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Nia Griffith (Llanelli) (Lab): Will the hon. Gentleman explain how, with a tax take from people living in Wales being some £9 billion short of tax expenditure, an independent Wales would put right that hole in the economy?
Jonathan Edwards: I have been totally clear in my comments about the constitutional journey of my country: we are not in a position to fight for independence at this very moment, which is why Wales needs the economic powers to build up its economy to be in a position to do so. We are in a different situation to Scotland. We will not get anywhere if we continue with the policies of the Labour party, which aims to keep economic control in London and to keep our communities impoverished. It is in its vested interest to do so, which is why it is opposed to all the measures being put forward by the Silk commission.
Mr MacNeil: People who say that Wales’ tax take is not equivalent to its expenditure are quite short-sighted. They fail to realise that they are living in the United Kingdom, the tax take of which has not matched expenditure since 2001, and is not likely to do so until 2018. This is a UK that records a deficit year after year, and has a debt that grows year after year.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. Obviously, Mr MacNeil will want to catch my eye to make his speech. I would not like him to use it all up now, so shorter interventions.
Jonathan Edwards: The point that is often forgotten is that despite the fact that London is one of the richest parts of the European Union and that communities such as mine in Carmarthenshire are at the bottom of the European wealth league, public expenditure per head is higher in London than it is in Wales—that is until very recent figures, which showed that Welsh spending had caught up. It is an incredible situation. I could not make this up.
The way in which monetary policy is formulated is also in severe need of reform. The week before last, I tabled an early-day motion calling for the Bank of England, or the Sterling Central Bank as it should be renamed, to be reformed better to take into account the economies of the UK when formulating monetary policy. The Governor should appear for scrutiny before the relevant Committees of the devolved legislatures, and meet with the devolved Governments, just as he has to with the Chancellor and the relevant Select Committees in Westminster.
In addition, the four external members of the Monetary Policy Committee should be nominated by the four nations, rather than hand-picked by the Chancellor of the day from the self-serving banking elite. [Interruption.] I am grateful to my friends from Northern Ireland who supported that early-day motion. There is an interesting story in the Western Mail about the need for the Welsh Government and the Northern Ireland Assembly to collaborate in the event of Scottish independence, be it a yes or a no vote, to ensure that we are not bombarded by Westminster. I hope that it might be a small step on the road to greater collaboration. Instead, what we have is a drive towards regional pay in the public sector, introduced by the previous UK Government and now developed by the coalition, which ghettoises low-wage economies outside London.
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Labour has gone a step further, with a pledge to cap benefits on a geographical basis if it forms the next Government. That means that the unemployed and disabled in Wales will receive fewer payments than those who happen to live in London. Wales will have lost more than £1 billion during 2013-14 due to cuts in benefits. Those include payments that people in work receive to top-up low wages. That money would have been spent directly in the Welsh economy, but is now lost.
Rather than hitting the sick and unemployed with a stick and labelling them “scroungers”, why do we not embrace the active labour market programme employed so successfully in Sweden? It is an interventionist policy, in which the Swedish Government spend twice the amount per capita that is spent in the UK, creating tailored action plans. The programme has productivity and mental health benefits, so it ends up costing the taxpayer far less, as individuals are moved from social security into employment, and it eases considerable pressure on heath services.
It is increasingly clear that the Treasury has been re-infected with the British disease of basing growth on inflating house prices backed up with taxpayers’ cash—the Help to Buy policy. Far from rebalancing the economy, the Treasury is reintroducing boom and bust. Instead of delivering an equitable share of infrastructure investment across the UK, the Exchequer lavishes London with its grand design projects, be it the Olympics, Crossrail 1 and 2 or High Speed 2. UK Trade & Investment does not deliberately channel foreign direct investment into the poorest parts of the state, unlike its German counterpart, Germany Trade & Invest, which has a statutory duty to do so. Is it not sobering that despite the cold war and a physical wall between the east and west of its country, Germany today is far more balanced in geographical wealth than the UK?
Other places have shown the way. Germany is a federal republic, and the constitution requires fiscal equalisation among the Länder. That is a timeless requirement on all parts of government, and policies are required no matter the era. After reunification, when poorer East Germany joined developed West Germany, a massive effort meant a variety of measures were implemented, including financial transfers to poorer regions and industrial development policies.
The same could be done from Westminster, but it has not been. The alternative is the approach favoured by the London parties, whereby investment is concentrated in London and the south-east, and wealth inequalities continue to rise. It is clear that it is time for a change. Where are the voices in support of such a change? Who will turn back the tide of growing inequality? We know that we cannot rely on the Tories in London, so unashamed are they in their love of banking and the financial elite. Where is Labour? Why is it not standing up against inequality? Its amendment seeks to wreck our motion, absolving it of its role in creating rising inequality over the past decade, but it is bereft of policies.
Last week, some of Labour’s Wales-based Members defended the UK as a redistributive Union. They are deluding themselves, both about their record in government, as inequality rose during that period, and about the current situation. A closer examination of their voting record would suggest that their rhetoric is unsupported by action. I cite their abstention on the Welfare Reform
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Bill, which introduced the cruel and dreaded bedroom tax; their abstention on a cut in the top rate of income tax; and their refusal to support any measure to help to promote measures to provide the Welsh Government with the economic powers that they need to move the Welsh economy forward.
Mr Iain McKenzie (Inverclyde) (Lab): The hon. Gentleman mentioned the bedroom tax, and I invite him to congratulate Scottish Labour which, in the Scottish Parliament, pushed the Scottish Government to end the bedroom tax in Scotland. Will he further assist me in calling on the Scottish Government to reimburse those good citizens who have already paid the bedroom tax?
Jonathan Edwards: The hon. Gentleman seems to forget that his party is not in power in Scotland any more—it is the Scottish National party Government who introduced that policy. Rather than grandstanding, he would be better advised to congratulate the SNP on its progressive track record in government.
Who could forget the hon. Member for Leeds West (Rachel Reeves), the shadow Work and Pensions Secretary, promising to be “tougher than the Tories” on benefits? Only today, the Leader of the Opposition has praised none other than Baroness Thatcher, that well known proponent of fairness and equality, in a bid to reform public services. By that, he can only mean more privatisation. Perhaps the greatest let down, and without a doubt Labour’s greatest folly, reflecting its abandonment of the fight against inequality, is its commitment to Tory austerity cuts post-2015. It is now blocking fiscal devolution to Wales, which would enable us to develop our own economy. It has also failed to commit to fair funding for Wales, even though it admits underfunding by more than £300 million a year as a result of the Barnett formula.
The national parties of Wales and Scotland fight for a partnership of equals between the nations of these isles. However, it is about far more than that. It is about what we do once we achieve that aim. The main reason is to honour the political traditions of our countries, which I have set out today and which have been undermined by centuries of Westminster rule.
1.45 pm
The Parliamentary Under-Secretary of State for Wales (Stephen Crabb): I am grateful for the opportunity to follow the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards)—my hon. Friend—who spoke with trademark passion. He gave us a treat by dipping into Welsh political traditions. Like my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), I greatly enjoyed his history lesson. I, too, went to school in Wales, and I remember some of that history. I caution the hon. Member for Carmarthen East and Dinefwr against looking back to the days of Hywel Dda through rose-tinted spectacles, as it was a brutal and unpleasant time.
I would also caution the hon. Gentleman against drawing a direct, continuous line from the days of Hywel Dda to 20th-century state socialism. If we are talking about the long-term economic problems with which Wales is still struggling, I would point out that state socialism was part of the problem for much of the 20th century, not part of the solution. I would also refer him to other political traditions in Wales that point to a
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stronger civic society and a culture of self-help. There is a more communitarian tradition, which risks being emasculated by any return to state socialism.
I pay tribute to the SNP and Plaid Cymru for choosing the topic for today’s debate, and I am happy to have the opportunity to set out what the Government are doing to reduce inequality and ensure fairness in society. Where the hon. Gentleman’s speech was a little disappointing, if I may say so, was in—
Gordon Banks (Ochil and South Perthshire) (Lab): The content.
Stephen Crabb: The content was marked by the absence of a really attractive vision for what the Welsh economy could be. I was sitting expectantly, hoping that the hon. Member for Carmarthen East and Dinefwr would set out a vision of what small-country, successful economics might look like under a Plaid Cymru Administration, but we heard precious little about that. I hope that some of his colleagues will be able to enlighten us on that. Instead, there was a familiar return to the talk of more spending, more borrowing and more debt—exactly the things that will shackle the people of Wales and their children for generations to come with more economic problems.
Andrew Selous: Does the Minister agree that there is nothing fair at all about getting the next generation to pay even more of this generation’s debts?
Stephen Crabb: My hon. Friend is exactly right. There is nothing fair, progressive or just about loading future generations with more debt and the consequences of debt. If we are a responsible political generation in the House, we will take care to ensure that our decisions minimise the impact on future generations.
This country continues to face deep-seated, long-standing economic challenges. The UK underwent an economic trauma between 2008 and 2010, and we are still living with the consequences. As a result of that trauma in those two years, there was a huge destruction of value in the economy, and a destruction of wealth, and we are still recovering from that, even in 2014. Although it is difficult for Opposition parties to admit, the Government have made difficult, challenging decisions and taken practical steps to reduce the deficit and restore stability and order to our national finances, which is the starting point—the foundation—for tackling all the other social and economic issues that the hon. Member for Carmarthen East and Dinefwr and others have begun to raise in the House this afternoon. As a coalition Government, we are ambitious that the emerging economic recovery should be a recovery for all parts of the UK, including Scotland and Wales, and for all people from all walks of life in our country. That is at the heart of our vision of fairness as a coalition Government.
Mr John Redwood (Wokingham) (Con): Does the Minister agree that the socialist remedy is so often to think of tax and regulations to get rid of the rich from London to abroad, and hopeless in thinking of ways of promoting other people to good jobs and success so that they can enjoy and share the prosperity?
Stephen Crabb:
My right hon. Friend is exactly right. There seems to be a blind spot in the left in that respect. We have begun to discuss fiscal powers for Wales and
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Scotland, and as that debate continues, what we should see from all the parties in Wales and Scotland are new, creative ideas to increase wealth and incentivise entrepreneurialism in those two challenged parts of the country.
Before I set out what the Government have done to tackle inequality and build a recovery for all, I want to deal with some of the issues that are already starting to be raised in this important debate. On the issue of spending and the necessary cuts to spending that we still have to make, the simple truth is that the previous Government left Britain borrowing more than £400 million every single day to pay for Government spending. As a result of the difficult decisions that we have taken, the deficit is now down by a third and we are borrowing nearly £3,000 less for every hard-working family in the country. However, there is still a long way to go. We are still borrowing around £100 billion a year and paying half that a year in interest just to service our debts, so there remain some difficult and challenging spending decisions further down the line. Whichever party or parties are in government after the next election, they will have to meet those decisions and challenges head on.
Caroline Lucas: For the benefit of us all and to enable a more enlightened debate, it would be helpful if the Government stopped pretending that the right hon. Member for Kirkcaldy and Cowdenbeath (Mr Brown)was responsible for the collapse of Lehman Brothers. I blame the Labour party for a lot, but the idea that the current economic crisis was somehow caused by that is ludicrous. It was a global economic crisis and—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I think the Minister has got the message.
Stephen Crabb: I applaud the hon. Lady for her attempt to rescue the reputation of the former Chancellor of the Exchequer and Prime Minister. The truth is that the trajectory of public spending was already far too high, even before the banking collapse. There was a structural deficit that placed at risk the stability of the UK finances even before the banking collapse.
Debbie Abrahams (Oldham East and Saddleworth) (Lab): Does the Minister not accept that official statistics show that the debt-to-GDP ratio was lower in 2008 than when we came into power in 1997? Those are the official figures.
Stephen Crabb: I am not sure that I recognise the figures that the hon. Lady gives.
