax? Huge pay and perks are not about rewarding for success; they are about some getting super-rich on the backs of everyone else.
The Tories say that low pay will cure unemployment. We say that low pay and unemployment go hand in hand. In the poorer areas of this country, we see low pay and unemployment--the twin symptoms of Tory economic failure. Every month, the Tories greet the headline claimant count unemployment figures with a blanket of complacency. They say that things are looking up, and that unemployment is no longer a problem. They accuse Labour of simply talking the country down. [Hon. Members:-- "Who says that?"] Government Members say that--those opposite obviously have worse cognitive dissidence problems than we thought.
Every time that Ministers tell the people of this country that everything is all right--as they have done tonight--they confirm people's absolute certainty that the Government are out of touch and do not care. They reinforce people's sense of despair.
Unemployment remains a major problem--it is a problem for those who are locked out of the labour market, and it is also a problem for those who are in work.
Column 887They feel insecure, and they worry that each pay cheque might be their last. Of course unemployment is worse than the claimant count describes.
There are pockets of structural unemployment. My hon. Friend the Member for Barrow and Furness (Mr. Hutton) spoke about the problems of unemployment in his constituency. One in three people on Merseyside are unemployed, and two out of every three young black men in London are unemployed. It is no good telling those people to wait until the economy grows, and then the benefits will reach them. They will not. Structural unemployment must be addressed by specific measures.
For example, the Government should establish a national child-care strategy for single parents who want to go out to work instead of bringing up their children on benefit. As my hon. Friend the Member for Renfrew, West and Inverclyde (Mr. Graham) said, there is a simple choice: the Government can provide child care or pay the income support bill for women who cannot go out to work, and who are condemned to bring up their children on the breadline.
To deal with unemployment, the Government must also act on the lack of skills among the unemployed. What a joke that the Government say in their amendment to our motion that they are improving skills in this country. They have failed on youth training. The figures show that it is not working, as my hon. Friend the Member for Bow and Poplar (Ms Gordon) said. They are also cutting training. They have cut the number of places on the training for work scheme by 55,000. They fail to understand the strong connection between long-term unemployment and inability to get a job.
People with low skills or no skills are the first to lose their jobs, and they take the longest to find a job. That is why it is a particular disgrace that the Government have cut down on the 21-hour rule. Instead of extending the hours that one can study before benefit is cut for an unemployed person, they are reducing them. One can now study for no more than 16 hours before one's benefit is cut. That is throwing an obstacle in the path of people who want to study, to improve their skills and qualifications and improve their chances of getting back to work. As my hon. Friend the Member for Sheffield, Hillsborough (Mrs. Jackson) said tonight, it is a kick in the teeth for people who want to get skills and want to get on. Of course international factors such as global competition and technological change have affected the labour market, but the Government could do one of three things: nothing, make things better and ameliorate the problems, or do what they have done--make things worse. They stand guilty of failing to act on unemployment. Unemployment is not a price worth paying. It is a problem not just for the unemployed but for the whole community. It is also a problem for the public purse.
In the face of that, however, the Conservatives have resorted to their instinct to blame the victim. The single effect of the jobseeker's allowance is that it will make the unemployed poorer. It will produce not one extra job. Not one person will find work as a result of it. It will simply make people worse off.
What question do the Government now seek to ask the unemployed when they go to claim benefit? What
Column 888question is in the forefront of the Government's mind? The booklet that will be given to unemployed people-- they will be asked to fill it in--asks:
"What is the lowest wage you are willing to work for?" That is the question that the Government choose to ask the unemployed. Of course, they had better give the right answer, or they will get no benefit at all. There is a clear message in that question: there is now no bottom line; whatever an employer is prepared to offer is what one must be prepared to accept.
I ask the Minister to tell us tonight: what is the amount that one can put in that box without losing one's benefit? What is the bottom line? That is a question that he is asking unemployed people. He should be prepared to answer in the House tonight. Of course, there is only one point in asking that question. It is a green light for employers to offer lower and lower wages, and the public will be left to foot the bill, because if employers do not pay the wages, the taxpayer will have to pay--in family credit, housing benefit and council tax benefit.
No doubt the Government will say, as they always do, that all Labour proposals mean extra public spending, but let me remind Ministers that they promised to cut public spending, but they did not. Instead, they spend more and more on the consequences of economic failure: unemployment, crime and poverty. They have spent less and less as a percentage of our national wealth on the things that would bring economic and social renewal, the things that are investing in the future. The Government have not cut public spending: they have spent more and more on mopping up the consequences of their own economic and social failure.
Howard Davies, the director of the CBI, said:
"At present, far too much of our public spending is devoted to compensating for the effects of failure, rather than investing in the ingredients of success."
