Lord Dubs
That this House takes note of inequalities in income, wealth and living standards in the United Kingdom since the 2008 financial crisis; and further takes note of the work of the Institute for Fiscal Studies Deaton Review, Inequalities in the 21st Century, and the report of the United Nation’s Special Rapporteur on extreme poverty and human rights on his visit to the United Kingdom, published on 22 May.
Lord Dubs (Lab)
My Lords, it is a privilege to open this debate, and I am grateful to the many Members of the House who are down to take part in it. As I prepared for the debate, I was almost overwhelmed by the mass of statistics on the subject of the level of inequality and poverty in the UK, but the one thing that all the figures show is that that level is far too high. There can be no dispute about that. There may be an argument as to whether things have got worse over the past two or three years. That is not necessarily my contention, but clearly the austerity policies introduced in 2010 have had a damaging effect on the people affected by poverty. I believe that the evidence shows that there is a great deal of inequality in the country, and this is having a damaging effect on many people here.
The question for Ministers and other politicians, therefore, is whether this is the price we have to pay for our present overall relatively high living standards. I am totally opposed to that: I do not believe it is a price we have to pay or a price we should pay, and we should reject any policies that continue to further those levels of inequality and poverty.
Many people are simply not comfortable living in a country where the differences between the rich and the majority are so wide. It gives me an uncomfortable feeling when I see poor people in the streets, when I am aware of the figures and the poverty. Frankly, I would not want to be the Minister answering this debate. It is a really tough call for her, but I suppose that goes with the job description. It is not as if the subject has not been debated frequently over many years. It is still vivid in my memory from when I was in the House of Commons seeing Margaret Thatcher as Prime Minister asserting, to quote her for memory, that a rising tide lifts all boats. She made a hand gesture to show that if the tide lifted the higher boats, the lower ones would also rise. I was amazed to hear that at the time: it was not true then and it has not been true since. The problem is that a rising tide has lifted some boats but not those at the bottom.
I think it is generally understood that, second only to the United States, the UK has the highest level of inequality of any advanced democracy. Without a redistributive tax and welfare system the situation would be much worse, so it is rather surprising that a contender for the Conservative leadership contest has committed to reducing tax on people earning more than £50,000 a year. I find that deeply shocking. They are hardly the most impoverished group in society, and I hope that the Minister will reject the proposal on the Government’s behalf before there are any changes in the leadership at the end of July.
A great deal of the evidence for this debate comes from the recently published introduction to the Deaton review, Inequalities in the Twenty-first Century. That includes some close statistics on the problem and will seek to tackle the issues over a further five-year study, so there will be more information to come. Launching the review, Sir Angus Deaton asked a key question:
“There’s a real question about whether democratic capitalism is working, when it’s only working for part of the population”.
That is the quote which underlies this debate. If people say that poverty and inequality is a price worth paying, some of us will reject that totally.
There has been an even more critical United Nations report on the impact of austerity on human rights in the UK. It predicts that close to 40% of children will be living in poverty two years from now. I know that the Government have vehemently rejected that report, but it has quite a lot of evidence to sustain it. Another report from a very authoritative source confirms the high levels of child poverty. Professor Russell Viner, president of the Royal College of Paediatrics and Child Health, a very reputable body indeed, said:
“The impact of poverty on children can be devastating—not only to their physical health in terms of increased risk of malnutrition, respiratory problems from poor housing and infection—but also their mental health”.
Those impacts are stark. Children living in poverty are more likely to die before the age of one, become overweight, have tooth decay or die in an accident. They are more likely to have poor cognitive, social and behavioural outcomes, and are at greater risk of developing long-term conditions, particularly respiratory conditions, type 2 diabetes, cardiovascular disease and mental health problems. That is a pretty tough indictment of policies that result in child poverty.
In its recently published report, The State of Child Health: Two Years On, the Royal College of Paediatrics and Child Health highlighted its grave concern that no progress has been made towards reducing child poverty and inequality in the UK since the original report, The State of Child Health, was published in 2017. The president of the college commented:
“This latest research serves to highlight the importance of tackling poverty if the relatively poor outcomes for child health in the UK are to improve. That means measures such as binding national targets to reduce child poverty backed by a national child poverty strategy, the reversal of cuts to universal credit and the reversal of public health cuts”.
Those are policy points. That is a whole policy agenda coming from an extremely reputable source; I will come on to more ideas about that later.
Meanwhile, millions of people in jobs depend on various forms of charity. We know that there has been an enormous rise in the use of food banks all over the country. Of course, all of us, not only those who arrive here via Westminster Tube station, see rough sleepers in our streets. I always feel deeply shocked and uncomfortable when I see so many people sleeping on our streets and using food banks, and when I see buckets in supermarkets asking people to donate food for the poor.
We have seen a runaway rise in incomes, with those in the richest households almost tripling their salaries in the past four decades. In 2017, pay among FTSE 100 CEOs was, on average, 145 times that of the average worker, compared with just 47 times in 1998. Frankly, 47 times is already a bit excessive, but I do not know how businesses operate when the people at the bottom of the scale realise that the pay of the CEO coming in—although they probably never see him or her; it is usually a him, though—is vast compared with what they get. In addition, real wages are still below the pre-crisis level. In the financial year ending 2018, the wealthiest fifth of individuals in the UK saw a 4.7% increase in their disposable income, compared with a 1.6% decline for the poorest fifth. That is why I challenge what Margaret Thatcher said many years ago. It had no truth then and has no truth today.
Let me refer to a specific group of people, with whom I have been fairly closely associated, who are doing things for virtually no money: the people volunteering for NGOs working with refugees, especially child refugees, in northern France and Greece, particularly the Greek islands. I have had the privilege of meeting these people. While the newspapers talk about bankers fighting for an extra million or two in their bonus, these people are working for pretty much nothing. They give a year or two of their lives to help and support some of the most vulnerable child refugees. We as a country should be proud that we have such wonderful young people—they are not exclusively from this country, but many of them are British—willing to serve their fellow human beings. Of course, many other people volunteer in our society and do things for their fellow human beings despite the backdrop of the large amounts of money that some people are getting.
Of course, there are other income inequalities, impacting variously on women, the young—with a knock-on effect on their life chances within the housing market—older people, the black and ethnic-minority population, and those with disabilities, with the latter perhaps suffering more than most. We hear a great deal about the gender pay gap, for example.
I want to repeat a proposal that I have made before, which I believe would help significantly: that all tax returns should be in the public domain. Therefore, we would know about incomes and we would be able to see them. This works well in some Scandinavian countries. We would be able to see what people are earning and judge the extent of pay discrimination as it affects women, older people, the black and ethnic-minority population and disability. I should make it clear that when I previously made this proposal, the Government’s response was quite unenthusiastic. Nevertheless, I still believe that the day will come when these things will be in the public domain and we shall all know more. It will be better for the whole of society. After all, people know what others earn in the Civil Service and indeed there are various areas of our country where we know what the incomes are and that does not have a damaging effect. Why not put these things into the public domain?
I turn now to housing. It is quite shocking that there are virtually no opportunities for young people to enter the housing market, whether to buy or to rent. Older people managed to buy their homes many years ago and are sitting pretty on houses that have greatly increased in value, while on the other hand there are still too many pensioners who are in dire poverty. However, it seems that we are giving young people very little chance in life. Their incomes are too low to enter the housing market—not just in London and the south-east, although we are particularly aware of this issue locally.
Inequality is not only about income. As the Deaton report makes clear, there is a divergence in life expectancy between deprived and affluent areas in our country and a growing burden of poor mental health among disadvantaged groups. There is also a geographical divergence between our successful cities and our former industrial towns and coastal areas, a problem which successive Governments have not done enough to tackle.
Danny Dorling, a professor of geography at the University of Oxford, has linked the fall in life expectancy to government policy:
“‘Something began having an influence shortly after 2010’, he said. ‘Older age mortality rose as services for the elderly were massively cut, social services in particular that were aimed to help those living on their own’”.
Let us take one topical example. A male child born in Kensington in Liverpool can now expect to live 18 years less than a child born in Kensington and Chelsea in London. That is a shocking difference and it is not acceptable. How can we live in a country where this goes on?
I know that some people on the other side of the Chamber do not like trade unions, but when we are talking about achieving more equality, trade unions have a significant part to play. The Deaton report said that stronger trade unions can tip power towards employees. In the Nordic countries, between 52% and 86% of all employees belong to a trade union compared to the UK figure of a little over 25%. Having workers on company boards, which is mandatory in Germany, can have a similar effect, curbing inequalities within firms, if not between firms. If workers are given a say in how companies are run, they might help resist downward pressure on wages, press for better working conditions and rein in executive pay at the top.
Inequality cannot be reduced to one dimension, stemming as it does from many forms of privilege and disadvantage. The real question is whether the immorality of increased inequalities in our country is sustainable or whether they should be condemned. I am very much of the latter view, and it is good to see my party bringing forward imaginative and costed solutions which I shall mention very briefly. They include a national transformation fund aimed at rebalancing the economy and a national investment bank with regional arms. I also welcome plans for tackling tax avoidance and evasion, increased corporation tax and a hike in the living wage, with the latter including a more equitable system that benefits younger workers.
As it stands, we on this side of the House are not yet the party of government and a general election may happen later this year, but it could be as far off as the early summer of 2022. I hope, therefore, that the Minister responding to this debate will give some indication of what her party plans to do to reverse the current depressing trends. They are a challenge to us all and to the Government. We have to tackle these problems and I hope that we will do it quickly.
Baroness Goldie (Con)
My Lords, we are very tight for time in this important debate, so when the clock shows five minutes I expect the Member to sit down, otherwise I may have to stand up.
Lord Wallace of Saltire (LD)
My Lords, I half agree with the Deaton review’s opening declaration that:
“Discussion of inequalities increasingly defines economic and political debate”.
That ought to be one of the central issues of British politics rather than the endless preoccupation with Brexit, sovereignty and making Britain great again, let alone cutting taxes for the rich and cutting services and benefits for the poor, as Boris Johnson is proposing to the apparent delight of Conservative Party members. I noted the article in the Telegraph last week by Daniel Hannan MEP, one of the Conservative Party’s leading ideologues. It dismissed the idea of poverty in Britain as being in reality about only inequality, and furthermore argued that inequality is not rising very much and, in any case, does not matter.
Successive analysts of open and democratic societies have argued for centuries that too great a gap between the rich and the poor is incompatible with a peaceful and mutually tolerant national community. The whole idea of a democratic national community requires a shared sense of commitment; a social contract shared by all citizens and between citizens and the state. Too wide a gap between the privileged and the underprivileged, between the very rich and the very poor, undermines this common citizenship. Liberals in the late 19th century and early 20th century invested public finances in state education, pensions and welfare in order to bring the poorest Britons into our national community.
The wildest Chicago School economists have denied the necessity of concessions to democracy in their pursuit of the free market, as we saw in their support for Pinochet’s economic experiments and political repression in Chile. Illiberal democracy offers citizens grievances against foreigners and myths about national history as a distraction, while oligarchs and billionaires use their money to buy influence and distort the political debate. We see illiberal democracy, or populism, played out by rich and privileged men pretending to be men of the people, spreading across the democratic world and now across the Conservative Party in Britain.
I regret that the sometimes intemperate language of Philip Alston’s UN human rights report has allowed the UK Government to dismiss the argument that he makes. It would have been more powerful as a restrained analysis than as the case for the prosecution he has made it. The detailed studies on which it is based, from universities, reputable think tanks and government agencies, are powerful enough on their own. Like the Deaton review, it emphasises the multiple dimensions of poverty and inequality, and the interaction of disadvantages in child care and early years support, education, housing, access to jobs and public transport with low wages and benefits. I welcome the accumulation of data-based studies, including those from the Resolution Foundation and the Social Metrics Commission.