Richard Fuller: Will the Minister assure the House that he understands the figures even if the Opposition do not, and that between 1995 and 2010 the total indebtedness of the UK went from twice the size of the economy to five times the size of the economy, making us the most indebted major economy in the world?
Stephen Crabb: My hon. Friend explains it very well for the benefit of Members of all parties. Under the previous Labour Government, the trajectory of public spending was set on a reckless course, and when the banking crisis hit, the true consequences were felt by hard-working families throughout the country.
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Andrea Leadsom (South Northamptonshire) (Con): While Opposition Members would like to absolve Gordon Brown of any guilt over the collapse of the banking system, only this morning in the Treasury Committee we were looking still at the debacle of the Co-operative bank—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order.
Andrea Leadsom: It is very apparent—
Mr Deputy Speaker: Order. When I say “Order” I expect the hon. Lady to sit down. The intervention is becoming a ramble, but more importantly we are talking about a Member of Parliament, not by name I hope.
Stephen Crabb: The choice still facing the United Kingdom is either to stick to the long-term economic plan to secure a better, more financially secure future for hard-working people and their families throughout the country, or to listen to the Opposition parties and the motion before us calling for a return to the days of spending and borrowing beyond our means, leaving our children and their children to pick up the bill.
Angus Robertson: As we are talking about getting the record straight, recent quotes of the Business Secretary have been raised a number of times. He said that London
“is becoming a giant suction machine draining the life out of the rest of the country”.
Does the Minister agree with the Business Secretary?
Stephen Crabb: We touched on this point during the opening speech of the hon. Member for Carmarthen East and Dinefwr. I remind hon. Members that the most recent gross value added figures show that parts of the United Kingdom far from London are rebounding strongly with growth and starting to narrow some of the economic gap that we are all concerned about.
Mr Redwood: I think the Minister could agree that the former Prime Minister and Chancellor was not responsible for Lehman Brothers, but by the same token, should my hon. Friend not remind the House that the right hon. Gentleman was responsible for the competition and banking regulation regime that led to the collapse on his watch of the Scottish banks RBS and HBOS?
Stephen Crabb: My right hon. Friend makes the point perfectly well.
It is the firmly held belief of this Government that it must pay to be in work, and we are restoring the incentives to work; restoring the value of work in our society. That is one of the reasons why we have brought in the benefit cap, opposed by the Opposition parties, to ensure that families are always better off in work rather than claiming benefit. We are also increasing the incentives in the tax system, putting money back into the pockets of working people by raising the income tax personal allowance to £10,000, taking 2.7 million people, many of whom are on the lowest wages, out of income tax altogether. In Wales alone, that will benefit 1.2 million workers, taking 130,000 people out of income tax altogether. For the record, in Scotland 2.2 million workers will benefit and 240,000 will be taken out of income tax altogether.
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Sheila Gilmore: The Minister is very quick to talk about taxation issues, but surely the net effect of the Government’s policies on tax, on payments of benefits and tax credits, is that people on lower incomes have suffered a loss.
Stephen Crabb: I simply disagree with the hon. Lady’s argument. The Government are determined that, as the economic recovery emerges throughout the country, people on the lowest incomes should be at the front of the queue to benefit from that recovery.
We recognise that for those on the lowest pay things remain challenging. Wage levels are not where we want them to be. That is why we need a strong minimum wage. I am proud that the coalition Government have not only implemented the recommendations of the Low Pay Commission in full, but that last year we were able to go beyond its recommendations and increase the apprentice rate too. We can afford that only because we have taken difficult and responsible financial decisions.
Mr Russell Brown (Dumfries and Galloway) (Lab): The Minister is exactly right. The coalition Government have taken tens of thousands of people out of paying tax, but does he agree with his Liberal Democrat colleagues, that if they raised that tax-free allowance any higher, people who are not paying tax at the moment will see no benefit from that?
Stephen Crabb: I have just given the House the numbers of people who are benefiting from the steps that we are taking to increase the personal allowance. With that measure and the other steps that we are taking, such as strengthening the minimum wage, we are providing real practical tools to ensure that those on the lowest incomes start to see the benefit of the economic recovery.
Mr William Bain (Glasgow North East) (Lab): The Minister omitted to mention that 279,000 people in this country go to work every day but do not even receive the minimum wage. I want to take him to the point he made about making work pay. What would he say to a low-income worker in Wales, England, Northern Ireland or Scotland who will see the work allowance of universal credit frozen this year, next year and the year after, taking £600 million away from low-paid workers?
Stephen Crabb: In Wales, when universal credit is rolled out fully, 200,000 households will see their entitlements increase. Alongside that are all of the incentives brought in to encourage work and more hours of work, so that people are not penalised for choosing to work rather than stay at home on benefit.
The hon. Member for Carmarthen East and Dinefwr started his contribution by referring to Hwyel Dda and the position of women in society in Wales in the 15th century, so I want to take a moment to look at the role of women in our society, which I expect will be raised more as we get further into the debate. There are more women at work than ever before. Nearly 14 million women are in employment—an increase of more than half a million since May 2010. Let us compare that with the record of the previous Government, who oversaw a rise in female unemployment of 30%. We recognise that for some women the work that is available might be part time or reduced hours, and we should not be tempted to
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fall into lazy thinking that women always prefer to work part time. A great many do not; a great many women want to work full time.
Caroline Lucas: I certainly agree with the Minister on that. Does he agree that it is a scandal that we still do not have equal pay for equal work? Will he join me in calling for compulsory equal pay audits for larger employers, as well as legislation to require that within five years 40% of board members of larger companies are female, so that we can begin to address this fundamental inequality?
Stephen Crabb: I absolutely agree with the aspiration to have greater fairness in the workplace and to narrow the gender pay gap, but I will not be tempted to agree with all the compulsory measures and burdens that the hon. Lady would place on businesses. We want businesses to be the engines of job creation for both men and women in Scotland, Wales, England and Northern Ireland, so we should resist the temptation always to call for more regulations and burdens to be placed on them. The best way to increase the availability of work that fits the needs of women, and indeed the needs of all those seeking work, is to grow the economy and create more opportunities for work.
The hon. Member for Carmarthen East and Dinefwr also mentioned food banks. Unlike the previous Government, who did not want even to admit that food banks existed and refused to allow them to be advertised in jobcentres—Labour Members still try to duck the fact that the number of food banks increased more than tenfold when they were in government—we take a positive view of their role. I have been the trustee of a food bank in my constituency in west Wales. I am proud that this Government are working in partnership with food banks, which are a vital part of a social economy at what is still a difficult time for a great many families.
Gordon Banks: Despite the Minister’s rhetoric at the Dispatch Box, can he not just for once agree, openly and honestly, that the number of food banks and the number of people in work who are using them have gone through the roof on this Government’s watch?
Stephen Crabb: The number of food banks has been increasing for a great many years, as has the number of people using them, but the hon. Gentleman is wrong to pretend that 2010 was somehow year zero. The food bank that I was a trustee of was set up in 2007, under the previous Labour Government. We should not forget that one of the reasons people are driven to use food banks is household debt. The Labour party, as well as being intensely relaxed about people getting filthy rich, was also far too relaxed about people being pushed into excessive household debt.
Mr Weir: I accept that 2010 was not year zero for food banks, but the reality is that they are increasing exponentially, mostly because of the benefit changes introduced by this Government, who are clobbering many low-paid families, and often the people using them are in work.
Stephen Crabb:
I hear what the hon. Gentleman says, but the reasons that drive people to use food banks are complex and it is a mistake to try to single out any one cause. When I speak with food banks in Wales, they do
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not tell me that it is the benefit changes that are responsible in most cases. Household debt is a far more important factor.
Debbie Abrahams: I thank the Minister for giving way again; he is being very generous with his time. Citizens Advice has analysed why people are going to food banks and found that inappropriate sanctions as a result of welfare reforms and low pay are the key contributors.
Stephen Crabb: The hon. Lady talks about inappropriate sanctions on benefits. I recall hearing one of her Front-Bench colleagues say only a few weeks ago that the Labour party would be even tougher on benefits than this Government have been. I think that she needs to get some consistency with her Front Benchers on whether they support sanctions.
The best way to reduce economic inequality is to have a growing economy and to ensure that people are in work. Today, more people in Wales have gone out to work than at any time before, with economic inactivity at its lowest level since records began. However, the tragedy is that there are still 200,000 people in our country who have never worked a day in their lives. I hope that the hon. Member for Carmarthen East and Dinefwr agrees wholeheartedly that that represents an enormous waste of talent, potential and skill and that a small nation such as ours cannot afford to lose that potential. I hope that he shares my ambition for welfare reform to see those people who have been locked in worklessness brought back into the labour market to achieve their full economic and social contribution.
Mr MacNeil: Does the Minister think that the situation he describes is the result of something inherent in those people or the result of the circumstances and structures they are living in?
Stephen Crabb: That question probably warrants a separate debate. I firmly believe that the vast majority of people want to work. I believe that human beings are hard-wired to want to make an economic and social contribution, but the welfare system, which too often the Opposition parties run to the barricades to defend, blunted that inherent instinct that people have to want to better themselves and to choose work over dependency.
Mr MacNeil: The Minister has accepted that it is not the result of something inherent in those people, so why do they not work, and why can they not work? I contend that it is the structure of the United Kingdom that leaves them in that situation.
Stephen Crabb: I think that I answered the hon. Gentleman’s question the first time.
More than 1.6 million private sector jobs have been created since 2010, and the way to ensure that that number keeps growing is to maintain this Government’s economic discipline and not to follow the discredited plan-B economics of the Opposition parties, which would see growth slow down and inequality widen.
We recognise that the economic situation is still challenging for many people across the UK, but we are committed to reducing the burden on the cost of living where we can. Inflation is at its lowest for four years, benefiting families and businesses across the UK. The
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Government recognise the impact that persistently high pump prices have on the cost of living and on business costs. We have taken action to support the motorist by freezing duty for almost four years. Had we continued on the path set by the previous Government and followed their taxation plans in full, petrol would be 13p higher per litre than it is today and the average motorist would be paying more than £7 extra for a tank of fuel.
Under the previous Government, energy prices escalated, with the average domestic gas bill doubling between 1997 and 2010. It is this Government who have brought forward changes to help reduce energy bills. We are ensuring that the most vulnerable get direct help with their bills: 230,000 homes will be warmer this year by getting energy efficiency measures installed under the energy company obligation; and 2 million households will get help under the warm home discount, including more than 1 million of the poorest pensioners.
Gordon Banks: The Minister now has an opportunity to say whether he will support Labour’s plan to freeze energy prices to cut the burden on hard-pressed households.
Stephen Crabb: I will not be tempted to support an unworkable and generalised plan that has been criticised by industry stakeholders and the people who really know about these matters. What I support are the practical steps that this Government are taking on a broad range of fronts to return money to the pockets of hard-working people and insulate the most vulnerable against the challenges that remain in our economy.
Hon. Members would not know it from the interventions of Opposition Members, but inequality surged when the Labour party was in government. It is the party that was, as the hon. Member for Carmarthen East and Dinefwr said, intensely relaxed about people getting filthy rich. This Government are determined to see inequality fall. It is under this Government that those with the broadest shoulders are facing the greatest burden. The richest members of society now pay a higher proportion of tax than they have ever done, with the richest 1% paying almost 30% of the total income tax take and the richest 5% paying almost half.
There is nothing fair about ignoring or ducking the challenge of welfare reform. If we are serious about tackling inequality, we must be serious about tackling the wasted opportunities we see before us. In Wales, 92,000 children are growing up in households where no one works, and 200,000 people in Wales are yet to work a day in their lives. That is the result not of this Government’s policies but of years of failing to stand up to the problems of dependency and the decline of work incentives. I make no apologies for the fact that it is this Government who are taking this once-in-a-generation opportunity to embrace welfare reform.
The Labour party championed welfare reform 20 years ago. Where have all the Labour party’s welfare reformers gone? Labour MPs 20 years ago were among the first to recognise the problems of dependency and the decline of work incentives that were emerging in our welfare system, but these days no one on the Opposition Benches speaks up for people caught in welfare traps. Instead, they turn poverty into a political football. They have opposed every sensible measure that we have put in place to restore fairness and opportunity to our welfare system.