Of course, low pay is a growing problem for the public purse as well. Family credit has become a subsidy for low pay rather than help for large families. As the hon. Member for Stratford-on-Avon (Mr. Howarth) pointed out, its cost has more than doubled in just four years, and that cost will double again. The Government are topping up what is turning out to be a bottomless pit of low pay. They are turning a blind eye to low pay and making the taxpayers pick up the bill, and the taxpayers will not stand for it.
We firmly believe in a welfare-to-work strategy that uses the benefit system as an incentive to put people into work rather than paying them to stay out of work, but the public purse cannot go on topping up low pay indefinitely. There must be a floor under wages: there must be a national minimum wage. The failure of Tory economic and social policy has scarred millions of people, destroying communities and holding Britain back.
People in this country do not want to see growing divisions, rising crime and the poverty and alienation that come with a divided Britain. They do not want to see their taxes constantly mopping up the consequences of the Government's failure, never building for the future. People in this country want a nation at work, not a nation on benefits; they want a nation of people working together, not growing apart. That is why we tabled the motion, and we shall vote for it tonight.
Column 8899.41 pm
The Parliamentary Under-Secretary of State for Employment (Mr. Phillip Oppenheim): I am grateful for the chance to reply to today'debate. I listened carefully to nearly all the speeches--I was sorry to miss one or two--and particularly enjoyed that by my hon. Friend the Member for Teignbridge (Mr. Nicholls), which I thought extremely thought provoking. I also enjoyed the speech by my hon. Friend the Member for Aylesbury (Mr. Lidington), which dealt very effectively with the flaws in many parts of the Rowntree report, and especially effectively with the issue of trade.
I was interested by what was said by my hon. Friend the Member for Twickenham (Mr. Jessel), who was particularly enlightening about the relationship between vegetable consumption and the birth rate. My hon. Friend the Member for Hertsmere (Mr. Clappison) also made a number of good points. I hope that the hon. Member for Birkenhead (Mr. Field) will forgive me if I say that, although I did not agree with everything in his speech, I thought it balanced. I think that most Conservative Members enjoyed it and found it enlightening. I particularly welcome the opportunity to debate the key issue of the relationship between unemployment and poverty. The debate has shown the complexity of the issues involved in any sensible discussion of the subject. It is, I think, fair to say that all of us--regardless of party--would like to see the incomes and living standards of all our people rise. Later in my speech I shall examine the Government's policies in that regard--and, of course, the Opposition's--but, first, I shall dwell briefly on the Rowntree report, which has been widely quoted and occasionally even misquoted. Like most good reports, it rewards careful reading.
One of the less well-reported aspects of the study is the fact that, in 1979, of the bottom 10 per cent. of the population, one third were pensioners, compared to only 12 per cent. now. Since 1979, average pensioner incomes have increased faster than those of the remaining households--a point that was made very effectively by my hon. Friend the Member for Hertsmere. Perhaps Opposition Members should also examine more closely the passage and graph relating to the growth of income inequality: it is interesting, because it shows that the growth in inequality began not in 1979 but in 1976, fully three years before Mrs. Thatcher came to power.
We have heard much today about the growth in poverty, which was mentioned by the hon. Members for Bow and Poplar (Ms Gordon) and for Rotherham (Mr. MacShane). It is worth pointing out that the basis for the claim that poverty has grown is the so-called European decency threshold--three words that probably cause tremors in the spines of most of my hon. Friends; they are pretty bad individually, but together they are devastating. The threshold was introduced in 1977, and currently assesses the poverty line for Britain at nearly £12,000 a year. That level of income would not be recognised as poverty by most people. That is why no European Government have accepted the definition, and why the previous Labour Government did not accept it when it was introduced in 1977.
Column 890The report talks about the polarisation between households with two earners and other households, but it also shows that participation in the labour market by women from low-income households has been catching up with participation by those from high-income households, and that women's pay is now closer to men's pay than at any time in our history.
One important facet of the Rowntree report, however, should, and does, concern all hon. Members. It rightly points out that the growth of unemployment is one of the main causes of poverty. We must not duck that issue. If I were in opposition, however, I would not take too much comfort from that, as people have not forgotten that the Labour Government doubled unemployment in the five years they were in power. Unemployment rose at a faster rate between 1974 and 1979 than it has since 1979. The Labour Government's record on unemployment was worse than that of the European Community as a whole, whereas now we are doing considerably better.
Ms Harman: Does the hon. Gentleman recognise that unemployment is still almost 1 million higher than it has ever been under any post-war Labour Government, that long-term unemployment remains at almost 1 million and that the United Kingdom is the only Group of Seven country that has had no rise in employment since 1979? In short, will he start telling the truth, instead of just covering the argument with lies?
Mr. Oppenheim: I thought that the hon. Lady had made her speech earlier. She should recognise that, when the Labour party was in power, Britain's record on unemployment was significantly worse than that of the European Community as a whole, whereas now we are doing better.
