Taxation: Families

Lord Greaves Excerpts

Thursday 17th January 2013 Lords Chamber

[Lord Greaves]

My Lords, I feel out of place on this speakers list. I looked at it and thought that almost everyone on it apart from me is an expert and they will be bandying figures and statistics around that will send my brain numb by the time I stand up to speak. That is true: they have sent my brain numb. The debate is full of experts, not least the noble Baroness, Lady Hollis, who introduced the debate, and my noble friend Lord German. I have to say that I thought the noble Baroness was kinder to the Government than I would have been had I been making her speech.

I congratulate my noble friend Lord German on introducing a number of things into his speech that would not have been there if it had not been for the presence of the Liberal Democrats in the Government. If things are bad, they are nothing like as bad as they would have been had we just had the Conservatives.

The reason why I thought that I should take part comes from my work as a local councillor, where I represent one of the poorest areas in east Lancashire. Last week, I was watching the television at home. The BBC in the north-west was doing a week-long series on food banks in the region. I thought, “Has it really come to this?”. This country is something like the sixth richest in the world. It is richer than it has ever been apart from a slight sag in the past five years—it really is slight in historical terms. Has it really come to food banks now being part of the mainstream culture of this country? I find it extraordinary.

I had made a list in preparation of all the problems that we are experiencing at the moment, but the noble Baroness, Lady Hollis, dealt with them all in far more detail and far more expertly, so I will not read them out. But I have one or two points to make. The changes can all be individually justified, particularly against the need that the Government see to cut spending, but put together the position is horrific for many people. When that is combined with benefits in kind provided by local services through local authorities and other bodies, it is made even worse.

I think that it was the noble Baroness who said that if you cut people’s benefits, there are serious effects on local economies. The fact is that benefits, as a side-effect, are an efficient way in which the Government can put money into the economy. Most of the money that people get in benefits is spent. As that money is spent, it has a direct positive impact on local economies. On the one hand we have the Government, with Mary Portas and all the rest of them, saying “Town centres are in trouble—let’s have initiatives to help them”. On the other hand, they are taking money away from the very people—certainly in small and medium-sized towns—who use the town centres most, because many of them do not have their own transport to go to the out-of-town or edge-of-town supermarkets and so on. The poorest people spend their money and so, simply from an economic point of view, it is a good idea to give more money to them.

I concur with everything that has been said about some of the quite appalling attacks on poor people that have been made, such as the comparison between strivers and skivers, which the noble Baroness, Lady Hollis, called ugly, cynical and indecent. I congratulate her on finding words for that which are appropriate to use in the House of Lords. I tried to think of words but thought that I had better not mention them, because any that I would use would be out of order.

I recommend to anybody who thinks that the answer is that people who do not have jobs should just get them that they go down to their local Jobcentre Plus, have a look at what jobs are on offer and how many of them there are. They will very quickly come to the view that that is not the immediate answer.

It is fairly clear that somewhere between 10% and 20% of the poorest people in this country are quite deliberately being made poorer by the policies of this Government. If they are not in work, their benefits are being cut; if they are in work, they are too poor to benefit from the cuts in income tax, because they do not pay it, and their benefits are also being cut.

I rely a lot on the work of Professor Danny Dorling, an incredibly energetic geographer who seems to produce a book every three weeks. He is not one of those typical geographers who simply stroll around the countryside looking at the scenery. It is fairly clear, from work that he and others have done, that the levels of economic inequality in this country declined year on year from some time shortly after the end of the Great War into the late 1970s—inequality being the spread between the richest groups of people and the poorest groups. In the 1980s it got worse; it got steadily worse during the years of Conservative government from 1979 to 1997 and it continued to get worse, year on year, through the Labour years until 2010. That is clearly still happening, partly because people at the top are getting much richer, but also because people at the bottom have not been keeping up with everybody else and are now quite clearly falling behind. We are told that the answer lies in social mobility, which I am in favour of. However, you can have social mobility in a more equal society and economy and in a less equal economy. On its own it does not alter the basic facts.

As a Liberal, I go back to William Beveridge and try to put things in the context of what he said back in the 1940s. As we all know, he put forward his five giant evils: want, disease, squalor, ignorance and idleness from lack of work, which perhaps we would now call worklessness. His remedies are interesting to read today. Everybody now says that what they want to do—wherever they stand on this argument—is based on what Beveridge thought.

Beveridge proposed that people in work pay a standard weekly payment into the social insurance fund and suggested unemployment payments for people for as long as they have not got a job. He also proposed benefits for pensioners, maternity grants, widows’ pensions, pensions for people injured at work, and so on. What was crucial was his proposal of what he called child allowances, which became family allowances and which have now mutated into child benefit. They were at a very much higher level than child benefit has now become. As part and parcel of that, he advocated the creation of a National Health Service, so that when you were poorly you got treated for free at the point of need.

The crucial part of all Beveridge’s proposals was that payments in all these cases should be at a standard, flat rate, depending on contributions, with no means tests, which he was opposed to. So many of the problems that we now have in what people call the welfare benefit system—the tax allowances and all the rest—have come about because people have tried to be too clever by means-testing this, that and the other, with all the unfortunate side-effects that means tests have. The cleverer people get, the more they try to finesse the system; the more detail they put into it, the more problems they create.

I will give two examples. Instead of subsidising property, which is what used to happen until about 20 or 30 years ago, we now have the mantra that in the area of housing the people in the houses should be subsidised. The effect of this is the present crazy housing benefit system, which takes up so much of the welfare benefit budget and yet is no more than old-fashioned out-relief for landlords. We also have the working tax credit, which is no more than a subsidy to employers who pay low wages. This is the fact of the matter and the situation that we have got into. I do not know how we will get out of it. I am quite sure, however, that we will not get out of it by making the poorest 10% or 20% of people in this country even poorer today.