Examination of Witnesses (Questions 180
- 199)
TUESDAY 16 JANUARY 2007
PROFESSOR ADRIAN
SINFIELD AND
PROFESSOR JOHN
VEIT-WILSON
Q180 Mr Walker:
May I ask a question to which there is probably no answer, but
please try to answer it? If in a perfect world we could increase
the minimum wage to, say, £10 an hour, which is never going
to happen, but if we could increase it to £10 an hour, would
you two gentlemen, as serious academics, then think "Job
done" and that you could start a second career, the fundamental
underlying causes of poverty having been dealt with and off you
go? You probably would not think that.
Professor Veit-Wilson: No.
Q181 Mr Walker:
So if we got the minimum wage to £10 an hour, what would
be your next focus? What would be your next priority as far as
your academic work and considerations are concerned?
Professor Veit-Wilson: It would
still be what it is at the moment which is to discover whether
£10 an hour is the figure we ought to be aiming for. When
we had made sure that nobody's household income fell below whatever
that level was that we are aspiring to, then I would come onto
those other questions. I do not believe that these are either/or
matters; a number of different things have to be done together.
Ensuring adequate incomes is certainly one of the first.
Professor Sinfield: It is only
an extremely limited achievement in a society to reduce the number
of people living in poverty. There is a great number of other
things one could do to improve the welfare in society in a whole
range of other ways. If you did get it to £10 an hour there
is still the crucial issue of what resources you are going to
make available to the people who for one reason or another are
not working, not able to work, not willing to work or whatever
they are doing. This is a crucial issue. Just to come back to
Mr Davidson's point earlier, I am very struck by the fact that
when I have interviewed the unemployed I cannot help myself thinking
this guy is really looking and that guy is not and how wrong I
have very often been in terms of judging people and going back
to the same family six months or a year later discovering that
the work patterns of these people are very different because jobs
came up. It is a bit like at school where nobody really likes
to say they are working hard. People put on a whole range of stories
to justify what they are currently doing. This is a big factor.
I have also had people who present themselves very much as wide
boys explaining to me why it did not pay for them to work when
in fact they have actually been receiving less benefit than they
should have been and they did not realise it because they understood
the system so badly. There really is a problem with our complicated
system.
Mr Davidson: There is nothing worse than
an incompetent wide boy.
Q182 Chairman:
Ian has mentioned migration a couple of times, immigrants taking
the jobs. As you are aware, there are certain types of jobs which
our British friends are reluctant to take or even willing to take
up such as cleaning, low-paid jobs, low-quality jobs which are
only filled by immigrants and even they are reluctant to clean
the toilets. What would be the message to deal with that issue?
Professor Sinfield: In the past,
before the immigrants came, a lot of these jobs were filled by
local people. The decision very often is on the part of the employers.
They find certain people more acceptable to take, there is a high
turnover; because the quality of the job is poor they can expect
a high turnover. They expect certain relationships, so it is a
pattern which goes on over time, constantly changing, depending
on who the immigrants are, which particular group. Sometimes it
is people coming in from rural areas who may be Scots.
Q183 David Mundell:
On that point about geographic movement within Scotland, which
is part of the route to poverty, it seems to me, particularly
in Scotland, where the purpose of a number of post-industrial
communities in many ways has moved on—former mining communities
or where there has been a large industry—yet people are
very keen to stay there though it is quite clear that their economic
prospects would be better if they moved somewhere else. For clarity,
I am not in any way suggesting any forced movement of people.
How do you see that issue? There is a route out of poverty, which
would be moving, but people are simply not taking it.
Professor Sinfield: This is a
classic problem and it is important to look at the reasons they
are not taking it. I have not interviewed unemployed people in
Scotland, but I have in the North East of England. What was astonishing
was that there was a general belief that people were not prepared
to move, but these people had actually done quite a lot of looking
around: South Africa, Australia as well as in the south. One of
the crucial things was that they were convinced, from a whole
range of experiences of neighbours and friends, that moving down
towards London they would not be able to get housing and this
was a major factor. If you look at the research which has come
out of the closure of the timber mill in Corpach near Fort William,
you will find that a lot of the people who had lost their jobs
there came from Glasgow originally, were born in Glasgow, but
they were born in Glasgow because their parents moved there in
the 1930s because the jobs disappeared near Fort William in the
1930s. They moved south, then they moved back again, then they
lost their jobs again. These people are going to become very wary
about making another move, so you do need to locate it in the
context of what has been happening. There is an enormous movement
of people but it tends to be in fairly small stages; there is
not a vast amount of long-distance moving.