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Stephen Crabb: I will not give way.
This Government are working for a recovery that benefits the whole of the United Kingdom. We recognise that there are specific challenges for Scotland, for Wales and for Northern Ireland—challenges for devolution but also the long-standing economic challenges that these parts of the UK have borne. Devolution provides the best of both worlds. Strong devolved legislatures ensure that key decisions are taken closest to those affected, but so too can this Parliament make decisions in the shared interests of the whole of the United Kingdom. The devolution settlements are flexible. We have seen this most recently with the Scotland Act 2012; the Northern Ireland (Miscellaneous Provisions) Bill, currently in the House of Lords; and, most recently, the draft Wales Bill, currently being scrutinised by the Welsh Affairs Committee.
I am sure that we will hear more today about Labour Members’ apparent position on the proposals to devolve an element of taxation to the Welsh Government in Cardiff. Previously they seemed to be supporting the consensus on the Silk commission’s proposals, but, as the hon. Member for Carmarthen East and Dinefwr rightly highlighted, since a week ago they seem to have reneged on that cross-party agreement and are now full speed in reverse in trying to backtrack and ditch the proposals.
Before I conclude, it is only right that I focus briefly on the situation in Wales as part of the broader devolution settlement. There has been much positive economic news for Wales. Over the past year, the employment rate has increased by more than in any other region. The number of unemployed people has fallen by 24,000 since the election—it is down by 12,000 only in the last quarter —and the number of economically inactive people in Wales has never been lower. The majority of jobs created in the past year were full-time. The number of people in part-time work who want full-time work is only 18%, and through growing the economy we can help those 18% to find the full-time work they want. A positive future for Wales has been set out by the Silk commission, whose work I praise. The Government have responded to part 2 of its work by bringing forward ambitious proposals in the draft Wales Bill. I am pleased that the hon. Member for Carmarthen East and Dinefwr and his party have welcomed the moves towards greater devolution for Wales. There are of course areas on which we do not agree, but we have at least set out a positive vision for Wales that we share on this issue.
By contrast, Labour Members in Westminster seem to be suffering from a complete lack of vision for the future of Wales and its part in the UK and seem to have run out of steam as regards devolution. Rather than embracing the proposals in the draft Wales Bill and the Government’s response to the Silk commission, they have shied away from anything other than borrowing. When they speak, I hope that they will set out their plans for tackling economic inequality, although I am yet to see any evidence from them of such a vision for Wales or beyond.
2.12 pm
Mr Angus Brendan MacNeil (Na h-Eileanan an Iar) (SNP): Thank you very much, Mr Deputy Speaker. [Interruption.] I also thank the hon. Member for North East Somerset (Jacob Rees-Mogg) for his usual cheer as I start to speak.
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We are having an important debate today. In recent months we have had a number of debates on subjects such as the minimum wage, the bedroom tax, and gender issues. Those are all important debates in themselves, but they are also, if I might be so bold, symptoms of a bigger issue that is afflicting our society and other societies—inequality and unfairness. In many ways, this debate has been screaming out to be had, especially in recent times as people are waking up to how things are arranged in our society or societies.
Yesterday, a commission headed by Church of England bishop, Dr John Sentamu, published a thoughtful report on the problem of working for poverty wages in the UK. Much has been written on this subject by eminent Nobel-winning academics and economists. Last week, when we realised that this debate was going to happen, my hon. Friend the Member for Moray (Angus Robertson) said that he was going to play word bingo during my speech and had chosen the word “Stiglitz”. I suppose that many of my thoughts and much of my further outrage on this issue have been ignited by Joe Stiglitz, and that propelled the idea for this debate. I would hope to do him justice, but I know I will not, so I recommend reading his book, “The Price of Inequality”, available on anybody’s Kindle app for £5—or, indeed, Paul Krugman’s “End This Depression Now!” Another interesting book I have seen but not read is “The Cost of Inequality: Why Economic Equality is Essential for Recovery” by Stewart Lansley. Perhaps the aim of economic equality is too far away, but certainly the aim of reducing inequality should be uppermost in all our minds; indeed, I think we shall see that it is becoming so.
Gregg McClymont (Cumbernauld, Kilsyth and Kirkintilloch East) (Lab): Can the hon. Gentleman enlighten the House on how his proposal to cut corporation tax for the biggest businesses in Scotland will reduce inequality?
Mr MacNeil: It is quite simple—if we start to create jobs and opportunities for people, we will reduce inequality. I would certainly not be in the position of one of the hon. Gentleman’s colleagues who said last week:
“If the Scottish people are going to be better off economically and so on, I would still be against breaking away from the Union.”—[Official Report, 6 February 2014; Vol. 575, c. 467.]
It does not seem to matter whether we can cure poverty—Labour Members would still be against independence because they have made careers talking about it, and handsome careers at that.
Jacob Rees-Mogg: I am interested in the hon. Gentleman’s call for lower tax rates. Has he now become a tartan Tory?
Mr MacNeil: Devil the fear, as my old Irish mother would have said, devil the fear—no chance at all. I think the hon. Gentleman will see, as he pays more attention to the words to come, that the only Tories on this side of the House are probably the red Tories.
I listed the books I mentioned earlier for a reason. We must be aware that we do not have to reinvent the wheel to get people more opportunities and chances in life. Much of the research and science has been done, and the information has been gathered. Perhaps if we stopped, looked and learned from what is around us we would
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stop falling into the same traps that different generations have fallen into. Why should inequality matter—why is it important? Is it merely because a number of influential professors with Nobel prizes have written books? I would contend that they have put intellectual bones on our instinctive emotions of sympathy and empathy for our fellow people when we see them in situations that disturb us and we think are wrong. This is why nations have international aid budgets and why we give to charity. Sometimes it can be argued that the money is not always best directed, but nevertheless it is useful in the main. It shows an underlying striving for fairness and is a reproach against inequality within the broad set of people.
My first engagement with the idea of inequality was in the religious education class in Craigston primary school at the age of seven or eight, or perhaps even six, with Mrs MacCormick, God bless her. Looking back, I often think that we were really doing philosophy classes rather than RE classes. The example given was this: “If you’re given a box of chocolates at home would it be best to eat them all yourself or share them with your brothers and sisters who have not been given any chocolates?” I have to say that this scenario created a tension in my mind given my great love of chocolates. As you can see, Mr Deputy Speaker, I do not have so much a sweet tooth as a whole set of sweet teeth. I was caught in the tension between doing what was manifestly right and what I really wanted to do on another level. The consensus quickly grew in the class that it was best to share—even among six, seven or eight-year-olds. I am pleased to see you nodding in agreement, Mr Deputy Speaker.
Mr Deputy Speaker (Mr Lindsay Hoyle): I assure the hon. Gentleman that I was not nodding in agreement; I was just wondering whether there were inequalities within the chocolates.
Mr MacNeil: Very good, Mr Deputy Speaker.
It is a slight concern of mine, however, that the captains of industry, as they get called, or the high-bonus City bankers or hedge fund managers, have never had that experience at a young age and have not engaged meaningfully with sympathy for the situation that others may be in as they gobble all the chocolates of productivity that our economy has produced, believing instead that they are self-made men and self-made women who worship their own creators.
Richard Fuller: Before the hon. Gentleman moves on from his Milk Tray doctrine of equality, will he accept that very many of us do learn those lessons in school and do not necessarily need the Government to act for us to fulfil our responsibilities as individuals? What would he say about considering ways to exhort people who have wealth, regardless of the taxes they pay, to give more to others?
Mr MacNeil:
The hon. Gentleman’s intervention is laudable, and I understand what he says, but I disagree. The consensus post the great depression of the 1930s showed the importance of regulation, and that lesson was probably forgotten by the 1980s in the era of the Reagan-Thatcher deregulation that led up to the precipitous problems that finally exploded six years ago. In the absence
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of regulation, people have to look into their own hearts, but sometimes we can spend far too long doing that. The rule of politics, Parliament and Government is to ensure that we have the structures whereby all can benefit and they are not just dependent on the whim of some well-meaning individuals who may be a minority among the wealthy and could direct their contribution in the wrong way.
Before I get to the body of my speech, I have a final example of something that I think informs the human condition, namely the observations of anthropologists on hunter-gatherer societies. I hope this will also inform the debate, because I think that inequality is essentially about human choices—perhaps even bias—whether they be conscious or subconscious.
Anthropologists note that hunter-gatherer bands did two main things: they hunted and they gathered, hence, of course, the name—there is no need to be a Nobel prize winner to spot that. The crucial observation is that they treated the products of the hunt and the gather very differently. The products of the hunt were shared out almost instinctively, with many people who might not even have been on the hunt getting a share. Anthropologists explain this as the sharing of luck and good fortune, with those on the hunt realising that they might not have had a successful hunt in different circumstances and that, given the way in which the society of the day was arranged, they might earn the good will of others who might be lucky on another day.
That sharing, however, was not mirrored in the gather, and anthropologists reckon that that was due to the labour and endeavours of the individual graft and application of the gather.
Caroline Lucas: I am enjoying the hon. Gentleman’s exposition of hunters and gatherers. I wonder whether it could lead us to a discussion about access to ownership of land. Does he share my concern that very little has been done by successive Governments to address the inequality that arises from the fact that the richest 0.6% of the population own 46% of the UK’s land? Will he join me and others—indeed, this applied to Winston Churchill—who support a system of progressive land value taxation as a much fairer way of taxing land than council tax and business rates?
Mr MacNeil: I hear what the hon. Lady says. I am tempted to go down the route of the argument about the taxation of land and labour. I hope the hon. Member for North East Somerset agrees that it has many merits and that he will move a little closer to me on the left wing as a result.
Gemma Doyle (West Dunbartonshire) (Lab/Co-op): On taxation, does the hon. Gentleman agree that the 50p tax rate should be brought back, and would he support it in a separate Scotland?
Mr MacNeil: I have two points to make in response to that. First, when the 50p tax rate was abolished, Members from Plaid Cymru, the Scottish National party and a number of other minority parties—as they are termed in this place, even though we, of course, are the only majority Government on these islands—went through the Lobby to oppose the cut. If memory serves me right, Labour Members sat on their hands and did not do so.
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Secondly, I would support the return of the 50p rate on the basis of need and argument. I understand that the UK Labour party is suggesting an increase to 50p for a short fixed term, probably because of the level of the UK deficit, but the Scottish deficit is at a different level. Is the increase necessary in the UK because of economic circumstances—that is one argument—or is the hon. Lady saying that a 50p rate is Labour policy for ever?
Gemma Doyle: I am happy to clarify that the question was whether the hon. Gentleman supports the 50p tax rate.
Mr MacNeil: We voted against its abolition. It would not have gone—we would have the 50p tax rate right now—if the hon. Lady and many others had joined us in the Lobby. The question is: why did she and her colleagues not go through the Lobby to vote against the cut? Where were Labour Members that night? There was no sign of them. Would anybody from the Labour party care to tell me why they did not vote against the cut to the 50p tax rate? I would be very pleased to hear why not. Will one of the about 20 Members on the Labour Benches please stand and explain why Labour did not oppose the cut to the 50p tax rate? Going once, going twice, gone: Labour has refused to explain.
Pete Wishart (Perth and North Perthshire) (SNP): I remember that evening very well. To call Labour Members headless chickens would be an affront to headless chickenry, given the way they were running around. Does my hon. Friend agree that perhaps it was a principled abstention that the Labour party pursued that evening on the 50p tax rate?
Mr MacNeil: Well, a principled abstention by the Labour party is news to me, but I take on board what my hon. Friend says.
