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Earl Russell: My Lords, I am most grateful to the noble Lord for giving way; but may I ask him not to engage us just yet in arguments about how this country has been structured for several hundred years? He will have plenty of time to do that later.

Lord Kingsland: My Lords, I certainly would not wish to offend the noble Earl although I have clearly done so, and I apologise to him. However, where constitutional issues are concerned, I believe that we should be slow to make change. After all, our constitutional history is one of continuity, not of sudden breaks. We would do well to remember that because it has served us well.

I listened with great interest to noble Lords who raised the question of Wales. One wonders whether the Welsh people ought also to have the option of having a similar kind of devolution to Scotland. It has been said by some noble Lords that they do not want it; but how do we know that they do not want it unless we ask them? Even if it turns out that the Welsh want a different form of devolution, is the form of devolution proposed workable? As I understand it, primary legislation will be made in the United Kingdom Parliament and

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subordinate legislation will be passed by the Welsh assembly. However, as the noble Baroness is well aware, primary legislation in this country is now made in inordinate detail. It is one of the weaknesses of our constitutional system. What will be left for the Welsh assembly to do? If that assembly is to have a meaningful role in making subordinate legislation, a completely different kind of statute law for Wales must be produced. Therefore, to legislate jointly for measures that incorporate both England and Wales will no longer be feasible if the Government are to honour their commitment to Wales. Much thought will also have to be given to that matter.

I hope that the noble Lord, Lord Winston, will forgive me if I do not deal with his remarks on health in great detail. He said that vertical and horizontal planning in the health service was of the greatest importance. He also spoke about CT scans, ultrasound and telepathology (if I pronounce them correctly). I am afraid that he is well above my cruising level. However, I wish him the greatest luck in convincing his own Government of the importance of those measures. The noble Lord, Lord Winston, accused the previous government of underspending on health. With great respect to the noble Lord, I believe that that is an unfair accusation having regard to the statistical record. Moreover, given the enormous leaps in medical science, with which he is much more familiar than I, he will be aware that it is a demand that will never be completely satisfied. But we on these Benches shall be watching very closely the level of expenditure on the health service. After all, during the election campaign we were accused of breaking our promise in 1992. We shall be looking very carefully at what the Government do in this area to ensure that their promises to the electorate in 1997 are not broken.

I also listened with great interest to the remarks of the noble Lord, Lord Owen, about Europe. I should like to make two comments. I deal first with proportional representation. Whether or not proportional representation comes about in the 1999 European parliamentary elections, I hope that it will not be based on the regional list. In another world I had some experience of the regional list. I do not regard it as a satisfactory method of electing members to the Parliament. The great difficulty is that no individual elected on the list has responsibility for a specific piece of territory.

My experience is that those members who are elected on the list spend the next five years making sure that they retain the same favourable position on the list that they had before. They do that, not by spending time in the Parliament or by helping their constituents, but by spending most of their time dining out their party leaders to make sure that they are given preferential treatment. Whatever else we do in the European elections of 1999, I urge that we do not choose the regional list system. It may be that some version of the German system which mixes single constituencies with added members is feasible. I do not know. I much prefer the system that we have already.

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My second observation is about the pillar system of which he spoke. I entirely concur. The pillar system has proved to be a good innovation and it will endure. One area about which I am less happy is the democratic control of pillar two and pillar three, because there is a tendency of Government Ministers to account neither to the European institutions nor to the national institutions. As a result, areas which are crucial to individual rights like asylum, refugee status, immigration and all of those which touch on foreign affairs and the individual, are almost unaccounted for. Given the fact that the pillar system is likely to endure, we must find new ways of making intergovernmentalism work democratically.

My Lords, I have now been speaking for 18 minutes; time has marched on, and I will take my place on the Opposition Front Bench. I reiterate that we shall stand by the Salisbury convention and its principles, but we shall amend in this House with as much vigour as we can muster.

10.20 p.m.

The Parliamentary Under-Secretary of State, Department of Social Security (Baroness Hollis of Heigham): My Lords, your Lordships will not misunderstand me when I say that it gives me particular pleasure to reply to this debate and to thank noble Lords for their good wishes to my noble friend the Lord Chancellor, to the Front Bench team and to myself. I would like on our behalf to thank all those who have taken part in an interesting, rich and vigorous debate. In particular, I welcome the noble Lord, Lord Kingsland, and congratulate him on a most elegant debut from the Opposition Front Bench. I also thank the noble Lord, Lord Rodgers, for his welcome of the gracious Speech on behalf of the Liberal Democrats.

