Examination of Witnesses (Questions 160
- 179)
TUESDAY 16 JANUARY 2007
PROFESSOR ADRIAN
SINFIELD AND
PROFESSOR JOHN
VEIT-WILSON
Q160 Mr MacNeill:
Moving from the Scandinavian society you describe, a lot of people
would agree that a more equal society is probably a better society;
some would not. There must be vested interests preventing this
sort of move to a more egalitarian society. Have you identified
any area, deliberate or accidental, of vested interest blocking
a move to a more equal society, which many of us would want to
see? I can think of reactionary voices which might mention regional
taxes for one, but does anything else come your way?
Professor Sinfield: I have continued
to be concerned over the years about the extent to which we have
what you could call a tax welfare state as opposed to a public
welfare state. Some areas of this have been restricted because
no longer can you get tax relief when you are buying your own
home, which was a major factor in the past, which cost the nation
in tax foregone more than all expenditure on council housing.
Pensions would be a major area where the Government are giving
about £14 billion in tax relief on people building up their
pensions, but they are not included in the public expenditure
accounts in the same way in which money that is going directly
into pension credit is. All governments, not just the British
Government but a whole range of governments, do not take account
of these tax reliefs, although they are equally something that
affects the balancing of the budget and this is something we could
do much more about; in fact I have a brief bit in my evidence
to you on this.
Q161 Ms Clark:
Quite a bit earlier in the session there was mention of the word
"status" and you have been talking about more quality
jobs. There is always going to be a need for people to do jobs
that may fall within your definition of low quality jobs, the
kind of dirty jobs that just need to be done for the whole of
society, and there are always going to be people who would be
happy to do those jobs and may not be looking actually to climb
up the ladder. Surely an important point is that those jobs are
given the status that they should have and that they have the
wages that go with that, rather than thinking that everybody has
to aim for what would be considered by others to be betterment.
Professor Sinfield: In any society
you are going to have bottom jobs, but those wages should surely
be above the poverty line and—this is a crucial issue—that
the people who are doing the jobs that are the least popular in
society are not being thrust into poverty because of it. It seems
a straightforward issue.
Professor Veit-Wilson: It is a
terribly important point that everybody feels that they have the
status of doing a worthwhile job in society and that is recognised
and respected by other people. The lack of respect is one of the
most psychologically damaging aspects of poverty. In answer to
the previous question, I was reminded of work which an American
sociologist, Herbert Gans, did on the positive functions of poverty.
He went on about that for quite a long time and we need to be
reminded constantly that there are many both social and economic
reasons why some people's poverty is very functional to other
people. Paying low taxes for low wage service jobs and so on is
one and, I am not going to elaborate the point, also having people
to look down on, being able to support one's own status by saying
there are those people—what our colleague, Professor Lister,
has called "othering" people—treating them as
"them". It is worth remembering in a context like this
that the statistics show that very many more people pass through
low income at some stage in their lives or even within the last
decade than are poor at a point in time if you do a cross-sectional
count. So far more people have experienced the conditions that
are being raised in this discussion than are poor at a point in
time.
Q162 Mr Walker:
Just out of interest, what do you believe would be an adequate
or fair minimum wage? What should the Government be paying?
Professor Veit-Wilson: You cannot
answer that question without doing the study first to discover
what would be a living wage in a particular social context. It
comes back to the point about local labour markets as well and
there is a question as to whether there should be regional or
local variation in wage rates. If we just mention London weighting
as an example, we do have that concept in certain ways because
of a notion that housing in London is quite different in its market
costs from what it is elsewhere. It is not terribly well supported
in all cases by the evidence, but for some it is.
Q163 Mr Walker:
If you have regional minimum wages that would create regional
labour market distortions because the incentive for people would
be to live in one area and commute to an area within commuting
distance where the wage was higher. Do you see that as a potential
problem? I say that because in Hertfordshire we have a hard time
keeping our policemen because they live in Hertfordshire but commute
into London where the wages are better. They do not want to be
Hertfordshire policemen; they want to be London policemen.
Professor Veit-Wilson: It is also
because they cannot afford to live in London and that is true
for a great many service occupations. A great many people commute
and like commuting. The richer you are, the further you can afford
to live away from your work, and I am sure both of us know people
who live a very long way away from their highly paid work and
enjoy doing exactly that. This question of labour markets and
labour market rewards is a pretty complicated one and we cannot
easily answer it here. The point of my answer was that there is
not a simple figure to be produced. Calculations in London by
the East London Communities Organisation, and I believe now by
the GLA, have been that a living wage in London for the lowest
paid cleaners in Canary Wharf and so on would have to be something
well over £7 an hour and not the £5 minimum wage.