I see inequality and deprivation on the ground in Bradford and West Yorkshire. The most deprived wards in Bradford, whether predominantly ethnic white or Asian, also have the highest rates of crime and violence, the largest number of children growing up in single-parent households, the least access to playing fields and open spaces, and the lowest ranking schools. Last summer, I was driven round a former council estate by one of our local councillors. We saw no representatives of authority—police numbers had been cut and community police teams disbanded—and we saw social housing that had been sold off now rented out for multiple occupancy by private landlords. We saw children who should have been at school playing in the street, and teenagers who looked as if they were dealing drugs. The prospects for social cohesion, let alone social mobility, in such circumstances are dire.
We should also note the regional dimension of inequality in England and welcome the first report of the UK2070 Commission, chaired by the noble Lord, Lord Kerslake. It notes,
“the historic concentration of public investment in London and the wider south-east”,
under successive Governments—Labour, coalition and Conservative—and its link to the concentration of political power in London.
Let us admit that all parties have contributed, over two decades and more, to the problems we now face. However, the Conservative’s determination to shrink public spending to 35% of national income, against the 40% which was the agreed coalition target, is making economic inequality and social alienation much worse. We could do a great deal to solve such problems with 3% to 5% of our national income, instead of demanding more and more tax cuts for those already well off.
I heard a member of the Cabinet yesterday refer to our “broken social contract”. He is right to use such stark language. If not fixed, a broken social contract will threaten to break our liberal and democratic national community.
Baroness Stroud (Con)
My Lords, I thank my friend, the noble Lord, Lord Dubs, for tabling this important debate. I have huge respect for his work, particularly in the area of refugees.
Whenever the subjects of poverty and inequality are debated in this House, emotions rightly run high. It is for this reason that I founded the Social Metrics Commission—to create robust measurements of poverty to help inform policymakers and provide clear and accurate metrics that all of us, regardless of our political persuasion, can use with confidence to drive improved outcomes for those in poverty. I wanted to bring to an end the battle that has characterised the measurement of poverty and move the debate on to what can be done. I was therefore delighted when the UN special rapporteur chose to use the Social Metrics Commission measure in his final report, and I thank Philip Alston for his recommendation that the metrics be adopted as the UK’s official measure of poverty. Further, I thank the Government for their commitment to taking these new measures forward as experimental stats and look forward to working with them towards them becoming official statistics.
My first point in response to the report is that we need to work together for the sake of building an effective strategy that will change lives. If the work of the Social Metrics Commission taught commissioners anything, it was to believe the best of one another. We had a guiding principle that, wherever we came from politically, we would believe that we all cared about the outcomes for those in poverty. So, while I am delighted that the UN special rapporteur chose to use the data of the Social Metrics Commission in his report, the tone and accuracy of the report does not match the consensus and accuracy that underpins all that the commission is trying to achieve. If we are to make real progress, we need to believe that we are all committed to the task ahead and that we all want to see that progress.
The second lesson of the commission was to be really careful about what the data is actually saying. The argument that poverty has dramatically increased since the financial crisis cannot be argued from the statistics the UN special rapporteur has chosen to use. It is incorrect to argue from the SMC data that the number of people in poverty has risen since 2008. Despite headlines, in reality the poverty level today is broadly similar to what it was prior to the financial crisis and before austerity policies. What is more, where the HBAI measure showed poverty falling throughout the financial crisis, which always felt counterintuitive, and rising since, the SMC shows that the rate of poverty rose, as one would expect, over the financial crisis, and has remained stable at its pre-financial crisis level. If we want to focus on the real tragedy of the past 20 years, it is that poverty levels have largely been stubbornly consistent, standing between 21% and 24% throughout this period. In fact, the SMC report shows that since 2001, under successive Governments —Labour, the Conservative/Lib Dem coalition and Conservative—while the composition of who is poor may have changed, the number of people in poverty has remained tragically consistent. It is too easy for us in this Chamber and in the other place in debate to say that 200,000 people have moved from one side of the poverty line to the other. However, there are 7.7 million people in persistent poverty who have been so generationally. If we are honest, none of us has really seen the sort of breakthrough here that we long for, and we cannot allow this to be the reality of this generation.
The good news that could have been highlighted is that there are fewer pensioners living in poverty than previously thought. This is a tribute to the hard work done to improve the lives of pensioners over the past two decades by Governments of all colours and shows that concerted policy action can really make a difference. The real value for the UN rapporteur in using the SMC measure would have been to better identify who is in poverty, with a full measurement framework that captures depth, persistence and the lived experience. Much of the inequality that the IFS will focus on in its five-year review is in this space, such as the inequality of mental health outcomes, education outcomes and employment opportunities for those in poverty compared with those who are not, among others. These are among the lived-experience indicators of the SMC measure, and the Deaton review is right to focus here. The UN rapporteur had an opportunity to highlight what has been left out of historical approaches to poverty measurement, particularly disability and full- time work.
Lord Browne of Ladyton (Lab)
My Lords, my noble friend Lord Dubs said in his opening remarks that it was a privilege to open this debate; I am sure the House will agree that it is always a privilege to listen to him. I pay tribute to him for securing this important debate and for the way in which he introduced it.
I intend to address my remarks to the issue of inequality. The levels of inequality in this country are shameful. The detailed evidence of that is to be found not only in the Deaton review and the research that underpins the special rapporteur’s report but, interestingly, in the speech made by the Prime Minister when she took over at No. 10 on 13 July 2016. People can read the detail for themselves, but she made a speech of about 650 words, of which she devoted more than half to describing the challenges she was inheriting from her predecessor, David Cameron; she described him as a “great modern Prime Minister”, whose “true legacy” was “about social justice”. In contradiction to that description, the country she described in half of her speech was one of burning injustices and inequality, and she restricted herself then to only nine examples; there are many more. I am certain that other noble Lords will deal—and have dealt to a degree—with the evidence in detail. But, in my limited time, I intend to assume that their contributions will comprehensively prove the case for urgent action, as the previous speaker did.
To add to our shame, we know how to deal with these inequalities. I have picked a few solutions at random. On life expectancy, where the disparity between rich and poor is growing, access to healthcare services and education is crucial. Spending on public health has fallen since 2016 and education spending is flatlining. Deprivation is the driver of inequality more broadly, but benefit cuts have continued to be rolled out, and food bank use and homelessness have continued to rise since the summer of 2016. We now have an audit of race disparity in the criminal justice system but, as the deputy director of the race equality think tank the Runnymede Trust said:
“Highlighting the gaps doesn’t address the gaps”.
We need action, and we have known that we need action for a long time. Social mobility has been virtually stagnant for four years and requires the implementation of at least some of the recommendations of the Social Mobility Commission. On the gender pay gap, women on average still earn 18% less than men; progress is far too slow.
In 2010, we had in place much of the necessary infrastructure to support the programmes needed to address many of these challenges. These public programmes are being pared down, bit by bit. Institutions that protected vulnerable people are being closed, social care services are at breaking point and local government and devolved institutions are stretched far too thinly as more and more responsibility for this is given to them by central government. The social safety net that once provided a guarantee of security against the most extreme level of poverty and deprivation has systematically been eroded to focus austerity on the poorest while giving tax cuts to the privileged few.
In responding to this debate, I hope, as my noble friend Lord Dubs does, that the Minister will engage with these and other solutions, and confirm that a Government still led by a Prime Minister who promised to make a country that works,
“not for a privileged few, but for every one of us”,
will increase investment in them. Why is it that the Chancellor’s £26 billion reserve, taken from the poor by austerity, is being referred to as a “Brexit war chest”? I have to say to the Minister that I fear disappointment, but I caution her to avoid the responses her colleagues have deployed against the increasing evidence of inequality. She should avoid the Chancellor’s inclination to deny the existence of the scale of poverty and inequality; apparently, he does not see it, yet, as my noble friend and the noble Lord, Lord Wallace of Saltaire, pointed out, the evidence on the streets of the communities that we live in is there for us all to see.
Secondly, I welcome the increase in employment, but it is not a panacea for poverty. A shocking 2.8 million people are in poverty who are in families where all the adults are working, and one in six food bank users is working. In particular, will the Minister avoid the response deployed by the Prime Minister at PMQs on 22 May? When faced with the evidence of inequality set against the obscenity that the wealth of the 1,000 richest people had increased by £50 billion in the preceding 12 months, she stated that in every year under the Conservatives the richest had paid more tax. Does she not realise that this response provides evidence of growing inequality, not the opposite? Is she proud of the fact that the richest have increasingly monopolised both the wealth and the income of this country?
Lord Farmer (Con)
My Lords, I too congratulate the noble Lord, Lord Dubs, on securing this important debate, which gives us the opportunity to welcome among other things the Deaton review of inequalities.
Sir Angus promises that he and his expert panel will think about inequalities broadly, determine the right mix of policies to tackle them and not be confined to traditional economic measures of income and wealth. Unusually for this country, the review will also explore how family structures drive inequalities. I suspect that this is due largely to the fact that Deaton’s academic career was forged in the United States, where academics and respected commentators are able to study and discuss family structure in a way that problematises family breakdown instead of simply accepting it.
Rightly, the IFS introduction to the review describes family as one of the most important aspects of life. Yet the UK Government and academic research community seem remarkably unconcerned that about one in six children—a significant proportion—is born into a household with no father present. This is a considerably higher proportion than in most of Europe and is heavily concentrated among those with less income and education. At least four in five of these children will live in a poor household while they are very young. Almost one-third of their mothers have no educational qualifications.
The Deaton review has promised to determine how living in fractured family settings affects economic, social, emotional and health outcomes for the children and adults involved, and the long-term ramifications. The panel has much existing work to draw from: since 2006 the Centre for Social Justice has been calling out the relationship between family breakdown and poverty and has had the courage to say that we can and must do something to try to prevent family breakdown.
The centre’s most recent research, which controlled for factors such as socioeconomic grade and ethnicity, found that those who experience family breakdown in their childhood or youth are more than twice as likely to experience homelessness, to be in trouble with the police or to spend time in prison. They are almost twice as likely to experience educational underachievement and not raise their own children with the other parent—in other words, repeating the cycle that their own parents went through. They are close to twice as likely to experience alcoholism, teen pregnancy and mental health issues, and 1.6 times as likely to be in debt and on benefits.
This is not rocket science. Indeed, it is blatantly obvious to more than 80% of British adults, who say that stronger families are important in addressing Britain’s social problems—as do an almost identical percentage of divorced people. Does the Minister agree that politicians do not need an unblemished track record in their own family matters to recognise this urgent issue and to do something about it? I am not, of course, thinking about anyone in particular who has—shall we say?—a particularly colourful family life.
Deaton and his team have promised to look at whether growing rates of parental separation and single parenthood are due to changes in either cultural or social norms or to a cluster of disadvantages such as a decline in good working-class jobs and secure incomes—or to some combination of the two. His open-mindedness in the area of underlying causes is to be applauded, as is his willingness to open up the subject of family structure to much-needed scrutiny in the UK policy and research context. I trust that Professor Deaton will follow through and give this neglected driver of inequality the urgent attention it deserves.
Baroness Thomas of Winchester (LD)
My Lords, the noble Lord, Lord Dubs, has helpfully defined what particular inequalities he is focusing on: income, wealth and living standards. It is well known that families with a disabled person are among the poorest in the UK. I am glad that the Government have now accepted the Social Metrics Commission’s definition, with its figure of 6.9 million people who are in families where a person has a disability. That person is more likely to be unemployed or in insecure employment and to have been hardest hit by austerity measures. The Equality and Human Rights Commission published a report last year which criticised how the benefits system operates for disabled people, particularly vulnerable claimants who have experienced difficulties with UC, PIP assessments and the benefits sanctions regime, which, it says, have had no tangible positive effect on moving disabled people closer to paid work.
As we have heard, the Government have dismissed the highly critical report of the UN special rapporteur by saying, roughly, “How dare he?” Yet disabled people told him repeatedly about benefit assessments that were,
“superficial, dismissive, and contradicted the advice of their doctor”.
The report goes on to say, tellingly:
“Those with disabilities are also highly vulnerable to cuts in local government services, particularly within social care, which has left them shouldering more of the costs of their care. This has driven many families with a person with a disability to breaking point”.
The Deaton report must surely look at problems faced by disabled people and their families, because the figures are stark. The charity Scope says that disabled people face extra costs of between £583 and £1,000 a month. A particularly large amount goes on energy costs.
