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The Archbishop of York
That the Virtual Proceedings do consider the case for increasing income equality and sustainability in the light of the recent health emergency.
The Archbishop of York
My Lords, I am grateful to the Government Chief Whip and the usual channels for granting me this opportunity to move a Motion that is very dear to my heart—thank you. I commend Her Majesty’s Government for their rapid action in the current crisis and, through unprecedented public spending, working to protect jobs and avert millions of redundancies. It is in the light of this recent health emergency that I beseech your Lordships’ House to take note of the case for increasing income equality and sustainability.
Last Thursday, the noble Baroness, Lady Bennett of Manor Castle, opened a Question for Short Debate on Covid-19 and people living in poverty. I believe that what we are doing today has the potential to make a lasting difference. As Amelia Earhart, the first woman to fly across the Atlantic, said:
“The most difficult thing is the decision to act, the rest is merely tenacity.”
As long ago as 28 April 1909, Winston Churchill, then president of the Board of Trade, gave a speech in the other place in which he said:
“It is a serious national evil that any class of His Majesty’s subjects should receive less than a living wage in return for their utmost exertions.”—[Official Report, Commons, 28/4/1909; col. 388]
Not much has changed since. That principle remains as strong as ever in our national life.
Ten years later in 1919, after a world war and a global flu pandemic, the International Labour Organization constitution affirmed:
“Peace and harmony in the world requires an adequate living wage.”
The economic argument that workers should be paid a fair and living wage was not new even then. In 1776, Adam Smith, said to be the father of modern market economics, wrote:
“Servants, labourers and workmen of different kinds, make up the far greater part of every great political society. But what improves the circumstances of the greater part can never be regarded as an inconveniency to the whole. No society can surely be flourishing and happy, of which the far greater part of the members are poor and miserable.”
Many jobs fall far short of this ideal for millions of workers across the United Kingdom. The truth we now see is that the vast majority of front-line key workers are hard-pressed on poverty wages.
Kate Pickett’s and Richard Wilkinson’s ground-breaking book The Spirit Level showed that a wide range of social problems are more common in societies with larger income differences between the rich and the poor. The solution must be to narrow the gap between wages and basic living costs. The creation of an economic equality and sustainability commission would help to facilitate the creation of more income equality and a fairer society that would solve many of the pressing social problems such as the supply of genuinely affordable homes and social care provision. David Cameron, before he was Prime Minister, acknowledged:
“We all know, in our heart, that as long as there is deep poverty living systematically side by side with great riches, we all remain the poorer for it.”
When I was Bishop of Stepney, I soon became aware that low-paid workers there were having to work two or three minimum wage jobs but still struggled to make ends meet. At that time, the Living Wage Foundation, started in Bethnal Green in 1997, called on businesses to recognise the important role of their “invisible” workers and pay them a real living wage.
A recent Living Wage Foundation publication from 3 March 2020 quotes two case studies of year 6 pupils. The first says:
“Mum works extremely long hours to make ends meet—often do not see parents for long periods. Choice between paying bills and paying for food.”
The second says:
“Mum works as a Care Worker and is paid £8.21 an hour. Have to do the dishes and keep things tidy at home—I have my chores to do. Mum is not supposed to work weekends but works Saturday and Sunday—comes home, has dinner, watches TV and goes to sleep. I am lonely. This”—
a living wage—
“would make a difference to my family.”
I am very proud to support the proposals from the Living Wage Commission, which I chaired, for the real living wage, calculated according to the cost of living, providing an hourly rate of pay that is independently calculated each year. Rates for 2019-20 are £9.30 across the UK and £10.75 in London. This living wage applies to all directly employed staff over the age of 18, regardless of the number of hours they work. We need to distinguish between Her Majesty’s Government’s national living wage—a higher minimum wage rate for over-25s—and what I referred to as the real living wage, through which families do not go short.
If we support the principle that those who are least well-off should get the most help, it is shocking that children living in poverty have not been the number one priority in the unprecedented package of support announced by the Chancellor. The coronavirus national emergency is already exposing the inadequacy of the safety net provided by our social security system, as more people who have not previously relied on benefits get to experience how mean it really is. Hopefully, this will lead to a more generous and compassionate system. So, why not increase the national living wage to £10 per hour for everyone now? The time has come for us all to stop talking about welfare benefits and talk instead about social insurance, a term which underlines both that our focus should be on need, and that we are all in this together.
The biblical vision is not of a world in which individualism and consumerism are the purposes for which we are made, but one in which we are created for fellowship and mutual responsibility. It is of a world in which the principal aim of policy is to enhance the well-being—that is, the personal and communal flourishing—of all in society. The challenge is to articulate a vision of that eudaimonia; not a word much used in Yorkshire or in your Lordships’ House, but a useful Greek word to describe the well-being and flourishing of a community and all those within it.
Dame Julia Unwin, in her chapter in the book I edited, On Rock or Sand? Firm Foundations for Britain’s Future, analysed the changing face of poverty in this country, including the rising gap between the rich and the poor. She also highlighted the new and deeply worrying fact that for the first time, the historic link between poverty and unemployment has now been broken. She writes:
“The notion that hard work will enable people to leave poverty and build a life of self-reliance has been broken. Instead the prospects of work provide intermittent activity, limited reward and no security.”
After the current crisis, the major concern of our age is sustainability. It is becoming ever clearer that income equality is a precondition for moving to environmental sustainability. It now seems inevitable that people all over the world will suffer endless environmental crises and hazards, leading to displacement and food shortages. As well as a need for better systems for emergency aid, much will depend on a strong ethos of mutual support between neighbours as well as between countries. That is fostered by greater equality, as Richard Wilkinson and Kate Pickett have shown in both The Spirit Level and more recently in The Inner Level. Greater equality is the basis for stronger community life and indeed a greater capacity to be united in a response to the climate emergency.
It is therefore crucially important to reduce income differences both before and after tax. We need to make income tax highly progressive again and to have higher taxes. To reduce inequalities before tax, all employers should, as a minimum, pay the real living wage. In English cities where Labour-controlled local authorities have set up fairness commissions, they have almost always become living wage employers. They have successfully communicated their real living wage commitment to everyone they do business with and have encouraged them to consider implementing the real living wage for the real cost of living.
The current crisis has made all of us aware of the need to recognise the value of our key workers. Please listen to the words of Linda, a carer:
“Since I started being paid the living wage I haven’t had to worry about if I can pay the bills and more importantly than that, I get to spend time every day with my mum and daughter and I’m not falling asleep on the sofa as soon as I get in. I eat better, I sleep better and I’m much less stressed”.
That is from a page in the Living Wage Foundation’s guide.
The Scottish Government and Wirral Council recently took bold steps to support care workers, committing to uplift them to the real living wage—including ancillary workers such as cleaners and catering staff. Some of the local employers have been paying their workers a real living wage since long before the crisis, recognising that higher pay benefits not only workers but businesses, through lower staff turnover and lower absenteeism. Care work is a huge industry with around 1 million workers supporting some of the most vulnerable people in society, often for incredibly low pay. For too long, its importance has been undervalued and underfunded but now there is a real opportunity to create lasting change in the sector.
As we emerge from this crisis, we must look again at how we value this work and pay for it. It is time to rethink how government, public bodies and businesses work together in order to bounce back better and ensure that there is adequate funding, so that all care work is rewarded with, at least, a real living wage. Then, we must deliver fair pay rises for our key workers and rewards for workers across the economy, to restore what they have lost through 10 years of cuts and slow growth. Let us make paying the real living wage the litmus test for a fair recovery. Let us help our country become a place where the wellsprings of solidarity—of a new, undivided society—can begin to spring up, and then go beyond the real living wage. Income inequality is the great giant of our time, which we must slay. The real living wage is a crucial tool in our armoury, but the living wage is a first and vital step in challenging inequality.
Let me end by sharing with your Lordships the four guiding principles which have impelled me to work tirelessly to promote the real living wage. The first is that all human beings are of equal worth in the sight of God. There is no one and no group of whom we can say “They are less important” or “They don’t matter”. The needs of the other person are always as important as my own. The second is a commitment to offer everyone the opportunity to flourish. A society is well-ordered only in so far as it offers ways of flourishing to all its members. The third is a recognition of our human interrelatedness and interdependence. As the African proverb says, “When a tiny toe is hurting, the whole body stoops down to attend to that toe”. The reality is that we are all inextricably bound up with each other’s welfare. We rely on each other; if one suffers, sooner or later we will all suffer. Covid-19 and the lockdown have vividly demonstrated this for us all. The fourth is the need to accept our duty of responsibility by using our God-given potential both for ourselves and to serve others. I beg to move.
Baroness Penn (Con)
My Lords, I remind your Lordships that this is a time-limited debate. This means that contributions are limited to two minutes, to enable all speakers to contribute and the Minister to give the fullest possible response.
Lord Moynihan (Con)
My Lords, I congratulate the most reverend Primate on initiating this debate. It is timely, since Covid-19 has provided politicians with the opportunity to put well-being before growth. The crisis which has brought so much pain and damage has also given rise to greater social interaction and neighbourliness, and a desire not only to take care of each other but to show respect and affection for those who care for us. NHS workers and carers across the country have become an intrinsic, tangible part of our family and daily life, whom we now depend on and embrace. Their prominence has been made possible as fast living and the consumer-driven lifestyles that fuel income inequality have been put on hold. In their place, the appeal for voluntary helpers has exceeded all expectations. Party politics effectively evaporated in the corridors of care. In place of prejudices and barriers, we are witnessing social cohesion, friendliness and mutual support. People have rediscovered those they live with.
Income inequalities are divisive the world over. As with other sustainability issues, the social and business consequences are inseparable. Correlations between a nation’s degree of income inequality and its rates of domestic abuse, crime and obesity will come to the fore again. Every one of these “social” problems blights and imposes a huge tax on society. But this health emergency provides the opportunity for a new approach and for closer collaboration, transitioning to sustainability in an overcrowded world.
It is not just our politicians but our companies, our religious leaders and our opinion formers who have a responsibility as we emerge from Covid-19. We must all take ownership; we must all take action; we must all take an interest. We must not ignore the important lesson we have learned: that we can put well-being before the excesses of economic growth.
Lord Livermore (Lab)
My Lords, it is a privilege to pay tribute to the most reverend Primate the Archbishop of York, whose commitment to equality shone through in his opening speech, as it has done throughout his career. I hope that he will continue his campaigning work in the years ahead.
Britain is a deeply unequal society. Income inequality is the fifth highest in the OECD, and there are vast inequalities in wealth, opportunity, education and life expectancy. It is tempting to believe that the Covid-19 pandemic is a great leveller, yet these inequalities have become greatly magnified. The economic effects of the pandemic are disproportionately experienced by the low paid and the young. Those working in shut-down sectors are seven times more likely to be the lowest paid, and those under 25 are three times more likely to work in hospitality or retail—sectors that have closed entirely. The health risks are disproportionately borne by the poor, those from black and minority-ethnic backgrounds, and women, because they are more likely to be key workers, live in cramped accommodation, or have an underlying health condition.
Alongside exposing the inequalities in our society, this health emergency also risks exacerbating them further. Unemployment will be concentrated in the lowest-paid sectors, potentially scarring future employment and earnings. Those soon to leave school or graduate will enter a labour market in severe recession, with lower job prospects and wages. For school-age children, prolonged periods out of the classroom are particularly damaging to those from poorer backgrounds.
Despite this bleak picture, the response to the virus has shown us a better way. While homelessness has doubled over the past decade, funding has now been found to house more than 90% of rough sleepers. Meanwhile, air quality has dramatically improved, as nitrogen dioxide levels have halved. No one, of course, would choose for life to continue as now, but we do face a choice about the society we want to be. As we commemorate VE Day, let us remember how that victory signalled a desire for change, and go forward with the same determination to build a new social contract, fit for the future.
