Inequalities

Baroness Goldie Excerpts

Thursday 13th June 2019 Lords Chamber

[Lord Dubs (Lab)]

My Lords, it is a privilege to open this debate, and I am grateful to the many Members of the House who are down to take part in it. As I prepared for the debate, I was almost overwhelmed by the mass of statistics on the subject of the level of inequality and poverty in the UK, but the one thing that all the figures show is that that level is far too high. There can be no dispute about that. There may be an argument as to whether things have got worse over the past two or three years. That is not necessarily my contention, but clearly the austerity policies introduced in 2010 have had a damaging effect on the people affected by poverty. I believe that the evidence shows that there is a great deal of inequality in the country, and this is having a damaging effect on many people here.

The question for Ministers and other politicians, therefore, is whether this is the price we have to pay for our present overall relatively high living standards. I am totally opposed to that: I do not believe it is a price we have to pay or a price we should pay, and we should reject any policies that continue to further those levels of inequality and poverty.

Many people are simply not comfortable living in a country where the differences between the rich and the majority are so wide. It gives me an uncomfortable feeling when I see poor people in the streets, when I am aware of the figures and the poverty. Frankly, I would not want to be the Minister answering this debate. It is a really tough call for her, but I suppose that goes with the job description. It is not as if the subject has not been debated frequently over many years. It is still vivid in my memory from when I was in the House of Commons seeing Margaret Thatcher as Prime Minister asserting, to quote her for memory, that a rising tide lifts all boats. She made a hand gesture to show that if the tide lifted the higher boats, the lower ones would also rise. I was amazed to hear that at the time: it was not true then and it has not been true since. The problem is that a rising tide has lifted some boats but not those at the bottom.

I think it is generally understood that, second only to the United States, the UK has the highest level of inequality of any advanced democracy. Without a redistributive tax and welfare system the situation would be much worse, so it is rather surprising that a contender for the Conservative leadership contest has committed to reducing tax on people earning more than £50,000 a year. I find that deeply shocking. They are hardly the most impoverished group in society, and I hope that the Minister will reject the proposal on the Government’s behalf before there are any changes in the leadership at the end of July.

A great deal of the evidence for this debate comes from the recently published introduction to the Deaton review, Inequalities in the Twenty-first Century. That includes some close statistics on the problem and will seek to tackle the issues over a further five-year study, so there will be more information to come. Launching the review, Sir Angus Deaton asked a key question:

“There’s a real question about whether democratic capitalism is working, when it’s only working for part of the population”.


That is the quote which underlies this debate. If people say that poverty and inequality is a price worth paying, some of us will reject that totally.

There has been an even more critical United Nations report on the impact of austerity on human rights in the UK. It predicts that close to 40% of children will be living in poverty two years from now. I know that the Government have vehemently rejected that report, but it has quite a lot of evidence to sustain it. Another report from a very authoritative source confirms the high levels of child poverty. Professor Russell Viner, president of the Royal College of Paediatrics and Child Health, a very reputable body indeed, said:

“The impact of poverty on children can be devastating—not only to their physical health in terms of increased risk of malnutrition, respiratory problems from poor housing and infection—but also their mental health”.


Those impacts are stark. Children living in poverty are more likely to die before the age of one, become overweight, have tooth decay or die in an accident. They are more likely to have poor cognitive, social and behavioural outcomes, and are at greater risk of developing long-term conditions, particularly respiratory conditions, type 2 diabetes, cardiovascular disease and mental health problems. That is a pretty tough indictment of policies that result in child poverty.

In its recently published report, The State of Child Health: Two Years On, the Royal College of Paediatrics and Child Health highlighted its grave concern that no progress has been made towards reducing child poverty and inequality in the UK since the original report, The State of Child Health, was published in 2017. The president of the college commented:

“This latest research serves to highlight the importance of tackling poverty if the relatively poor outcomes for child health in the UK are to improve. That means measures such as binding national targets to reduce child poverty backed by a national child poverty strategy, the reversal of cuts to universal credit and the reversal of public health cuts”.


Those are policy points. That is a whole policy agenda coming from an extremely reputable source; I will come on to more ideas about that later.

Meanwhile, millions of people in jobs depend on various forms of charity. We know that there has been an enormous rise in the use of food banks all over the country. Of course, all of us, not only those who arrive here via Westminster Tube station, see rough sleepers in our streets. I always feel deeply shocked and uncomfortable when I see so many people sleeping on our streets and using food banks, and when I see buckets in supermarkets asking people to donate food for the poor.