In the limited time available, I want to turn to what the Government could do to help disabled people in the benefits system, which is an absolute lifeline for them. First, the implementation of universal credit is sadly and unnecessarily turning into a nightmare for many people. There are reports from all over the country of how it is not helping vulnerable claimants. Even in relatively prosperous places such as Winchester, I hear from Citizens Advice about a lack of care and flexibility in how such claimants are dealt with. This apparent heartlessness would not be imposed by the staff unless it was built into the whole system.
MPs’ postbags and CAB caseloads are full most of all with problems with PIP. Here is a typical example. A constituent of my MP colleague has heavy callipers on her legs due to a congenital hip condition and has had a Motability car for some years. However, on reassessment, she was told that, as she is able to drive, she must be able to walk, so she was refused enough points for the car. When the MP intervened, the car was restored, but just for two years,
“in case your legs get better”.
This level of ignorance is unforgivable, but it is not unique.
Citizens Advice in Mole Valley, Surrey, is particularly concerned about mandatory reconsideration, meaning that decision-makers have to examine a claim before a possible appeal. This is still far too much of a rubber-stamping exercise. At the end of January 2019, 81 % of new claims and 76% of reassessment decisions reviewed at MR were overturned on appeal. Clearly, therefore, it is not working. It causes delays, stress to claimants and is confusing and poorly understood. Some 73% of cases are overturned by tribunals. We clearly need an assessment of the cumulative impact of welfare policies on disabled people and a levelling of the playing field.
Lord Ravensdale (CB) (Maiden Speech)
My Lords, it is a great honour to address your Lordships’ House for the first time, after some weeks of observing and learning. In one of my first, very hesitant forays into the Chamber, I was told by one of the doorkeepers, “You are a Peer of the realm, my Lord. You should bowl in there like you own the place”. I hope I am now entering somewhat more confidently—if not quite “bowling in” yet—but what hits me still as I enter this amazing place are the echoes of history and the many great things that have been achieved and accomplished within these walls.
I thank noble Lords from across the House and all the officials and staff for the very warm welcome that I have received. In particular, I thank the noble Earl, Lord Cork and Orrery, and the noble Lord, Lord Vaux of Harrowden, for all the help that they have given me in settling into the House. It has been a rather daunting but incredible experience.
I will tell noble Lords a bit about myself. I am a chartered engineer; I work for an engineering consultancy firm in Derby with a particular focus on nuclear energy. I am a project director and technical lead, leading teams to deliver aspects of the nuclear steam-raising plant for the Royal Navy fleet and deterrent submarines. I am very proud to work on these critical national programmes. I look forward to bringing my experience in engineering, defence and energy to the work of the House.
Turning to the subject before us, I thank the noble Lord, Lord Dubs, for initiating this vital debate on a matter that I am passionate about. Arguably, there is no more pressing issue in our society today than the inequalities that exist and the means of addressing them. When we look at all the upheavals in western society over the past decade—Brexit, the gilet jaunes, Trump—all of these can be traced back to the tear that is emerging in our societies between the haves and the have-nots. In the spirit of maiden speeches remaining relatively uncontroversial, I will keep my remarks much more general and measured than they might otherwise have been and avoid, I hope, provoking too much outrage.
Today, I will focus specifically on the effects that globalisation has had on inequality in the UK and the regions. In this, we must not lose sight of one central fact: when viewed at a global level, income inequality has continually reduced over the past three decades, principally brought about by the lifting of millions—if not billions—out of poverty in India and China. More than anything else, this shows the immense power of capitalism and globalisation to transform lives for the better and transform the world for the better.
There are, however, dark sides to this. One is the effect that globalisation has had on many workers in the West, including in many sectors of the UK. Too often, globalisation is presented by politicians and economists as an unalloyed good, when in fact it has caused huge disruption, many job losses and wage reductions in many sectors of western economies, including that of the UK. It is those at the lower end of the income scale who have suffered most from this. What, therefore, should be done? We should not abandon free trade, raise tariff barriers or protect failing national industries. What we really need is a globalisation that works for all in the economy. I will raise several points here.
First, public discussion must be much more open, as there are costs as well as benefits to globalisation. Secondly, training and reskilling the workforce is going to become ever more important as changing global markets continue to affect old industries. Thirdly, there needs to be much more of a focus on areas outside the metropolis. The Deaton report makes it clear that London has experienced much higher growth than other regions—as mentioned by the noble Lord, Lord Wallace—such as the Midlands, where I am from, and the north. This is partly due to the hollowing out of old industries. Much more must be done to encourage clusters of new industries to be set up outside the capital and to renew the infrastructure in those places. That is why initiatives such as the northern powerhouse and the Midlands engine are so important. They must get the focus they deserve.
I finish with a question for the Minister: can she assure us that renewed focus will be given to revitalising areas outside the capital and, importantly, that the Midlands will not be excluded from these initiatives? With interest rates at record lows, the Government should seize the opportunity.
The Earl of Listowel (CB)
My Lords, it is a signal honour to follow my noble friend Lord Ravensdale’s excellent maiden speech. He lives in the Midlands and his wife is a secondary school teacher in, I think, an inner-city school. He is an engineer and an expert in nuclear physics. His experience and expertise will clearly be invaluable to your Lordships’ House. I am sure your Lordships will join me in hoping that we might have many future occasions to hear him take part in our debates and discussions.
I also join in thanking the noble Lord, Lord Dubs, for calling this important and timely debate. I am reminded of the work that the Labour Government did in introducing Sure Start and Every Child Matters—very important measures to improve the life chances of our vulnerable children. The noble Lord referred to the Royal College of Paediatrics and Child Health’s briefing, which is very important. It highlights that two years ago the rates of child infant mortality began to rise in this country. For a second successive year, the rates of childhood mortality have been rising after 100 years of decline.
I will speak briefly about housing. I pay tribute to the Prime Minister for her statement of commitment to “just managing” families, particularly her bravery in speaking to her party about the need for social housing. I especially welcome the lifting of the restriction on local authorities borrowing to build social housing. Some 130,000 children in this country, many of them young children, are living with their parents in bed-and-breakfast and hostel accommodation, and in houses in multiple occupation, as has been described—the highest level since 2003. I hope that, whatever changes take place in the next months, the Prime Minister’s commitment to social housing will be carried through. I turn to the Government’s Back Benches for support in doing that.
On inequality, the royal college highlights that, compared with similar nations, we have higher rates of infant mortality, lower rates of breastfeeding and higher rates of child obesity. Information from the charity Best Beginnings highlights that if you are from a black or minority ethnic community you are 80% more likely to die in infancy than if you are not. Much of this, as the briefing highlights, arises from poverty.
I join in the call from the noble Lord, Lord Dubs, to think again about the cuts in welfare. I especially emphasise the introduction of the cuts to benefits for people who have more than two children. This results in a cut in their incomes for each additional child of I think £2,850 per year. This is most harmful. I cannot think of any other country that does this—maybe a few states in the United States do. This really needs to be rolled back.
I emphasise the need to care better for our caring professionals. As a parliamentary officer of the children’s group, I have seen that the cuts have resulted in the wholesale reduction of early intervention to support families. There are great initiatives such as the Government’s troubled families programme, but underlying all this are huge cuts to the early intervention that stops children and families falling into disrepair. Professionals—particularly social workers, but also those working in schools—are having to field families and children who are more and more troubled and disturbed.
We need to recommit, particularly to health visitors, a crucial group of professionals. I have visited with health visitors on several occasions over the last 20 years and have seen that they can get into houses when a child is very young, giving excellent advice to parents and helping those children and families get to children’s centres and other settings. However, one in four health visitors has been lost recently. In some areas, only 10% of health visitors can make their early visits at eight weeks. In others, that figure is 90%.
I visited a Leatherhead clinic recently. Speaking to health visitors, I hear the pressure they are under, but all professionals in this area need additional support. I ask the Minister if she can look at what can be done to support health visitors. I look forward to hearing from her; perhaps she might write to me on what will be done about this very important matter. I join in lamenting the situation we are currently in. It will require work from all sides to make good the harm that has come to our most vulnerable families in recent years.
Lord Hain (Lab)
My Lords, I strongly agree with the excellent points made by the noble Lord, Lord Ravensdale, on globalisation. I share his passion for engineering. In fact, I started studying engineering and then switched to political science and economics. It has been downhill for me ever since.
The report by the UN special rapporteur and the launch of the Deaton review should have been warning shots across the bow of the ship of state, demanding a radical change of course. The new annual report into living standards, poverty and inequality from the Institute for Fiscal Studies will, I am sure, be another volley in the same vein. However, so far, the only response from the Government has been to sound “steady as she goes” and plough on.
Ministers are in denial. They refuse to admit the stark reality of deprivation in Britain today, and they reject any responsibility for making it worse through their austerity policy. Two facts stand out: one charting the startling spread of dire need, the other showing how years of austerity have forced local authorities to take desperate measures to the detriment of their communities.
First, consider the number of food banks in the UK run by the Trussell Trust. There were 80 in 2011 and 400 in 2013. Today, there are more than 1,200—that is just those run by the Trussell Trust. Seven years ago, a third of a million people received at least three days’ emergency food from the Trussell Trust food banks. Last year, that figure reached a record level of 1.6 million. This is incontrovertible evidence of a land haunted by hunger, yet the Chancellor denies that vast numbers of people face dire poverty in Britain today. It is obvious that, sadly, he and his Cabinet colleagues have not got a clue about the misery experienced by millions of families and individuals, many of whom are in work.
My second fact speaks for itself. Since 2010, more than 700 council football pitches have been lost due to council funding being slashed. This is in addition to the sell-off of school playing fields. We keep hearing that exercise is the nearest thing to a magic bullet for promoting health and improved opportunity, but government cuts are undermining the very ground on which we stand, walk and run. In a sane world, Tory leadership candidates would now be unveiling plans for reducing poverty and inequality, but Brexit fever has them in its grasp, so poverty and inequality have played no part.
The Chancellor claims that the UK has started its journey out of austerity, but the fiscal squeeze that George Osborne used to boast about is set to continue remorselessly. The Office for Budget Responsibility has confirmed that the 10-year Tory budget cuts remain in place, a fiscal squeeze that will have taken over £150 billion of spending out of the economy in tax rises and public spending cuts by 2020. This squeeze has led the economy to grow more slowly than in the previous year for four consecutive years, with no improvement in prospect, entrenching massive inequality. The gap between rich and poor is now greater than ever before, in modern times at least.
To my astonishment, I recently read in the Times and the Financial Times that a Tory think tank called Onward had called for the next Tory leader to spend nearly £200 billion more over the next four years, by bringing national debt down more slowly. The author, Tory MP Neil O’Brien, a former adviser to George Osborne, said,
“it’s time to turn on all the taps and make sure that poorer families and poorer areas really feel the benefit of a growing economy”.
Those words deserve to be taken seriously but they are being lost in the Tory leadership contest, where everything, including poverty and inequality, plays second fiddle to Brexit or to unaffordable, opportunistic tax cuts for the well-off. Those will simply widen inequality, all the time deepening the Government’s scandalous indifference to the shocking crisis in elderly care and affordable housing.
Baroness Finn (Con)
My Lords, I congratulate the noble Lord, Lord Dubs, on securing this hugely important debate and for his commitment and hard work over very many years, especially on behalf of refugees. I also congratulate the noble Lord, Lord Ravensdale, on his excellent and insightful maiden speech.
This is an enormously broad debate and we have only a few minutes, so I will limit my remarks to the review that Sir Angus Deaton is undertaking for the IFS. This helpful and serious review will enable us to examine exactly where we face challenges of inequality and what might be done to ensure that everyone has the same opportunity. Inequality, perhaps even more than poverty, is a very politically charged topic. The idea of people being left behind—whether that is the poorest being left behind by the wealthy, the older generation left behind by the younger, women left behind men or people left behind due to a lack of education—is, understandably and rightly, of huge concern to us as a nation. The idea that inequality may be increasing, and that people may be slipping further and further behind, has rightly been the subject of debate in this place and further afield.