Lord Bruce of Bennachie (LD)
My Lords, I wish to support the case for a universal basic income. The current crisis has shown the need for people to have access to basic funding, yet the machinery to deliver cash to many people does not exist. Many key workers on whom we now know a functioning survival economy depends—not just health and social care workers but delivery drivers, shop assistants and food producers—are all paid below average. Others, such as those on zero-hours contracts, those living within the cash economy and some self-employed people, are missing out altogether.
The post-Covid-19 scenario may be for higher unemployment and less job security. Work patterns are likely to change radically as more technical solutions are applied. It is true that new technologies may create new jobs, as some argue, but they may also make some jobs redundant. That will leave a small number of lucrative activities; some, but fewer, low-skilled and lower-paid jobs; and, overall, not enough employment to go round. We surely cannot contemplate a society were a small minority corner the jobs and opportunities, leaving the overwhelming majority behind. It is not only unfair but likely to prove politically unsustainable.
The scale of government intervention in the past two months shows that a universal basic income could be affordable. If it were set at between £50 and £100 a week, it would provide basic peace of mind and security, but not at a level that would deter people from joining the workforce if they could. It would also make people more willing to engage in consumption, and would therefore act as a stimulus to the economy. It certainly should not be buttonholed in any ideological category. It can be applied in a way that is economically and socially beneficial, right across society, and could sit alongside other targeted benefits. It could be funded through taxation in much the same way as child benefit, which is clawed back progressively, up to 100% from higher earners. A universal basic income would make a significant contribution to evening out income inequality. It is an idea whose time has come.
Baroness Meacher (CB)
My Lords, one of the main economic risks from the pandemic will be the likelihood of mass long-term unemployment, as we experienced in the 1980s. Today, the Resolution Foundation predicts a 600,000 increase in youth unemployment this year—this is just the beginning. The pandemic is destroying economies across the globe, and recovery will take time. Long-term unemployment destroys a person’s confidence and mental health, while employers are very reluctant to take on demotivated, depressed, unemployed people. The most at risk of unemployment are the least well qualified; this is fundamentally an issue of inequality.
At a time of mass unemployment, the punitive universal credit regime, providing minimal benefits within a fear-inducing sanctions framework, becomes immoral. Unreformed, it will create serious mental health problems, crime, and an even bigger drugs problem, funded by crime, than we have already.
A part of the solution will be active labour market policies and the job guarantee. In 2005 and 2007, the OECD published evidence of the effectiveness of such policies, which ensure that, after a specified period out of work, an unemployed person will be offered work in the public or charity sectors at the rate for the job, probably at the minimum wage. Denmark and the Netherlands were examples of countries which pursued such policies and had low unemployment against the trend. Had the UK adopted these policies, we would not have had 2.5 million out of work for about four years after the global financial crisis of 2008. Yes, there would be a net cost to the Exchequer, but the benefits would far outweigh those costs: the improved employability of those involved and higher tax revenue and lower benefit costs over time; and, at the personal level, less mental breakdown, crime and drug use. In essence, it would mean greater equality and sustainability and a healthier and happier society.
The Archbishop of Canterbury
My Lords, first, I thank the most reverend Primate for tabling this debate today, as well as for a lifetime’s work of battling inequality. May we continue to benefit from his wisdom and prophetic voice. I also look forward to hearing the maiden speech of the right reverend Prelate the Bishop of Derby.
I wish to highlight the issue of those particularly at risk because they do not have the right to access public funds. Migrants are more likely to be self-employed, in temporary work, or working in industries which have been especially badly hit. They are less likely to own their own homes, risking homelessness if they lose their income. Concerns have been raised that migrants may be compelled to continue working even if they become ill as to stop would be to risk destitution, which puts their and others’ health at risk.
We rely on the contribution of migrants to our society and economy. Some 850,000 migrants work in our health and social care sector, while they make up 40% of our food manufacturing industry. These are essential industries. They are working on our farms so we can have food on the table. We owe them deep gratitude.
After the Grenfell Tower disaster, the Government confirmed that
“all victims, irrespective of their immigration status, can access the services they need, including healthcare and accommodation.”—[Official Report, Commons, 22/6/17; col. 167.]
Can the Government give a similar confirmation now, and suspend the NRPF condition to allow migrants to access public funds?
Many of those without access to public funds are supported by small charities, which themselves face existential threats due to the health emergency. Will the Government continue to offer more support to those charities before they are no longer able to function and pick up their normal operations?
Christ teaches us that every human is equal before God. I pray that, as we face these extraordinary times, we seek to enact policies that affirm the dignity and worth of all as we have seen it in their contribution to us.
The Earl of Caithness (Con)
My Lords, I am not in favour of a universal basic income. It does not add up arithmetically, it does not improve living standards and, where it has been tested, it has not been a great success. I ask my noble friend about food and feeding those on the lowest incomes—a subject one of the House’s committees is currently looking at. The statistics are that, in 2017, 90,000 people died prematurely due to ill health. Some 20% of the population suffered from obesity, and the cost to this country in that year was £54 billion. Much needs to be done by the Government and us, both corporately and individually, to reduce these numbers.
Food standards and quality are integral to this. Can my noble friend the Minister tell me, in taking back our sovereignty and tackling this problem, which is more important—maintaining our high food and welfare standards or agreeing a trade deal that allows cheap food imports farmed to less rigorous standards? I also ask my noble friend what plans the Government have to secure the supply of basic food to those who can least afford it, particularly in these troubled times.
Lord Wood of Anfield (Lab)
My Lords, Covid has revealed the injustice of inequality in a savage way. It is a disease that has disproportionately hit the poorest. Lockdown has further exacerbated these inequalities, and remote working is mostly a luxury of white-collar professions. Those on low pay and in the gig economy have little financial option but to carry on working, with all the risks that that brings. Our children are now schooled remotely, but the Sutton Trust shows that huge inequalities exist in the provision of education. However, I believe that there is a Beveridge moment coming as the crisis unfolds—a chance to come together to shape the kind of country we want to rebuild. I make a plea for this Beveridge moment to have four key principles about equality at its heart.
First, we need to rectify what has become one of Britain’s largest comparative disadvantages: our long tail of low-skilled, low-wage workers. We have too many workers who revolve in and out of no work and bad work, with no protection or assets, who are told to take any job and climb an escalator of prospects that, frankly, does not exist. It has to stop.
Secondly, we need to redesign our public services to place prevention of life-chance inequalities at their heart. From health care to social care, education to housing and transport to culture, every service should have the goal of pre-empting deprivation at its core.
Thirdly, we must put equality and social justice at the heart of the tax choices we will have to face as we look to pay for our response to this crisis. Germany responded to reunification with a solidarity tax, a supplementary income tax for the wealthiest Germans. I believe it is time for us to contemplate a UK version of this and to grasp the nettle of taxing the sources of huge inequalities in wealth, in particular land and housing.
Lastly, the impact of Covid on the poorest countries is likely to be more catastrophic than in the developed world, but the architecture of international co-operation is now weaker than at any time since 1945. The UK should lead the effort to rectify that and make the assembly of an international coalition for greater global equality a foreign policy priority.
Baroness Randerson (LD)
My Lords, there is a business phrase: “Never waste a crisis”. We must not waste this crisis. We must not accept a return to the status quo. Our two priorities have to be climate change and a fairer, more equal society.
I will talk for a moment about Wales, my home country, which for decades has been the poorest part of the UK. Some 730,000 people, a quarter of the population, live in poverty, and income in Wales is about 90% of the UK average. This is a product of different things. Wales is a heavily rural area, and rural incomes tend to be lower. Tourism is very important, but the hotels are shut and the festivals cancelled. Farming faces an uncertain future because of Brexit.
Wales has also never fully recovered from the collapse of the heavy industries and the closure of the mines, but there have been very bright spots of investment—Tata Steel and Airbus, for example. But in the last weeks, both those companies have warned of their perilous financial position. We now face the danger of well-paid, skilled jobs being lost. So poverty in Wales is highly likely to increase after the Covid crisis.
My call is for long-term investment as a priority, first of all in education, from nursery schools through to universities, and secondly in infrastructure, from 5G to rail electrification. These investments must serve to develop our priorities.
Baroness Watkins of Tavistock (CB)
My Lords, I thank the most reverend Primate the Archbishop of York for securing this important and timely debate and for his learned and compassionate contribution.
The Government instigated new fiscal policies in the light of Covid-19. These have been welcomed as they were designed in part to alleviate financial disruption to households and therefore promote health security within our borders. The population has adhered to these current restrictions, demonstrating the value to society of the significant investment, but it is not just low income that contributes to inequalities in our society; it is the very varied contracts that people have at the moment. This is the reality for carers who are employed, who may often work on zero-hour or minimum- hour contracts. I hope that, following this crisis, those carers do not have to resort to food banks, or face rent arrears or the difficulty of not being able to work.
I return to the issue of instability of income and low incomes generally. The Taylor review of modern working practices says that we must make flexible working the default in employment contracts. If we did this and moved towards the target rate of 66% of median earnings as a national living wage, we would begin to move towards greater equality in income levels and stability in the country.
I ask the Minister to inform the House about the likely timetable for the introduction of the expected employment Bill, which may well address some of the inequalities that I and other noble Lords will outline today.
Baroness Neville-Rolfe (Con)
Most of us are probably in favour of more equality in general. Some will remember that the Duke of Omnium, Trollope’s Liberal Prime Minister, was especially in favour of perfect equality—yet he was vastly rich and owned thousands of acres.
The best way of helping everyone materially in the long term is to increase the size of the overall cake. The capitalist system is by far the most successful ever devised for making a country richer—compare Cuba and Venezuela with the United States and Canada, or, better, South Korea with North Korea. But—and I accept that it is a substantial “but”—the distribution that results from naked capitalism is not regarded as fair, which is why we have progressive taxation, welfare, the NHS and the living wage, which the most reverend Primate the Archbishop of York has of course pioneered. All these allow us to balance fairness with the needs of economics. Moreover, the best measure of equality in a society is generally agreed to be the Gini coefficient, and the fact is that, at least since the financial crisis of 2008, movements in the index have shown that UK society has become somewhat more equal.
As we all know, we have to find enough to pay for the NHS, schools and social care—£230 billion last year, comparable to the total raised from income tax and corporation tax—and, lest we forget, the main provider of taxes is business and the people that it pays and employs. This is why the lockdown must end soon, or we will not be able to afford so much that we value.
Finally, the crisis has shown us that people’s need is not for money alone. We need a society where people show care and respect for our fellow humans. Look how moved we have been by our army of volunteers. Kindness matters, and so do religious networks; one of the horrors of the current rules is that churches and mosques are shut.
I warmly welcome the maiden speech of the right reverend Prelate the Bishop of Derby; I have much enjoyed evensong in her beautiful and historic cathedral.
The Lord Bishop of Derby (Maiden Speech)
My Lords, Jesus said,
“seek first the Kingdom of God”,
and in your Lordships’ House, I have caught glimpses of that kingdom: in the warm welcome, in the kind advice of officers and staff, in the patient support of the Church of England Parliamentary Unit, and in the substance of the work noble Lords do, as today.
In January 2015, I became the first woman consecrated bishop in the Church of England. I take this opportunity to thank my friend, the most reverend Primate the Archbishop of York for his support and encouragement, and to pay tribute to his integrity and influence. It is true to his priorities that he uses this debate to champion the poor and continue the fight for justice. It was a particular gift to be “called home” a year ago, to serve as Bishop of Derby and I am proud of the ways in which diocesan staff, clergy, schools and congregations have stepped up in these difficult times. Derby and Derbyshire have responded generously to meet the needs of the most vulnerable: they have made known the kingdom of God.