Q164 Mr Walker:
We are talking about £14,000 a year.
Professor Veit-Wilson: Yes, that
may be it. What we are talking about here is enough to be able
to live on decently and avoid many of these signs of poverty that
we are raising.
Q165 Ms Clark:
When we took evidence in Inverness it was suggested to us that
a reasonable minimum wage would be in the region of £7 an
hour. What is your reaction to that suggestion for that part of
the country and, indeed, for Scotland? Do you think that is the
right level, do you think it is too low? What are your views in
terms of what level a minimum wage would need to be pitched at
to address some of the problems of real poverty that exist?
Professor Veit-Wilson: I really
do believe one has to study the subject and what any of our opinions
are does not really matter until we have the evidence.
Professor Sinfield: One of the
interesting things is that the University of Loughborough, and
John is on the Advisory Group, are now looking at this minimum
income standards issue which we have been pushing the Government
to do for many years, and which some other countries have and
seem to operate quite successfully, as John's study has shown.
Q166 Mr McGovern:
Regarding the minimum wage, would you agree that whether you agree
with the figure or where it is set, it helps to alleviate the
problem you referred to earlier about "othering"? I
mentioned the fact that my mother worked in a jute mill. When
an American company started coming to Dundee, the jute mills became
the least desirable jobs, but even within the jute mills there
was still this "othering"; my mother was a weaver rather
than a spinner. Do you think the national minimum wage helps to
alleviate that whether you agree with where it is set or not?
Professor Sinfield: It certainly
made an impact and has got rid of some of the very lowest rates
of pay without there being any clearly discernible impact on unemployment
which a lot of people said was bound to happen and it has not
happened. What I find worrying is that the Low Pay Commission
seems now to be holding on in terms of the increases and I am
not sure how strongly justified their evidence is for doing this.
I would have thought it could continue to go up. The additional
point that I hope you will put in is that there should be closer
attention to ensuring the enforcement of the minimum wage. I find
this rather distressing because I looked at the failure to enforce
minimum wage council orders in the 1960s and 1970s and the government
did not want to offend the employers and so on. I get the feeling
that there is an element of this. I know the DTI has just shortened
the time period for things to be put right and has increased the
penalty but they could release some more funds rather than restrict
funds to groups like the Low Pay Unit and others to act as in-betweens
to help people ensure they are getting the correct amount.
Chairman: You make a very important point.
When we were in Inverness taking evidence we were told very clearly
that there are some employers who are not paying the national
minimum wage, so there is an issue of enforcement and you make
a very good point. I am very pleased that you were also a supporter
of the national minimum wage when it was introduced and now I
believe our Conservative Members are very enthusiastic about this
as well.
Q167 David Mundell:
Just so we are clear, for the record, we are supportive of the
national minimum wage. Going back to the initial comments Professor
Veit-Wilson made at the start about poverty, you were indicating
really that it was just a straightforward lack of money you saw
as being the definition. Is that over-simplifying it?
Professor Veit-Wilson: No. I was
simplifying but it was not the only thing that I said. In marketised
societies like ours, many of the discussions about what we mean
by "poverty" revolve around the consequences of one's
market position in terms of the definition. The generalised definition
I gave was the lack of resources to take part in society according
to the standards expected and those resources in our kind of society
are very largely monetary ones. That is why, when we are talking
about policy issues, I consider having an adequate income the
central and essential feature, though there are many other policies
that would need to be followed up besides that. It is not the
only one; it is not a panacea for all the problems that we identify
as poverty. May I just say two things about the low wage one?
One is that the Low Pay Commission never looked at the question
of what was needed. The figures that it has arrived at have always
been by discussion between the parties and that has not included
evidence about what goes into the calculation of a living wage.
The other thing is that the statistics that we use in this country
for all their strengths and weaknesses are based on household
income and counting people according to the disposable incomes
of the households in which they live. That means that if we are
looking at the question of dealing with, for example, children's
poverty then we have to take into account the value of the benefits
which are received which are meant to help with that or, indeed,
dispose of that particular question. So another aspect of this
is not just whether the minimum wage is enough, but whether it
is enough in combination with universal benefits like child benefit
to ensure that a family which has dependant children in it does
not fall below whatever is being set currently—I prefer
it on an evidence basis—as the poverty measure.
Q168 David Mundell:
And where within that would fit the concept of specific assets?