However, there are some facts within the Angus Deaton review that it is helpful to highlight in this debate. First, inequality as measured by the Gini coefficient has remained broadly unchanged since the early 1990s. Despite the conversations happening around inequality, in reality the Gini coefficient, which is most usually used to measure inequality, has remained broadly unchanged since the early 1990s. If we look at a 90:10 ratio, measuring the people at the top of the income field next to those at the bottom, inequality has actually fallen from the early 1990s. Household incomes are more evenly distributed across society than they were in the 1990s. Far from the story of dramatic increases, inequality has actually stayed flat.
Secondly, according to the IFS, overall income inequality has remained stable, as incomes have been topped up by the Government. If we hone in on just incomes, the story is interesting. It is true that there has been a rise in incomes in the top households, with the average high-earning household earning around 40% more than it did in the 1990s, compared to stagnation in the lowest-earning households and smaller uplifts in the middle. The salaries of FTSE 100 CEOs are now a staggering 145 times the salary of an average worker, compared with 47 times higher in 1998. However, due to government policy, for example by expanding tax credits in the 1990s, overall income inequality has remained stable, as incomes have been topped up by the Government. After taxes and benefits, household incomes across the distribution have kept pace, and the poverty rate has remained stable since the late 1990s. However, we all know that money earned from work comes with dignity and security, and that people care about where that money comes from. This is why providing a true living wage to ensure that work really provides for families is key.
It is worth shining a light on other areas where inequality is playing a role in people’s lives. One such example is where those on lower incomes experience higher levels of family breakdown. Some 16% of children in the UK are born into households with no father; we know that this has significant impacts on poverty, with single families experiencing a much higher rate of poverty than two-parent households, and on the stability of children’s lives, which can trap people in a cycle of generational poverty. Policies which support families and ensure that this support is at the heart of government thinking will potentially make a huge difference to how the next generation grows up.
The Deaton review will provide a fascinating insight into the nature of inequality in today’s society. In terms of income inequality and the structure of society, the picture has remained very flat. However, it is vital to understand and unpack fully the social issues related to inequality and the lived experience of poverty and inequality. Only by doing so properly can we ensure policy interventions are able to target most effectively the places where they can make a real difference.
Baroness Young of Old Scone (Lab)
My Lords, I first congratulate the noble Lord, Lord Ravensdale, on his maiden speech. Although I cannot support the electoral method by which he has arrived with us in the Lords, I am pleased he is here, because he is young and we are all too old. We need to hear more younger voices in this House.
It is futile to argue about the conflicting statistics on whether inequality and poverty are getting worse or better. The reality is that more than 20% of people in this country suffer grinding poverty every day. They suffer anxiety about money and work, and endure real impacts on their health and that of their children. The burden falls most on children and the disabled, and those in regions where real unemployment is highest or the available jobs are low paid.
Most of us can have no concept of what it is to deal with daily grinding poverty. I lived and was brought up in a basic working-class Scottish rural household, and we did not have much money. But in my teens I read Walter Greenwood’s novel Love on the Dole, which absolutely makes real the degrading effects of poverty on individuals, families and communities. It had a profound impact on me, opening my eyes to the horrors of real poverty. So I was very pleased to see the debate in the name of my noble friend Lord Dubs, as it gives us the opportunity to explore something that, for the last couple of years, I simply could not understand: why, when we allegedly have the lowest levels of unemployment for 45 years, is the Trussell Trust reporting that food bank use has increased by 75% over the last five years, and has reached 1.6 million visits annually to March 2019? Other noble Lords have highlighted this. I could not get these conflicting statistics to compute.
The growth of food bank use in this country is frankly unacceptable for an advanced economy, but the employment statistics also need to be challenged. They ignore the 750,000 people on zero-hours contracts, which count as work but, in many cases, do not provide an adequate income and lack job security. They may suit some people, but only some. A Sheffield Hallam University report has also identified that an additional 1 million people do not appear in the unemployment figures, as they are hidden in the weakest economies or parked on incapacity benefits, and that the real rate of unemployment could be higher than at any time since 1997. Please can the Government stop telling us that the unemployment figures show us that we have never had it so good? Can we have more transparency about what actually constitutes employment and whether it really brings people out of poverty? The Resolution Foundation has reported that,
“the majority of people in poverty now live in a household in which someone works”.
Can the Minister assure us that the Government accept that poverty and inequality are not being adequately addressed? We do not want a response that is a war of competing statistics; we want a recognition that long-term poverty exists and needs tackling. Can the Minister assure us that benefit payments need to reflect the true cost of living and that the flaws in universal credit, such as the five-week wait, the two-child limit, the freeze on child payments and the advance loan system need to be fixed? Will the Minister assure us that work needs to be secure and genuinely reflect a living wage; that genuinely affordable housing—not the Mickey Mouse definition, which is far from affordable for people on low income—would help; and that the programme of work on regional disparities needs to be addressed with more vigour? I hope the Minister can satisfy the House on these issues.
I hope the Minister will also take this opportunity to dissociate herself from the appalling announcements by candidates for the Tory party leadership. I looked at the work of the Resolution Foundation—not exactly a left-wing, Trotskyist organisation—which has calculated that 83% of Boris’s tax reductions for people earning over £50,000 a year would accrue to the richest 10%, particularly to richer pensioners such as me. I do not want this tax cut; I want it to go to people living in genuine poverty. The announcements that are part of this campaign do not give confidence that the Conservative Party is intent on tackling the crying shame of poverty and inequality in this country. I hope the Minister can reverse that impression.
Lord Adonis (Lab)
My Lords, a bedrock of modern civic equalities is good-quality public services. The recent development doing most to sap the bonds that tie us together as a national community is the declining quality of our public services, which have been reducing in quality for the first time in a generation. Reversing that, in practical terms, service by service, should be the work of Ministers and Governments over the period ahead. I hope the Minister can give the House some practical, concrete instances of what the Government will do to turn back the impact of austerity policies since 2010. It is no good willing the ends without willing the means. Looked at public service by public service, there have been sustained and serious cuts in quality.
One thing I am proudest of the previous Labour Government for doing is substantially increasing spending on state education, including real-terms, year-on-year, per-pupil increases and a significant increase in school capital spending. Unless pupils have decent quality buildings to be educated in, they will not get a decent education. The noble Earl, Lord Listowel, rightly referred to Sure Start, nurseries and centres for under-fives. These have been systematically closed and cut back since 2010 and that simply needs to be reversed. It is not warm words that we need from Ministers, but concrete policies to bring back Sure Start centres, open under-fives centres that have been closed, reverse the cuts in the school capital programme and have year-on-year increases in per-student funding. Average fees at the school which the next Prime Minister may well come from are £39,000 a year, while we have seen year-on-year cuts in the real-terms funding for students attending state schools.
The figures speak for themselves. Total spending per pupil in English state schools, at this year’s prices, has been reduced by £500 in the last eight years from £6,378 to £5,872. The school capital programme, which 10 years ago was driving the Building Schools for the Future programme, aiming to rebuild or modernise every secondary school in the country and all primary schools that were short of places, has fallen from £8.8 billion in the last year of the Labour Government to £5.2 billion this year—a 41% drop. As the noble Earl said, the number of Sure Start centres has been dramatically slashed. Large parts of the country have no under-fives service whatever. One of the greatest cross-party achievements over the past 25 years was regarding services for under-fives as every bit as much a part of the education system as conventional schools.
Closures of GP surgeries are reaching an alarming level. The number of GPs per 100,000 people shrank last year, for the first time since the 1960s, after 40 years of sustained increases. Last year, 138 doctors’ surgeries closed—a record number in recent decades. The inequity in life chances and opportunities between students who go to university at the age of 18 and those who go into apprenticeships has been a long-running problem in our society. That, too, has got worse over the past 10 years. Funding for universities has been protected, albeit through increases in fees, while the number of apprenticeships has dramatically fallen. Last year, the number of apprenticeship starts, at 375,000, was 26% lower than three years before. Despite the introduction of an apprenticeship levy, the actual number of apprenticeships has fallen dramatically.
Public transport in local communities, so vital to the life chances of poorer people in particular, has suffered really serious cuts in the last 10 years, particularly to bus networks. For young people seeking to establish themselves in local communities up and down the country, bus services matter more than anything. Local bus fares have increased in real terms by 36% over the last 13 years and many services have got worse. They have worsened everywhere except London, which started with the best services and has managed to maintain them.
Libraries are dear to the hearts of many noble Lords. The level of library closures has been scandalous: 737 have closed since 2010 and over 500 more are kept open only by volunteers. Warm words are not enough. Unless we systematically reverse these cuts in public services—with a real-terms increase in education spending, an end to cuts in GP surgeries, a cap on bus fares outside London and guarantees, which I think must come through new regulations, that services will not be cut—inequality will get steadily worse in our society.
Lord Freeman (Con)
My Lords I am very pleased to follow the noble Lord, Lord Adonis, particularly his remarks about transport. He and I have a lot in common in our support, and the relevance of transport to this debate is well accepted. I congratulate the noble Lord, Lord Dubs, on initiating this debate. It has been very important so far, and the quality of the debate and the quality of advice have been much appreciated.
I want to comment briefly on inequities in the United Kingdom, which are often inherited. It is the duty of any politician—anyone speaking in public—to address that inequality. We should be encouraging our young people, in particular, to aim for the stars and not be put off or offended by what they see as the difficulty of making progress in their careers or in their education. The first concern is: are families discharging their duties properly, encouraging their children to go for proper qualifications, whether at school, university or in experience in public life, so that they can make a real contribution to society and ensure that their contribution is listened to properly? Families have a real responsibility in making sure that inherited disabilities, in terms of promotion, property and education, are diminished.
Secondly, schoolteachers have a specific responsibility. We must encourage teachers to identify which of the children under their guidance are likely to be discouraged simply because of inherited perceived disadvantage. Thirdly, individuals like us sometimes do not applaud enough the achievements made by our children, our grandchildren and others we know, to ensure that discrimination in terms of promotion and achievement in life are nullified. We as individuals have a real responsibility to encourage ambition and make sure that there are few roadblocks to a successful career.
Role models have a real responsibility, certainly on television. They must lead in guidance and example to children, those in education and those in employment so they are determined to make a success of themselves and provide leading models to society.
Finally, we parliamentarians have an especially great responsibility. I am glad that in your Lordships’ House we see schoolchildren regularly enjoying visits to Parliament. That is one way of making sure that we can do something about inherited inequities—we do not want schoolchildren in particular to think that your Lordships’ House and those in authority somehow have an unnecessary advantage and domination over their lives. I very much welcome those in the Galleries, not only in your Lordships’ House but also in the other place, listening to this debate. I hope they will gain something from it and be reassured that we as a House are absolutely determined to make sure that inherited disadvantages are put behind us.
Baroness Bryan of Partick (Lab)
My Lords, I sincerely thank my noble friend Lord Dubs for enabling this debate, which tackles a burning issue that is not getting enough attention due to the current political climate. As he said, there is so much to say on this issue that it is necessary to concentrate on just one thing.
The Deaton review refers to the gap in life expectancy between affluent and deprived areas. This gap has widened significantly over the last 15 years. In 2001, women born in the most affluent areas lived on average 6.1 years longer than women born in the most deprived areas. In 2016, this gap had grown to 7.9 years.
My own home city of Glasgow has the unenviable reputation of having the lowest life expectancy for men in the UK, but it is not just cities versus suburbs. In East Dunbartonshire, an affluent suburb, women have the longest life expectancy in Scotland. Right next door in West Dunbartonshire, which includes areas of deprivation, they have the lowest. Until recently, we could at least say that, while there was still a gap, most people of all backgrounds were living longer, but these improvements have stalled and for the first time in 35 years we are seeing some reverse.
This information on the differences in life expectancy is not new. The issue of socially and economically determined health inequalities has been on the agendas of different Governments for decades. Resources have been put into tackling smoking, poor diet and lack of exercise, but the gap continues to widen.
