Income Inequality

Debate between Lord McFall of Alcluith and Lord O'Neill of Gatley

Thursday 21st January 2016 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, of course one can infer some tentative implications about productivity from yesterday’s data on employment, but it would be very premature to do so. We know from the very latest productivity statistics that, if one uses a magnifying glass, there has been a modest increase in productivity in the last two quarters for which data have been reported. It is an ongoing observation that, in what are generally currently regarded as some of the most successful economies in the world, cyclically, the US included, they have, if anything, an even bigger apparent conundrum on this than we do here in the UK, because of the evidence of the past 12 months.

[Lord McFall of Alcluith (Lab)]

My Lords, the latest figures indicate that the salary of a chief executive in the largest corporations in America is now 333 times the average wage, while in Britain it is now 180 times that. The Minister is right that inequality has been growing in Britain for the last three years. It is now at the level of World War 2; if in 20 years’ time we continue this trend, it will be at the level of Victorian standards. As a distinguished economist, the Minister could do us all a favour by telling the privileged members of the Cabinet that GDP is not the best way to measure the prosperity of a country; it should be a measure of well-being. If we focused on that area, we might start to tackle this horrendous problem.

[Lord O’Neill of Gatley]

My Lords, I take the noble Lord’s suggestions with great interest. I repeat that it is the responsibility of boards and their shareholders to analyse and support the compensation of their chief executives. As we have touched on in parts of the productivity plan, those boards and shareholders should think carefully on an ongoing basis about the justification for those levels of remuneration.

Spending Review and Autumn Statement

Debate between Lord McFall of Alcluith and Lord O'Neill of Gatley

Wednesday 25th November 2015 Lords Chamber

[Lord O'Neill of Gatley]

My Lords, the Chancellor’s Statement was very clear on this issue. He will welcome the noble Lord’s appreciative comments.

[Lord McFall of Alcluith (Lab)]

My Lords, if it is the case that in a short three-month period from July to November the transformation in the Government’s figures was due solely to the generosity of the OBR, will the Minister confirm that spending by the Government will be £83 billion more in this Parliament, funded by £47 billion of tax increases and £35 billion of welfare cuts? Given the answer that was given earlier, the Autumn Statement is silent on the welfare cuts. Will the Minister indicate where that £35 billion will come from over this Parliament?

[Lord O'Neill of Gatley]

My Lords, as I have already said, it is indeed the case that the new baseline that the OBR presented allowed for considerably more flexibility in today’s announcements. However, it does not change the overall thrust of economic policy. What it has done, as I emphasised, is given more flexibility across the board in respect of three areas. As has been debated considerably in this House recently, there is a £12 billion increase in public sector investment spending over what was previously planned, which covers particularly housing but also transport, including both road and rail. Relative to the Budget in March in particular—the coalition’s final Budget—but also to the summer Budget, there is also a lesser pace of spending reductions across the board. The Chancellor highlighted that, going forward, the aggregate real cuts would be something like 0.8%, compared with 2% previously, and that is a slower pace than was previously the case. If one looks at the mix—and there are some very interesting tables presented in the Treasury document and particularly by the OBR about the shifting balance—previously spending reductions made up significantly more than 50% of the planned savings but are now a bit less than 50%, and the balance is made up in other areas, including lower debt payments, which I think the noble Baroness, Lady Kramer, indirectly referred to.