There are common threads running throughout my ministry, including the fight for equal access, inclusion and opportunity; a passion for the arts, culture and sport; and a commitment to children and young people, with particular concern for the most vulnerable and at risk. It is an honour, therefore, to be vice-chair of the Church of England Children’s Society. At this time of national emergency, we know that there is much to be done: to respond to every child; to keep all our children and young people safe; to support the mental health and well-being of our children; and to protect children and families facing increased financial insecurity as a result of this crisis. The inequalities that affect the more than 4 million children in poverty in our country run deep and are systemic, so solutions need to be long-term and sustainable.
When asked about the kingdom of God, Jesus brought a child among them and said,
“of such is the kingdom of heaven”.
I thank noble Lords for their patience in hearing my plea that we put children at the heart of our work for a more just, equitable and sustainable society.
Lord Boateng (Lab)
My Lords, we warmly welcome the speech of the right Reverend Prelate the Bishop of Derby and her presence now on the Bishops’ Benches. Above all, we thank the most reverend Primate for his contribution, not just in bringing us this debate but for a lifetime of service to the cause of social solidarity. He spoke, as he has throughout his career—throughout his service, from his time as a curate in Herne Hill, when I remember him well—of the importance of solidarity. He said that we are all in this together. Indeed, we are, but we have to make a reality of that, because the truth of the matter is that we are not a more equal society when, even before the coronavirus, UNICEF estimated that there were 2.5 million children living in food insecurity in our own country. Now it is even worse.
The Rainbow food centre, which I know well, has seen an increase of 42% in the number of children now having to turn to it for sustenance. We have to address this and give serious consideration, I argue, to a universal basic income. It is not true that it is not effective. The evidence is, as the LSE demonstrated only too recently with Compass, that a £20 billion scheme would lift one-third of people out of poverty. We know that it is being tried in Spain; we ought ourselves to examine it carefully. If we cannot do that, we can increase child benefit for all, and we ought to. We can and we should revisit the two-child rule. Will the Minister assure us that that is being done?
Social solidarity means “ubuntu”. The most reverend Primate knows that well. We are all in this together; let us demonstrate that with practical policies.
Lord Shipley (LD)
My Lords, I congratulate the right reverend Prelate the Bishop of Derby on her excellent maiden speech, and thank the most reverend Primate for all his work in support of this House, but particularly for his tireless campaigning on issues of financial inequality, debt, poverty and homelessness over many years.
Recent data from the Office for National Statistics has shown that people living in more deprived areas have experienced Covid-19 mortality rates of more than double those for people living in less deprived areas. A postcode lottery of morbidity is unacceptable, and the Government simply must tackle the fundamental inequalities that have put some people at greater risk.
A briefing I received from Citizens Advice in Newcastle earlier this week made several proposals that I hope the Government will adopt to assist households as temporary financial interventions are reduced. It suggests that there should be no sudden cut off to the job retention scheme or the income support scheme, and that there should be long-term increases in the safety net provided by universal credit because many people will find it hard to get back to work when lockdown ends. There should also be a recognition that further extensions may be needed for existing mortgage and debt holidays, and it proposes a coronavirus financial hardship fund, which would be different from universal credit in that it would help people facing sudden essential costs, through a grant or a loan. These proposals seem wise. We should remember that furloughed workers on low pay have had a 20% cut to their incomes.
I was a signatory to the recent call to prevent disadvantaged children falling behind in their learning by means of extra tuition through a catch-up premium for their schools. I hope the Government will understand the vital importance of this, to reduce educational inequalities.
Lord Harries of Pentregarth (CB)
My Lords, I pay tribute to the most reverend Primate the Archbishop of York, who has always been courageously committed to the subject of this debate. As he retires as Archbishop, I wish him well for the next stage of his very distinguished public ministry.
The coronavirus has revealed in the starkest terms that the world we have lived in until now is quite unacceptable. For example, it has long been known that life expectancy in the most deprived areas is about 10 years less than it is in the more affluent areas, so it is not surprising—though still deeply shocking—to see twice as many people dying of the virus in those deprived areas than in the wealthier parts of the country. We got too used to the old world, with its grotesque inequalities, too resigned to the notion that this is the way that things always must be. They do not always have to be like that.
At the same time, the virus has revealed that another world really is possible. The population have shown the most remarkable solidarity, the Government in their financial rescue plans have acted boldly in the interests of the whole, and the underpaid hospital workers, care workers and others at the front have rightly been recognised as vital key workers. Let us have a world where they are not only clapped, but also paid enough to live on. The average hourly pay for a care worker in the UK is £8.19 an hour. How many of us could live on that?
We cannot think only of those in our country. We must think of the most vulnerable groups across the world, on whom the global economy depends. For example, there are 64 million migrant workers in the world, and in so many countries, crowded into insanitary dormitories. They have been particularly at risk. People used to talk about cheap labour. Let us talk instead about precious human beings. It sometimes seems as though the world is divided between those who, broadly speaking, are beneficiaries of a capitalist economy, and those who are financial slaves because they have no option except to starve. The world that we have inherited is no longer acceptable. Let us find a new, more humane way to live together.
Lord Mackay of Clashfern (Con)
My Lords, I thank the most reverend Primate the Archbishop of York for his service and wish him and his well-esteemed lady a retirement—not necessarily from campaigning, but from his office—as long and happy as it is well deserved.
After the French Revolution, equality became a very prominent issue. In a sermon, Reverend Robert Shirra, a minister in Kirkcaldy, Scotland, examined a number of groups and concluded that equality does not exist. Not necessarily for that conclusion, a street in Kirkcaldy is called after him to the present day. I accept the conclusion that most human groups have a hierarchy and that where the incomes of members of the group are concerned, that usually leads to hierarchy in levels of income. I believe that this terrible virus has taught us very clearly how much our well-being and our lives depend on one another. Those higher up the hierarchy need a strong interest in the well-being of those who are lower. This should also be a powerful factor in the relationship between different groups. Of course, this is not a new thought. The divine head of the faith that the most reverend Primate and I have professed for a long time required:
“Love your neighbour as yourself”.
Baroness Sherlock (Lab)
My Lords, I thank the most reverend Primate for choosing this topic and for his years of public service, especially for his care for those on the margins and the risks he has taken for justice—from cutting up his dog collar live on air to protest Mugabe, to being willing to be driven blindfolded to try to persuade gang members to identify those who killed Charlene Ellis and Letisha Shakespeare. Even more impressively, he has even cooked for Mary Berry. The House will miss him in retirement, but it was a delight to hear the maiden speech of the right reverend Prelate the Bishop of Derby. I look forward to more from her.
Our country is in stasis, our economy in meltdown and our way of life in the spotlight. This crisis is a lens through which we see clearly the way we have chosen to order our society and our world. The disparity in our jobs, our homes and our wealth reveal massive inequality and injustice. Those in overcrowded flats, insecure jobs or freshly unemployed with few savings are having a very different crisis from those who are working at home, jobs and income secure, kids studying online, relishing the peace outside.
Will the Government talk directly to those hardest hit in this crisis before they shape the recovery? It does not have to be like this. We do not have to accept the poverty and inequality, the gig economy and the tax avoidance, the polluters not paying and the erosion of the welfare state. My noble friend Lord Wood is right: this can be a Beveridge moment. We can use this terrible crisis, like the post-war Government did, to say we want a country fit for heroes—in the NHS and social care, in supermarkets and schools, the drivers and refuse collectors, the stressed parents, the desperate carers, the anxious disabled people and the lonely older people. This is a moment of decision. We can make different choices for all of us. The future need not look like the past.
Baroness Kramer (LD)
My Lords, I will talk in particular about self-employment. Of course I join others in condemning self-employment that is phoney or abusive, but most of the 5 million independent contract workers prior to Covid were neither phoney nor abused. They brought flexibility to our changing economy and they included many of our most innovative and creative individuals, from IT to industrial design to the arts—a workforce critical to the new economy of the 21st century. The creative industries alone, largely made up of independent contractors, contributed over £1 billion a year to GDP.
The Government finally recognised this in their very welcome Covid self-employment support scheme and to some extent in the bounce-back scheme, although I still think they should have done more, as I have said in previous speeches. But as we move into the next phase, self-employment becomes even more critical. First, many people who have been furloughed will find that they do not have jobs to go back to. Secondly, we need to move into a new economy, not recreate 2019. That means innovation and change.
Universal credit fails to support those seeking to start a self-employed business, whether window cleaning, IT consultancy or film production. This is crazy because it becomes a serious argument for universal basic income. I am personally in two minds about UBI because I can see its pitfalls, but universal credit has proved itself so inflexible and become so much a stick to beat people on benefits rather than a support that it is time to be open to alternatives.
In addition to other arguments for UBI, most of which concern boosting demand, the Government could use such a scheme to underpin a growth shift to self-employment, allowing independent contractors to take risks. It becomes a mechanism for starting businesses as well. No one wants a crisis like Covid, but our recovery should improve the future, not return us to the past.
Baroness Boycott (CB)
My Lords, I welcome this debate and thank the most reverend Primate for introducing it. Since the crisis began and the lockdown was enforced, extraordinary hardship has been suffered by many, in particular in relation to their food supply. According to research published this week by the Food Foundation—I declare my interest—5 million people in the UK are living in households with children under 18 and have experienced food insecurity. Shockingly, more than 200,000 children have had to skip meals because their parents do not have enough money. On top of this, 31% of kids who are entitled to free school meals—that is, half a million of them—are not getting substitutes. It was a terrific government idea to supply a £15-a-week voucher to make up for free school meals, but the delivery company that was chosen, Edenred, has been overwhelmed by demand and basically unable to meet it. That has meant a huge number of parents having no access to food.
Once again, it feels as though the Government have not stepped up to the problem of our food supply and its distribution. It has been left in the hands of the supermarkets—which have done really well—and the charity sector, which has played a blinder. We have heard from many other noble Lords about community initiatives and the way in which people have behaved towards their neighbours, which is heartening to see.
I dread to think of the physical and emotional impact on children when they finally return to school. We already know that a lack of good nutrition in the summer holidays can affect the poorest in our society and their academic achievements, and these can go on for life.
The Welsh Government have committed to supporting children through the coming summer holidays. Will our Government do the same? Will they please consider increasing support through the child benefit system, which is the one system that ensures that money gets directly to mothers and children regardless of whatever else might be going on in the family?
The Lord Bishop of Durham
My Lords, I congratulate the right reverend Prelate the Bishop of Derby on her moving maiden speech. I am grateful for all she does to champion the voices of children.
I want to thank Archbishop Sentamu for his leadership in consistently speaking up for racial and social justice. He champions work among young people, notably through the Archbishop of York Youth Trust. He inspires others to do the same.
The Covid-19 pandemic is a dividing experience through its unequal financial impact. The lowest-earning 10% are seven times more likely than high earners to work in a sector which has shut down. Archbishop Sentamu champions the real living wage. In-work poverty is compounded by irregular working hours. Such unpredictability means that families cannot easily save to safeguard themselves from unexpected life events. Eighteen per cent of the north-east’s working population experience insecure work. Turn2us found that people on zero-hours contracts expect a £193 drop in monthly income. These workers often provide essential services such as cleaning and delivery, yet face great financial instability. Will Her Majesty’s Government promote Living Hours accreditation?
Under-25s are two and a half times as likely as other age groups to work in a sector which has now shut down; youth unemployment could rise to 2 million. Long-term unemployed young people go on to earn less and are more likely to be unemployed in the future. What plans do Her Majesty’s Government have to protect young people in the labour market from the detrimental impact of the coronavirus crisis?
This crisis highlights the need for a fairer all-round taxation system in which those on middle and higher incomes, of all ages, contribute more to paying the long-term costs. I hope, too, that we will explore a universal basic income system and not simply dismiss it.