The Deaton review also refers to deaths relating to drugs, suicide and alcohol. He uses the term “deaths of despair”. This type of death has been rising in the UK and affecting people in middle age. While deaths from cancer and heart disease fell among men and women aged between 45 and 55, deaths from despair increased. Add to that the incidents of mental illness. The joint strategic needs assessment publication in August 2017 pointed out that:
“Stable and rewarding employment is a protective factor for mental health and can be a vital element of recovery from mental health problems. Unemployment and unstable employment are risk factors for mental health problems”.
The trade union leader Jimmy Reid, who is still held in great esteem in Scotland, used his inaugural speech as rector of Glasgow University to describe:
“The feeling of despair and hopelessness that pervades people who feel with justification that they have no real say in shaping … their own destinies”.
The lack of skilled, well-paid and permanent jobs and the nightmare of surviving on disability or jobseeker’s allowance have contributed to deaths of despair.
Does the Minister accept that austerity has contributed to increasing the gap in life expectancy, and does she agree that it is misleading for the Government to claim success in job creation if someone is going into a job that is precarious, low-paid and lacking dignity and could ultimately end in a death of despair?
Lord Liddle (Lab)
My Lords, I congratulate my noble friend Lady Bryan on her speech. Although we come from different Labour traditions, on this issue we share common aims and values. I also thank my noble friend Lord Dubs for introducing this debate. He is one of my heroes: not only do I aspire to his longevity, I aspire to remain as committed to politics and helping to improve people’s lives as he continues to do in the second half of his 80s. I also congratulate the Cross-Bench contributions of the noble Lord, Lord Ravensdale, in an excellent maiden speech, and the noble Earl, Lord Listowel, who always makes a moving contribution in this House.
We have had a lot of analysis and a lot of numbers. I should like to focus on some things that ought to be done, rather like my noble friend Lord Adonis, who talked about public services.
First, the Government must reverse the cuts to benefits for children and disability payments which have occurred under universal credit. There is nothing wrong in principle with the idea of universal credit, but the fact that for working-age people benefits have been held below inflation, while my benefits as a pensioner have continued to rise above inflation, is a scandal and must be reversed. This should be a top priority for any Government of any colour. Secondly, we must look at our system of taxation of property and wealth. Council tax is unfair. It does not tax property in an egalitarian way and we need to look at the taxation of wealth as a whole because of the enormous inflation in wealth that has occurred, partly as a result of quantitative easing. We must have new systems of tax to pay for the improvements in public services of which my noble friend Lord Adonis spoke. Thirdly, we must tackle the scandal of executive remuneration. There is a lot of talk about this. Business says that it wants to act, but we need radical corporate governance reform to deal with this problem, about which there has been far too much talk and far too little action.
Most importantly, we must recognise that the noble Lord, Lord Kerslake, who is not in his place today, chaired the UK2070 Commission, which has done an excellent analysis of the flaws in the economic model in the United Kingdom and what is contributing to poverty and inequality in our country. The driving force of this, in my view, is the problem of regional inequality and the disparities that it causes. In the past 10 years, the rate of growth in London has been 3%; the rate of growth in the north has been 1%. If this continues, we will have a very divided country indeed. It results in impossible pressures. Young people who are on lower wages than they were in London are forced to pay very high rents to live and do their jobs here. Their incomes after housing costs present a real problem. Obviously there must be radical reform of the housing market.
In terms of action on the north and the regions, part of the answer is infrastructure investment, which has been mentioned, and part is trying to move out of London some of the sources of energy in our economy in culture, research, enterprise and innovation. A crucial point is that made by my noble friend Lord Adonis about education. Now, 60% of children in London have a chance of going to university. In my county, it is 30% to 35%. We must establish a political consensus that those problems need tackling, and I fear that I do not see that happening in the Conservative Party at the moment.
Lord Davies of Stamford (Lab)
My Lords, I add my congratulations to my noble friend Lord Dubs. He always thinks very carefully before he takes any initiative in this Chamber and regularly brings to our attention some of the moral issues which lie behind the decisions we take and the work that the Government do. That is an extremely valuable contribution, as was his speech today. I agree with an awful lot of what he said, not least what is in my view the moral obloquy of cutting taxes at a time when we are reducing spending on vital public services such as social care, the NHS and, as my noble friend Lord Adonis just explained, education.
It is important to be rigorous in a debate such as this, and we must distinguish clearly between the two subjects of inequality and poverty, which too easily get mixed up. They are in fact very different concepts and can well contradict each other, or there can be trade-offs between them. A policy designed to cut inequality may well produce more poverty. For example, tax rises may have that effect. On the other hand, a policy designed to reduce poverty—for example, tax cuts—may actually increase inequality. One must be careful what one is doing here.
The second proposition I put to the House is that there is no way in which you can intervene directly on inequality. It would be a nice idea if you could, but actually you cannot. You cannot have the state laying down people’s income or how much capital they should be allowed to possess. I do not think anyone is seriously suggesting such a thing. You could of course introduce something like a Cuban revolution, or a Chinese revolution, when people appeared to become more equal but at the expense of starvation. I do not think anyone is likely to be tempted by that approach.
Equally, you cannot increase levels of taxation unreasonably, because people will just go abroad—they will disappear and take their businesses with them. My eldest son, who is the only member of my family who pays tax at a 50% marginal rate, tells me that there is something very psychological about that rate. His employers are very keen for him to relocate to the United States and he would gain considerably from doing that. He does not want to do that, but he feels—and he speaks for a lot of people, because he has contemporaries who are similarly fortunate in their incomes—that people have a psychological barrier about 50% and if you go beyond that, you get some very counter-productive effects. One must be very careful about not making that sort of elementary mistake.
The fact that you cannot really deal with inequality directly is perhaps not so tragic, because I do not think that inequality is anything like as important as poverty. Some people will immediately think that that is just my personal normative preference. I hope that I can persuade the House that it is rather more than that; that it is rather more objective.
The fact is that if most human beings were as concerned—let alone more concerned—about where they stood in a relative table of income and wealth as they are about the absolute purchasing power and wealth they enjoy, they would logically be as satisfied with the thought that some wealth or income had been taken away from somebody else as they would be by knowing that they were themselves going to be made richer in absolute terms. That is such an absolute absurdity that I do not think anyone would seriously contemplate the idea. It would also be a threat to the whole concept of human rationality, so I do not think that we need fear saying that it is poverty, or the reciprocal of poverty—wealth, the purchasing power of individuals—that concerns people most. Nobody cares very much if someone else has a Lamborghini, but I do not think I speak only for myself when I say that I would be very upset if someone took away my modest motor car. I have absolutely no desire whatever to have a Lamborghini; I would not know what to do with it if I did.
Pursuing that view, we must maximise growth and therefore be more able in future to deal with the demands of both our public services and our private aspirations. If we do that, we will almost certainly increase inequality. That has always been the case. There is a sound economic reason for that: growth requires investment, which requires taking risks—some of which are very high—but no one will take those risks unless commensurate rewards, which can be very high, are available. So, in a period of successful growth, people become disproportionately rich. That has been the case throughout the economic history of the world. Of course, it is equally true in India or China as it is here or in the United States. We just have to live with that.
In those circumstances, the best policies that we can pursue are the indirect ones. I agree totally with my noble friend Lord Dubs about transparency, workers’ directives and publishing individuals’ income and tax statements. I believe very much in workers’ directives being on the remuneration committee agenda in public companies. Private companies and private equity firms should take the same responsibility for disclosing their profit and loss account, cash flow and balance sheet. Moreover, we should continue in line with the Labour Party’s glorious record—such as on education—especially in passing the Equality Act, which made life so much easier for people. Last week’s news that 60% of Oxford and Cambridge entrants now come from state schools is a return on the investment we made 10 years ago.
Baroness Verma (Con)
My Lords, I start by thanking the noble Lord, Lord Dubs, for securing this incredibly important debate. As he and other noble Lords have said, this issue is incredibly complex. Inequalities come in all shapes and sizes.
I want to focus on something that brought this issue home to me. During the recent mayoral elections in Leicester, I came across a large part of my city’s population that cannot read and write in English or speak it. For that very reason, they are unable to engage some of the services that may be available to them. I saw this predominantly among communities where women, in particular, were at home and did not know what social care or healthcare they could access. It was really worrying. Today, in the 21st century, every single person in this country should be able to communicate for themselves if they require something so that they can engage socially or communicate if they fear something. Coming across a large population of such people in my home city worried me.
Next Saturday, my mother will celebrate her 80th birthday. She has been in this country for nearly 60 years; she came here when I was a baby of nine months, so work that one out. She was determined to be part of the society that she had come to because it offered her so many options for liberal living. When I was campaigning in Leicester, I was concerned at the huge population not taking advantage of that liberal living. They did not have the ability to go out and access jobs or engage with their children’s school lives because they could not communicate. These are all barriers to equality and opportunity; I know that we have also spoken a lot about austerity today.
Lord Davies of Stamford
I agree with every word the noble Baroness says. Is not part of the solution that FE colleges in cities should be obliged to provide teaching of English as a foreign language?
Baroness Verma
If you are a citizen of this country, you should have access to learning English. If you do not come into this country with English skills, you should be able to access them.
I am deeply worried that cultural discrimination already exists in some communities; I put my south Asian community at the forefront of this issue. We reinforce it by not enabling people to break out; they do not know where to go or how to fight the inequalities that they face both internally and, no doubt, externally. I mentioned my mother because my dad was a typical conservative Sikh; he did not want my mum to learn to drive or go out on her own to night school. When he passed away very suddenly 12 years ago, my mother had to cope. Thank God, she did exactly what good mothers should do: ignore what their husband says. She went out, learned to drive, learned English and was able to communicate. Today, 12 years on, my mother can toddle off and do what she wants when and how she wants, and nobody can stop her. However, I fear that isolation and inability will stop too many people across the country, particularly from my community, when they find themselves having to learn to cope. I fear for my community.
To finish, I hope that my noble friend the Minister will encourage colleagues across government to ensure that the discussion around the need for English to be learned in this country is made relevant.
Lord Lea of Crondall (Lab)
My Lords, in the time available, I want to give the IFS a very big tick for the quality of its scoping study. I very much look forward to the four-year cycle coming to a conclusion.
In the 1970s, I was a member of the Royal Commission on the Distribution of Income and Wealth, chaired by Lord Diamond, who some people may remember from Harold Wilson’s Government. We were very keen to make sure that people understood that we needed a parallel data system for wealth, alongside that for income. Wealth is characterised by land, one of the three factors of production; the others are labour and capital. Indeed, in macroeconomic terms and in terms of Treasury public accounts, getting more from land is one way to do a lot of the things that Members here have said should be done without putting up everyone’s rates of income tax and other taxes.
I remind colleagues of the brilliant exposé on land ownership in Britain published in the Guardian only three or four weeks ago. Now, land creeps into the nature of our economy in a different way. A lot of companies used to borrow money from the banks for investment; now, more than 50% of banks go into land-related lending. We can see this characteristic in Britain where we are reinforcing inequality. The Guardian piece shows that little has changed over the past 1,000 years. Many members of the aristocracy and the landed gentry are descendants of the Norman barons. You had to be a friend of someone in the family of the Duke of Normandy—this was the Norman conquest—to own a lot of land in Britain, and that is true today. It is the same people. Some 17% of English land is not registered with the Land Registry while more than 50% is inherited and has never been bought or sold. Half of England is owned by less than 1% of the population. The home owners’ share adds up to just 5%, so a few thousand dukes, baronets and country squires own far more land than all of Middle England put together. I thought that this House might be the place to put that on the record because I have not noticed any of the hereditary Peers making that point.
The scope of the IFS review is important in another way. It talks about trade unions and collective bargaining, and of course I declare an interest. People have to acknowledge that you need a balance in the labour market and the capital market, which can come about only if you recognise that initiatives such as workers’ representatives on remuneration committees would do a lot to change the tone of the virtue signalling in boards of directors, so that it is not just about short-term share prices. The IFS mentioned this in its synopsis. The country may be going to the dogs, but one thing which must be done to avoid that is to look carefully at the imbalance of incentives in how our economy works.
I turn to education. Yes, I am of the school of thought which says that if you say Eton costs £40,000 a year—I do not know whether that is right—you are investing £200,000 and you get a return on that capital. There is no doubt about that—they are not in the business of philanthropy. They are taking away other people’s playing fields. They want a return on capital to protect their difference. That is what investment in public schools is all about.