We have seen a runaway rise in incomes, with those in the richest households almost tripling their salaries in the past four decades. In 2017, pay among FTSE 100 CEOs was, on average, 145 times that of the average worker, compared with just 47 times in 1998. Frankly, 47 times is already a bit excessive, but I do not know how businesses operate when the people at the bottom of the scale realise that the pay of the CEO coming in—although they probably never see him or her; it is usually a him, though—is vast compared with what they get. In addition, real wages are still below the pre-crisis level. In the financial year ending 2018, the wealthiest fifth of individuals in the UK saw a 4.7% increase in their disposable income, compared with a 1.6% decline for the poorest fifth. That is why I challenge what Margaret Thatcher said many years ago. It had no truth then and has no truth today.

Let me refer to a specific group of people, with whom I have been fairly closely associated, who are doing things for virtually no money: the people volunteering for NGOs working with refugees, especially child refugees, in northern France and Greece, particularly the Greek islands. I have had the privilege of meeting these people. While the newspapers talk about bankers fighting for an extra million or two in their bonus, these people are working for pretty much nothing. They give a year or two of their lives to help and support some of the most vulnerable child refugees. We as a country should be proud that we have such wonderful young people—they are not exclusively from this country, but many of them are British—willing to serve their fellow human beings. Of course, many other people volunteer in our society and do things for their fellow human beings despite the backdrop of the large amounts of money that some people are getting.

Of course, there are other income inequalities, impacting variously on women, the young—with a knock-on effect on their life chances within the housing market—older people, the black and ethnic-minority population, and those with disabilities, with the latter perhaps suffering more than most. We hear a great deal about the gender pay gap, for example.

I want to repeat a proposal that I have made before, which I believe would help significantly: that all tax returns should be in the public domain. Therefore, we would know about incomes and we would be able to see them. This works well in some Scandinavian countries. We would be able to see what people are earning and judge the extent of pay discrimination as it affects women, older people, the black and ethnic-minority population and disability. I should make it clear that when I previously made this proposal, the Government’s response was quite unenthusiastic. Nevertheless, I still believe that the day will come when these things will be in the public domain and we shall all know more. It will be better for the whole of society. After all, people know what others earn in the Civil Service and indeed there are various areas of our country where we know what the incomes are and that does not have a damaging effect. Why not put these things into the public domain?

I turn now to housing. It is quite shocking that there are virtually no opportunities for young people to enter the housing market, whether to buy or to rent. Older people managed to buy their homes many years ago and are sitting pretty on houses that have greatly increased in value, while on the other hand there are still too many pensioners who are in dire poverty. However, it seems that we are giving young people very little chance in life. Their incomes are too low to enter the housing market—not just in London and the south-east, although we are particularly aware of this issue locally.

Inequality is not only about income. As the Deaton report makes clear, there is a divergence in life expectancy between deprived and affluent areas in our country and a growing burden of poor mental health among disadvantaged groups. There is also a geographical divergence between our successful cities and our former industrial towns and coastal areas, a problem which successive Governments have not done enough to tackle.

Danny Dorling, a professor of geography at the University of Oxford, has linked the fall in life expectancy to government policy:

“‘Something began having an influence shortly after 2010’, he said. ‘Older age mortality rose as services for the elderly were massively cut, social services in particular that were aimed to help those living on their own’”.


Let us take one topical example. A male child born in Kensington in Liverpool can now expect to live 18 years less than a child born in Kensington and Chelsea in London. That is a shocking difference and it is not acceptable. How can we live in a country where this goes on?

I know that some people on the other side of the Chamber do not like trade unions, but when we are talking about achieving more equality, trade unions have a significant part to play. The Deaton report said that stronger trade unions can tip power towards employees. In the Nordic countries, between 52% and 86% of all employees belong to a trade union compared to the UK figure of a little over 25%. Having workers on company boards, which is mandatory in Germany, can have a similar effect, curbing inequalities within firms, if not between firms. If workers are given a say in how companies are run, they might help resist downward pressure on wages, press for better working conditions and rein in executive pay at the top.

Inequality cannot be reduced to one dimension, stemming as it does from many forms of privilege and disadvantage. The real question is whether the immorality of increased inequalities in our country is sustainable or whether they should be condemned. I am very much of the latter view, and it is good to see my party bringing forward imaginative and costed solutions which I shall mention very briefly. They include a national transformation fund aimed at rebalancing the economy and a national investment bank with regional arms. I also welcome plans for tackling tax avoidance and evasion, increased corporation tax and a hike in the living wage, with the latter including a more equitable system that benefits younger workers.

As it stands, we on this side of the House are not yet the party of government and a general election may happen later this year, but it could be as far off as the early summer of 2022. I hope, therefore, that the Minister responding to this debate will give some indication of what her party plans to do to reverse the current depressing trends. They are a challenge to us all and to the Government. We have to tackle these problems and I hope that we will do it quickly.

[Baroness Goldie (Con)]

My Lords, we are very tight for time in this important debate, so when the clock shows five minutes I expect the Member to sit down, otherwise I may have to stand up.