I would be the first to admit that unemployment is still far too high in Britain, as it was when the Labour party was in power; but let us not forget that, if some panacea existed for the problem, which afflicts almost the whole of the industrialised west, France and Italy would not be suffering from unemployment rates of close to 12 per cent., nearly a third higher than in Britain.
Equally important, Britain has not only fewer people out of work, but far more people in work. In Britain, more than two in three of the adult population--
In Britain, more than two in three of our adult population are in work--a higher figure than in Germany and far higher than in Italy or France. The figure is
Column 891certainly far higher than the figure in socialist Spain, with its highly regulated labour market and national minimum wage, where less than half the population are in work, and where nearly a quarter are unemployed.
Mr. MacShane: I am grateful to the Minister, to whom I gave way twice for very lengthy interventions. The pontificator maximus has arrived- -wonderful, here he is. No Opposition Member mentioned the European decency level. We are Europeans and he is not very decent, but I suggest that he make his speech in Rotherham, and that he tell the people there that no poverty exists and that unemployment is not a problem-- [Interruption.]
The only way we shall create more secure, high-quality jobs for all our people is if our economy is a success. Whereas in the 1960s and 1970s we were consistently bottom or near the bottom of the league of major industrial countries on growth in manufacturing productivity, industrial output, inflation and manufacturing output, in the 1980s--and since then-- we have been at least as good as the G7 average and, in the case of manufacturing productivity growth, as good as the best. That is why, while productivity and real pay stagnated at all levels from 1974 to 1979, the massive rise in productivity since 1979 has allowed for a large rise in real take-home pay at all levels. A single man in the bottom 10 per cent. of earnings has seen a real increase of 23 per cent. in his take-home pay since 1979; the same person would have seen a fall of 1 per cent. under the previous Labour Government. Under Labour, the rich got poorer, but the poor did not get any richer.
Mr. Graham rose --
Anyone who pretends that there is an easy, painless panacea is perpetrating a cynical con on the less well-off. This seems to be a good point at which to examine the Opposition's policies. How would they help the unemployed and reduce poverty? They have a policy--it is called the minimum wage. We know that because, on 5 January, the hon. Member for Peckham (Ms Harman) proudly trumpeted it in a letter to Labour group leaders. Unfortunately, she cannot tell us at what level Labour would introduce the minimum wage, whether there would be different levels for young workers and trainees or what it would do about differentials. If the hon. Lady is now going to enlighten the House, I shall gladly give way.
"What is the lowest wage you are willing to work for?" That is the question that he is asking the unemployed. What is the bottom line?
Column 892wages any lower than they had in their previous job. I have answered the hon. Lady's question; will she now answer mine? I see that she is not prepared to do so.
Several hon. Members rose --
Let us see what other Labour supporters have to say about the minimum wage. Baroness Castle backed a report which concluded that the higher the minimum wage, the greater the increase in unemployment, which is why she did not introduce one. John Grant wrote recently in The Guardian that it was a "pious hope" to expect better-paid workers not to want to maintain differentials--and he was the low-pay Minister under the previous Labour Government.
Only a few months ago, Lord Healey said:
"Don't kid yourselves--the minimum wage is something on which unions will build differentials . . . therefore the minimum wage becomes a floor on which you erect a new tower".
The deputy leader of the Labour party said:
"A minimum wage would cost jobs--any fool knows that". Well, apparently, only some fools have groped their way to that enlightenment. At least the deputy leader of the Labour party has spelled out his economic policy, which is:
"Society should tolerate relative inefficiency in labour intensive sectors".
In other words, local authorities should be able to employ more low-skilled staff.
Let us briefly refresh our memories about the performance of those local Labour authorities, which will play such a large part in Labour's job creation plans, with the words of Mr. Leo McKinstry, who was the political researcher of the hon. Member for Peckham and a former Labour councillor. He said:
"I could see only too clearly the spirit of Labour in local government-- that mean-minded cocktail of political correctness, bureaucracy, intervention and abuse of public money--pervaded the whole party".
Let us add that to the shadow Chancellor's pronouncements: "Our new economic approach . . . is rooted in the world of economic ideas, ideas which stress the growing importance . . . and the growth of post neo- classical endogenous growth theory and symbiotic relationships."
There we have a crystal-clear vision of where Labour wants Britain to go. The deputy leader wants a nation of low-skilled public corporation workers and the shadow Chancellor--well, no one is quite sure what he wants.
I quite understand that Labour would prefer to be coy about its policies. It says that it wants a minimum wage, but can tell us nothing about the level or differentials. It says that it wants to clobber the high-paid, but cannot tell us to what level it would raise the top rate of tax. It seems enamoured of the Rowntree report, but cannot tell us how many of that report's 20 recommendations it would implement and what it would cost.
Several hon. Members rose --
"Win a day in Parliament. All you have to do is say in no more than 100 words what the policies and priorities of a Labour Government would be."
We will just have to wait until those good ladies have returned their answers before we can have some clear Labour policy. Several hon. Members rose --