One of the issues raised, particularly in the rural context is
that people have a car or may have a car which is, in some deprivation
statistics, highlighted as in fact meaning that they are better
off, whereas the car is a requirement for their existence or the
possession of a car might be having an adverse affect on their
income. Where does that fit into the wider view of what people
might have available to them?
Professor Veit-Wilson: It is not
just a matter of counting what white goods, cars or other things
they have like that. The real issue, as the Nobel Prize winning
economist, Amartya Sen has put it, is what are they capable of
doing? Not having a car in a rural area without adequate public
transport, possibly for good reason, means that they cannot do
a great many of the things which we are expected to be able to
do, whether it is get to work or visit granny or whatever else,
without having their own personal transport. The other aspect
of possession of assets in that tangible sense, of course it is
not only tangible assets we are talking about, is what return
do they provide in a flow of resources which can then be made
use of? So having tangible assets in the form of savings or other
cash generating assets may be very important to be taken into
account in what we are talking about at the moment. That may also
be true of the social assets, what is sometimes called cultural
or social capital that people have, the contacts they have. I
have worked with a team research in Russia since the changes there
and much the most important thing in that situation, and it may
apply in some of the communities that you are concerned with,
is who you know, what contacts you have, what social networks
you are involved in, much more than a particular possession. If
we are looking at the picture of the level of living, and this
comes back to an earlier point about the satisfaction people have
in their communities, then it is not just counting up tangible
assets that count. If you are setting up house for the first time,
then clearly you have to have the resources to be able to acquire
those goods and tangible assets that are appropriate. We could
equally well be talking over a lifetime of whether you have the
flow of resources that allows you to build up the pension rights
or savings which again will protect you in old age. We have to
take all the different kinds of resources into account if we are
looking at the whole picture and if I have made at the beginning
a rather simplistic statement about measuring cash flows at this
point in time, it is in the context of the sort of policy questions
I referred to earlier. Are we talking about the adequacy of the
benefit or the minimum wage system?
Q169 David Mundell:
You did also make reference to a formula that you said had been
available to Government and ministers since the 1960s which would
have calculated perhaps what that cash flow was. What is that
formula?
Professor Veit-Wilson: The word
"formula" that I used was not the formula about how
to calculate, it was the formulaic form of words used by officials
and quoted by ministers to explain why it is quite impossible
in Britain to calculate what a decent minimum income is even though
it is possible in other countries to do so. Sometimes people call
that a "mantra" and I was trying to be careful not to
use that word, but I am going to use it now. What the National
Assistance Board officials did was to take different methods of
looking at what you could actually buy on national assistance
scale rates, how the managers saw the lives of people who were
claimants at that time and what the evidence was about what the
British population in general were spending their money on. They
compared those and made a judgment about what a more adequate
level of benefit would be. In 1966 that was only implemented to
the extent of the long-term addition for pensioners and certain
other claimants.
Q170 Mr MacNeill:
Just a couple of brief points. With Gordon Brown and credits for
children and for families, do you think he would be better taking
more people out of tax and recycling money back in through credits?
Essentially here we are probably talking about the philosophy
of equality and we have talked a lot about lower end lifting through
minimum wages. Do you think there is a necessity of upper end
capping as well to achieve a more equal society? Two points there.
Should we just get rid of credits and just do more taxation in
general? What is your general view?
Professor Sinfield: On the second
one, I still stick to the position that Richard Tawney took before
the First World War that what thinking rich men see as a problem
of poverty thinking poor men see as a problem of wealth. You cannot
disconnect these things and clearly it has an impact on our society.
This was brought out very well by Anthony Sampson. He did these
marvellous Anatomy of Britain books, the first one in 1962.
Just before he died he produced his last edition and said that
the most fundamental change in Britain over the last four decades
was the fact that the rich no longer have to explain themselves
to anyone, to the Government, to God or even to themselves. He
was saying that the extent to which there is respect for wealth
and money-making was what he thought was the biggest change in
Britain and it does seem to be that this goes with the increase
in poverty, the increase in deprivation and the failure to recognise
that we are a society which needs to keep all members within it.
I do think it is a real problem, therefore I would argue for capping.
Q171 Mr Walker:
You would argue for the capping of the ultimate salaries?
Professor Sinfield: I would argue
for a progressive income tax structure rather than the one at
the moment where the whole range of progression is from 36 to
35% and the wrong way round.