I was talking about hunter-gathering. I was not so much hunting Labour Members as asking why they did not go through the Lobby on the 50p tax rate. I was discussing why people have certain outlooks in life. I think that when people view the fruits of their success as being the result of a hunt that involved a great deal of good fortune and support, they might have a tendency to be slightly more left wing, whereas those who think the fruits are the result of their own individual hard graft might have a tendency to be more right wing and view their gains as a gather. I will make no further judgment on that idea—I just want to put it out there and let people chew it over—but I think there is something deep-seated in our own personal biases as to why we arrive at certain points of view.
Michael Connarty (Linlithgow and East Falkirk) (Lab): Will the hon. Gentleman give way?
Mr MacNeil: It would be a great pleasure to give way to the hon. Gentleman. Perhaps he will tell us why Labour did not vote against the cut to the 50p tax rate.
Michael Connarty: I would be quite willing to brief the hon. Gentleman later about the technicalities of why the vote was not called on that particular night.
The hon. Gentleman is talking about a sociological analysis, but some people have moved on since then and done a socialist analysis. When society is divided into
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those who support capital and those who support labour, what happens is that the forces of those who have the power in the land—the landed classes—join with the merchant class to support capital, and they have succeeded in increasing the value of capital by driving down the cost of labour. That is why we have the inequality we have, and that is the structure of the society we—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. It is very good to have a lecture, but not during an intervention. If the hon. Gentleman wants to catch my eye later, I am sure he will be able to do so and give me a lecture then.
Mr MacNeil: I thank the hon. Gentleman for that interesting intervention. As an MP for a left-of-centre party—sadly, the hon. Member for North East Somerset is no longer in his place to hear this—I am asking how it is possible that our society and, indeed, many other societies, particularly in the English-speaking world, can tolerate inequality, which has now grown to levels beyond those of the 1920s. Has something primitive been transmitted to our minds through the media? The belief that the poor are poor because they are undeserving and have not worked hard enough is a primitive thought. People have to be helped, because we are complex creatures living together in society. People have deep psychological needs and some can suffer from the paralysis of feeling swamped or depressed when they feel stuck or trapped.
Yesterday’s report by the Living Wage Commission, “Working for Poverty”, looked into the scale and problem of low pay and working poverty in the UK. The first shocking statistic I stumbled on came from the work of the Resolution Foundation, which had tracked low-paid workers for a decade between 2002 and 2012. Despite working for a decade, only 18% of those people had managed to escape low pay in that 10-year stretch. In other words, people in low pay had a four in five chance of remaining there.
“1.3 million employees remained stuck in low pay for the subsequent decade, and a further 2.2 million workers held higher paid jobs but returned to low paid jobs by the end of the decade.”
That is and should be depressing. Imagine the feelings of the people we eyeball who have been living with that reality on a daily basis for a decade.
There is good news and bad news. Over the past decades, the wealth of this and other countries in the west has grown as productivity has increased. The bad news is that the fruits of that productivity have been disproportionately distributed. According to the BBC’s wealth gap analysis, as the wealth pie grew and there was more to slice up, many people got roughly the same slice of the pie while others took a share that would embarrass a lion.
Between 1997 and 2007, the income of the top 0.1% grew by 82% to an average of £1.179 million annually; the top 0.5% saw an increase of 66.5% to an average of £452,000 annually; and the top 1%, which, of course, includes the previous two groups, saw their income rise by 60%, but their rise was only about a quarter of that of the 0.1%.
Meanwhile, between 1997 and 2007—the happy decade, as some in financial circles call it, before the crash of six years ago—the bottom 90%, which includes most of society, saw their wages rise by only 17%, a disproportionate slice of the economic pie. Another way of looking at it
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is that the fraction of pay the bottom 90% were getting in comparison with the top 1% had fallen by a fifth over that decade. As Professor Stiglitz says:
“A corporate CEO will not exert less effort to make the company work well simply because his take-home pay is $10 million a year rather than $12 million.”
The “Working for Poverty” report contains a series of nuggets and goes fearlessly into some thought-provoking factors.
Mr McKenzie: The hon. Gentleman has mentioned poverty and how to tackle it, which is welcome, but can he explain why the SNP Government in Edinburgh have taken £1.2 billion out of anti-poverty programmes since 2008?
Mr MacNeil: The hon. Gentleman will find that the efforts of the SNP have been very laudable in Scotland, with unemployment and youth unemployment lower than in the rest of the UK. The SNP Government have done all they can. He should realise that the Government in Edinburgh are in a financial straitjacket set by the philosophies of the Chancellor of the Exchequer and the Secretary of State for Work and Pensions in London. If the hon. Gentleman really wanted to tackle such issues, he would free himself from that straitjacket, and the SNP or whichever party was in government in Edinburgh would be fully accountable, rather than held within the straitjacket of another Government’s philosophy with which we disagree. Does he want to intervene again?
Mr McKenzie indicated dissent.
Mr MacNeil: No, the hon. Gentleman is very happy.
Gregg McClymont: Can the Scottish Government not spend the block grant in any way they see fit?
Mr MacNeil: The hon. Gentleman is absolutely correct: the Scottish Government can do so, but they have to balance the budget. In fact, although John Swinney, the Finance Secretary, balances it every year, the Chancellor of the Exchequer does not. If the hon. Gentleman wants extra expenditure, he knows full well that, under the devolution settlement, he must explain what he will cut. It is, “Want, want, want,” but he has not made any suggestions about what he will cut.
Mr Weir: Will my hon. Friend acknowledge that although funds for fuel poverty programmes have all been slashed down here, they have continued to be invested in Scotland; that child poverty in Scotland is now lower than in the UK as a whole; and that, worst of all from the Scottish Parliament’s point of view, one of the drivers of poverty is the welfare changes controlled by this Parliament, not by the Scottish Parliament?
Mr MacNeil:
My hon. Friend is absolutely correct. We can see that again in the philosophy behind the bedroom tax, which is not one that I subscribe to in any way. Last night, I stumbled across a Channel 4 programme on Walsall and Glasgow housing authorities. It talked about having to demolish houses in Walsall, due to their being left empty: people cannot stay in them because of their cost and what people have lost in welfare. Glasgow housing authority has demand for 1,500 more one-bedroom properties—people want them so that they will not be
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penalised—but it does not have them. It is, inefficiently, trying to build them so that people can avoid the bedroom tax, but the costs are colossal.
Pete Wishart: I am loth to interrupt my hon. Friend’s fantastic speech, but perhaps I can help him a little. We know a bit about what the Labour party proposes to do with the Scottish budget because of the cuts commission. It intends to do away with universal benefits and it does not like free bus passes and free prescriptions. That is what it would do if it gets control of the levers of power in the Scottish Parliament. We know exactly where it is going with its cuts commission.
Mr MacNeil: My hon. Friend is absolutely correct. Johann Lamont has a cuts commission. [Interruption.] I hear from the Labour Front Bench that she does not have a cuts commission, which is another example of how Labour Scottish Members say one thing while Labour in Scotland says another. If Labour Front Benchers want to tell us what Johann Lamont is doing—if she has told them—they are more than welcome to intervene.
Mr Russell Brown: Will the hon. Gentleman tell us why £1 billion has been removed from anti-poverty programmes since 2008 under his Government? Perhaps that might paint a clearer picture.
Mr MacNeil: I thought the hon. Gentleman was going to stand at the Dispatch Box to tell us what Johann Lamont is thinking about the cuts commission, but he failed to do that.
Stewart Hosie (Dundee East) (SNP): There is a lot of deflection going on. The Labour party has said that nothing is off the table, which might mean £9,000 per child per year to go to university, a return to a tax on ill health with charge-free prescriptions going and all that. In his heart, does my hon. Friend not agree that this is ideological: the British Labour party thinks that we are part of a something-for-nothing society, when all we are doing is caring for those most in need?
Mr MacNeil: My hon. Friend puts it very well: we are caring for those in need. Our hearts should go out to those needing help, and we should not be thought of as part of a something-for-nothing society.
Gemma Doyle: Will the hon. Gentleman tell us how much less money there would be to spend on public services in Scotland if his party gets its way and cuts tax for big business?
Mr MacNeil: If my party gets its way, there will be more money for services in Scotland, because our fiscal position is far better than the UK’s and our deficit per capita is lower. If we become independent, we can do a lot more to help. I hope that the hon. Lady does not hold the position of the hon. Member for Lanark and Hamilton East (Mr Hood). Last Thursday, he told us:
“If the Scottish people are going to be better off economically and so on, I would still be against breaking away from the Union.”—[Official Report, 6 February 2014; Vol. 575, c. 467.]
If by becoming independent we can fight poverty, will the hon. Lady support independence?
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Mr Jim Hood (Lanark and Hamilton East) (Lab): I am quite amazed that the hon. Gentleman is surprised that I and many other hon. Members are against his nationalism. To put my comment last week in context, I said that despite the lying of the SNP Government and the Westminster Government here, I would not support nationalism and would therefore vote against his Government. He should not be surprised, because I have always opposed nationalism. I always will oppose nationalism, because I do not make judgments about people on the basis of the side of the road or the side of the bed they were born on.
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I think the hon. Gentleman has got the message across.
Mr MacNeil: I am pleased that the hon. Gentleman has intervened, but I am surprised that he says he is against nationalism, because we live in nations. That is why we have the United Nations of about 193 nations. I am not sure exactly what structure he favours. Is he is in favour of the abolition of the Parliament in Westminster and of the UK state?
Mr Deputy Speaker: Order. The hon. Gentleman must sit down. I will be helpful: we have had a good debate about chocolates, and I want to get back to inequality. I certainly do not want to get bogged down in the rights and wrongs of abolition. I know that he is desperate to finish his speech on inequalities, and I am desperate to hear it.
Mr MacNeil: My speech is about making lives better for people wherever they are from and wherever they are worldwide. That is the important point to bear in mind.
The “Working for Poverty” report even touches on the untouchables of our society—football clubs. It states:
“Research from Citizens UK shows it would take a full-time cleaner 13 years to earn what top footballers earn in a week. Football clubs are important institutions in communities across the UK. They should be setting an example to employers nationwide.”
I must praise the columnist for The Observer Kevin McKenna who, like me, is a supporter of Celtic football club in Glasgow, the richest team in Scotland. Sadly, a few months ago, Celtic refused to pay the living wage to all its staff at the ground. It turned Mr McKenna’s stomach that those subject to such wage inequality could rub along, shoulder to shoulder, with people earning tens of thousands of pounds a week. That has also turned the stomachs of many football fans, especially given that Celtic had cashed in on the story of Brother Walfrid, a Marist brother who now lies at rest in Dumfries, who started Celtic as a means to help the poor of the Glasgow east end in the 1880s. I do not mean to single out Celtic, but to give an example of the toleration of those in even rich organisations for the shocking pay levels given to people the whites of whose eyes they see daily. Frankly, it removes the shine, lustre and glitz from the big football clubs of our land when we realise that gritty reality and see it up close.
Lorely Burt (Solihull) (LD): I have every sympathy for what the hon. Gentleman is saying, but what is his party’s policy on tackling the scourge of overpaid football players?
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Mr MacNeil: I must tell the hon. Lady that, to be absolutely honest, I have not considered that question politically. [Interruption.] Labour Members are mocking, but they would, because they probably have no response. If they have one, they are more than welcome to intervene. If the hon. Member for Ochil and South Perthshire (Gordon Banks) wants to limit the pay of top footballers, he can jump up to the Dispatch Box and tell us how. The hon. Member for Solihull (Lorely Burt) addresses a point that we should look at and think about in our society, since it is one of the jarring unfairnesses and inequalities. People working together shoulder to shoulder with such massive disparities sums up what is happening in our society.
In the report “Working for Poverty”, Dr John Sentamu’s foreword starts with a nugget from the CBI director-general John Cridland, who said that there are
“still far too many people stuck in minimum wage jobs without routes to progression…and that’s a serious challenge that business and government must address.”
I again praise the Archbishop of York for saying elsewhere in his report that business itself has to step up to the plate and make sure that people are getting a fair day’s pay for a fair day’s work, but praise is due to John Cridland also, for his remarks at the outset of the report.