Professor Veit-Wilson: You asked
your question in terms of the choices made by individuals, but
this is in the context of economic and social policies which governments
have some control over. I am thinking of the experience both in
County Durham, which is close to where I live, and in Sweden,
which I have had a look at, in terms of the problems of rural
depopulation when industrial location changed. In both of those
areas—in one case a country, the north of Sweden, in the
other case a county of Britain—the problem was one of local
employers—in the Durham case mining, in the Swedish case
all kinds of timber by-products—closing down. In Durham
there was uproar when the county council proposed to close down
the services to particular villages on the grounds that the mine
was no longer there and the people should move away from it. Similarly
in Sweden, it created an enormous political uproar and the end
result of a great deal of argument there was that the Government
was actually for the people, where they wanted to live. It was
not the Government's business to be forcing people to concentrate
somewhere else in the country. Who is the Government for? It was
the choices that people made about their communities, where they
wanted to live, and therefore if the free market of employers,
with all the forms of incentive and support that employers get
wherever they are, did not wish to be there any longer, then perhaps
some others should be there. So economic policies to devolve industrial
location, and also to ensure the support of the social services—not
closing the schools, the post offices, the hospitals and such
things—were provided.
Q184 Mr Davidson:
We picked this up in rural areas. If you think the Government,
the state, should provide bus services, post offices, all these
services to rural areas, working on the basis that money does
not grow on trees, you therefore have a small group in an isolated
environment demanding that the rest of us, particularly my constituents
in urban areas, should pay more taxes in order to keep them in
the locations to which they have become accustomed. There is an
issue there about fairness and reasonableness as well. Going back
to my days in Strathclyde, I can remember one particular family
who lived 40 miles out demanding a bus every day to pick their
child up and collect them and deliver them to school, then take
them back again. There is that issue around the collective interest
as distinct from the rights of the individual, is there not? How
do you balance that?
Professor Veit-Wilson: The Swedes
balanced it by saying that is the kind of society we want and
people, expressed through the political system, were prepared
to pay the costs of doing that. I cannot remember whether all
the Durham citizens who pay their taxes were prepared to pay the
costs, but I imagine that they were and of course regional funds
were available to support that as well.
Q185 Mr Davidson:
Presumably all the increases in pension credit, winter fuel payments
and the rise in some child tax credits are moves in the right
direction in terms of alleviating poverty or are we getting any
of that wrong? It just seems to me that pension credits, winter
fuel as a universal payment, rise in child tax credits are unalloyed
good. Apart from your point about these being universal rather
than means tested, is there another downside we ought to be aware
of?
Professor Sinfield: There is a
strong argument for saying that the amount of resources going
to children should be increased. There is also a strong case for
saying that the element which goes to child benefit should be
increased because that goes to people without any of the problems
of claiming and reclaiming which have beset tax credits. This
is a very important element: to increase the resources for children.
Q186 Chairman:
I can understand and appreciate that you are not a fan of tax
credits. If we have a certain amount of funds available to us
and we want to distribute these within the community, then obviously
we should target first the people in most need rather than distribute
them equally between the rich and the poor, well-off and less
well-off. How would you balance that?
Professor Sinfield: There is a
very strong argument on that basis for increasing the family benefit
for second and subsequent children to the same level as for the
first child. This is a powerful case and a lot of evidence has
been brought together on this. If you take the tax credit one—and
I take your point on that—then the argument must be to operate
tax credits with the greatest degree of efficiency, which means
that you have to invest in more staff. This is really crucial.
It is not simply that people do not receive what they are intended
to, which in itself is a problem leaving people in poverty, but
because of all this uncertainty the whole system is becoming stigmatised.
A lot of people, when they hear these figures about 33% being
underpaid or overpaid, think it means the system was wrong rather
than the fact that circumstances changed in the course of the
year, so there was need for an adjustment. If more staffing were
put onto this, then it could be operating very much more quietly
and effectively. This is a crucial issue: investing in Her Majesty's
Revenue and Customs, Work and Pensions, but also in the independent
agencies, welfare rights, money advice and so on. It would be
a really worthwhile investment. It would bring resources back
in.