Will Her Majesty’s Government do everything possible to create increased, sustainable income equality and thus create a more just society that looks more like the kingdom of God?
Baroness McIntosh of Pickering (Con)
My Lords, it is a privilege for me to serve on the Rural Affairs Group of the Church of England. I take this opportunity to pay a personal tribute to the most reverend Primate the Archbishop of York, who is both loved and revered in equal measure in York and North Yorkshire. He brings a very special, very vibrant presence and appears utterly humane at every opportunity. Two particular references come to mind: when he came to pray and preach for us at my invitation in Thirsk, Malton and Filey, and the comfort that he has shown to, among others, Joan, the mother of Claudia Lawrence, who has been missing from York for a number of years now.
The most reverend Primate is absolutely right to focus on inequalities at this time. Government does not usually employ people, except now, through the furlough scheme. I want to refer to the plight of small businesses and the self-employed—those who do employ people. Currently, the self-employed, especially tradesmen such as plumbers, electricians, hairdressers and cleaners, are really struggling. I would like to see them treated on the same basis as employed people at this time of emergency measures. Discrimination is also suffered by older workers, often volunteers, who are struggling for the hours and the recognition that they deserve, and some younger workers are finding it difficult at this time to get on to the employment ladder. Most of all, I make a plea for the Minister to look really closely at how zero-hour contracts can be justified; they must be addressed.
In conclusion, my plea to the Minister is that the length of the furlough scheme should match the length of the closure experienced by charities and businesses during the lockdown and that he will address, and perhaps terminate once and for all, the practice of zero-hour contracts. We all wish the most reverend Primate a long, happy and busy retirement.
Lord Faulkner of Worcester (Lab)
My Lords, I, too, congratulate the most reverend Primate for securing this debate and for the wonderful way in which he introduced it. This is such an important subject. Many of your Lordships will have seen the front-page lead in last Saturday’s Guardian with the headline “UK’s corona divide”, and,
“People living in poorest areas dying at twice the rate of those in richest areas”.
This is based on new data from the Office for National Statistics.
In my two minutes, I want to draw attention to the part played by tobacco in contributing to these shocking figures. Smoking rates among people in routine and manual jobs are more than twice the national average. Among people who are unemployed, smoking prevalence rises further. Nationally, half the difference in life expectancy between rich and poor is due to higher smoking rates among those on low incomes. Smoking caused around 78,000 deaths in England last year and over 400,000 hospital admissions. Data from the UK Covid symptom tracker app shows that smokers are more likely to report Covid-19 symptoms, and smokers with the virus who need hospital care are more likely to die than non-smokers.
This should be a wake-up call. We must do more to improve population health and reduce health inequalities, not just respond in times of crisis. Investing in tobacco control and stop-smoking services to achieve the Government’s ambition of a smoke-free England by 2030 would reduce health inequalities, save lives and lift over a million people out of poverty. While tobacco addiction pushes smokers into poverty, the tobacco industry makes over £900 million in profits in the UK each year. A polluter-pays charge on the tobacco industry, as advocated by the APPG on Smoking and Health—I declare an interest as one of its officers—could provide sustainable financing for the tobacco control measures needed to deliver the Government’s smoke-free ambition and support the majority of smokers who want to quit to do so.
Baroness Tyler of Enfield (LD)
My Lords, in the short time available, it is simply not possible to go into any detail about the measurement of income inequality, which is a complex and contested area. Suffice it to say that, according to the OECD, the UK has one of the highest levels of income inequality in Europe, albeit lower than in the USA.
Of particular relevance to today’s debate, the Resolution Foundation has pointed out that while everyone is feeling the effects of Covid-19, the impact is not equally distributed. Indeed, workers in shut-down sectors such as hospitality and non-food retail are among the lowest paid in the workforce, earning less than half than those able to work from home. There are strong links too with wider social inequalities. Private renters, who already face a great deal of insecurity, are also 40% more likely to work in shut-down sectors than their homeowning counterparts. Key workers, particularly those in health and social care, are more likely to be parents. Indeed, almost 40% of working mothers were key workers before Covid-19 and are much more exposed to health risks. Most starkly, earners in the bottom half of the earnings distribution are twice as likely to be key workers and 2.4 times as likely to work in those shut-down sectors. These are our fellow citizens, who are bearing the economic brunt of the crisis.
From a well-being perspective, those who are most likely to be back at work in a reopened economy—those who may not have the option to work from home—are also those more likely to be on a lower income, at risk and in need of assistance; for example, with childcare. I join others in calling on the Government to start framing policy responses to Covid-19 through the lens of well-being, which can help expose the complex multifaceted problems that it presents and the policy trade-offs that will be needed. Inequalities, be they in income distribution, health or well-being more broadly, are erosive of trust and social cohesion—things that we need now more than ever. Policies such as improving job security as well as proposals for a universal basic income must surely come to the fore.
Baroness Uddin (Non-Afl)
My Lords, I thank my friend the most reverend Primate. We have a shared history as co-protagonists fighting racism in Tower Hamlets. He has been a vociferous advocate for all communities, particularly post 9/11, in addition to his seminal role in the Macpherson and Damilola Taylor inquiries.
The current health emergency is being felt hardest by families on low pay, people with disabilities, and women and children living with abuse; they are experiencing untold financial distress, often relying on community and charitable organisations for their daily sustenance. We are staggering through what is a bleak narrative by any decent standards, given that the geographical areas hardest hit by years of neglect, poverty and social injustice—namely, Newham, Tower Hamlets and Hackney—are also now seeing disproportionate numbers of deaths compared with our cousin boroughs.
The inept political decision by decision-makers who cannot fathom the physical and mental impact of poverty has cast the shadow of universal credit and low pay on an entire generation of people already toiling with decades of structural inequalities, the most defenceless, and inflicted on them an unfair system leading to a fundamentally unequal divide. Yes, we have to balance the budget, but we must also strive for an equal and humane society.
The rainbow on the horizon, as many have said, is the Government’s rapid financial response to this emergency, which has proved that we can fund services in our uppermost priorities. We must ensure that the most vulnerable have their rightful place in contributing to a fairer and kinder society as we rethink the emerging economy post Covid-19.
Finally, I pay my respects to Colonel Tom Moore and Dabirul Islam Choudhury, both 100 years old—one raising millions of pounds; the other, inspired, raising tens of thousands for a better tomorrow. I wish the most reverend Primate and his wife, Margaret, a peaceful retirement, but one not too distant from the House.
Baroness Healy of Primrose Hill (Lab)
My Lords, I too thank the most reverend Primate. This is the time to take bold action to tackle poverty and economic insecurity. A brutal light has been shone by the coronavirus on the underlying inequality in this country, where people in poor and deprived areas are twice as likely to die. Income insecurity, low pay, temporary work and poor housing have all taken their toll on health, as the recent Marmot report showed. A recovery of universal basic income must be the way forward as the country tries to emerge from this crisis. We need to begin to build a fairer, more resilient and good society and economy, as we did after the Second World War.
Welcome though the employment support schemes put in place by the Government are, they will soon come to an end without a further commitment to extend. With over 2 million people applying for universal credit in the last two months, delays in paying out cash mean that families have gone hungry. Now is the time to put in place a mechanism to distribute cash to everyone without delay, to provide an income floor that nobody falls below, and a springboard to recovery.
As the lockdown is eased, many sectors such as aviation and hospitality may never recover, and the jobs lost permanently will mean that people must be helped to retrain and reskill. Many are calling for temporary hardship schemes to cover the gaps that the self-employed must endure while they wait for funds, but a UBI would ensure no one had to rely on a food bank or face homelessness because of benefit sanctions or delays with universal credit. It would not replace wages but would instead help to boost them, especially for those front-line staff in the care sector, who have finally been recognised as key workers that society relies on to look after the most vulnerable.
The Earl of Clancarty (CB)
My Lords, Covid has revealed further the underlying poverty in this country, as well as exacerbating the problem. There is no more obvious symptom of that poverty than food banks, demand for which was the greatest in 2019, before the health crisis started, so it is clear that when we look at current demand, it is considerably higher than it would have been without that base level.
Food banks are one of the biggest black marks against this country. It is self-evidently a social problem that a significant number of people cannot afford to put food on the table, because poverty itself is a social ill. It continues to surprise me how little food banks are raised as an urgent matter, perhaps because they have become too much an accepted part of the social landscape. Nevertheless, Philip Alston noted last year, as others have done, that they should not be a safety net. It is the Government’s job to provide at least that.
It is difficult to question the Government on this, since what we tend to hear about in reply is the public’s generosity and, since the health crisis, the departmental and charitable support for food banks—anything other than the current necessity for their existence. Can the Minister say whether the Government intend to take steps to make food banks unnecessary? I plead for a focused reply.
If you pull at food banks, inevitably you pull at so much else. Social problems are largely treated separately and compartmentalised, even as the evidence of a link between poverty and social problems such as mental health and domestic violence builds up. Yet that remains largely unaddressed by the Government.
In 2016, a Joseph Rowntree report on poverty estimated costs to the public purse of £78 billion per year, including healthcare, social care, schools, policing and children’s services. This is money that for social and financial reasons should be spent at the very beginning of the process, either through welfare or, better still, through a universal basic income, to provide the decent standards of living that all citizens have a right to and to avoid many of the social problems to which poverty leads.
Lord Young of Cookham (Con)
My Lords, the House is grateful to the most reverend Primate for this debate. It is timely because the Government are about to embark both on a spending review and a Budget which between them will shape the nation’s response to the pandemic, as well as setting out the Government’s response to the competing priorities we debate this afternoon.
On 12 March, the Prime Minister said, “I must level with the British public.” He was talking about the impact of the virus on the nation’s health. We now need the same frankness about its impact on the nation’s economy. Six months ago, a number of commitments were made in good faith by my party in its manifesto:
“We will not borrow to fund day-to-day spending … We promise not to raise the rates of income tax, National Insurance or VAT”,
and
“debt will be lower at the end of the Parliament”.
Those commitments are unsustainable, and we should say so now. In particular, leaving untouched the most progressive tax we have makes it impossible to respond to the compelling case made by the most reverend Primate and the right reverend Prelate the Bishop of Durham.
I have two practical suggestions. First, we should abolish the universal winter fuel allowance, and roll the savings of up to £3 billion into social care, which has had a raw deal in recent settlements.
Secondly, we should introduce at least one new council tax band on top of band H. In a recent report, the IFS described council tax as
“increasingly out of date and arbitrary, and highly regressive with respect to property values. It is ripe for reform.”
It is absurd that the most valuable properties pay only three times as much tax as the least valuable. Ideally, there should be a revaluation, but that will not happen. However, a new, higher band would make the tax more progressive and bring in more resources for local government.
Clarity on the manifesto; replacing an untargeted benefit with help for social care; and a more progressive local tax. Those are the building blocks towards the fairer society advocated by the most reverend Primate.
Lord Adonis (Lab)
I strongly agree with everything that the noble Lord, Lord Young, has just said. The last Labour Government introduced one higher band in respect of council tax. The noble Lord’s pro1posal for another higher band and using the resources for social care should be taken forward.
I, too, join the tribute to the most reverend Primate the Archbishop of York. As a spiritual and a pastoral leader, he has touched the lives of many of us, and his international work has also been seminal. Most of us will never forget the way he took Mugabe to task—particularly Zimbabweans.
On the big issue of youth poverty that he has raised and what we do about it in the coronavirus crisis, I shall follow my noble friend Lord Boateng and make a few concrete suggestions. I shall just rattle through them almost like tweets as we have so little time.
First, as my noble friend said, we should revisit the two-child rule. This relates to families who are on benefits and it goes to the heart of poverty. It is completely unjustifiable, and it targets further poverty on the poor, which is the opposite of what we should be doing.