Making work pay is important—very important. The UK taxpayer is paying a staggering £3 billion to £6 billion to cover the costs of inadequate pay, which affects a colossal 5.24 million workers—an increase of 400,000 in the past 12 months alone. That is welfare on a sadly grand scale, for which we should not be asking the taxpayer to foot the bill.
The report notes that the prices of everyday items have risen faster than prices of other goods. Food costs 44% more than in 2005 and energy costs have more than doubled. On the bright side, it notes that vehicle costs have remained stable and the cost of audiovisual equipment has halved. In more serious terms, the report notes that children of parents on low pay are less likely to achieve in school compared with their peers at every stage of their childhood education. A living wage employee gets nearly double the amount of family time in a typical working week as someone on the national minimum wage—a subject I shall return to later in my speech.
The report lays out more correctly the problem in the gains of productivity and their distribution, noting that the arrangements are such that economic growth alone will not necessarily solve Britain’s low pay crisis. Unlike the hon. Member for Bedford (Richard Fuller), I think the Government have a role to play; it is not just a matter for well-meaning individuals. Paul Krugman and Joe Stiglitz observe that low pay takes demand out of the economy, as the people circulating money in the economy are those who are on low pay. There is even an argument that higher unemployment benefit is an economic multiplier, in that the money that goes into recipients’ pockets circulates more quickly.
Gemma Doyle: The hon. Gentleman is being generous. He mentions the opinions of Professor Joseph Stiglitz. Is he aware of another of Professor Stiglitz’s comments:
“Some of you have been told that lowering tax rates on corporations will lead to more investment. The fact is that’s not true. It is just a gift to the corporations increasing inequality in our society.”?
Will he reconsider his position on corporation tax?
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Mr MacNeil: Had the hon. Lady been in Parliament when Labour were in power and seen what her party did in that period, she might be less bold. We have to look at what is good for Scotland and what we can do to create opportunity and employment in Scotland, and I will not resile or shy away from that in any way, shape or form.
The contention is that money is not circulating. That is why some years ago we had a fiscal stimulus and why we have had quantitative easing. My problem with QE is that it has not been aimed at the demand recovery for which Stiglitz and Krugman would look; instead, in the opinion of many, it is propping up financial institutions. I note that, at one time, Ben Bernanke suggested that the way to return demand to Japan 20 years ago, when the country was experiencing stagflation, was to take a helicopter full of yen notes and fly above Japanese cities shovelling them out. That is certainly one way to return demand to the economy, but of course serious voices would recoil at the idea and not allow it to happen. There are some answers in economics, however, that are counter-intuitive to many of the things we naturally feel and do daily. We should not be afraid of looking at some of the other, more grounded, ideas, but I fear that a Government who have chosen the cult of austerity over the pursuit of growth are unlikely to look imaginatively at what they can do for the economy—they certainly have not done so in the past three years.
Growth in productivity has not been matched by growth in wages. The “Working for Poverty” report notes that
“Wages and economic output began to decouple in 2003, five years before the onset of the financial crisis. Real average wages have grown by 13% since 1999, whereas economic output”—
“has risen by four times this rate.”
That means again that economic growth alone will not solve Britain’s low pay crisis. The Government should set up a commission of inquiry into poverty and inequality, as we call for in the motion, to look at how we can improve the lives of citizens—people we see daily; people we perhaps knew in school, or relatives; people who live in our communities. They should not be left behind, with only 18% escaping low pay over a decade, as we heard earlier. In a further example, the report notes that
“Productivity growth and median pay began to decouple in the 1980s and median hourly earnings have failed to keep pace with the average value of output that workers produce.”
I am heartened to know that even the Prime Minister supports the living wage, saying that where companies can afford to pay the living wage, they should. A living wage is only £7.65 an hour—that is the figure mentioned in the White Paper for independence and in the “Working for Poverty” report. That is only £306 for a 40-hour week or about £16,000 per annum—not a king’s ransom by any means. We should remember that the minimum wage is £6.31 an hour, so it takes an increase of only £1.34 an hour to get to the living wage. I praise the Prime Minister for what he said, but while he apparently sees the justice and wisdom of the measure, as a politician in charge of a Government, he is doing nothing about it. We should realise that life is short, life in politics is shorter, and life in power is shortest of all, so Governments should take the opportunity when they have power to do a lot to improve the lives of the people they govern.
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Some of this debate is mere dry statistics. We should look at some of the human stories in the “Working for Poverty” report—the accounts of normal, decent people across the countries who are trying to earn an honest living in a state, the UK, that does not value all its citizens fairly. Their stories should be heard and understood; they inform the debate and help to remove the dryness of the statistics.
Stewart Hosie: Very generously indeed, my hon. Friend has praised the Prime Minister, who at least wants to do something about the minimum wage, but is it not disappointing when the hon. Member for East Dunbartonshire (Jo Swinson) was answering questions about the living wage, she said, even though it is £7.65 in Scotland and £8.80 in London, that it was “too difficult to calculate”? Is not that a rather bizarre position for the UK Government to take, given that we already know what the figures are?
Mr MacNeil: My hon. Friend puts it very well indeed. I do not think any more needs to be said.
Case study 1 in the interim report from the Living Wage Commission is Paul’s story. The report tells us that
“Paul is a support worker in the care sector in the North West of England. His partner is a youth worker in the youth justice sector for the local Borough Council. They have a sixteen year old daughter and are both paid below the Living Wage.”
“I started work for my current employer in 2009 and have never been given a pay rise. During this time I have experienced a palpable leap in the cost of living. My wife started her employment in 2010 and she has witnessed a drop in the amount of money she is paid for her considerable and anti-social working hours.
We are both working full-time, living in local housing association rented accommodation and we are always struggling to pay our way. We have no luxuries, we have not been on holiday and we do not socialise. We work, eat and sleep. There are no extra benefits we can claim to help us. There is little we can hope to do but keep on working in the hope that we will eventually see some ‘light at the end of the tunnel’.
I have juggled our debt as best as I am able to. I have moved some debt onto zero interest credit cards which have given us an 18 month window to clear some debt without accruing the hefty interest charges which would be crippling.
We are substantially in arrears with the rental of our home. The landlord is attempting to negotiate a payment plan to help us to manage this debt. We avoid doing so to enable us to more flexibly manage our debt. One week we can pay a little off our rental debt but the next we must buy food and fuel, pay outstanding vets bills, and more besides.
We often spend days apart. This is due to my low pay and the need for me to do sleep-in duties as a carer to garner something like a liveable income. We can often only communicate through rushed text messages and leaving voicemails for each other. Our sixteen year old daughter misses us both greatly. We did not even have a day out together as a family in 2013.”
That one story crystallises in many ways the nub of today’s debate. I am grateful to the Archbishop of York for his report and for setting out people’s experiences. Perhaps the saddest line in that quotation is:
“We work, eat and sleep”.
It is shocking that the citizens of a first-world, G7 country are living in that way.
Government Members often talk about the importance of family as a building block of society. I would argue that the living wage benefits and reinforces families. To take home the same wage that an employee on the living
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wage would receive for a typical 37.5 hour week, minimum wage earners would have to work 52.3 hours a week in London or 45.5 hours a week outside London. In a typical Monday-to-Friday working week, that is equivalent to working 10.5 hours a day in London or 9.1 hours a day outside London. That rises to 11.5 hours for London or 10.1 hours outside London if we include an hour’s lunch break.
A worker who does a Monday-to-Friday job in London on the national minimum wage, who gets the Government’s recommended amount of sleep each night and who has an average commute therefore gets only three hours and 45 minutes to spend as they wish in each week day. The same employee would get six hours and 45 minutes of time each day if they were paid the living wage. That is an extra three hours a day or almost double the time that a minimum wage worker has to spend with their family or to do anything else that they want to do. That shows how those in low-paid jobs have little work-life balance and have to sacrifice the time that they spend with their children or on social engagement. That can lead to other problems further down the line. If ever there was an example of what an additional £1.43 an hour could bring, that is it.
When we hear people using the family as a political argument in future, it must be backed up by some economic and legislative muscle in order that people have a decent wage and a decent start in life. The most important point to make is that the people we are discussing are working—they are the working poor. They work long hours to do what they can for themselves and their families, yet they are unable to participate properly in society.
It is a damning indictment of all of us in this House that we have tolerated the emergence of such a reality in our midst over the past few decades. Although I am only 43, all of us have a responsibility for that. We have a responsibility to speak out about it. That is why we are having this debate. I hope that the Government will listen and will bring forward a commission of inquiry on inequality and poverty, because those issues blight the lives of far too many people. It should simply be stopped.
Jonathan Edwards: Does my hon. Friend share my concern at the lack of interest in this policy agenda, which is demonstrated by the number of Members who have put their names forward to speak in this debate? The Westminster parties do not care and just do not get it.
Mr MacNeil: It is disappointing that more Members have not engaged in the issues of poverty and inequality. Cynics would say that if this were a debate on Members’ pay, conditions and benefits or any other reform of the House of Commons, the Benches would be full. Alas, we are debating a topic far removed from that. That is why I have tried to humanise the debate.
I was not going to read Becca’s story from the Living Wage Commission, but it is a cracker of a story. The report states that she
“lives in Leeds and has worked in minimum wage jobs since she was a teenager. Now in her thirties, she has a degree and wants to start up her own business, but she can not find the money or the time.”
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“I have pretty much always worked for minimum wage. I worked in an office photocopying for two years, I have worked in customer service, I once sat watching a TV screen and counting cars on clickers. I’ve done all sorts.”
That is another example of a person who is trying to better herself, but who is—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I have a good feel for the examples, as, I am sure, does the House. This should be the hon. Gentleman’s speech, not just a speech full of examples from other people. I have allowed a few examples to go, but I have heard enough for now. I want to hear from the hon. Gentleman, rather than other people.
Mr MacNeil: Thank you, Mr Deputy Speaker. It is because of my modesty and kindness that I want to share the wisdom of others. I do not see myself as the sole well of wisdom. [Interruption.] “Thankfully,” say my SNP colleagues.
We have to consider how poverty and inequality are affecting young people. I spoke to a young person recently who said, “It’s difficult being young. Houses are expensive. We have tons of student debt. The costs of living are rising and wages don’t go up. It’s sort of tough being young at the moment.” That young person was right. I was at university when student loans came in. I followed a demonstration against student loans that was led by a student who later became an MP. I later saw him on television backing Labour’s introduction of tuition fees in 1998. I cannot remember his constituency.
There has been a sharp rise in the number of 24 to 34-year-olds who are living at home with their parents. As Joe Stiglitz said, that is not due to a rush of filial devotion, but because they have no choice. The economic cards are stacked against them. Youth unemployment is high in many countries. It is too high in Scotland and higher still in the UK as a whole. Instead of getting on with their lives, the young find themselves in a holding pattern.
The SNP has done what it can in Scotland by keeping tuition fees at zero, which is saving families from paying £36,000 for a four-year degree. Families risk having to pay that if we vote no to independence. We know that there are cuts down the line and some people think that this is a something-for-nothing society and that certain things should be taken off the table. We do what we can with the powers that we have, but we want to do so much more.
An exciting proposal in the White Paper that will tackle inequality is to follow Sweden’s example on child care. Parents of early-years children in the UK face the highest child care costs in Europe. Parents in Scotland spend about 27% of household income on child care, compared with the OECD average of 12%. Independence would give us the opportunity to make transformational changes to the way in which Scotland provides child care services. That will allow women, in particular, to work without worrying about the cost of looking after their children. With independence, the benefits of their work, such as economic growth and tax revenue, will stay in Scotland and contribute to the costs of child care provision.
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The Scottish Government plan to have a universal system of high-quality early learning and child care from the age of one up to school entry. At the end of the first year of an independent Scottish Parliament, every three and four-year-old and vulnerable two-year-old will be entitled to 1,140 hours of child care. That is the same amount of time as children spend in primary school each year and is equivalent to 30 hours per week over 38 weeks. That is an important aspiration. It demonstrates one way in which we should be moving our society forward. It would certainly be a way to reduce inequality.