Q187 Ms Clark:
I have certainly had constituents who did not want to apply for
tax credits because either they themselves had had experience
or had experienced others receiving tax credits and then having
to pay it back at a later stage. Surely the point you are making
is that it needs to be a simpler system as well as maybe a better
resourced system so that does not happen, that it actually tracks
people's real income as they go along better rather than saying
we will get rid of this form of targeting to some of the poorest
in society. Surely this policy this Government have introduced
has given a huge amount of money to some of the poorest people
in this country and rather than scrapping the whole thing surely
we should be trying to work out how to improve it.
Professor Sinfield: No, I was
saying nothing about scrapping it. However, it seems to me that
if we are going to have it we should make it efficient and if
we know it is going to be complicated and we know it needs more
staff to make it work, if we can simplify it fine, but do not
let us get rid of the staff before we see whether the new simplification
works.
Q188 Ms Clark:
Do you agree that it has been a very effective policy at tackling
some of the most extreme forms of poverty in Scotland?
Professor Sinfield: I do not know
how far it has dealt with the extreme forms but it has certainly
played a crucial role in lifting many families out of poverty.
Therefore there is a strong argument for saying the adult element
of the child tax credit should not remain frozen. This is an issue
to be looked at. There also needs to be more attention to the
issue of families with disabled children.
Q189 Mr McGovern:
It is certainly my perception and is it not the case that as soon
as you start targeting certain groups, those most in need, you
are accused of means testing?
Professor Sinfield: Yes, but the
question is: what is wrong with means testing? If you have a system
which is going to eight out of 10 children rather than one or
two out of 10 then the system is operating differently in terms
of the stigma which is attached to it. More people are willing
to get into it, but the crucial thing is that it should be efficient.
Q190 Mr McGovern:
Yes, but means testing is almost always spoken about in derogatory
terms as something that people should not have to face. If that
means just giving everybody everything, then the resources are
not there to do that, are they?
Professor Sinfield: That would
be a different argument. I would argue that some of these tax
welfare state issues should be cut back, so there would be more
resources for providing on a universal basis. Putting that on
one side, if you have a means-tested system which goes to the
great majority, as for example in the past the university grants
did, the element of stigma there was extremely small; very few
people were not claiming on that basis. There were problems of
complication; there were problems of complication with tax credits.
Professor Veit-Wilson: Yes, it
is a matter of people not feeling disrespected by being singled
out as "those poor". That is the point. If it is the
majority of people who undergo a financial test you cannot have
that kind of distinction; people do not feel stigmatised in that
kind of way.
Q191 Mr McGovern:
I may not have quite understood. Presumably everybody who applies
for a benefit undergoes that sort of test.
Professor Veit-Wilson: Not if
it is a contributory one.
Q192 Ms Clark:
This has been an issue which has been around for a very, very
long time and traditionally there has been a great deal of support
for universal benefits which everybody gets and obviously child
benefit is a really good example of that. What you seem to be
arguing is that we should be seeing quite significant increases
in child benefit, perhaps for the first child but definitely for
additional children. In terms of the work you have done, would
you get involved in what the cost is going to be at the end of
the day? As politicians we are always asked what it is going to
cost. Is it the case that any form of addressing poverty that
is to have a universal approach is going to cost a lot more than
a targeted resource?
Professor Sinfield: It depends
on the ways in which you operate it. If you think of the cost
of child tax credit and you add on all the overtime and all the
additional problems which came from trying to introduce it in
a cheap way, you would come up with a very big figure. You could
then ask how much of it had been given out in child benefit. It
would be possible presumably to raise the question: if you had
a much bigger family benefit, then you could tax it. It would
be a different sort of argument. I personally would not want to
push that argument as a priority at all. The way in which you
allocate resources and the way in which you actually take resources
from people as their incomes get higher are important issues.
