Inequalities

Lord Lea of Crondall Excerpts

Thursday 13th June 2019 Lords Chamber

[Lord Lea of Crondall (Lab)]

My Lords, in the time available, I want to give the IFS a very big tick for the quality of its scoping study. I very much look forward to the four-year cycle coming to a conclusion.

In the 1970s, I was a member of the Royal Commission on the Distribution of Income and Wealth, chaired by Lord Diamond, who some people may remember from Harold Wilson’s Government. We were very keen to make sure that people understood that we needed a parallel data system for wealth, alongside that for income. Wealth is characterised by land, one of the three factors of production; the others are labour and capital. Indeed, in macroeconomic terms and in terms of Treasury public accounts, getting more from land is one way to do a lot of the things that Members here have said should be done without putting up everyone’s rates of income tax and other taxes.

I remind colleagues of the brilliant exposé on land ownership in Britain published in the Guardian only three or four weeks ago. Now, land creeps into the nature of our economy in a different way. A lot of companies used to borrow money from the banks for investment; now, more than 50% of banks go into land-related lending. We can see this characteristic in Britain where we are reinforcing inequality. The Guardian piece shows that little has changed over the past 1,000 years. Many members of the aristocracy and the landed gentry are descendants of the Norman barons. You had to be a friend of someone in the family of the Duke of Normandy—this was the Norman conquest—to own a lot of land in Britain, and that is true today. It is the same people. Some 17% of English land is not registered with the Land Registry while more than 50% is inherited and has never been bought or sold. Half of England is owned by less than 1% of the population. The home owners’ share adds up to just 5%, so a few thousand dukes, baronets and country squires own far more land than all of Middle England put together. I thought that this House might be the place to put that on the record because I have not noticed any of the hereditary Peers making that point.

The scope of the IFS review is important in another way. It talks about trade unions and collective bargaining, and of course I declare an interest. People have to acknowledge that you need a balance in the labour market and the capital market, which can come about only if you recognise that initiatives such as workers’ representatives on remuneration committees would do a lot to change the tone of the virtue signalling in boards of directors, so that it is not just about short-term share prices. The IFS mentioned this in its synopsis. The country may be going to the dogs, but one thing which must be done to avoid that is to look carefully at the imbalance of incentives in how our economy works.

I turn to education. Yes, I am of the school of thought which says that if you say Eton costs £40,000 a year—I do not know whether that is right—you are investing £200,000 and you get a return on that capital. There is no doubt about that—they are not in the business of philanthropy. They are taking away other people’s playing fields. They want a return on capital to protect their difference. That is what investment in public schools is all about.

I am very pleased that most of these points are covered by the IFS review and I look forward to realising the ambition of the synopsis. We are not reaching any conclusions today; we are just saying that extra things can be added to it. We will see what it concludes at the end of the next four years.