Secondly, everyone in the education world knows that there is a big crisis at the moment over the provision of free school meals, because the voucher system is not working and the meals are not being provided in schools. We need a quick and targeted fix for this. The best proposal I can come up with about what we should do immediately is to double child benefit—which is to some to extent targeted because it is taxed away for the better off—for the duration of the crisis so that families have the money they need for schools meals rather than complicated school meal vouchers.
Thirdly, we need to give people the right to repeat years in school, because a lot of young people are losing out on education at the moment.
Fourthly, we need to give people the right to do additional years of further education, because a lot of young people are going to be unemployed or will not get the results they need. That should be tied into an urgent review of apprenticeships and the right of people to study in FE if they cannot get apprenticeships because the numbers are falling.
Finally, on university fees, it is clearly unconscionable that students should have to pay fees for substandard courses from this October. The Government should have either a reduced fee or no fee for next year.
Lord Chidgey (LD)
My Lords, I, too, congratulate the most reverend Primate on bringing this debate to us this afternoon. I shall make two points, the first looking at the impact of Covid-19 on the economic patterns experienced by different groups of workers and the second looking at the implications further afield on reaching sustainable development goal 16 on peace, justice and strong institutions.
Everyone’s health is at risk from the virus, which is causing workers’ lives to be altered across the country, some more than others depending on the work that they do. I reinforce the words of my noble friend Lady Tyler. The Resolution Foundation has identified four main groups of workers with similar experiences. Of these, key workers are the most exposed to harmful effects, as they are working in jobs where social distancing is very difficult. On the other hand, people working in shut-down sectors are most likely to be feeling the economic effects of the crisis. The other groups—those who can work from home and those who continue to go out to work—can continue with some sense of normality. Key workers and shut-down workers are suffering the most acute consequences, with lower-paid people, particularly the young and women, being the hardest hit. The virus does not discriminate between the rich and the poor, but the economic impact does. It is important for the Government to recognise the challenges and the sacrifices that some groups are more likely to be making than others.
Even before the devastating impact of Covid-19, only 18% of fragile states were on track to meet the sustainable development goal, and violence and conflict was on the rise. Mercy Corps will be debating this in a virtual discussion on 12 May—particularly the influence of weak governance, weak health systems and often significant displaced populations—in response to the virus. As Covid-19 spreads, the risk of violent conflict may increase, locally at first, and at multiple levels in the medium and long term.
Lord Singh of Wimbledon (CB)
My Lords, I thank my good friend the most reverend Primate the Archbishop of York for securing this important and timely debate. I offer him my best wishes in what will be, I am sure, a busy retirement.
Covid-19 has brutally made us aware that the severity and likelihood of infection discriminates against the poor and disproportionately affects black and minority-ethnic groups, and, importantly, their children. Lower-income groups are more likely to suffer from a poor, unbalanced diet, which can result in obesity, heart and lung diseases, and, particularly among those of Asian origin, diabetes and kidney and liver diseases, and can ultimately impact their mental health.
The global pandemic has made us focus on the need to urgently redress gross inequalities. Both Christianity and Sikhism lay great stress on concern for the poor and a fairer distribution of resources. But, in our selfish rush for material prosperity, at the expense of the needs of the disadvantaged, we have ignored the important ethical imperatives that are necessary for a socially and economically healthy society. The pandemic is a timely reminder that, as both our religions teach, life has both spiritual and material dimensions. I hope that the Government will take the lead in resetting the balance.
Lord Balfe (Con)
My Lords, I also congratulate the most reverend Primate the Archbishop of York on securing this debate. I draw attention to my interests in the register.
I must start by mentioning that a basic income, an idea which has come up from time to time, has been trialled in Finland, where the trial was abandoned. It would be good to look at why that was before we go too far.
I want to talk about what I see as the real scandal: the perception that those right at the top end of the economy do not need to pay much in the way of tax. I read in today’s Times, for instance, that Deloitte has 669 partners in Britain, who earned an average of £882,000 each last year. In another, quite separate story, I read that the boss of Ocado was paid £59 million last year, and that the finance chief and the chief operating officer, somewhat more humbly, got only £14 million each—of course, the business recorded a loss of £214.5 million. When people read these mind-boggling figures they wonder where, at the bottom end, they are going to exist.
I am pleased that, when I was chair of the finance committee of the Reform Club, I managed to bring in the London living wage. It is still paid there. However, we need to look at how we can benefit people at the bottom of the scale and how we can get fair tax out of the people in the middle. When people see Sir Philip Green flying in from Monaco, or Richard Branson on his island in the West Indies, they are rightly very cynical. My message is that we need to get together with people, and internationally, to tackle the tax havens and the many ways in which it is possible to hide or move income. It is not tax evasion; it is tax avoidance, by transferring money to the most beneficial regime. In the same way, some companies transfer their rights to Luxembourg, and thereby reduce the amount of tax that they have to pay in the UK.
I therefore ask the Government to look at ways of co-ordinating international action with the OECD, the European Union and others, to close the tax havens in the Channel Islands, Monaco, Panama, the Virgin Islands and the like. We really must start to tackle these abuses, which I believe underscore the way in which people see unfairness in society. If we are to have a fair division of income, we have to start tackling those people who believe that they are above income tax law.
Baroness Young of Old Scone (Lab)
My Lords, our record in the UK on income inequality and poverty is not very good. We have a higher level of income inequality than most European countries; 30% of children still live in relative poverty; and one in nine of the workforce has little or no job security. Covid-19 is making this worse, as many noble Lords have outlined.
However, this is not just about income inequality. Another inequality has been thrown into stark relief by Covid: the lack of the basic human right of access to green open space. The public have fully recognised that their physical and mental health depend hugely on being able to access green open spaces, the countryside and nature, yet 2 million homes do not have a garden. The most affluent areas in this country have five times more public green space per person than the most deprived areas.
A key part of the post-war settlement was a visionary programme to guarantee access to open space and nature in the form of our much-loved national parks system. I urge the Government to now follow that lead to ensure a fair and inclusive recovery that also delivers green equity—a nature recovery network both urban and rural to ensure that all our citizens have a right of access to green open space in the future.
Baroness Hayman (CB)
My Lords, this crisis has made us reflect on what matters to us and on who matters to us—the people we love and cannot be with, but also the strangers on whose courage, compassion and service we as a country have depended literally for our survival. We frequently express our gratitude to these people in words. After this, we need to express it in deeds, in reality, in changes and in a fairer system of income and taxation. However, we also owe it to the generations that come after us to be fairer. When we rebuild our economy, we need to do so in a way that is sustainable. We need to look at a greener future, with an economy that does not pollute or endanger the future of the world in the same way.
Today, the Committee on Climate Change has written to the Prime Minister setting out six key principles for rebuilding an economy that is stronger, cleaner and more resilient for the future—not a hair-shirt economy but one from which we can benefit as a community. Will the Minister assure me today that those recommendations will be taken very seriously?
Lord Lucas (Con)
My Lords, this pandemic has hit the less well-off the hardest, both in terms of the mortality rates and in the suffering of those affected by the lockdown. In the depth of this crisis, we have an opportunity to sweep away vested interest and entrenched ways that have got in the way of fairness and simplicity and to come out of it with a system that is much better for the less well-off and much fairer for us as a society. As my noble friend Lord Balfe said, it is simply ridiculous that we should continue to allow people who earn vast sums of money to get away with not making a proper contribution to the national income, whether they be individuals, corporations such as Google or Chinese traders who avoid paying VAT.
The inefficiencies of the system, as outlined by my noble friend Lord Young of Cookham, also need attention. There is a great opportunity here to make things better by taking advantage of the situation which we have, unfortunately, been presented with. I do not know whether the most reverend Primate’s suggestion of upping the living wage or of a universal basic income would work best, but something must be done to make sure that we no longer have a society in which a substantial number of people live below poverty levels. It simply will not do.
Lord Hendy (Lab)
My Lords, I thank the most reverend Primate for tabling this debate, and for citing in his opening remarks the speech of Sir Winston Churchill introducing the Trade Boards Act 1909. A wealth of academic research shows that greater even than the effect of progressive taxation and minimum wage legislation on diminishing inequality is the impact of extensive collective bargaining. That is what marks out the more egalitarian economies of Scandinavia.
From 1909, we had extensive collective bargaining in this country. By 1979, at the end of the most egalitarian decade in British history, when 65% of GDP was in the form of wages, 82% of British workers were covered by a collective agreement. Today, collective bargaining coverage is less than 25%. Consequentially, the wage share of GDP has fallen to less than 50%. Workers have lost their collective voice in determining their terms and conditions, as the current crisis has emphasised.
I urge the Government to take a leaf out of Winston Churchill’s book and, in discussion with the TUC, CBI and experts, reintroduce compulsory sectoral collective bargaining as Churchill did in the Trade Boards Act 1909. The wages councils, as the trade boards were subsequently renamed, were abolished in 1993 and voluntary sectoral agreements terminated and undermined in both public and private spheres. To cope with the transformation needed after this crisis, we need to bring them back to life, as we did to deal with previous crises: after the First World War, in the 1930s after the crash, and during the Second World War.
Baroness Bowles of Berkhamsted (LD)
My Lords, income inequality is accompanied by a lack of security and inequalities in health and longevity. Keeping the poorest poor is not good value for society or the state. The financial crisis slightly levelled incomes but left millennials comparatively disadvantaged, and now they are the ones most likely to have younger children, hit by school closures and cut off from grandparental help.
Indices now show that inequality is back on the rise, and the pandemic has already created its own economic inequalities—those who can work and those who cannot, those qualifying for grants or furlough payments and those who are not, those who will have jobs to return to and those who will not.
In January, a World Economic Forum report indicated that increasing social mobility—a key driver of income inequality—could benefit the UK economy by $130 billion by 2030. Tell me a better way to help recovery.
We can use what we have learned in lockdown for good. The “new normal” should treasure the positives, keep them and reinforce them. Work from home has been enabled for so many more people—use that to enable a more sustainable work/life balance, cut transport, and open more jobs to the disabled, carers and other people who have not been given the chance to work entirely from home.
We can have a green recovery, a caring recovery, a better shared recovery—and find that it pays its way. Will the Government seize that opportunity?
Lord Bilimoria (CB)
My Lords, the CBI, of which I am vice-president, was engaged in a project on structural inequality in the UK last year, culminating in the report Structurally Unsound in 2019. It noted that being from an ethnic minority background and suffering health issues can compound the inequality that you suffer.
I thank the most reverend Primate the Archbishop of York for his stellar service in his amazing career and I wish him a wonderful retirement. We shall miss him.
At the University of Birmingham, where I am chancellor, Karen Rowlingson, professor of social policy, mentioned that those with low incomes are more likely to suffer from Covid-19 and indeed, sadly, die from the virus. They are also more likely to see a negative impact on their incomes from lockdown than other groups in any recession that may come. If we can find ways to reduce income inequality, that will be crucial.
The City of Boston government has instituted a Covid-19 health inequities task force. Does the Minister think it might be a good idea for the UK Government to follow suit?
According to the IFS, after stripping out the role of age and geography, Bangladeshi hospital fatalities are twice those of the white British group, Pakistani deaths 2.9 times as high, and black African deaths 3.7 times as high. As the noble and right reverend Lord, Lord Harries, mentioned, key workers are at a higher risk of infection through the jobs that they do, and for carers the average wage is £8.19 an hour.
The Government have introduced a range of excellent measures—the job retention scheme, changing the rules for statutory sick pay, self-employment support—yet despite that almost 2 million people are now claiming universal credit, jobseeker’s allowance and employment support allowance. This is only going to get worse.
In coming out of the lockdown, the process of opening up should be mindful of inequalities. Will the Minister let us know whether the furloughing will be phased out and part-time working allowed?