I am very pleased that most of these points are covered by the IFS review and I look forward to realising the ambition of the synopsis. We are not reaching any conclusions today; we are just saying that extra things can be added to it. We will see what it concludes at the end of the next four years.
Baroness Prashar (CB)
My Lords, I thank the noble Lord, Lord Dubs, for securing this very important debate and I congratulate the noble Lord, Lord Ravensdale, on his insightful maiden speech.
The fact that the IFS Deaton review was set up to understand inequalities and identify the right mix of policies to tackle them is a powerful indication of how dire the situation is. It rightly says that we need a coherent approach to respond to inequalities and not one that is fragmented and piecemeal. The United Nations report paints a very bleak picture of life for many of our citizens. The report also shows that the costs of austerity have fallen disproportionately on the poor, women, racial and ethnic minorities, children, single parents and people with disabilities. It is a grim picture for a country that is the world’s fifth-largest economy.
We have to ask ourselves: are we comfortable with the kind of society we are becoming—a society where we are witnessing extreme hardship, the normalisation of food banks, homelessness and child poverty, and growing divisions in health, wealth, life chances, family environment, regions, political influence and so on? Austerity measures, cuts in public expenditure, particularly at the local level, and changes to the benefits system are causing extreme hardship and destroying the very fabric and cohesion of our society. Libraries, youth clubs and other public spaces, some of which are the glue for social cohesion, have either shrunk or gone. The consequences are evident for all to see.
Universal credit is a case in point. The UN report notes that the Government are taking an experimental “test and learn” approach to universal credit. This has led to the devolved Administrations and local authorities having to set up contingency measures to protect claimants and off-set the worst consequences of its features. The UN rapporteur said that he was struck by how much of their mobilisation resembled the sort of activity one might expect for an impending natural disaster or health epidemic. Now that the benefits are all rolled into one, it leaves claimants who are trying to keep a roof over their heads and make ends meet vulnerable to high costs.
Delays in paying benefits are turning people to desperate measures. The knock-on effects of these are manifold on family life, working life, health and so on. The strange phenomenon of poverty is that it increases costs. The poverty premium effect means that people on low incomes pay more for the things they need as they are unable to pay up front or use a direct debit. Saving costs and improving or streamlining systems are laudable objectives, but if they end up having a detrimental effect on those they are trying to help and causing more hardship for the most vulnerable, we need to take stock. Can the Minister tell the House what steps are being taking to improve the universal credit system and to remedy the shortcomings highlighted by many, including in the UN report? Furthermore, the prevalence of inequalities and division is all too evident. Rather than denying or repudiating the facts, should we not be channelling our energies into developing a deliverable agenda to tackle these divisions and inequalities?
Lord Morris of Handsworth (Lab)
My Lords, this is a timely debate because the Government regularly deny claims of poverty on the grounds that employment is rising. In his statement on poverty in the UK, Professor Philip Alston, the UN special rapporteur on extreme poverty and human rights, described that response from Ministers as an “endlessly repeated” mantra. He said that they have overlooked the fact that 14 million people, a fifth of the population, are living in poverty and that the levels of child poverty are,
“not just a disgrace, but a social calamity and an economic disaster”.
Ministers have described the report as “barely believable”. The Secretary of State for Work and Pensions has said that she would lodge a formal complaint with the UN. The denial is based on rising employment figures, but last year the Joseph Rowntree Foundation reported that the number of people with a job but living below the poverty line has risen faster than employment.
Another concern set out in the report is the Government’s embrace of technology and automation. The digital-by-default feature of universal credit excludes people without internet access or, indeed, the basic skills. Professor Alston said:
“We are witnessing the gradual disappearance of the postwar British welfare state behind a webpage and an algorithm”.
Applicants for universal credit are referred to libraries if they do not have any technology of their own, but first you must find your library. Statistics from the Chartered Institute of Public Finance and Accountancy show that since 2010 at least 478 libraries have closed, 8,000 librarians have lost their jobs and council spending on libraries fell by £66 million last year. Yet libraries provide access to computer resources for those who have none, schoolchildren living in crowded conditions find peace to do their homework, and rough sleepers and elderly people can read a newspaper to keep in touch and—for some—keep warm. They provide a community resource for meetings. Libraries are as much a social service as a source of knowledge or to serve a love of reading.
During his visit to British cities, Professor Alston coined the expression—which he took back to the United States—that food banks, which Ministers have often dismissed as nothing to do with austerity measures, represent a new turn in poverty. The Trussell Trust reports that in the year ending March 2019, 1.6 million three-day emergency food parcels were given to people in crisis, an 18.8% increase on the previous year. Professor Alston reminded us that the UK is the fifth-largest economy in the world, yet the Joseph Rowntree Foundation reports that 14 million people—a fifth of the population—live in poverty, while 1.5 million are destitute and unable to afford basic essentials.
We have now moved to a point where we are beginning to have a debate on and a real appreciation of the issues. I cannot begin to understand how this Government can ignore Professor Alston’s report. We read and hear daily examples of what he reports and we witness them every day, not least, as we were told earlier, as we walk from the Underground into this building and pass people who are homeless and destitute. This is not fake news—it is the reality for millions of our citizens and we can take no pride in it.
Viscount Hanworth (Lab)
My Lords, a stark appraisal of the state of the nation was provided in November 2018 by the report of the Australian economist Philip Alston, in his role as the United Nations special rapporteur on extreme poverty and human rights. His critique was met with surprise and disbelief by leading Conservative politicians, who were unable to recognise the truth of his assertion that our inequalities are dividing Britain as never before and that current social policies are causing widespread misery and distress. Given that the measure of average per capita real income has been increasing throughout most post-war years, it was unimaginable to these politicians that the hiatus in the growth of the economy that we have been witnessing since the financial crisis could have driven so many into poverty.
The dismissal of Alston’s findings was all the more startling for coming from the politicians responsible for years of unnecessary austerity, who have made savage cuts to the welfare budget in the process of imposing the so-called regime of universal credit. However, among European nations, Britain has one of the highest levels of inequality. As measured by its Gini coefficient, its inequality is exceeded only by that of Romania, Bulgaria and Lithuania, all countries with high levels of rural poverty.
As has been mentioned, it has been revealed that 14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the official poverty line and 1.5 million are destitute and unable to afford basic essentials. Local authorities, which have traditionally played a major role in providing housing and sustaining the welfare of our citizens, have been starved of resources by destructive government policies.
The social divisiveness that characterises contemporary British society is the antithesis of the solidarity that characterised the wartime years and the early post-war years, which is still in the memory of many of us. That solidarity was gradually eroded over a quarter of a century, partly in consequence of perpetual industrial strife. When Margaret Thatcher came to power at the end of the 1970s, she was able to declare war on the unions that had been a major factor in maintaining the incomes of working people. It was during this period that the inequalities in income that we see today began to emerge. The large reduction in taxes of high-income earners that were a feature of the Lawson budgets of 1986, 1987 and 1988 were factors in a rapidly increasing inequality which occurred at a time when the wages of working people were stagnant.
The defeat of the unions was assisted by the process of deindustrialisation that proceeded throughout the Conservatives’ period in office. It was hastened by the insistence on maintaining a high value of the pound, which made it unprofitable to export manufactured goods and made imported goods cheaper and more attractive. The deregulation of Britain’s financial markets in 1986 at the end of the second Thatcher Administration began the process of a rapid divestment of Britain’s ownership of its commercial and industrial assets, from which our financial sector continues to profit. This process was responsible for elevating the value of the pound, which was further to the detriment of British industry. It also sowed the seeds of the financial crisis of 2008, the dire effects of which still dominate our economy and society.
British workers have been denied gainful employment while the richest members of society, who reside mainly in the financial sector, have seen runaway growth in their incomes. The present-day Conservatives have adopted the social and economic nostrums that prevailed during the Thatcher Administration. They have continued to place public services in private hands and sought to address the crisis in housing with help-to-buy measures that serve only to raise house prices and enrich construction companies. The help has been aimed at young, middle-class families of a kind who might comprise the sons and daughters of Conservative politicians. At the other end of the income spectrum, they have imposed the so-called bedroom tax, aimed at increasing occupancy of the wholly inadequate supply of social housing.
At present we do not have the high levels of unemployment that beset the middle years of the Thatcher Administration. Instead, large numbers are employed in the low paid, insecure and demeaning jobs of the trickle-down economy, also described as the gig economy.
The absurdities of Brexit pose a further threat to the livelihoods of working people. If a hard Brexit materialises, the foreign owners of British industry will curtail their investments, if they do not cease their operations altogether. The effect will be a further impoverishment of a large proportion of our population and an increase in inequality in Britain to an extent not seen since the early years of the 20th century.
Baroness Osamor (Lab)
My Lords, I welcome the noble Lord, Lord Ravensdale, and congratulate him on his maiden speech.
This debate is timely given the recent promises by a Tory leadership candidate to cut taxes for the richest in our society and for large corporations. He clearly had not read the Deaton report and/or had not recognised, as the IFS and Professor Deaton have highlighted, that we are at a moment of crisis for democratic capitalism.
I am from Tottenham in Haringey. Once upon a time in Tottenham it was the minorities and the working classes who were marginalised, but today it feels as though everybody is cut off, due to government cuts, apart from the very few with access to unearned income through sizeable property or shareholdings.
Given that we have only a short time to speak in this debate, I would like to highlight three key issues for the Government to respond to. The first concerns the regulating of international markets. Most expert commentators agree that the US is the least equal country in the world. The Deaton review refers specifically to a healthcare system that creates monopolies and delivers huge profits to private health providers while also creating significant public health issues, such as the tragic levels of opiate addiction across poorer communities in the USA.
Why, then, have the Government in recent weeks been trumpeting the idea of a trade deal with the US, a deal which many commentators are saying would simply entrench the monopoly position of superstar businesses and place an even greater premium on shareholder value? Will the Minister explain what consideration, if any, has gone into the questions posed by the Deaton report about the need to ensure that the private sector is not just taking without making? I am talking specifically about new taxes on unearned income, new incentives for longer term investment and new regulations to control private sector monopolies. Should not any policy-maker who is interested in tackling inequality be focused instead on continuing to support the good work of our colleagues in Brussels to develop incentives for longer term investment and to tame private sector monopolies?
My second issue is income disparity. Most of us in this Chamber will be aware of the Prime Minister’s high-profile commitment to tackling race and inter- generational income disparities. This is an issue that the IFS Deaton report will be picking up over the next five years, and which I raised on 11 March at the UK Voluntary National Review parliamentary event concerning the UK’s annual sustainable development goals report to the UN. I am particularly keen to ensure that we in this Chamber are updated on what the Government are doing to understand and address the extreme variations in attainment when broken down by ethnicity and region; what effect, if any, the Equality Act 2010 has had on reducing race income disparities in the workplace; and the current status of the SDG report.
My third issue is reforms to the social contract. Last November, Professor Philip Alston commented:
“British compassion for those who are suffering has been replaced by a punitive, mean-spirited, and often callous approach … elevating the goal of enforcing blind compliance over a genuine concern to improve the well-being of those at the lowest levels of British society”.
At the time, the Government rejected Professor Alston’s findings and said that they would lodge a complaint with the UN. Will the Minister update us on the status of that complaint and the ongoing discussions between the Government and the UN in relation to Professor Alston’s report?
I shall close on a positive note. The Deaton report reminds us that 200 years ago, democratic capitalism faced a similar crisis. Salaries, life expectancy and living standards were falling for everyone other than the landowning classes and the large industrialists. By the end of the 19th century, Parliament had passed a series of reforms to ensure greater democracy, improve the rights of workers and place restrictions on wealthy landowners and industrialists. These reforms also paved the way for the establishment of the welfare state under the Attlee Government. Let me be clear: our challenges now are quite different from those of the 19th century. Never before have we had a system which enables such vast wealth to be accumulated so quickly by so few people, and never before have we had a system that threatens the very existence of humans through global environmental destruction. I hope that this Chamber will pick up the baton from those previous incumbents of the two Houses. I implore us to establish a working group to work with Professor Alston and Professor Deaton so that we can take urgent action to initiate debate and legislation as their research develops.