It has been argued that inequality has caused the rise in household debt because people try to keep up with the Joneses. There are more pernicious examples of what inequality can do. Professor Paul Krugman states:
“Before the financial crisis of 2008 struck, I would often give talks to lay audiences about income inequality, in which I would point out that top income shares had risen to levels not seen since 1929. Invariably there would be questions about whether that meant that we were on the verge of another Great Depression—and I would declare that this wasn’t necessarily so”.
In the end, it turned out that that was the case. Once again, we are not arresting the growth in inequality. Are we on the verge of repeating the same mistake? I wish that we would learn, but we seem not to be doing so.
Some voices in the world are talking about inequality. Yesterday, the mayor of New York, Bill de Blasio, made a speech about tackling inequality in New York. My only criticism is that, when one looks at the detail, it is quite timid. The Pope has said:
“The promise was that when the glass was full, it would overflow, benefiting the poor. But what happens instead, is that when the glass is full, it magically gets bigger nothing ever comes out for the poor.”
The church and nation committee of the Church of Scotland addresses that issue frequently and, as I said, the Church of England’s Archbishop of York has also done great work. A number of US Senators are aware of the problems and what is happening.
In my view, Governments should concentrate on growth and jobs. The deficit obsession and austerity cult has taken demand from the economy and probably led to a slower recovery—we have probably lost years as a result of the policies that were followed. We cannot fully prove that because we do not have a controlled environment in which to do so scientifically, but the feeling among many economists is that growth has not returned as strongly as it should have done, and that when it did come back it was three years delayed.
We are in food-bank Britain; we have the bedroom tax hammering people. VAT, one of the most regressive taxes, has been increased to 20% in this Parliament. That is a real shame and something that hits people disproportionately. We have had the cut to the 50p tax rate. That probably cost £4 billion to £5 billion in revenues, although the Commons Library has stated that behaviour alteration should mean that it will cost only £0.5 billion. Only £0.5 billion? That means that the cut to the 50p rate of tax has cost the Exchequer and not raised any extra revenue.
In the debate last Thursday—I am coming to a conclusion, Mr Deputy Speaker—it was sad that many of those Members who had the opportunity to speak in
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a very time-limited debate made no real mention of the future, and there was no mention at all of poverty. Unfortunately, we seem to have made a god of money, and we treat those who do not get hold of it as somehow inferior beings. In fact, as somebody once remarked, the cure for cancer might well be found in a child living in a poor household. They should be given a helping hand and an opportunity for their future because—who knows?—they could help us some day.
I have a couple of final reflections. It was said of Nelson Mandela that he not only liberated the blacks in South Africa, but also the oppressors. When I look at inequality I see, of course, great insecurity at the bottom, but I also see insecurity at the top. People realise that when the safety nets are removed, they themselves are a step or an accident or two away from going down. If those people do not have a society with safety nets in place for their own security, they can never fully relax. They need to get more and gather more because—who knows?—they, a relative or a friend might need it.
That struck me very strongly when I was at Alabama state university on an exchange programme with a US Congressman and we went to see a game of American football. We were taken to the president’s box of the university, and there were people who had made it in life. I met a man from Leeds, but it struck me that despite having made it, the talk was all about health insurance, health care, and what sort of plan people had—conversations we do not have in this country. In reality, there was deep insecurity because the social nets were not there to help everybody. When the nets are not there for the poorest and most vulnerable, we, our friends, our relatives, the relatives of relatives and friends of friends, are all but one step away. It is not a nice situation to be in, and I could see the fear in the whites of their eyes. Even though they personally had made it in society, there was massive insecurity around them.
Just as Nelson Mandela liberated the blacks and the oppressors, so too does the arresting of inequality liberate the poor and the rich—not quite in equal measure, but it certainly liberates them both from the insecurity that inequality brings to us all. We should work to get rid of inequality, and I hope that when we have independence, we can prove that one of the best ways of fighting inequality and poverty is through the prosperity that I expect we shall bring to Scotland.
3.3 pm
Guto Bebb (Aberconwy) (Con): It is a pleasure to follow the hon. Member for Na h-Eileanan an Iar (Mr MacNeil). In 1979 I spent a fantastic summer holiday on the Isle of Barra—something that I have promised my children I will repeat at some point.
Mr MacNeil: You’re very welcome to come back.
This has been an interesting and passionate debate thus far, but I would like to pick up on a few points made by the hon. Gentleman about the minimum wage. Members across the House will share the aspiration to increase the minimum wage, but to accuse the Prime Minister of inaction when he has simply stated a need to consider the facts is slightly unfair. On Friday, I met a number of constituents who run small hotels in my constituency. Not a single one of those six businesses
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had posted a profit in excess of £15,000 for the past three years, yet they all employed people and each paid slightly above the minimum wage. They want to do the right thing and retain their staff, but when talking about prosperity and creating jobs, we must ensure that anything we do with the minimum wage does not destroy the very thing that helps people out of poverty, which is having a job.
Lorely Burt: I understand the hon. Gentleman’s point about the minimum wage, but is he aware that were the Government to adopt the Liberal Democrat policy of increasing the threshold at which people start to pay tax to the minimum wage, that would achieve the living wage?
Guto Bebb: There is certainly an argument that to increase the minimum wage when, as things currently stand, the Government have already taken tax out of the minimum wage, would look as if they were kicking businesses for the sake of kicking them. I have supported the fact that the Government have increased the personal allowance dramatically, which has made work pay for people in many circumstances, but my point is that taking time over a decision is not something we should be ashamed of. Indeed, we should be proud of taking time to make the right decision on something that is so important for a constituency such as mine, where 27% of the working population are either self-employed or work for small businesses.
I must take issue with a few points raised by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in his opening remarks. He began his speech by talking about Hywel Dda, who was indeed classified as one of the better Welsh kings. I was, however, surprised to hear the hymn of praise to a royalist from an avowed republican. Indeed, in terms of Hywel Dda, or Hywel the Good, being good, perhaps the true title should be Hywel the not-so-good. In addition to being the man who classified and created Welsh law, he also ordered the execution—the murder, I should say—of his brother-in-law in order to take over the kingdom of Dyfed, which is the current constituency of the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Furthermore, so as to extend his kingdom to the north and take over the whole of Wales, he also dispossessed the two sons of Idwal Foel from Gwynedd. When giving examples, I think we must put the man in the context of his time. It is interesting to highlight, however, that the Hywel Dda laws were in many ways ahead of their time in trying to achieve a level of equality between the sexes—not something that we saw in other parts of the United Kingdom for a very long time.
I also take issue with the comments by the hon. Member for Carmarthen East and Dinefwr about a proportional system of electing people leading to greater engagement with the political process. It is an attractive argument, but one that can be rejected simply by looking at the situation in Wales. We have 40 Members of Parliament who are elected on a first-past-the-post basis, and 60 Members elected to the Welsh Assembly, which uses a version of proportional representation. In a constituency such as mine, however, 70% of the electorate—
Mr Deputy Speaker (Mr Lindsay Hoyle): Order. I am a bit worried that we are getting in to a debate on proportional representation. I presume the point is linked to fairness and equality somewhere.
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Guto Bebb: I am responding to the initial comments that proportional representation leads to a more involved electorate. I would challenge that because, as I was about to say, in my constituency 70% of constituents turned out in 2010 on a first-past-the-post race, but under a PR system in 2011, the turnout was only 40%. If we want democratic engagement, I argue that the evidence for the hon. Gentleman’s point is not clear.
Finally, I agree with the hon. Gentleman that when trying to ensure full employment in Wales and supporting businesses—all part and parcel of improving equality and job opportunities—we must support our small businesses and ensure that our banks are lending. My right hon. Friend the Chancellor of the Exchequer has made huge strides in trying to ensure that the banks support small businesses, but I accept the arguments about the need for further intervention to support small businesses in Wales.
I take from the comments of the hon. Member for Carmarthen East and Dinefwr an implied rejection of the work of Finance Wales, an organisation which has existed in Wales for a long time and has the purpose of supporting small businesses. In my view, it is a Government-supported way of supporting small businesses. On Friday, however, in my constituency I met a small hi-tech IT company employing 23 people, which had been asked to pay 9% above base to be lent money by Finance Wales. That is the type of behaviour that, if undertaken by the banks, we would be criticising openly. The initiative is supported by the Welsh Labour Government, and they should ask themselves serious questions when small businesses trying to create employment opportunities in my constituency are offered penal rates to borrow money.
I have some sympathy with the comments made by the hon. Member for Carmarthen East and Dinefwr. I share his surprise at the behaviour of the Labour party in the Welsh Grand Committee last week. Democratic engagement is part and parcel of the process through which we engage people and tackle inequality. However, the Labour party’s rejection of the entirety of the Silk commission report, with the exception of borrowing powers, should concern us greatly. If we are to create equality, in Wales and in the United Kingdom as a whole, we should avoid spending more money on debt repayment than we do on education. The only part of the Silk commission report that the Labour party seemed willing to support was more borrowing powers—no surprise, perhaps—but that is a betrayal of the aspirations that those of us on the Government Benches have for the people of Wales.
Mr MacNeil: I have been hearing quite a bit about the Welsh Labour Government’s rejection of more powers going to Wales, but I still cannot find the reason for that. Do they doubt their own abilities of stewardship and governance? Does the hon. Gentleman know why they do not want them?
Guto Bebb: It is not for me to correct the hon. Gentleman, but I am not sure whether the proposals were rejected by the Welsh Government. They were certainly rejected by the Labour Front-Bench team in Westminster—a significant difference. Perhaps Labour Members can enlighten us on whether there is a lack of trust between the Westminster team and the Assembly team.
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The motion is wrong-headed in many ways, but its key failure is highlighted in the final sentence, which
“calls on the Government to halt its further spending and welfare cuts”.
That tells us that the motion is not serious. It talks about the importance of creating equality and opportunities and supporting people and communities, yet it does not recognise that to have a successful, sustainable economy we cannot carry on borrowing at rates that are unsustainable in the long term. There is nothing moral, fair or reasonable about asking our children and grandchildren to pay for our mistakes. We have a responsibility to future generations not to saddle them with unsustainable debts. We have an ageing population and a demographic problem, nowhere more so than in parts of north Wales that I represent. We face a real challenge to care for the elderly and to ensure that we have a fair pension system. Future generations will have to meet those obligations. In asking them also to meet our inability to take hard decisions, the motion is not a serious one, and it deserves to be rejected.
Jonathan Edwards: Will the hon. Gentleman inform the House what the debt to GDP ratio is now—it has risen under this Government, of course—and what it was in 1947, when the NHS was created?
Guto Bebb: The hon. Gentleman has made this point on numerous occasions. He is absolutely correct to say that the level of debt has increased under this Government, but for a party that says the level of debt should have increased at an even faster pace, it is hardly reasonable to argue that this Government have therefore failed. It should also be pointed out that we have an NHS that is, rightly, much more expensive and costly than it was in 1948, so that is a false analogy.
Dr Thérèse Coffey (Suffolk Coastal) (Con): Dare I say it, but the comment by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) shows that until we balance our books and are in surplus we will never start to pay down debt. His motion contradicts his desire to reduce the debt to GDP ratio.
Guto Bebb: I fully accept and endorse my hon. Friend’s comments. It is important, when we debate public spending and the level of so-called cuts, to bear in mind that we are running a state that is not meeting its obligations. Even in this financial year, we are borrowing £110 billion. We are not out of the woods by any stretch of the imagination. It would be an irresponsible Government who would damage the opportunity for people to have more equality through a willingness to borrow more without any plan to reduce the country’s level of debt.
Mr MacNeil: Is the problem for the Government not that the rush and the desire to attack the deficit has taken the focus away from what they should be doing: returning demand and growth to the economy? To make an equivalence between the national economy and a household budget is wrong-headed in the extreme and has led to the three-year delay in growth. It is leading to the wrong policies and—
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Mr Deputy Speaker (Mr Lindsay Hoyle): Order. In fairness, the hon. Gentleman has had a good day. He has made a lot of interventions and he spoke for almost an hour, so to try to make another speech is unacceptable. A lot of Members want to get in.