Q172 Mr Walker:
Do you think that position that might be Utopia—it might
be someone's Utopia but not my Utopia—is just not going
to happen, is it, with the international flow of capital and labour
around the world? That just simply is not a possibility. So should
we even be thinking in terms like that, because that would distract
us from really addressing underlying problems?
Professor Sinfield: There are
two separate issues here. How far people should allow their income
to go up is an issue that we could well differ on but whether
it should be unlimited is a different point. The evidence from
Atkinson and others is very clear that it is not a worldwide issue;
it reflects very much the policies of the countries, the extent
to which inequality widened in the United States and in Britain
only across a major group of industrial countries in the last
two decades of the last century. There is a factual point here.
The globalisation issue does not justify unlimited salaries; it
really does not. It may justify higher salaries; that is totally
different.
Q173 Mr Walker:
It may not justify it, but it may be the reality that that is
what is going to happen.
Professor Sinfield: No, you are
not right. I really do not think you are right. I do not think
the evidence supports you.
Q174 Mr MacNeill:
What about the Gordon Brown point on the taxation and the family
credits or the tax credits?
Professor Veit-Wilson: Quite a
number of us in this field supported the idea of what you might
call the post selective universal aspects of tax credits. In other
words, you make the benefit available to everybody and then tax
it back again. Of course the Treasury liked that because it was
treated as negative expenditure. The point was that it did not
show on the public expenditure side of the balance sheet and that
was what was so good about it. Some of us who supported this,
because it seemed a rather clever wheeze at the time, have become
disillusioned by the failure to be able to administer it in a
way which actually reflects and recognises the difficulties which
people on very low incomes have in managing highly fluctuating
and unreliable incomes. So it may be a good system in practice
and those of us with high incomes can afford to cope with tax
over-payments and under-payments and so on, however if you are
trying to manage from week to week it is exceedingly difficult
and if at the end of the year you are presented with a bill which
you have absolutely no resources to repay, that is calamitous.
Q175 Mr Davidson:
You responded to David Mundell's point about whether poverty is
about not having enough money by saying there are all sort of
other things as well. Is it helpful to us to think of a division
between, on the one hand, poverty, which is about this question
of money and all the other issues which could be characterised
as social exclusion because there is now an industry in a sense
about social exclusion and it seems to me that there is actually
a distinction that can be drawn and that to lump too much together
makes the scale of the problem almost impossible to tackle and
therefore you do not bother at all. For us as a Committee, not
able to tackle the whole range of everything, to focus then on
issues relating to income and poverty would actually be a meaningful
contribution that we could make.
Professor Veit-Wilson: I would
say from a policy point of view, yes. However, I was trying to
make clear in the written evidence which I submitted that a lot
of people use these terms in a lot of different ways and that
makes it very difficult. Even in this kind of conversation, for
me to distinguish in what I am saying between playing a very academic
role of "he says this" and "she says that"
and "these people are using the word this way" and what
I would actually think makes for clearer planning, because that
is what we are about in the end, would help to focus on creating
the conditions in which everybody has the resources to be able
to be included and then concentrate on those who fail, even though
they have demonstrably adequate resources to do so. At the moment,
we focus on those who are not included or who are excluded, however
you want to use those terms, but we do not always make sure that
they have the resources to be able to take part in society in
the first place. Some of the commentators on social exclusion
have been at pains to point out that some of those who are described
as being socially excluded are not poor and some of those who
are poor and you mentioned them earlier, are not socially excluded
in the senses in which that term is quite commonly used. So it
is not very helpful to use one as a kind of euphemism for the
other. From a policy planning point of view, it is much better
to be clear what you are trying to do, what the appropriate measure
for that is and then see what is left over after that that remains
to be dealt with. There are, of course, other bits like the educational
system, housing and so on and each deserves attention in their
own right.
Professor Sinfield: I would very
strongly support that, but may I just add that there is a case
for saying economic resources and not income. The non-academic
reason for that is that in some cases, say in relation to people
with disability, it is the economic resource of meeting some sort
of particular need that enables them as well as the other incomes
to participate in society. School meals are an example of a resource
that should be free; travel allowances have made a big difference
for many older people.
Q176 Mr Davidson:
That leads me on in a sense to this juxtaposition of income and
benefits and support and so on and disincentives and the like.
I have in my area large numbers of people who are working on low
wages and I have large numbers of people who are on benefits who
have displayed quite astonishing degrees of knowledge and ingenuity
in maximising their income from benefits. There is a question
of crossover there, of disincentive. People have often asked me
why they should go for a job when they will lose this or when
they will lose that, why they should go out and work for the equivalent
of 50p an hour and so on and so forth. How do we overcome this
issue about wanting on the one hand to make sure that those who
are unable to compete in the job market are adequately provided
for without leaving the door open for rascals and villains to
abuse the system without having quite a big gap between what you
can earn and what you receive if you are not?