The director-general of the CBI, Carolyn Fairbairn, said that when coming out of the lockdown perhaps most important of all is building back better. However difficult, the crisis has afforded us the chance to be radical. Tackling inequality must be paramount.
Baroness Verma (Con)
My Lords, we are grateful to the most reverend Primate the Archbishop of York for this debate. This crisis has demonstrated why it is more critical than ever to work with policymakers, educators and employers to make sure that we put the sustainable building blocks in place to enable economic mobility as well as ensure that the safety nets required for those who need the state to intervene are properly protected.
Many are facing incredibly difficult and uncertain times. The lives of poor working families were already stretched to provide and they were just managing before the crisis. They are now incredibly bleak. There is plenty of evidence available showing that life outcomes are hugely dependent on the tools that enable you to develop, the environment in which you are born, and access to nutrition and education.
These past weeks have seen the best in communities stepping up and helping others, and I hope that will not be lost in the months that follow when we slowly return to a form of normal. However, the solutions must go beyond depending on communities stepping up. Policymakers must work on how the cycles of long-term poverty can be broken. This deeply complex question requires not just short-term financial interventions but a rethink of what community and society mean. How do local businesses once again step up to work with educational institutions, and how do local authorities, with the extra funding that they have received during the crisis, demonstrate sustainable co-ordinated neighbourhoods?
During the last few weeks we have seen price hikes on many products, and no doubt we will see many more. What work is being done with companies, banks and retailers to ensure that already indebted people do not face further financial uncertainty as they try to manage a return to normality? Will my noble friend ensure that help and support is available that is accessible to everyone?
Lord Monks (Lab)
My Lords, I am pleased to take part in this debate. I wish the most reverend Primate very well for the future and thank him for his outstanding service to date.
Inequality has widened since the 1980s. Some have argued that it has been inevitable, but it is not. There are other reasons, but it is in part a result of the decline of collective bargaining, as my noble friend Lord Hendy argued. Collective bargaining needs a boost; Stanley Baldwin did it in the 1920s and 1930s. That would do quite a lot to end the self-servicing ethos that lurks in the corners of too many boardrooms.
We know that more equal societies do better on a range of issues, including education and health, to pick out two. They are also doing better with the virus, which is disproportionately affecting the UK’s poor, as others have argued. This must not be repeated in the post-Covid world. We have a chance to do something about that.
I have a couple of questions. Will the Government agree to the TUC proposal to establish a national economic and social council to forge a national strategy on equality and recovery in a way that is fair to all sections of the community? Secondly, as my noble friend Lord Wood suggested, will the Government consider a one-off solidarity tax, including on wealth, to fund job creation and the NHS, and perhaps even bite into some of the debts that we have recently been running up at a tremendous rate?
This week, as we commemorate the spirit of VE Day, can we recover that kind of spirit as we go forward to tackle our problems and let the broadest shoulders carry the heaviest burden?
Baroness Harris of Richmond (LD)
My Lords, I too thank the most reverend Primate for initiating this important debate. In doing so, I wish him well in his retirement years and thank him for his service to both this House and the country.
Inequality has risen steeply since the 1980s. The Covid-19 virus appears to have the heaviest impact on the lives of people living in deprivation or facing difficult socioeconomic circumstances. Those working in retail, industrial jobs, transport or tourism—as it mainly is in my area—are far less likely to have working from home as an option. Indeed, Richmondshire, the district in which I live, has been found to be the most at-risk area in England, with a prediction of 35% of jobs likely to be affected by a prolonged shutdown. We are a tourism-reliant area. No tourists and no money circulating in the local economy equals no jobs. The predicted 15% unemployment that we will sustain will have a devastating economic impact on us. We have outstanding assets in our county, but we also have great need: in our skills gap, which needs improving; in our low-wage economy; and in our poor connectivity with many of our deeply rural and coastal areas, which rely on better broadband. I do not have time to mention poor public transport or the need to invest more in education and encourage apprenticeships.
We will need a new, sustainable economic strategy. We must never again assume that we are safe from a pandemic virus, so we must ensure income protection for everyone now. If we did not appreciate it before, we now know the importance of key workers in all our communities. A universal basic level of income, funded by the state, must now be considered, with proper support for those with disabilities or frailties. Investing in low-carbon technologies, small-scale renewables, energy and fuel efficiency is now a matter of urgency. We as a country have some very difficult decisions to make. Let us hope that we make the right ones.
Baroness Prashar (CB)
My Lords, I thank the most reverend Primate the Archbishop of York for securing this debate.
My focus this afternoon is on ethnic minorities. Stark analysis by the Institute for Fiscal Studies illustrates the disproportionate impact of the pandemic on ethnic minorities and warns that some ethnic groups look more likely to suffer economically from the lockdown. The harsh realities of long and entrenched inequalities faced by ethnic minorities are all too evident. Ethnic minorities are more likely to be in insecure and low-paid work and are more likely to be unemployed. Ethnic minority staff in the health service are more likely to be on the front line, less likely to progress at work and more likely to be disciplined. All these factors put them at greater risk. While genetics and so-called cultural factors have been mooted as possible reasons, they must not mask the fact that persistent and long-standing social and economic inequalities lead to poor health outcomes and that racial discrimination is a factor.
A study last year by the Centre of Social Investigation at Nuffield College, University of Oxford, found shocking racial discrimination in the labour market at levels unchanged since the late 1960s. The Runnymede Trust’s latest report, The Colour of Money, shows that racial discrimination, like poverty, is a determinant of economic inequality. Runnymede’s other report, The State of the Nation, paints a very grim picture of disparities.
As a former director of the Runnymede Trust, some 36 years ago, it pains me to say that after nearly four decades the situation is not much better. For too long we have neglected to tackle discrimination and unfair institutional practices. In the last decade we have focused more on cultural factors and promotion of diversity, and not enough on racial discrimination and economic inequalities. This is not a binary choice. If we neglect racial discrimination and economic inequalities, disparities will persist. Building a resilient and sustainable society will remain a dream.
Deep-rooted problems require not just talk but strong action and policies pursued with determination and conviction. Can the Minister please tell the House what action the Government are planning to tackle persistent racial discrimination and consequent economic inequalities, which have been laid bare by this pandemic?
Baroness Altmann (Con)
My Lords, I too thank the most reverend Primate and wish him well for his retirement. Of course, income is not the only determinant of individual well-being and there will always be richer and poorer in every society, but a vital social and moral issue for the aftermath of this crisis is to see a greater contribution from the better-off to help lower-income groups and alleviate poverty. I will focus on three issues: the role of monetary policy, debt and fiscal policy in addressing income inequality.
Monetary policy’s quantitative easing boosted the assets of wealthiest groups and asset owners while increasing housing costs for the less well-off and younger citizens. As a result, households have taken on extra debt for life’s essentials, thus exacerbating income and wealth inequality.
Rising debt levels were based on expectations of ongoing employment that have been frustrated by the crisis. Will my noble friend the Minister ask his department to look into ways in which the socially damaging side-effects of QE can be mitigated by policies to redistribute wealth and income windfalls?
The crisis will see millions more people relying on state support. This requires not simply increased tax rates but a wider tax base. The offshore-based entities that have made massive windfall profits during this crisis—from so much business moving online, for example—must pay a fair share of the support for our population. Taxation of turnover in UK markets, rather than profits that can be moved outside this jurisdiction, and more progressive property taxation—as mentioned by my noble friend Lord Young of Cookham—are just two examples. I hope that this crisis will lead us to a more equal society.
Baroness Warwick of Undercliffe (Lab)
My Lords, I join others in wishing the most reverend Primate the Archbishop of York a happy and very well-deserved retirement. I declare an interest as chair of the National Housing Federation, the voice of affordable housing in England.
People need good, affordable homes to sustain greater income equality. The ONS has shown that income inequality is increasing. A significant factor is the cost of living, along with income instability and insecurity. Housing costs are a substantial proportion of living costs, sometimes more than 50% of monthly income if you rent in the private sector.
Even prior to the crisis, many individuals and families across the UK had always struggled to meet everyday living costs. With thousands of people losing their jobs as a result of the pandemic, this situation will get worse. The Government have introduced a job retention scheme and increases to universal credit to provide much-needed support, and I welcome these, but some gaps remain in helping people meet their housing costs. The uplift in universal credit or the local housing allowance will have no effect on some families already claiming benefits, because they are caught by the house- hold benefit cap. It is an arbitrary cap that further undermines families who are already struggling, with schools closed and no childcare to allow them to start work. Parents—particularly single parents—are struggling to get jobs. Will the Minister consider the need to suspend the housing benefit cap? Can he tell us what monitoring the Government are doing and how families affected by the cap are coping during this crisis?
As we rebuild from this pandemic, investment in affordable and social housing would not only reduce the cost of living for many more families in low-paid and unstable work but enable the Government to move away from subsidising unaffordable rents with the welfare system.
The ability of many families to bounce back quickly from this crisis will depend on the changes we make now to reduce the amount people spend on one of life’s basic necessities: somewhere safe and secure to live. Can the Government say whether they will take the first step by significantly investing in affordable housing?
Baroness Featherstone (LD)
My Lords, I hope that everyone now sees that we need to introduce policies that better balance what is good for “me” with what is best for “us”—the aspiration for the common good as opposed to only individual advancement. The cynic in me thinks it will not be a nanosecond before people forget their gratitude to those on the front line—before they vote for a party that offers tax cuts rather than tax rises to pay those in care homes and other front-line jobs a better rate of pay.
It is both the Government and we the people who need to change: we shop on credit, we drink, we numb ourselves by sitting in front of one screen or another. Church attendance is dropping and teachers’ authority is diminishing. We have had the scandal of MPs’ expenses, banks defrauding us, the Catholic Church and paedophiles, and sportspeople cheating. The media feed the frenzy of this downward spiral, cataloguing the cataclysm. Governments lie and cheat. This really has been a decline and fall.
We should be looking at policies to reduce stress and inequality, with less emphasis on status and more on co-operation and friendship. Status is based on pecking order, coercion and privileged access to scarce resources, while friendship is based on a more egalitarian basis of social obligations and reciprocity.
In the grand sweep of policy, there are obviously big picture items—tackling poverty, reducing social exclusion, increasing income equality, cutting crime, building more homes and saving our planet with radical action, individually and with policies. We all—Governments and the people—have a responsibility for behaviour change. This is social liberalism.
Lord Hastings of Scarisbrick (CB)
My Lords, we are most grateful to the most reverend Primate for his tremendous life example. I wish him well in the future. This is also a moment to be grateful for the welfare state, for the furlough support scheme, for food banks and the support of good neighbours—grateful for an infrastructure that protects people from the worst extremes.
I will focus on one particular area: the absence of savings among people in the United Kingdom. According to information received, savings levels are roughly half what they were 10 years ago. People on average are saving less every year than they might have done previously. Some 53% of those aged between 18 and 35 have no savings at all, and for the average person in the population, one in three has savings of less than £1,500. When a big crisis hits, such as coronavirus, people have little to fall back on. We have developed not a savings culture, but a capital expenditure culture and a commercial culture.
I have benefited from the experience of being an ambassador for Tearfund. Just a year ago, I went to see how 400,000 women in Ethiopia had saved nearly $30 million between them by putting their 2ps together. That is like the Grameen Bank model. It is now working in New York; it could work in London. What will the Government do to encourage saving clubs along the pattern of the Grameen Bank? It is successful in Bangladesh and in the USA; it could be successful in the UK. Also, what will the Government do to develop a savings culture so that people can better protect themselves, even with the little they have, as long as they also look to dependency on the state, quite rightly, and the support of good neighbours?