Guto Bebb: I reject the hon. Gentleman’s argument. To have more equality, we need more jobs and economic opportunities. The hon. Gentleman argues that that would happen with more Government spending as a proportion of the economy. If that was the case, then Wales would be, by a long stretch, the most successful part of the United Kingdom, because there is no part of the UK more dependent on the public purse. The dependency on public spending in Wales has led to failure not over the past three or four years, but over a 15 to 20-year period. It has not led to economic growth or prosperity, and it has not led to economic opportunities. Indeed, the very reverse is true: the size of the state in Wales is one of the reasons why the rebuilding job being undertaken by the Westminster Government is so important. In a Welsh context, we have created an economy that is unbalanced and has not created the variety of jobs needed to support our young people and ensure that we have an equal society. I argue very strongly that anybody who says that the answer to all economic issues in a Welsh context is more public spending is simply wrong.
Jonathan Edwards: Will the hon. Gentleman give way?
Guto Bebb: I will try to make a bit of progress.
The key point to remember is that those who now claim that the economic recovery has been too slow in coming are the exact same people who claimed that unemployment would increase dramatically because of the decisions taken in 2010. They are often the same voices who argued that there could be no growth without public spending, yet in Wales and in the whole of the UK we are seeing a vast increase in private sector employment. We have 1.5 million new private sector jobs, a ratio of almost 4:1 in comparison with the loss of jobs in the public sector. Wales is not an exception. Time and again when this is debated in the Welsh media, we hear people saying that the economic recovery is happening in London and the south-east. That is simply not reflected in the facts. In Wales, unemployment is falling and employment rates are increasing.
Anyone who is genuine about the opportunities necessary to reduce inequality would welcome the jobs that are being created. What we often hear from the parties on the Opposition Benches, however, is a complaint about the type of jobs being created: that they are not proper jobs and not the type of jobs we should be proud of. That is such a demeaning comment to make to people going out of their way to try to earn their living. I wonder how someone working in a Tesco or an Asda in my constituency feels when they hear a member of the Labour party demeaning a job as nothing more than shelf stacking. Such comments from a party that claims to represent labour are utterly disgraceful. I have made this point to the House previously and I will make it again.
One of the most moving things I have done as an MP was to visit a Tesco partnership store in Toxteth, in Liverpool. I can tell Members that a visit from a
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Conservative MP from north Wales is not something that happens very often at any store in Liverpool. The Tesco store in Toxteth was the largest inward investment into Toxteth since the riots in 1982. It was Tesco that undertook that investment. Half the staff employed at that store had been unemployed long term—for more than 18 months. The retention rate was more than 94% and the pride they showed in the fact that they were now working for a living was moving—there is no other way of describing it. I met one lady who ran the bakery section and asked whether she would ever want to move on. Her response was, “I’d have to be taken out of here in a box. It has given me my life back.”
Mr Russell Brown: I apologise to the hon. Gentleman—perhaps I am not in the Chamber as often as I should be—but I have yet to hear any of my colleagues condemn anyone in the retail sector. Those are valued jobs and, as the hon. Gentleman, I and many other colleagues know, working in retail is about much more than serving customers and stacking shelves.
Guto Bebb: I welcome that intervention from the hon. Gentleman, who clearly understands the importance of the retail sector. I was talking about comments made on radio and television by members of the Labour party. When I hear those comments I get annoyed as they refuse to acknowledge the fact that the sector provides the individuals in Tesco in Toxteth, or in various businesses in my constituency, with the opportunity to start a career, learn a skill and move on—and I would argue that people need a job to be able to move on to another job. It makes such a difference and those opportunities should not be dismissed by those who earn far too much to appreciate how important it is to earn a living, perhaps for the first time, and, in some cases, to be the first member of a family for a generation to take a job.
We need to be aware of the fact that the success we are seeing across the UK is being replicated in Wales. In a Welsh economy with relatively low levels of pay, it is even more important that we reduce the tax burden on those individuals. I have heard Opposition Members complain that although it is all very well to reduce people’s tax bills, by increasing the personal allowance tax credits have been reduced. That is not about what is right for the individuals; it represents the significant difference between the Government and Opposition. Government Members want to allow people to keep as much of their earnings as possible, because if a person goes out there and works we should tax them as little as possible. The Opposition were quite happy to tax people earning as little as £6,000 a year and recycle the money through an expensive, well-paid bureaucracy before paying it back to buy a client state. That was the dishonesty of the tax credit policy.
Nia Griffith: Will the hon. Gentleman explain why his party has introduced measures that have cut the taper on the tax credit system, making it much more severe and causing more difficulties for people? Does he not agree that the only way to reduce the tax credit bill, as tax credits top people up to a decent wage, is to ensure that wages go up through a strong minimum wage and incentivise employers to introduce a living wage?
Guto Bebb:
As the hon. Lady knows, as I have already touched on the minimum wage, I believe that it is a complex issue that must be considered carefully. My view
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is that we should carefully consider moving towards a point where we do not need tax credits, as the imperative is to allow people to earn a living and pay as little tax as possible on their earnings. That should be the aspiration.
Mr Marcus Jones (Nuneaton) (Con): My hon. Friend mentions the issues caused for his constituents by the way in which the Labour party dealt with income tax and the tax threshold, but were they not compounded by the removal of the 10p tax rate?
Guto Bebb: It undoubtedly did not help.
When we discuss inequality we should be aware of the key point that the Government have been very proactive in ensuring that the inequality faced by pensioners is dealt with. We can compare the impact of the triple lock on pensioner poverty with the previous Labour Government’s decision to increase pensions by a paltry 75p.
Mr Brian H. Donohoe (Central Ayrshire) (Lab): Taxation is not just about income tax, but about VAT. Is that not perhaps the most unfair tax on those at the bottom of the pile?
Guto Bebb: I would reject that argument. We talk about VAT, we often forget the exemptions. If somebody is buying a new Ferrari, I have no problem with their paying £50,000 in VAT. If somebody buys their food in a supermarket, they pay 0% in VAT. If VAT were 20% on every single item, it would be a regressive tax. For those who spend a significant proportion of their income on food, or on household fuel, which is taxed at 5% rather than 20%, the VAT issue is not as clear cut as Opposition Members try to make it.
Debbie Abrahams: Will the hon. Gentleman give way?
When we talk about inequality, it is important to recognise that the Government’s work on pensioner benefits has significantly reduced pensioner poverty. We should also recognise that in a country such as Wales, with such a high dependence on self-employment, the Government’s moves to introduce a single-tier state pension will make a huge difference for those who are self-employed and will result in less inequality when people reach retirement.
The hon. Member for Carmarthen East and Dinefwr, who has now, unfortunately, left his seat, said that there was a need for more investment in a Welsh context. Let me be very specific about the situation in Wales. Since 2000 and 2001, the Welsh Government, supported by European structural funding, has invested billions of pounds in so-called initiatives to deal with Wales’s lack of economic progress. When people talk about the need for public sector investment to create wealth and employment opportunities, it is important to consider the case study of how European funding, spent under the guidance of the Welsh Labour Government—and under the Welsh Labour and Plaid Government for four years—was used through so-called interventions that were meant to create employment opportunities and ensure that we had a more equal society. That has failed dramatically and for the entire period of intervention by the Welsh Government and the EU, west Wales and the valleys have gone backwards rather than prospering.
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Guto Bebb: Let me finish this point.
Back in 2000, when the decision was made to apply for objective 1 funding it was argued that this was a once-in-a-lifetime opportunity for Wales as the GDP of west Wales and the valleys as a percentage of the European average was roughly 74%. As hon. Members will be aware, once that percentage is above 75% the highest level of EU intervention is not available. It was also described as a once-in-a-lifetime opportunity because in 2004 all the accession countries from eastern Europe, which had been behind the iron curtain for decades, would become part of the European Union. Lo and behold, in two rounds since 2001 Wales not only has qualified for such funding but has qualified because we are going backwards rather than forwards. Those Members who argue that public spending, Government intervention and the “Government know best” mentality are the way forward for the Welsh economy should seriously consider the impact of public spending on west Wales and the valleys.
I shall now take a final intervention from the hon. Member for Na h-Eileanan an Iar.
Mr MacNeil: What the hon. Gentleman is describing in Wales is a symptom of picking winners; things cannot happen there organically. What is the difference between the EU accession states and Wales? What is the difference between Wales and the Republic Ireland, which used to be behind, but is now well ahead of Wales? The difference is that they have Governments who can make things happen organically within their nations, instead of having to join the “picking winners” line because of policies from another country’s capital that do not fit their needs.
Guto Bebb: Obviously, I do not accept most of the hon. Gentleman’s arguments; certainly, we should be careful about taking lessons from the Irish implosion. Ireland is probably one of the few countries to have a banking crisis even greater than ours. Many of the eastern European accession countries have managed to create vibrant economies by imposing low-tax regimes, and the whole of the UK should look carefully at those countries’ performance.
In the debate about whether we have a 50p, a 45p or a 40p tax rate, I remind Labour that it found the 40p tax rate completely acceptable for the vast majority of its 13 years in government. What is the purpose of income tax? That is a question that is often forgotten. Its purpose is not to bring down and punish the successful. If we believe in a more equal society, we want more money coming into the Exchequer, because that means we can do more to support the less well-off in society, but we have lost sight of that argument. If we reduce taxes and get more money coming into the Exchequer, that is something that should be welcomed. Time and again, it has been shown that when taxes are reduced, more often than not, the result is more economic activity and a greater success story.
Richard Fuller: Does it not strike at the economic illiteracy of the shadow Front-Bench team that they are far more interested in a headline tax rate than in raising revenue to pay for the public services people want?
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Madam Deputy Speaker (Dawn Primarolo): Order. Before the hon. Gentleman continues, I should point out that this debate has been going for more than two and a half hours, and he is only the fourth speaker. If every Member insists on taking this long, there will be a lot of disappointed people in the Chamber. I am sure he has lots to say, but so have other Members, and some consideration on both sides of the Chamber could help in making speeches just a little shorter than over half an hour.
Guto Bebb: Thank you, Madam Deputy Speaker. I took my cue from the initial speeches, which I think lasted an hour.
The issue of tax is crucial. I do not want to reduce tax for the sake of it; I want to reduce it because it will stimulate the economy and bring more money into the Exchequer. The hon. Member for Na h-Eileanan an Iar said he wanted to reduce corporation tax to stimulate the economy. I do not understand why reducing corporation tax stimulates the economy, but the same does not work for individuals.
I turn to inequality and the attack in the motion on the Government’s welfare reforms. Those reforms are crucial to the coalition Government’s legacy. In 2010, it was said the coalition came together to deal with the deficit, but just as important, I would argue, was the welfare reform agenda. It might not work, but if it does not, it will be the greatest shame. This brave effort to reform our welfare system is not about penalising people or depriving them of money; its whole purpose is to show faith in people—a faith never shown by the opposition parties.
The Labour Government had a make-believe target for taking people out of poverty. Poverty was defined as below 60% of the average wage, so if the average wage rose by 10% and the wage of somebody on 60% went up by 10%, they moved from not being in poverty to being in poverty. They were better off, but because the line had moved, they were defined as being in poverty. Even worse, if somebody was on 60% plus £1, they were defined as not being in poverty and therefore a success for the Government. That person did not necessarily feel suddenly out of poverty—they still struggled and found life difficult—but policy makers could forget them because they were above that line. That is why we ended up with 5 million unemployed people during 13 years of the previous Labour Government—5 million people, yes, who had money thrown at them so as not to embarrass Labour in relation to its poverty target, but 5 million people forgotten by Labour and denied the initiative to work because they were being paid to be on welfare. It was deeply shameful that they ignored people in that way, and I am proud to be part of a coalition Government who are at least making an effort to deal with it.