Lord Sawyer (Lab)
My Lords, I congratulate my noble friend Lord Dubs on initiating this very important debate at a crucial time in our nation’s development. I congratulate the noble Lord, Lord Ravensdale, on his excellent maiden speech. I am sure we will hear a lot more from him in future. I am pleased to see my noble friend Lord Brookman in his place. He has spent a lifetime fighting poverty, but he does not speak a lot.
I have read some of the important papers that are being discussed today and have listened carefully to the debate in the House. There have been some very powerful, riveting speeches by Members on this side including my noble friends Lord Hain, Lord Adonis, Lord Morris of Handsworth and many more. They made a powerful case against the Government’s policies. I think it will be almost impossible for the Minister to give an adequate reply, but I know she will have a good try.
From my perspective, it is interesting that on the other side of the House, there has been no real acceptance of the unequal society that we on this side see. The response has been very muted and not much has been said. There have been a few contributions about the family, which is understandable from that side of the House, but it has not responded in the way that we have to the terrible dilemma we are in. The divisions around this policy are deep and, in a sense, they reflect the divisions in society. We are fractured and broken in many ways. This debate shows exactly where we are.
I always seem to get stuck at the end of these debates when all the good points have been made, so I try to think about whether I can say anything of interest or whether I should sit down—I do not really mean that. We ought to look at the situation more carefully. Members opposite should look more carefully at the other side as well.
We should look more carefully at the Scandinavian countries—which are not all Labour; there are conservatives as well—and the way they approach this kind of problem. In the Netherlands and in Scandinavian countries, deliberate action is being taken by central government to intervene against poverty and inequality. In Finland, there is a much more articulate response to the well-being of the whole population, with strong interventions, particularly in education and housing. Finland tops the World Happiness Report—surely, there is something that politicians on the other side can learn from that. Similarly, the New Zealand Government are focusing on their well-being agenda. Interestingly, it seeks to change people’s mindset regarding the importance of well-being and of GDP. Governments here could look at that carefully. Closer to home, we have the Welsh Government’s Well-Being of Future Generations (Wales) Act 2015, which many people, including me, have spoken about in this House. It is already making big advances for the people of Wales. We need public bodies to take into account the social impact of their decisions, not just the economic impact. It is very important that we try to change that pattern. Perhaps the Minister will say something about that.
The language around this debate is often very angry and polarised. That is completely understandable, but I take a different angle. We need to find a shared language and shared goals, as they have been able to do in the Nordic countries. We could start to look at them. I know we are not heading there—we are just debating the Conservative Party. I wanted to say this because it needs to be said. We could start to see the elimination of power, not just as a set of policy proposals but as a central value in society around which other things can be built.
Lord Judd (Lab)
My Lords, we all want to put on record our appreciation of the noble Lord, Lord Dubs, for once more having challenged us with this important debate, and for the effective and sensitive way in which he introduced it. He of course mentioned refugees and asylum seekers, and we must never forget that they are a real priority in this area. There is another group about whom we do not talk often enough in this House and who have special needs, and that is the Gypsy, Roma and Traveller community. We perhaps need a debate on that issue.
What have we learned from this debate as we near its conclusion? There are too many depressing realities: close to 40% of children predicted to be living in poverty in two years’ time; too many people over 65 living in relative poverty; millions of people who are in work dependent upon various forms of charity to survive, and much of the work in which they are involved degrading and dehumanising every day. We have heard about food banks, rough sleeping, falling life expectancy for some, decimation of legal aid, denial of benefits to severely disabled people, and difficulties for others in accessing benefits. We have heard about the whole issue of loneliness and failing transport, which particularly affects the rural poor, and the impoverishment of single mothers and those with mental health problems. I am glad that we have also heard about the impact on poverty of shrinking library services.
Surely these realities raise the fundamental question of what kind of society we want to be. Surely we should get back to the ideal that every single child, wherever and of whomever they are born, should have the right and opportunity to discover his or her talents and develop them to the full. This is not only about preparing them to fit into the economic machine but helping them to live, for example through education as distinct from just training. Training is of course crucial, but so is education. Why should everyone not be able to appreciate Mozart or Beethoven, rather than this being reserved as a right only for some?
We clearly need to see a reassertion of the importance of dignity and self-respect in employment; here I believe the reassertion of the role of trade unions is vital. We need a multidimensional approach, covering education, health services, mental health support, quality of employment, youth and community services, and decent, attractive environments. People need space around them in their immediate living situations in which to play and recreate. Surely we want a society based upon solidarity and inclusiveness rather than the one we have, which is too often based upon self-assertiveness, acquisitive selfishness and greed.
Baroness Janke (LD)
My Lords, I too thank the noble Lord, Lord Dubs, for securing this debate, and for highlighting the very unequal treatment of refugees and asylum seekers, particularly children.
It is shocking to many British people that, in the 21st century, we should have 14 million people in poverty. The fact is that, as the fifth largest economy in the world and a leading centre of global finance with record low levels of employment, one-fifth of the UK population is in poverty, and 4 million people are more than 50% below the poverty line.
Historically, the UK has had a proud record regarding its strong social security safety net, yet this has been systematically eroded. My noble friend Lord Wallace spoke about the social contract between the state and the citizen, where people in former times found a resource base to support them when they were afflicted by one of life’s major catastrophes, as many of us have been, or will be, in our lives. Now, people find that there is little more than the support of volunteers and charities with limited resources to provide for their basic needs. How can a country such as ours not be shamed by such a state of affairs, with our benefits service likened to the 19th-century workhouse made infamous by Dickens? As the noble Lord, Lord Morris, said, there is no pride in it at all.
I very much value the work done by the noble Baroness, Lady Stroud, particularly her cross-party work on the Social Metrics Commission, and, as she said, I hope we will work together to take action. The noble Baroness said that poverty is persistent. That is right; it is very difficult to get rid of poverty altogether. However, it is clear from many reports that recent policies have undermined the poorest, the most underprivileged and indeed the most vulnerable people. Not only the reports mentioned here but reports by Human Rights Watch, the Joseph Rowntree Trust, the Resolution Foundation and the Child Poverty Action Group all testify to this.
The noble Baroness, Lady Bryan, highlighted the vulnerability of women, who have been put at particular risk by many of these recent policies. Women earn on average 17.9% less per hour than men and make up 60% of workers receiving low pay. Single-parent families, of whom 90% are women, are more than twice as likely to experience poverty as any other group. Half of the total number of children in one-parent families are in poverty. The noble Lord, Lord Farmer, talked about family structure and repeating cycles, which are very much a feature of poverty unless help can be provided to enable people to escape that harsh situation.
Policies such as the benefit cap and freeze, the two-child limit and the introduction of full job-seeking requirements for single parents of children as young as three have had a stark impact according to the Alston report. In August 2018, two-thirds of those who had benefits capped were single parents; single parents in the bottom 20% of income will have lost 25% of their 2010 income by 2021-22.
As my noble friend Lady Thomas has said, disabled people are disproportionately affected. Nearly half of those in poverty—6.9 million—are from families in which someone has a disability. They have also been some of the hardest hit by austerity measures. Changes to benefits and taxes mean that some families are projected to lose £11,000 by 2021-22—more than 30% of their income.
I very much appreciated the thoughtful contribution of the noble Baroness, Lady Young of Old Scone, on people in work and the transparency of employment statistics. It is incomprehensible to me that, with a low unemployment rate, 4 million workers live in poverty, and that 60% of people in poverty live in a household where at least one parent works. Some 2.8 million people live in poverty in a household where both adults work. So I join the noble Baroness in calling for more transparency and analysis of what is going on with low pay, insecure employment, tech industries and zero-hours contracts,
The noble Baroness, Lady Prashar, and the noble Lord, Lord Adonis, drew attention to the fact that local services have been dramatically cut. I believe that this has contributed greatly to the misery of the poor in our communities. Support services that used to be the lifeline for those in poverty have been almost completely removed, including youth and community services, social care and debt counselling. Libraries have been closed in record numbers, as the noble Lord, Lord Judd, mentioned.
Children, too, are disproportionately affected. The noble Earl, Lord Listowel, mentioned that cuts to public health, early intervention and early education are putting many children at a severe disadvantage. Equally, schools often have to fill a gap by providing food for hungry children. Often clothes, toiletries and even basic equipment are provided by teachers out of their own pockets.
The number of food banks, as many noble Lords said—the noble Lord, Lord Hain, in particular drew attention to this—has massively increased. Reasons given for this include incomes not covering the costs of essentials, benefit delays and benefit changes.
I am particularly concerned that we in this Chamber take these matters very seriously, and I urge the Government to take action, particularly with revitalisations outside London, as the noble Lord, Lord Ravensdale, said in his maiden speech. The noble Lords, Lord Wallace and Lord Liddle, contrasted the differences in the welfare of people in different parts of the country.
I also believe that it is essential that the forthcoming comprehensive spending review takes full account of the desperate situation for so many of our citizens and recognises that urgent action is needed. The priorities must be to rebuild an effective social safety net and to restore services in the community so that needs can be assessed locally and support provided to people where and when it is needed. We must also make work pay by ensuring that working people are paid enough to be independent and self-sufficient and not suffer the humiliation and desperation of grinding poverty.
Lord Davies of Oldham (Lab)
My Lords, this has been an excellent debate, led by a superb opening speech from my noble friend Lord Dubs, whom I congratulate on securing this important debate on such a significant subject. Of course, we all enjoyed the maiden speech of the noble Lord, Lord Ravensdale. He will know that there is a limited number of engineers in the House and we are very pleased to see him supplement their number. There is no doubt that he will get a warm welcome from them, and from all of us who recognise that a great need of the British economy, if it is to improve, is to see engineers in positions where they play a more significant part in companies than many of them do now.
We should also recognise the significance to this debate of the work of the IFS—not only what it is promising to do in the long term but its reports thus far, which have identified that among the wealthier nations the United Kingdom is second only to the United States in economic inequality. One would think that it would be a priority for a Government to address that, yet we have to recognise that over the past decade, far from making it a priority, the Government have exacerbated the situation. My noble friend Lord Hain emphasised how much the policy of austerity was born not just of seeking to create a more secure economy but of the ideology of a Conservative Government: the belief in a smaller state.
Just at a time when the Government need to make a contribution to the welfare of society, we have had a decade of massive reduction in the power of public authorities. Even the Conservative authority of Northamptonshire has been brought almost to bankruptcy. There could not be a clearer case of not recognising the crucial role that local authorities are destined to play in our welfare.
Of course, there have been a number of contributions in this debate on health and education matters, in particular the collapse of Sure Start, and on services that local authorities can no longer provide. This, of course, has increased the pressure on less well-off families.
That is against a background where less well-off families are facing two big problems. One is that there has been an effective wage freeze for more than a decade, so that while it is true, as noble Lords have pointed out in great abundance in this debate, that the chief executives of the top FTSE companies have seen a massive increase in their resources, wages have effectively been frozen. Is it surprising, therefore, that there is enormous anxiety and concern among so many people?
In addition, there has been a sustained onslaught on benefits. My noble friend Lord Liddle identified universal credit as something that has caused great concern. My goodness, the Government have been seeking for several years to introduce fully universal credit, and they are still struggling with the fact that the premise on which it is founded has crucial weaknesses. The cost is borne by people with limited resources, so is it surprising that people find it extraordinary that the Government think that they can take a five-week delay in the payment of necessary benefits and not be in considerable distress? We know that the Government are rethinking aspects of that most important benefit, which has contributed significantly to the demoralisation of so many people.
Even the Government’s proudest boast, which is that unemployment is at a historically very low level, masks the fact that a large percentage of people in employment are in the gig economy, where their jobs are not permanent and the number of hours they can work in a week—and therefore their earning power—is limited. But they have the great merit of depressing the unemployment figures, so the Government can congratulate themselves on that. However, it has little to do with the welfare of society.