Your Lordships will understand if I start by talking about health and social security before attempting to reply to other concerns. Before doing so, I pay a very real and heartfelt tribute to my predecessor Lord Mackay of Ardbrecknish--always well informed, always quick thinking and unfailingly good humoured. As for the third party to our social security debates, Lord Russell, he is famed equally for his erudition and for his 16th century anecdotes. We have had one tonight, but perhaps less of the other. The thought that he is no longer alongside but opposite me on your Lordships' Benches fills me with appropriate trepidation. I know, however, that, like me, he is seeking to renew the welfare state so that it springs those who can and should enter the labour market back into the world of work, but also treats with decency and respect those who, for whatever reason, must remain on benefit.

The Labour Government have inherited a divided Britain. Since 1979 the divide between rich and poor has not only widened in income but also in life chances and in opportunities. We are today a more unequal society than any country in the OECD. To be poor in Britain today is not only to be work-poor and therefore cash-poor but also to be exposed to poorer health, inadequate housing, sub-standard schools, unsafe streets and a squalid environment. To be poor is to be excluded not only from the graces but also from the very decencies of life.

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Looking at this landscape during the war, Beveridge said, "Want, squalor, disease, ignorance and idleness are common enemies of us all--not enemies with which we may individually make a separate peace, escaping oneself to personal prosperity while leaving our fellows in their clutches. That is the meaning of social conscience: that one should refuse to make a separate peace with social evil". We are one nation. The Labour Government of 1945 swept to power because ordinary, decent people who remembered the 1930s said, "Never again. We are one nation." They built a welfare state and founded a National Health Service. Indeed, some of your Lordships in this House were in that 1945 Parliament and helped to build that new society. Fifty years later we face no less a challenge: to renew our welfare state and to rebuild our health service in a society where we live longer, where women work, where family structures have changed, where rights and responsibilities must again be reconnected; but together we can do it, and we will.

Reform of the welfare state is at the heart of the Government's agenda. The past decade has seen the welfare bill rising and rising from £50 billion in 1979, adjusted for inflation, to over £92 billion in 1997. Whereas social security spending took £1 in every £5 of government spending in 1979, it now takes £1 in every £3. Social security expenditure has nearly doubled in real terms, yet it has not made the poorest better off. It might be more defensible if it had. Instead, we know that they are poorer then ever they were. How come?

I accept that some of the growth in social security has come from the growing number of elderly people in our society who claim benefits to which they are rightly entitled. They are valued members of our society. However, the ratio of our elderly to our working-age population has now steadied, ahead of most of Europe.

The unacceptable and deeply worrying growth in our welfare budget has occurred for a very different reason. It is because welfare money has been spent in the wrong way on the wrong things. It has subsidised our economic and social failure rather than built economic and social opportunity. Spending on "failure" benefits, which are unemployment driven, has tripled in real terms--from £10 billion in 1979 to over £30 billion today. We are all paying the price: our taxes are the equivalent of an extra 11p on the basic rate of income tax since 1979 to subsidise failure.

The real price of this failure, however, is born not just by the taxpayer, not even especially by the taxpayer, but above all by those lingering on benefit. We have trapped too many people, especially young people, lone parents, and the long-term unemployed into an unwilling dependence on benefit when they would much rather be in work and independent. For we know, and they know, that the only path out of poverty is work. The Government's welfare bill has too often funded failure. We can see the evidence of that failure around us.

One of the fastest rising sectors of welfare expenditure has been in-work benefits. The result is a welfare system that subsidises the employer who pays low wages rather than the unemployed. It is ironic that

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the only thing the Conservative Government nationalised was the employers' wage bill. We all own a bit of that. Of course there is a role for in-work benefits for those marginal to the labour market--the long-term unemployed, or disabled, or those with many dependants. The basic schemes will continue under this Government. But they will be underpinned by the floor of a minimum wage. In that way, in-work benefits will meet the real need of the claimants rather than subsidising the exploitative employer. Those who do not now pay a living wage will have in future to pay a minimum wage.

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