Professor Sinfield: European sociologists
have said that the British seem to have been obsessed about this
differential, this work-shy problem for the last 700 years. It
really differentiates us from the other countries. The clear evidence
that there are large numbers of people who could work and are
not working because there are jobs available to them and they
are not going into work does not stand up. Certainly there are
people who say these things, who somewhat apologetically a few
weeks later explain to me why they took a job because everything
else was driving them mad. Equally there is a vast number of people
who do not understand the benefit system. On Friday I was listening
to a talk from a welfare rights worker who was attached to a health
centre in north Edinburgh who had brought in £400,000 in
the course of the year in terms of unclaimed benefits and tax
credits.
Q177 Mr Davidson:
I understand all of that. I am not unsympathetic to that. Very
often, these are in entirely different groups. The pensioners
who will not claim the minimum income guarantee and the pension
credit and so on are not by any stretch of the imagination the
people who have managed to maximise the benefits by one route
or another. If there are large numbers of people who would take
jobs if they were available but they are held back because there
is no work there for them, how do you explain the fact then that
large numbers of migrants have come into Glasgow and found 20,000
jobs and unemployment is continuing to rise? Clearly the work
was there, people were choosing not to take it. Is that because
there were insufficient incentives for them to take it? What is
the link there that we ought to be looking in policy terms to
address?
Professor Sinfield: If you are
taking somewhere like Glasgow which has had an appalling level
of long-term unemployment over something like 20 to 25 years,
you have a very different problem from the normal labour market.
One of the sad things, and this is why I said I wanted to speak
to you about false economies, is that Pathways to Work was starting
to work on a voluntary basis to the extent that people who were
not eligible for the scheme were asking whether they could be
brought into it and were being told there were not enough staff
to handle them. Now the Government is talking about making it
compulsory but cutting the number of staff to provide it under
the cutbacks in staffing for the DWP. I feel that Pathways to
Work was starting to deal with the issue that you were talking
about. I really do; over a period of time.
Q178 Mr Davidson:
As somebody who has chaired various groups in my area, I think
you are actually wrong because Pathways to Work was undoubtedly
dealing with many of those who did genuinely want to work, who
did require a degree of support, but there was also a group there
who had absolutely no intention whatsoever of working, if they
could possibly avoid it and their existence, which was known to
quite substantial numbers of people in the community, was undermining
the credibility of the whole system. The question of solidarity
and wanting to provide finance to raise everybody to a meaningful
level depends upon consent, it depends upon the feeling that some,
particularly those that are on low wages, are not being exploited
by others who are working the system. It just seems to me that
it is that juxtaposition and meshing together of issues that I
am not sure that we have right and I am not sure so far you have
actually helped us with that particularly.
Professor Veit-Wilson: It is quite
a while since I was involved in those kinds of questions but I
do remember one of the key issues about employability was whether
the employer actually wanted to take you on. It could be that
one of the difficulties with the people that you are talking about
is that they are less attractive as employees than are the people
who are coming in that you have described. I do not know your
labour market.
Q179 Chairman:
There are two issues here. One is whether the employer is willing
to take somebody on or not. On the other hand there are people
who enjoy a better quality of life without working and have more
benefits than the people who are working. They do not want to
take up jobs as well. Many employers tell me when I talk to them,
that people are sent to them and interviewed and when they ask
them the first question it is very clear they are here for a purpose
and they do not want to do the job. How can we address this issue
when people who are working, if you include their travel costs
and other expenses involved in working, become less well-off working
than the people who are not working?
Professor Veit-Wilson: What strikes
me about that and it is a very old problem is that it is saying
something about this question of differentials and incentives,
which we have been talking about earlier. Possibly it is because
the wage rates are not high enough rather than that the benefits
are too high. As I say, I cannot tell you what the minimum wages
ought to be, but what we do know from earlier labour market studies
is that the status of being in work and having the respect due
to somebody who is going to work, has its value as well, it does
not always have a cash value on it. For some people, it very clearly
has a cash value; they would rather be working than be on benefits
which might be very close to whatever net earnings they have.
It is a quite complicated question. We are dealing with a lot
of beliefs, with some social evidence which does not always support
those beliefs, and with questions of the structure of the labour
market rewards and the benefit rewards which deserve a great deal
more attention.
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