As for Brexit, we already know that the Government have committed considerable resources to a no-deal outcome. They had to, because it was easy to identify some of the immediate consequences of leaving Europe without a deal. It looks increasingly likely that that is the future for this country, and the Government will have to think again about substantial additional resources to cope with the many problems that are bound to occur if we leave Europe without a deal. We must all hope that proves not to be the case, because all our leading politicians express that hope, but they do not give us great encouragement that the hope will be translated into reality.
Our society is broken in that respect. There is a lack of trust between the people and those whom they elect; there is a lack of trust, too, between the people and those who sit in all kinds of positions of authority over them in circumstances where failure stalks the stage.
I am grateful that this debate has ranged widely. A number of contributions have been thoughtful and have not concentrated too much on government policy. However, from this Dispatch Box, I can discharge my duty as spokesperson for Her Majesty’s loyal Opposition only by identifying the last decade, for which this Government bear responsibility for, as having created the circumstances that are causing so much anxiety, distress and unhappiness among the British people.
Baroness Barran (Con)
My Lords, I thank the noble Lord, Lord Dubs, and echo noble Lords’ gratitude to him for introducing this debate, which has undoubtedly stimulated an interesting and important discussion in your Lordships’ House. I shall do my best in the time available to me, which I appreciate is a great deal longer than that available to your Lordships, to respond to as many of the points raised as possible. I hope noble Lords will forgive me if I have to write on some of them. I also thank the team from the UN for taking the time to visit our country last November and for speaking to individuals who face very difficult situations. I thank, too, the Nuffield Foundation and the researchers at the Institute for Fiscal Studies for the ambitious and important research agenda they are undertaking. We look forward to receiving the Deaton review and hope it yields findings that will enable us to continue our progress in this area.
I also join other noble Lords in welcoming to his place the noble Lord, Lord Ravensdale, and congratulating him on his maiden speech, which brought an elegant combination of expertise and humility. It was doubly impressive as there were apparently no notes—a great skill.
As we have heard from several noble Lords, the UN special rapporteur’s report was highly critical of both levels of poverty and the policy intentions of this Government. I must refute the impression given in the report that there has ever been an intention to impose policies that damage the prospects of the poorest of our citizens. This Government introduced the national living wage, supporting the wages of the lowest-paid to grow by 8% above inflation between April 2015 and April 2018. The percentage of jobs that are currently low paid, just below 18%, represents the lowest level for 20 years.
We take poverty and inequality very seriously and are committed to improving the living standards of all in our society. However, as my noble friends Lady Stroud and Lady Finn and other noble Lords explained, when we look at the data it is striking how little overall inequality, be it absolute, relative or among children, has changed during the past 20 years. I thank in particular my noble friend Lady Stroud and her colleagues on the Social Metrics Commission for introducing metrics that reflect the way we live: we have income; we have assets; and we have expenditure. For disabled people in particular, as the noble Baroness, Lady Thomas, pointed out, we need to recognise that there are fixed costs that go with disability. That is an important and helpful way forward, as is the commission’s focus on persistent poverty—the noble Lord, Lord Davies of Stamford, would probably agree with that.
That poverty and inequality are stuck is in spite of the efforts of Governments of every hue to change it. I share the view expressed by the noble Lord, Lord Dubs, and the noble Baroness, Lady Prashar, about the unacceptability of the levels of inequality; I just wanted to note that it is very hard to shift.
In common with other EU countries, we recognise that we face major challenges. The noble Lord, Lord Davies of Oldham, referred to real wages. While they have grown every month for the past 13 months, we all know that they remain at a similar level to 10 years ago. Whatever the overall statistics on inequality may or may not tell us, there are clearly groups in our society struggling to make ends meet, including some single parents and many with a disability.
Equally, we should not ignore the findings of the world happiness survey, which puts the UK at 15th in the world. As noble Lords pointed out, that is somewhat behind Finland but it is very helpful to refer to the concept of well-being.
A number of noble Lords, including the noble Lords, Lord Ravensdale and Lord Wallace of Saltaire, and my noble friend Lord Freeman, talked about the importance of strengthening the social contract, having a sense of aspiration and believing that we and our children have opportunities. The noble Lord, Lord Dubs, referred to his experience and that of refugees. As the daughter of a refugee, I can certainly vouch for the importance of being brought up to believe that anything is possible.
As noble Lords know, this Government believe that the best way out of poverty is through work and we are rightly proud of our record since 2010, with 3.6 million more people in work and a seven percentage point increase in the employment rate for the poorest 20% of the workforce. We have supported this increase in employment by increasing minimum wages and the personal allowance. That means that a person working 35 hours a week on the minimum wage takes home £13,700, an increase of £4,500 on 2010.
I shall now try to answer some of the questions raised by noble Lords and finally set out some of the important actions initiated by government that we hope will help to address some of the structural issues that contribute to both inequality and poverty. I want first to defend the Government’s stance in seeing employment as a critical component in resolving these issues, because it goes not just to the financial rewards that employment can bring but to a sense of social glue, connection, well-being and aspiration, which I think all your Lordships agree are critical.
The employment rate today is at a record high. The female employment rate is also at a record high of 72%. Since 2010, the employment rate of lone parents has increased by more than 10 percentage points and is now at 69.5%. Over the same period, youth unemployment has almost halved and a number of your Lordships, including the noble Baronesses, Lady Young of Old Scone and Lady Bryan of Partick—she and I were introduced on the same day, so it is a delight to be in a debate with her—talked about zero-hours contracts. Some 2.6% of all people in employment were employed on zero-hours contracts as their main job between October and December 2018.
As I touched on already, real wage growth has been flat over the past 10 years. The noble Lord, Lord Ravensdale, referred to the impact of globalisation. My noble friend Lady Verma is, I point out—if I have done the maths right—almost a perfect age; it sounds very similar to my own. She talked about barriers to accessing employment for people from black and minority-ethnic communities and those without English as a first language. We fully fund all adults to take English and maths to level 2 and from 2020 we will fund them for basic physical skills which, I know she will agree, are a critical factor. There has also been a disproportionate increase, compared to history, in employment of people from black and minority-ethnic communities, particularly in the high-skilled roles. I am sure your Lordships will share my pleasure in that.
The noble Lords, Lord Hain, Lord Browne and Lord Adonis, talked about cuts in public spending. I will cover this in more detail, but I just remind your Lordships that this Government inherited a uniquely difficult fiscal situation in 2010. However, the Chancellor has reaffirmed the five-year public spending plan, which has resource budgets growing at an average of 1.2% above inflation from 2019-20 compared with real cuts of 3% a year in the 2010 spending review.
Several noble Lords—the noble Baronesses, Lady Thomas, Lady Prashar and Lady Janke, the noble Lords, Lord Liddle and Lord Judd, and the noble Viscount, Lord Hanworth—talked about universal credit. We continue to spend more than £220 billion on the benefit system, and we are spending an additional £1.7 billion a year on universal credit, increasing by £1,000 the amount that 2.4 million households can earn each year before their UC begins to be withdrawn. The noble Baroness, Lady Prashar, asked for examples in which we are changing, reviewing or improving on the system. I will highlight two things: we are starting to test the system of more frequent payments following feedback from claimants and then will roll out more widely what works. I stress the really critical role of the work coaches, who are now receiving training on how to spot people who might be particularly vulnerable and do everything they can to make sure that they get the support that they need.
The noble Lords, Lord Hain and Lord Morris, and several others talked about the usage of food banks. Noble Lords will be aware that my right honourable friend the Secretary of State for Work and Pensions has acknowledged that there were problems early on with the rollout of UC but now more than 85% of payments are made on time, which compares very favourably with the legacy system. We believe that there is need for more robust data on trends in food insecurity and we are working with experts at the Office for National Statistics and the Scottish Government to introduce a new set of food security questions in the family resources survey from April this year. Obviously, we in this House look forward to the report next year from the ad hoc committee that has just been established on food poverty.
I turn to child poverty, a subject raised by several of your Lordships, including the noble Lord, Lord Dubs, the noble Earl, Lord Listowel, and the noble Baroness, Lady Janke. A child is five times less likely to be in poverty in a household where all adults are working. Today there are 665,000 fewer children living in workless households. In 2018, the Government announced an extra £1.7 billion for work allowances, which directly helps children living in the poorest households. We are also making investments, as your Lordships know, in the NHS, childcare and other areas which—if time permits—I will touch on.
My noble friend Lady Verma and the noble Baronesses, Lady Bryan and Lady Janke, talked about women and the gender pay gap as well as the role of women in the workforce. We should recognise that the gender pay gap brings visibility to the problem that we are facing: it shows unacceptable growth in the pay gap over time, but currently, at 8.6%, the gender pay gap is the lowest that it has ever been and we are determined to see it come down further.
My noble friends Lord Farmer and Lady Finn stressed the importance of family life and focused particularly on the importance of both parents playing a positive role in a child’s life. As he knows better than I do, there is so much research now on the impact of sustained stress on the development of a child’s brain and what that does to their life chances, particularly in the first 1,000 days. This is absolutely critical. We know that children living in single-parent households are almost twice as likely to be in poverty as those in couple households. There is not a sudden increase in this rate, but we are doing a number of things both directly and financially, as I have already touched on. More broadly, we published the domestic abuse Bill, which we hope will help address the experience of not only victims of domestic abuse but of their children. Our commitment to increasing mental health expenditure, our work on drug and alcohol and our support for free childcare are also crucial.
I am running rapidly out of time, but I want to touch on the concerns raised by the noble Baroness, Lady Thomas, about the PIP awards for disabled people. I hear the concerns that she raises, but I note that a greater proportion of people are receiving the highest level of PIP awards today compared to its predecessor, the disability living allowance. I am not able to do justice to all the other areas that have been mentioned, so I will make my closing remarks and then write to your Lordships with the rest of the answers to the important points that have been raised.
As many noble Lords pointed out, reducing inequality and poverty is about not just supporting living standards today but building and investing for the future. I wondered whether the noble Lord, Lord Adonis, had caught sight of my speech when he made a similar point. We want to build an economy that enables individuals to reach their potential tomorrow.
I will touch briefly on three areas where our investment today will help to build a more equal society. As I just mentioned, the data show that where a child is growing up with one parent or just one parent working they are more likely to be in poverty. That is why we have introduced 15 hours of free childcare for disadvantaged two year-olds and doubled the hours of free childcare for working parents of three and four year-olds. In 2019-20 we spent almost £6 billion on childcare support, which is a record amount, and more than 700,000 disadvantaged two year-olds have benefited from the free education places we introduced in 2013.
The noble Lord, Lord Adonis, and others criticised our record on education. We have committed to spending an additional £900 million in our schools in 2019-20 and have protected the pupil premium. The crucial thing is that the investment is starting to pay off. The gap between disadvantaged pupils and others has closed by about 13% at key stage 2 and nearly 10% at GCSE since 2011. We know that higher qualifications translate into higher-paid work—not a quick win, but an important one.
A number of noble Lords raised secure and affordable housing, which is at the root of a sustainable standard of living. The Government have committed more than £9 billion in this spending review period to the affordable homes programme to deliver 250,000 new affordable homes of a wide range of tenure, including social rent. The Prime Minister has also announced a further £2 billion of new funding in the affordable homes programme.
Finally, the NHS has always been the country’s most beloved public service, there to provide outstanding care whenever it is needed. The Government have introduced a long-term plan backed by the biggest cash boost in the history of the NHS, providing it with the certainty to plan for the next decade. These reforms might not show up in the inequality and poverty statistics today, but they are laying the foundation for an economy and society that delivers a higher standard of living for everyone—an aspiration that I know every single noble Lord who has spoken in the debate shares with me.
Lord Dubs
My Lords, I am grateful to all noble Lords who played a part in this debate. I am bound to say that I found their contributions interesting and thoughtful. I will reflect even more on the subject when I have had a chance to read them again in Hansard. I thank the Minister for the way she responded to the debate, even if I did not agree with her about everything.
I feel that there was a broad measure of agreement that the situation is not good regarding inequality and poverty. Nobody dissented from that, but the prescriptions for dealing with it are where we differ. All I say is this: the test of the debate lies not in the quality of the speeches, good though they were, but in whether it will have made a difference. I hope it will. It is up to the Government to do something about it.