Lord Stevenson of Balmacara (Lab)
My Lords, I join with others in thanking the most reverend Primate for his service to the House and to the country. His excellent speech caps a career spent campaigning for greater equality in income, notably the living wage. His time has surely come. I declare an interest as a former chair of StepChange, a debt charity, and I would like to make two points.
First, we are seeing a welcome attempt by the Government to mitigate the supply shock being caused by Covid-19. Keeping sufficient liquidity in the economy to ensure that companies can survive and hold jobs open is crucial. But as the IPPR reported today, once the immediate crisis is over, the economy will be scarred and we will need a broad-based stimulus to drive up demand, reduce risk and support the creation of high quality jobs—particularly, as other noble Lords have said, for young people about to enter the job market. Can the Minister confirm that plans for this are under way?
Secondly, the figures show that the Government need most urgently to support the debt charities that are working with those who are suffering because of unmanageable debt. ONS figures show that 8.6 million people have experienced reduced income as a result of the coronavirus crisis, while Citizens Advice has reported that over 13 million people have already been unable to pay or expect to miss at least one bill, and there has been an 81% increase in the use of food banks.
The Government should lead by example by taking measures to reduce the impact on households which are falling behind on bills. These could include bringing forward the statutory breathing space, temporarily suspending the rule that people become liable for their full council tax bill if they miss one payment, temporarily halting all bailiff activity and agreeing with the proposal from Citizens Advice for better protection for renters.
The Deputy Speaker (Baroness Pitkeathley) (Lab)
With apologies for the difficulty in hearing the noble Lord, Lord Stevenson, I now call the noble Baroness, Lady Janke.
Baroness Janke (LD)
My Lords, I thank the most reverend Primate for securing this important debate today which provides an opportunity to highlight the growing inequality of income and subsequent disadvantage to many people, as he has done for so long throughout his career. It is shocking for British people to learn that in the 21st century, 14 million people are living in poverty and 4 million of them are children. I also pay tribute to the right reverend Prelate the Bishop of Derby for her eloquent speech and the points she made from her experience of working with and protecting children.
It is well documented that policies over the recent years have not furthered the cause of equality—rather, they have widened the gap between the rich and the poor, as the most reverend Primate said in his speech. For most disadvantaged people, there has been a systematic reduction in, and removal of, vital services and rights, as so many noble Lords have said. With the massive and unprecedented cuts to local authorities, vital services have virtually disappeared, services on which the poor depend. Changes to benefits have removed any effective safety net for those who experience catastrophic events. The UK has the fifth largest economy in the world and is a leading centre of global finance, yet one-fifth of the population—14 million people—are living in poverty, with 4 million of them below the poverty line. The current pandemic emergency has laid bare the shocking shortfalls in our woefully inadequate social safety net.
We have heard from noble Lords today about the importance of tackling these issues, and the post-Covid recovery is going to be of crucial importance to the least well off in this country. We have heard about the importance of social insurance based on progressive taxation, a point made by the noble Baroness, Lady Neville-Rolfe. This would give rise to a new society that would spring up, as the most reverend Primate has said. The noble Baroness, Lady Meacher, highlighted the potential for massive unemployment and the need for a form of job guarantee scheme, while my noble friends Lady Kramer and Lord Bruce talked about the minimum basic income policy. My noble friend Lady Randerson highlighted the importance of investment in education and infrastructure, as well as the importance of supporting charities on which so many depend, a key point made by the most reverend Primate, the Archbishop of Canterbury.
We have also heard about the need to learn from the emergency, particularly from the care and kindness shown by people in our own communities and from the values of empathy and service that have been shown. The noble Lord, Lord Moynihan, and the noble and right reverend Lord, Lord Harries, highlighted this. The most reverend Primate the Archbishop of Canterbury spoke of the importance of affirming the dignity and worth of all. The noble Baroness, Lady Healy, highlighted the fact that key workers, often in low-paid and insecure jobs, are of vital importance, and spoke of the need for an income floor.
I also want to highlight the issue of health and the impact of poverty on health. The Marmot report produced in February this year—
The Deputy Speaker
My Lords, we seem to be having connection problems with the noble Baroness, Lady Janke. I call the noble Lord, Lord Tunnicliffe.
Lord Tunnicliffe (Lab)
My Lords, I too thank the most reverend Primate the Archbishop of York for introducing this debate and for his service to the country and the House of Lords. I also welcome the right reverend Prelate the Bishop of Derby—my hometown—and look forward to her future contributions after such a good maiden speech.
It has been an interesting debate, wide-ranging and touching on many points. I will try to give a personal perspective on inequality, which is about so much more than income. When I was young—I was born in 1943—we were poor. But my father had secure employment as a porter in the National Health Service. We had a council house, with security of tenure. We had controlled rents. In summary, we lived poor but in no fear. Today’s working poor are the very opposite. They have low incomes, employment insecurity, housing insecurity—frequently because they do not have security of tenure—and escalating housing costs in the private sector. They have lived over the last 10 years with declining public services on which they disproportionately depend.
The working poor live in fear, a fear that most of us in this House—there may be exceptions—cannot begin to imagine. When things go wrong, they go very wrong. If people are in the wrong part of the economy—including large parts of the care and hospitality sectors—when things go wrong, as Covid has illustrated, they go catastrophically wrong.
However, there are other features of inequality which we must not ignore. The most obvious of these is the inequality of capital and asset wealth. This is where housing, for some, instead of being a problem, is the opposite. My own house is probably now worth, in real terms, two or three times what I paid for it, without anything having been done by me to contribute to that appreciation. Housing ownership exacerbates inequality in a number of ways, including in retirement. The working poor are likely still to be in insecure rented accommodation when they retire; the affluent will by then almost always own their own house and their retirement will therefore be that much more comfortable. The inequality of capital wealth flows through to subsequent generations through inheritance. We must not forget also that there are inequalities through responsibility, where carers look after their young and old, as well as inequalities in standards of work and in relation to work satisfaction.
Poverty is wrong. Poverty in all its forms is unfair and uncaring. It creates a society that is unfair and uncaring. This is in income, housing, security and fear. In my experience, high pay is unnecessary. Most high pay depends on bonuses. Bonuses pervert behaviour and we know that we get some pretty perverted behaviour as a result of them, as the noble Lord, Lord Balfe, noted.
The economic and social effects of Covid-19 will take many years to run through. Instead of seeing these as a threat, we must see them as an opportunity—as some have said, a Beveridge moment. We must try to get a better understanding of our society and of inequality and its effects. I believe that a better understanding will lead us to a more equal society, a society more at ease with itself, with a more holistic understanding of value, not simply of wealth.
The Minister of State, Cabinet Office and the Treasury (Lord Agnew of Oulton) (Con)
My Lords, I begin by congratulating the most reverend Primate the Archbishop of York on his valedictory speech in this House. I echo the many tributes to him that we have heard today. We thank him for 15 years of service as the Archbishop of York and recognise his valuable work across his career, speaking out against authoritarian regimes and championing diversity, the environment and a range of social causes. I know noble Lords will join me in wishing him a very happy and well-earned retirement from his office. I draw particular attention to his work as chair of the Living Wage Commission, where he has rightly championed the need to end low pay, an ambition this Government share. In this role, in his career and today in this House, the most reverend Primate has chosen to highlight the important issue of inequality in our society.
Because of the limited time available and the large number of speakers, I may not be able to address each individual’s points, but I hope to cover the bulk of the issues. I shall begin with income inequality, the main subject of the debate. The Government take inequality very seriously. We are committed to improving the living standards of all in our society. I am pleased to report that in the latest data available, income inequality was lower than it was in 2010. However, it is striking how little overall inequality has changed over the past 20 years, given the efforts of all Governments—Conservative, Labour and coalition. This shows just what a challenge it is to shift. Furthermore, it is important to acknowledge that, whatever the overall statistics on inequality tell us, as noble Lords have highlighted, there are clearly groups in our society struggling to make ends meet.
It is right to consider how government policy as a whole impacts upon people’s lives and incomes. While the world has changed dramatically since the Spring Budget, Treasury modelling published at that time demonstrated that this Government are supporting the poorest in our society, showing that the poorest 60% of households receive more in public spending than they contribute in tax. For pensioners, the absolute poverty rate has fallen since 2010. It is also right that those with the broadest shoulders in society take their fair share of the burden. The top 1% of taxpayers are estimated to have paid over 29% of all income tax in 2018-19. Their contribution has increased since 2010-11, when it was 25% of the overall burden. I respectfully point out to noble Lords that the money has to come from somewhere, and they are doing their bit.
We know that work is key to improving people’s living standards and quality of life, providing more than just financial rewards—a sense of social glue, connection, well-being and aspiration. The Government have a strong track record on work, with the statistics for the three months to February 2020 showing a record high employment rate. Of course, we have seen significant events unfold since February, and I will turn shortly to the action the Government have taken to protect jobs in recent months. I reassure the most reverend Primate that work continues, and we have set an ambitious target for the national living wage, building on the progress so far. Supported by the national living wage, the lowest paid, defined here as full-time workers in the fifth percentile, saw their wages grow by 11% above inflation between April 2015 and April 2019. This is higher than at any point across the earnings distribution.
The Government have also confirmed an ambitious target for the national living wage to reach two-thirds of median earnings by 2024, if economic conditions allow. Since the national living wage was introduced in 2016, it has delivered the fastest pay rise for the lowest paid in 20 years. I accept that this may not go far enough for some noble Lords—the noble Lord, Lord Boateng and the right reverend Prelate the Bishop of Durham—who would like to see a universal basic income, but I believe that this is solid progress.
For those who need it, the welfare system provides a strong safety net. Before the current response to Covid-19, the Government were continuing to spend more than £220 billion on the benefits system, including an additional £1.7 billion a year on universal credit, increasing by £1,000 the amount that 2.4 million households could earn each year before their universal credit begins to be tapered.
Coronavirus has been one of the biggest crises that this country has faced in 80 years. The latest figures show that over 29,000 people have tragically died in the UK. At this time, the Government are rightly focused on saving lives. Our science-led action plan aims to slow the spread of coronavirus so that fewer people need hospital treatment at any one time, protecting the NHS’s ability to cope. That is why the Government have announced unprecedented support for public services, individuals and businesses to protect against the current economic emergency. We will protect, as far as possible, people’s jobs and incomes. In 2018-19, income inequality was lower than in 2009-10. In 2020-21, households in the lowest income decile will receive more than £4 in public spending for every £1 they pay in tax.
We are ensuring that the public sector has the funds it needs. The coronavirus emergency response fund will provide more than £14 billion to public services, including the NHS and local authorities. This builds on the £5 billion fund announced at the Budget and includes nearly £2 billion for the devolved Administrations. On top of this, we have announced a package to help individuals affected by the crisis. This includes the Coronavirus Job Retention Scheme to help firms keep millions of people in employment. As at 3 May, 800,000 employers had claimed £8 billion to help protect 6.3 million furloughed jobs. To support those on low incomes through the outbreak, we have also announced a package of temporary welfare measures. This includes a £20 per week increase to the universal credit standard allowance and working tax credit basic element. We have increased the local housing allowance rate so that it covers the cheapest third of all local rents, and we have extended statutory sick pay to self-isolators and those in their households.
We know that, for some, this period will be more difficult than for others. We are making every effort to ensure that the most vulnerable are protected. Our shielding package is in place to safeguard over 2 million people in England with the most serious under- lying health conditions. To answer my noble friend Lord Caithness, we have provided assistance to some 325,000 people, who have received predominantly food supplies in the last seven days. On the broader question of whether a trade deal will reduce the quality of food coming into this country, there has to be a balance between keeping food affordable for people such as those mentioned by the noble Baroness, Lady Boycott, to ensure that they are able to eat healthily, while not undermining in any way the quality of the food we eat.