Between 2005 and 2010, 400,000 people born in the UK moved into unemployment, yet 700,000 jobs were taken by people not born in this country. There was something wrong with a system that said to people in my constituency, “You can be on welfare, while someone from eastern Europe works in the local hotel or the abattoir.” That is shameful, and we need to deal with it, because the opportunity to develop must start somewhere.
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I feel passionately about this issue when I talk to the deputy manager of a hotel in my constituency. He came to this country from the Czech Republic, and within 18 months he was a deputy manager. I was very pleased for him, but I thought that the job could have been given to someone from the locality if that person had not been held back by the welfare trap that we had created. Our gradual move towards universal benefit is a brave move, but although it has been supported by Opposition Members in terms of their rhetoric, in terms of their actions they have rejected every effort that we have made to reform a system that is immoral, and is the basic reason for the fact that we have so much inequality in Wales.
The Labour party in Wales should feel particularly ashamed. The areas in Wales that are really struggling have given their loyalty to the Labour party not for one generation, not for two generations, but for three or four generations, and they have been failed time and again. It is clear from today’s debate that the Government are making really brave decisions to try to ensure that people are not seen merely as numbers so that they can be taken £1 over a moveable poverty line. Our coalition tries to see the value of each and every individual, and the contribution that the individual can make. Nothing will make a bigger impact on inequality than getting people back to work when they are capable of making a huge contribution that is currently being wasted.
When I see motions of this kind, what I see is the same old rhetoric of the middle-class, left-wing readers of The Guardian who have dominated this country for far too long. What we need are the reforms that are being implemented by the Secretary of State for Work and Pensions. What we need are the tax reductions that are being implemented by the Chancellor of the Exchequer. What we need is to show faith in the people of the country, whether that country is Wales, Scotland or the United Kingdom. Government Members see those people’s potential, but I fear that Opposition Members—especially those in the Labour ranks—saw them simply as numbers to be dealt with in the context of their poverty targets while doing nothing to help them, and they should be truly ashamed of that.
3.37 pm
Mr Russell Brown (Dumfries and Galloway) (Lab): It is a great pleasure to follow the hon. Member for Aberconwy (Guto Bebb).
Some of the best debates that we experience in the House—on all too few occasions, it must be said—are those that mean a great deal to the people whom we represent, and at the same time manage to secure a degree of consensus. It is therefore a great shame that the Scottish National party, Plaid Cymru and the Greens have chosen to go somewhat native today. Rather than providing an opportunity for a straight vote on a commission of inquiry to put pressure on the Government, they have chosen to show their real side by playing gesture politics.
Just over four weeks ago, my right hon. Friend the Member for Oldham West and Royton (Mr Meacher) led a Back-Bench business debate on the subject of welfare reforms and poverty. Winding up the debate for the Opposition, my hon. Friend the Member for Rhondda (Chris Bryant) made it clear that there was a need for a commission of inquiry.
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Nia Griffith: Is my hon. Friend aware that 18 Labour Members spoke in that debate, and not a single nationalist did so? I do not blame the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he was on paternity leave, but is it not shocking that the nationalists should dare to suggest that Labour is not equally concerned about poverty?
Mr Brown: I have a copy of the report of the debate, so I am well aware of its content and of which Members contributed to it.
We may find little common ground today, but we can at least agree with the nationalist parties on the need for an inquiry into the impact of the coalition’s cuts on poverty throughout the United Kingdom.
The motion opens with the words:
“That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses”.
It is those last four words—“according to some analyses”—that present the problem. If we look at the OECD figures, we can see that the most recent ones are out of date. Definitions are provided for these figures, and statistics are also provided, but because different surveys and methodologies have been used, it is a real problem to get fully behind the figures and to determine what they are saying. In other words, statistics can prove one thing to one individual but tell a different story to another.
The coalition’s austerity measures have undoubtedly resulted in the greatest burden falling on low and middle-income families, while the richest have been given significant tax cuts to ensure that they do not feel the cold draught of the current economic climate. That is why Labour Members have consistently called for action to tackle the cost of living crisis caused by this Government. Such action would include freezing energy prices, taking real action to end exploitative zero-hours contracts, and strengthening the minimum wage now.
My right hon. Friend the Member for Morley and Outwood (Ed Balls) recently said that if Labour forms the next Government,
“we will restore the 50p top rate of tax”.
I know that that causes anxiety for Government Members, but we believe that, in tough times like these, those with the broadest shoulders should bear the greatest burden.
Lorely Burt: Will the hon. Gentleman tell the House for how many days the 50p rate of tax was in force during the 13 years Labour was in power?
Mr Brown: The hon. Lady knows as well as I do that it was a matter of days, but this also relates to the comments made by the hon. Member for Aberconwy about the impact of taxation on individuals. For most of that time, there was never a need for that higher rate of tax to be imposed. The hon. Lady knows that it was a Budget decision to raise the rate from 40p in the pound to 50p. Yes, that rate applied only for a matter of days, but the Labour Government had not felt the need to increase it at any other time.
Alun Cairns (Vale of Glamorgan) (Con): Will the hon. Gentleman tell us how much he expects the 50p tax rate to raise in net gains to the Treasury, and how that squares with the comments from the Institute for Fiscal Studies about the policy?
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Mr Brown: It will definitely raise more than the 40p rate raises at the moment, but the big challenge for Government Members will be whether there will be a reduction from 45p in the pound to 40p in the next Budget. Can the hon. Gentleman tell me whether that will happen?
Alun Cairns: I notice that the hon. Gentleman did not answer my question about the comments from the IFS. Does he accept its view that the net gain from Labour’s policy would be negligible?
Mr Brown: The net gain will be significant. It will be some 11% more than is currently being raised.
It is notable that there is no mention in the motion of creating a fairer tax system. The Scottish National party’s plans for independence include slashing corporation tax, but it has been unable to provide any certainty on whether it would follow Labour in introducing a 50p tax rate. In fact, the SNP Finance Secretary in the Scottish Government has resisted making the party’s tax policy clear in any way.
We now accept that the driver of inequality has been the rate at which salaries at the top have increased in recent years. Again, however, the motion makes no mention of that. It says nothing about how we are to get to grips with high pay in the UK. The Labour Opposition have accepted the recommendations of the High Pay Commission, and we have outlined three key tests that the Government must meet to show they are serious about executive pay being at such high levels. First, we want firms to publish details on the ratio of employee average salaries to executive pay, and for the Department for Business, Innovation and Skills to publish a league table showing the highest ratios. Secondly, we want to see an employee representative on the remuneration committee of every company. Finally, we would repeat Labour’s tax on bank bonuses to fund a compulsory jobs guarantee for any young person on unemployment benefits for 12 months or more. These young people are not our future—they are part of today, and they need to be employed today and well into the future. That is real action to bring about fairness in our society, but what we have heard from the Scottish National party and Plaid Cymru this afternoon often bears closer resemblance to what those on the Government Benches have been saying.
Yesterday, during a question on economic inequality, Lord Newby stated that
“according to the latest ONS statistics, income inequality in the UK is at its lowest level since 1986. The Government are committed to ensuring that all families benefit from the return of growth to the economy”.—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408.]
That is not what far too many individuals and households are actually experiencing. Any economic recovery here in the UK is patchwork in its nature. As I have said in the Chamber previously, there are many rural localities where households are in a desperate plight, with below average earnings.
Stephen Crabb: Is the hon. Gentleman saying that he does not believe the statistics and that he does not believe that income inequality is dropping in the UK at the moment?
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Mr Brown: I am saying that a rosy picture is being painted. Some will say, “It is happening in London and the south-east”, but the Minister represents a Welsh constituency, which is rural, just as mine is. People in rural constituencies and in some urban constituencies are finding things really difficult indeed. The situation is still pretty tough and they do not recognise this rosy picture that is often painted.
Also in the other place yesterday, Lord Lawson stated that
“it is far more important to focus on making the poor richer than on making the rich poorer”.
I have to agree with that, but the Minister replied:
“we want to make sure that everybody makes a fair contribution to society and that all those in work get a fair wage for their labour. Obviously, there comes a point when taking too much tax from those right at the top becomes counterproductive.”—[Official Report, House of Lords, 10 February 2014; Vol. 752, c. 408-09.]
I would have to argue with that; those comments by the Minister tell us an awful lot about what those on the Government Benches are thinking.
Where we disagree with the text of the motion is on the words
“successive governments of all political hues have presided over an underlying trend of rising income inequality since the early 1980s”.
There can be no doubt that over the past 30 years or so there have been some particularly difficult and distressing times for many families, but during the early years after the change of government in 1997 rapid improvements were made right across the country. [Interruption.] I am not about to rewrite history; I am about to tell the Chamber what actually happened, because we tend to forget. This relates to a point made by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards), because he said that if Labour were to win the next election we would be carrying out the current Government’s spending plans. When Labour came to power in 1997 we held by the tight budgetary constraints, but as a party coming from opposition to government we decided that we would spend the money in a wholly different manner. What did we do with the chance that came our way? We created employment opportunities for young unemployed and long-term unemployed people, the disabled and lone parents through the new deal, and those very chances that were given to so many people brought about a marked change when coupled with the introduction of the national minimum wage and working tax credits. It was not the answer to every woe that people had suffered under the previous Government, but it was a major step forward. For many individuals, especially women, it meant that they no longer had to try to hold down two or three jobs to make ends meet.
The motion makes reference to inequality between men and women, but fails to recognise the gains made by women under the Labour Government from 1997 to 2010. I am talking about not just the minimum wage and tax credits but extensions to child care, which allowed more women to participate in the labour market, and extensions to maternity leave, which meant that women no longer had to choose between work and family life soon after having a child.
Let me now mention one or two things that have been raised this afternoon, including the issue of food banks. Over the past 12 months, there has been a 170% increase in the number of people using food banks. Between
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2010 and 2011—some two years ago—61,468 people were using food banks, compared with more than 346,000 now. Those are only the Trussell Trust figures. There are other ad hoc, less regulated, food bank systems.
The Minister mentioned welfare reform. Let me tell him, in case it has slipped his mind, that the previous Labour Government introduced three welfare reform Bills, and we maintained that those who could work should work and should be given help and support into work.
Pete Wishart: Where does the hon. Gentleman stand on the great “more powers” debate in the Labour party? Is he one of the boycotters, or is he an enthusiast of more powers? Would he give welfare powers to the Scottish Parliament, so that it is under Scottish people’s democratic control, or does he want to keep it with the Westminster Tories?
Mr Brown: I will come to that in just a moment. It is not that I need time to think. [Interruption.] Let me tell the hon. Gentleman that I am a solid believer in devolution.
We put three welfare reform Bills through the House. They were designed to ensure that those with the greatest need received benefits not just to exist but to live. We were able to recover that money by getting others into work. We were making progress on that when the banking crisis hit and turned the world upside down.
Stephen Crabb: The hon. Gentleman’s party may have introduced three Bills on welfare reform during its 13 years in government, but the records show that it ducked all the really difficult decisions on welfare reform. It was frit on that and, as a consequence, there are 200,000 people in Wales who have never worked a day in their lives.
Mr Brown: I hear what the hon. Gentleman is saying, but there is an element of him trying to rewrite history. We were making progress. I cannot say what he experienced in his constituency, but there were people in my constituency, some of whom had been out of work for a long time, were disabled, or had been seen as people who would never work, who got into employment, and that was thanks to the excellent work of the Department for Work and Pensions staff. We did make progress; it was just that it was not as much as we would have liked.
Alun Cairns: Can the hon. Gentleman point me to any Labour Government in the past who left office with unemployment lower than it was when they entered office?
Mr Brown: I will be honest with hon. Gentleman and say that I cannot give him that figure. However, I think he is trying to forget that there were almost 3 million people who were unemployed under the previous Conservative Government. We worked massively hard to reduce the levels of unemployment in this country, so much so that, as a Government, we were talking about the potential of full employment in this country, which is a long way away from where we are today.