Q193 Mr Walker:
I want to go back to wages very briefly. Having worked in private
business, I am aware that hiring decisions by most employers are
always based on price; they will pay the lowest they can get away
with. That does concern me because I believe we have an immigration
policy now which is largely run in the interests of big business
and does not take in the wider needs of society and the wider
implications of society. Because of these unprecedented levels
of immigration recently, we are seeing depressed wages in the
labour market and it would be very disingenuous of politicians
to say to people living in this country, the established population
whatever their colour or creed or race or religion, that they
should take these jobs at lower rates. That does not take into
account that many people settled in this country have families
which they need to support and they are not willing to live in
accommodation with 10 people in three or four bedrooms or even
two or three bedrooms. I really do not think, when looking at
poverty, that we can separate out the implications of immigration
from poverty. One, whether you like it or not, has an impact on
the other and I should be interested in your views on that.
Professor Veit-Wilson: It sounds
to me from the question that you are asking about the impact of
a free European labour market on wage rates in this country. I
must say I do not think I would want to respond to that. If you
are talking about poverty, then I would come back to something
rather more socially oriented: how do we see what is necessary
in the way of resources to live decently in this country? They
are not quite the same question. I could not answer you on the
economic effects of particular labour market policies.
Q194 Mr Walker:
Would you think it is incumbent on Government to run an immigration
policy which takes in the wider needs of societies rather than
just the needs of employers, whose main driver will always be
to reduce their cost of labour?
Professor Veit-Wilson: In a sense
we are talking about European labour market policies here and
we could be talking, though we have not been, about what influence
the European Community has on questions of minimum wages, labour
market conditions and so on. That is a very large subject and
certainly not one we are going to start on at this point in the
afternoon. I would hope that at the European level those questions
would be looked at in such a way as to ensure that poverty was
not created in any one country by a particular set of labour market
movements. If we are talking about the policies which our Government
can pursue, whether it is the Westminster Government or the Edinburgh
Government, then I come back to the fact that we should be looking
at what those governments can do with the powers they have and
under the constraints to which they are subjected to ensure that
people do not live in poverty long.
Q195 Chairman:
Professor Sinfield, in your memorandum you set out several ways
the Scottish Executive could alleviate poverty. Have you put your
views to Scottish Ministers; if so, what has been their reaction?
Professor Sinfield: No, I have
not put my views, although I certainly sent this—
Q196 Chairman:
They might have picked them up, might they not?
Professor Sinfield: They might.
Q197 Chairman:
So you have not had any communication or correspondence with Scottish
Ministers.
Professor Sinfield: No.
Q198 Chairman:
I am not asking here for a magic solution but what would be the
single most important step the UK Government could take to alleviate
poverty?
Professor Sinfield: I really would
want to support the points you made last time on the quality of
work, because this is a crucial issue, and what jobs are being
conducted. This comes back to the question you were asking about
employers. In a sense you were doing employers down. Employers,
except in certain jobs, are looking for somebody who would be
reliable, who can be responsible, who can do this job, who will
be there in six months' time. They are looking at the thing in
a rather different sort of way from the way you suggested. If
you are trying to get people into these sorts of jobs, then clearly
you need a decent wage and then that is crucially linked to what
is going to be made available for other people. There is very
clear evidence that poverty in Scotland has fallen amongst children,
families with children and pensioners; it has not fallen amongst
adults, single or couples, without children because benefit levels
have been left so low. This is a crucial issue. The other issue
I would come back to is this issue of false economies in terms
of cutting staffing and then getting nowhere and also failing
to invest in things like welfare rights and money advice.
Professor Veit-Wilson: If you
had asked for the single step which could improve health experience,
we would be talking about preventive measures and we would be
talking about the medical research which was needed to know which
measures were best at prevention. So if we are talking about the
single step to deal with poverty, I should say that it would be
the preventive measures and the one I am particularly interested
in is of course establishing at what level of income people do
actually experience poverty, what they need in order to get out
of it; preventive policies and the knowledge base on which those
policies are based. We are lacking both of those; we need them.
Q199 Chairman:
I am pleased that none of you has said independence for Scotland
and dissolution to deal with poverty. May I thank the witnesses
for their attendance this afternoon? Before I declare the meeting
closed, would you like to say anything in conclusion, perhaps
on areas we have not covered during our questioning?
Professor Sinfield: No thank you.
Professor Veit-Wilson: No. I should
like to thank you very much for your attention.
Chairman: Thank you very much once again.
I am sure your evidence this afternoon will be very useful for
the Committee when we compile a report and thank you very much
for your evidence. I am sure we had a valuable learning experience
and a very informative session this afternoon. Thank you very
much.
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