We have worked with local authorities and homelessness charities to offer safe accommodation to over 90% of rough sleepers, either on the streets or in communal shelters, who were known to local authorities at the start of this crisis. In addition to the wider package of support for English local authorities, we have provided £3.2 million specifically to meet the cost of accommodating rough sleepers with Covid-19 who needed to self-isolate. This is on top of the £492 million already committed to address homelessness and rough sleeping in 2020-21. Public Health England has also published guidance for those working in hostels and day centres. We absolutely understand that local authorities are under considerable pressure, both to continue providing essential services and to respond to the challenges of Covid-19 during these difficult times. This is why we have provided an additional £3.2 billion for local authorities, as well as further measures to aid their cash flow.
Now, more than ever, charities and those who work and volunteer for them are providing essential services to support the most vulnerable. We are supporting them with a £750 million package, including funding for hospices, St John Ambulance, Citizens Advice and charities supporting vulnerable children, victims of domestic abuse and disabled people. As well as this, the Government have pledged to match whatever the public donate to the BBC’s “Big Night In” campaign with the same amount to support further charities.
I will now try to pick up on the individual points raised by noble Lords. To save time, I will not mention everyone by name. A number of noble Lords asked about furlough extensions. I can confirm that the Chancellor has made it clear that there will be no cliff edge to the job retention scheme. The Government are working at pace to come up with the most effective way to wind down the scheme and ease people back into work in a measured way. We will ensure that the approach is coherent, with any necessary non-pharmaceutical interventions to protect public health, while considering the status of the economy, the scheme’s affordability and the need for certainty for employers and employees.
A number of noble Lords asked about rents and protection for tenants, particularly vulnerable ones. The Coronavirus Act required that landlords would be unable to start proceedings to evict tenants for at least a three-month period. We have targeted support at lower-income households to provide financial support to pay rent. Universal credit provides support for housing costs; we have increased the amount available to ensure that the lowest third of local rents will be covered in full.
The noble Lord, Lord Young, asked about the longer term and restoring a fiscal balance to the economy. As he will know, we have spent the last 10 years bringing borrowing and debt under control. This has ensured that our finances were well placed to deal with some of this crisis. We expect the spike in borrowing to be temporary; under the OBR scenario, borrowing is expected to fall back reasonably quickly in 2021-22 as temporary policy costs end and the economy starts to recover. By the end of the scenario horizon, the OBR expects borrowing to have returned to close to the Budget forecast.
The Government are currently considering options to fund social care, which would consider the financial impact on taxpayers as a whole, along with competing demands on taxpayers’ money from other public services and how to fund reform on a sustainable balance. All views, solutions and concerns are being considered as part of that process; we are absolutely looking at the longer term.
The most reverend Primate asked about the real living wage. As I have mentioned, low-paid workers will benefit from the April 2020 increase in the national living wage. That represents an increase of over £930 for the annual earnings of a full-time worker on the national living wage, equivalent to a total increase in annual earnings of more than £3,600 since its introduction in April 2016. The Government have also confirmed their target to push on, as I mentioned earlier, to reach two-thirds of median earnings by 2024 as long as economic conditions are secure. The Government are responsible for setting the legal minimum wage floors, which protect vulnerable low-paid workers. We commend employers who pay more when they can afford to do so. The Living Wage Foundation is clear that its measure is voluntary.
Regarding pay rises for key workers, they deserve to be properly rewarded for the work that they do. Last July the Government delivered a second year of above-inflation pay rises for almost 1 million public sector workers, in addition to the previously agreed multiyear pay deal for NHS non-medical staff, including nurses. More than 1 million NHS workers continue to benefit from the three-year “Agenda for change” pay deal. The reforms will see the starting salary for a newly qualified nurse rise to £24,900 in 2020-21, 12.5% higher than in 2017-18. The Government have also agreed temporary pay and pension packages for a number of public sector workforces, including the NHS, to increase system capacity and recognise their work tackling the Covid-19 outbreak.
We are determined to do everything we can to ensure that our social care workforce is safe, supported and truly valued. Supporting our workforce is one of the four pillars of our core action plan, published on 15 April. In March we provided local authorities with £1.6 billion of emergency funding which could be used to pay for additional costs we knew the sector would face. In April we announced a further £1.6 billion of emergency funding for local authorities.
A number of noble Lords raised universal basic income—UBI. There are, of course, fundamental problems with the realities of UBI. A flat rate of UBI would not take into account people’s circumstances and the additional needs and costs faced by some individuals. Therefore, it would not target support where it was most needed. The Government have therefore announced alternative measures to support people’s jobs and incomes, which can be delivered relatively quickly and effectively through existing benefits. At a time when the DWP and HMRC are experiencing unprecedented demand, the Government have to prioritise the safety and stability of the existing benefit and tax system.
The noble Baroness, Lady Warwick, raised sustainable public housing. The only way to stabilise and improve affordability over the long term is to build more houses in the right places. That is why this Government are committed to building at least 1 million more homes by the end of this Parliament, continuing the progress towards our target of delivering 300,000 additional homes a year, on average, by the mid-2020s. More than 241,000 additional homes were delivered in 2018-19, the highest level in the last 32 years, representing a 66% increase since 2009-10. Since 2010 we have increased housing supply by more than 1.5 million, including 460,000 affordable homes. We have helped more than 600,000 additional households purchase a home since spring 2010 through government-backed schemes, including Help to Buy and the right to buy.
Noble Lords raised free school meals. The Government are committed to ensuring that children who receive free school meals do not miss out. We have asked schools to work with their existing catering providers to continue to offer free school meals. Demand has been extremely high, but they are reaching families and we continue to work with our suppliers to improve the service. We thank schools, which we know are doing their best for parents and children while the system is upgraded. It is also worth pointing out that while we considered initially that a 20% occupancy of schools would be safe and reasonable during the crisis, we are seeing less than 2%, so there is the opportunity for more children to be in school, particularly children who are vulnerable, who were considered a priority area, along with the children of key workers, at the time.
Noble Lords raised child poverty and benefits. The Government’s official statistics on poverty for 2018-19 show that there was little change in overarching poverty rates between 2017-18 and 2018-19. Child poverty rates fell before housing costs, and the relative child poverty rate reduced by 2 percentage points and the absolute rate by 1 percentage point. Since 2010 there are 100,000 fewer children living in absolute poverty and the absolute child poverty rate has fallen by 2%.
On progressive taxation, as I said earlier, the top 1% of taxpayers are estimated to have paid over 29% of income tax in 2018-19. The poorest 60% of households receive more in public spending than they contribute in tax. The Government have already taken steps to ensure that those with the broadest shoulders bear the greatest burden, including reforming dividend taxation, reducing the amount of tax relief on pension savings that an individual can accumulate over their lifetime, and ending permanent non-domiciled status.
Between 2010 and 2015 we took 4 million people out of income tax altogether. Around 1.7 million people have been taken out of tax between 2015-16 and 2019-20. We cannot add those two figures together because one uses the RPI and the other the CPI, but it gives an indication of the work we have done and the priority we have focused on some of the lowest paid. The income tax personal allowance was £6,475 in 2010-11. That is rising to £12,500 in 2021. The basic rate—the lowest rate of income tax—was 20% in 2010 and has remained stable but it is now applying to fewer people.
A number of noble Lords raised the issue of the environment. The Government continue to take our environmental responsibilities very seriously and are committed to meeting climate change and wider environmental targets. The Budget reinforced the UK’s strong track record in this area. Announcements included £640 million for tree planting and peatland restoration, over £1 billion for further support for ultra-low emission vehicles, at least doubling funding for energy innovation and tax measures to encourage greater energy efficiency and reduce plastic waste.
The most reverend Primate the Archbishop of Canterbury asked about support for migrants. We are facing a rapidly evolving and unprecedented global health emergency and the Government are committed to doing whatever it takes to support people through this. We have announced a range of measures to ensure that people can stay safe and many of these are available to those with a no recourse to public funds condition, such as the Coronavirus Job Retention Scheme, the Self-employment Income Support Scheme, protections from eviction for renters and a mortgage holiday for those who need it. Statutory sick pay and some contributory-based benefits are not classed as public funds, so are also available to all. Local authorities may also provide basic safety net support if it is established that there is a genuine care need that does not arise solely from destitution, for example when there are community care needs.
I am running out of time, but what I have tried to illustrate is that we are making a lot of interventions to support people, in particular the most vulnerable in society. The range of contributions we have heard today demonstrates what a broad and complex issue this is. I have highlighted some of our actions. I will finish by thanking noble Lords for their contributions, and especially the most reverend Primate for securing this valuable debate. I am sure that noble Lords will join me in once again giving him our very best wishes ahead of his forthcoming retirement.
The Archbishop of York
My Lords, I thank all noble Lords for their wonderful contributions to this debate. My time does not allow me to thank everybody, but all noble Lords gave wonderful, amazing contributions. I join other noble Lords in congratulating the right reverend Prelate the Bishop of Derby. It was a great pleasure for me to hear her maiden speech, having consecrated her as the first woman bishop and having introduced her into your Lordships’ House. I thank her very much for her wonderful contribution.
I would have loved to hear the Minister respond to the three suggestions made by the noble Lord, Lord Young of Cookham, particularly the question of a new tax band above band H to increase the income for local authorities. That was supported by the noble Lord, Lord Adonis. The debate has been very clear that we have to do something about inequality in terms of many people’s income. It really requires a new way of looking at this and a new way of thinking carefully through what we are trying to do with the poor. In the end, they often end up with a double whammy and pay much higher costs for their well-being. Again, it is true—the noble and right reverend Lord, Lord Harries, gave a wonderful explanation of what often happens—that the poor tend to end up paying much. According to the noble and learned Lord, Lord Mackay, all of us really depend on one another and because of this, some of us can have much while others have very little.
I welcome the way the debate has gone. I just hope that we will be able to hear what has been said and then try to take some action, rather than leaving it and seeing what shape the future takes. I thank all noble Lords for their contributions. I will soon come to a close, but I want to say that everything that has been said is important and I hope the Government will take it seriously.
The noble Lord, Lord Wood of Anfield, called himself a Beveridge supporter and this a Beveridge moment. I remind your Lordships’ House that Beveridge said there were five giants: want, the need for an adequate income for all; disease, the need for access to healthcare; ignorance, the need for access to educational opportunities; squalor, the need for adequate housing; and idleness, the need for gainful employment. That is what he was calling for. As I see it, we need to be the sort of community that is moving forward with wonderful conviction and commitment to one another. We need to find a mechanism that some noble Lords called for.
As I see it, the debate was not about welfare alone but about well-being and a flourishing society founded on the principles of freedom, fellowship, service to God and neighbour and the rule of law. For me, these are the real firm foundations on which we can build a just, sustainable and compassionate society in which all can participate and flourish. For me, anything else is just sand. For the flourishing of a just and equitable society, the gap between those living in poverty and wealth must be reduced. Why is there a case for increasing income equality? In the light of the recent heath emergency, it is simply because it is a matter of justice, kindness and generosity. It is the right thing to do, and it is also desirable.
I love the wonderful story a rabbi told about his students who asked him, “When do you know light has come and night has ended?” They asked him, “Is it when you look at a tree and you see it is an apple tree and not a mango tree?” “No”, said the rabbi. “Is it when you can look in the distance and see that it is a sheep and not a dog?”. “No”, said the rabbi. Then they pressed him. “When do you know that light has come?”. He said, “If you look at the face of any woman or man and cannot see that they are your sister or your brother, it does not matter what time it is, it is still very night”. So today, may the day dawn when we deal with the whole question of the environment and an income that will sustain and support all our people.
I thank noble Lords for listening. I am looking forward to seeing the Government taking action on the many calls and concerns in the debate. It has been a real privilege to be part of it and make a contribution.
Motion agreed.