Inequality and Social Mobility

Amber Rudd Excerpts

Wednesday 12th June 2019 Commons Chamber

[The Secretary of State for Work and Pensions (Amber Rudd)]

I am grateful to the Opposition for giving me the opportunity, on behalf of the Government, to talk about our commitment to reducing inequality and to improving social mobility.

I know I came into this House to help people improve their lives. In my experience, so did every single Member of Parliament sitting across this House. We do that every weekend in our surgeries in our constituencies, and we do that on whichever side of the House we sit—addressing different policies and trying to use the levers we have and the financial stability that we hope to have to improve the quality of people’s lives—because supporting social mobility, fighting poverty and giving people a chance is not distributed along party lines. That is why I always want to hear from colleagues who are fighting to improve people’s lives, from the vision of my right hon. Friend the Member for Chingford and Woodford Green (Mr Duncan Smith), who introduced universal credit, to the tireless work of the right hon. Member for Birkenhead (Frank Field) in championing the most vulnerable in society.

[Rushanara Ali (Bethnal Green and Bow) (Lab)]

When she came to office, the Secretary of State rightly delayed the two-child policy limit along with the universal credit roll-out, and she deserves credit for that. Does she agree that she should scrap that limit altogether to prevent millions of children from being forced into poverty? That would be one way in which she could honour the commitments that she is making today to tackle child poverty.

[Amber Rudd]

The hon. Lady must bear in mind the context in which some of those welfare reforms were made. The Government came to office in 2010, in the midst of an economic crisis. Reforms were needed, and if we had not made those reforms, the consequences for the national economy could have been so destabilising that they might have reduced the funds that are now available for us to spend on social security.

[James Cartlidge (South Suffolk) (Con)]

What we also inherited was a welfare system in which dependency had been spread right across the income scales. What I encountered as an SME owner was employees deliberately stating that they did not want to work more than 16 hours a week because the system penalised them so heavily for having the aspiration to do so.

[Amber Rudd]

My hon. Friend is absolutely right. When people express concerns about universal credit, as they do sometimes, I often remind them of what it replaced: six different systems, two different places, annual assessments, and tax credits that were often incorrect. Our present system is about ensuring that there is real-time information, so that it is accurate.

[Several hon. Members rose—]

[Amber Rudd]

If Members will forgive me, I shall make some progress, and then I will take some more interventions.

Let me talk for a moment about the Government’s record. The hon. Member for Wirral West (Margaret Greenwood) went on at some length about that, so let me make some points to her in reply. I will begin with our record on employment. We have helped more than 3.6 million people to enter work; we have reduced unemployment to its lowest level since the 1970s; we have supported nearly 1 million more disabled people into work, and women’s employment is now at record levels.

Those jobs are not just in London or the south-east; more than 60% of the employment growth since 2010 has taken place in other parts of the UK. Nor—I can already hear the suggestions coming at me from the Opposition Front Bench—are they just part-time and temporary jobs. The jobs that make up this increase are overwhelmingly full-time, permanent roles, giving people the dignity and security of a regular pay packet. Behind every employment statistic is a person or family whose mental health, wellbeing and life chances are improved by participation in the workforce. This increased employment means that 660,000 fewer children are growing up in workless households, which makes them less likely to grow up in poverty.

[Stephen Timms (East Ham) (Lab)]

The Secretary of State will know that the number of food parcels distributed by Trussell Trust food banks increased by 19% last year. Does she recognise the close link between the growth of that problem and the roll-out, with its current flaws, of universal credit?

[Amber Rudd]

I know that the right hon. Gentleman has been very engaged in this subject. He will be aware that there are many reasons why people turn to food banks. There were some issues with the early roll-out of universal credit in terms of the timeliness of the payment. That has been corrected, and between 85% and 87% of recipients are now paid on time, which compares favourably with the previous legacy system.

Let me now talk for a few minutes about income inequality. Since coming to office, we have lifted 400,000 people out of absolute poverty. Another key fact that I can give in response to the Opposition motion is that household income inequality is lower now than it was in 2010. However, that is not enough for us; we need to build and do better.

Our safety net is one of the strongest in the world. We deliver the fourth most generous level of welfare support in the OECD. In this financial year, total welfare spending will be more than £220 billion[Official Report, 15 July 2019, Vol. 663, c. 5MC.]. As has been acknowledged by the Institute for Fiscal Studies, thanks to the benefits system, overall income inequality has remained stable, even as earnings have increased for the most well paid. That is because we have what the IFS has described as a highly redistributive tax and welfare system. We have deliberately taken action, through the tax system, to ensure that income inequality is reduced.

[Ged Killen (Rutherglen and Hamilton West) (Lab/Co-op)]

In my constituency, we have one of the top 100 least deprived postcode areas and just two miles down the road one of the top 100 most deprived postcode areas, where child poverty is heading towards 30%. What does the Secretary of State have to say to people living in that area, just two miles down the road from one of the least deprived areas, about income inequality?

[Amber Rudd]

I say to the hon. Gentleman that we recognise that there is more to do. I expect that those two areas have had the same differential for a long time, but this Government want to do more to narrow that and I will come on to some other proposals and examples of what we have put in place to try to improve that.

[John Redwood]

Will the Secretary of State confirm that there was a very sharp fall in real incomes at the end of Labour’s period in office, and the good news is that we are now above that old level and rising? Rising real incomes is the way to get people out of poverty.

[Amber Rudd]

My right hon. Friend is absolutely right. It is now over a year that monthly increases in wages have exceeded inflation. That is the best way to get people out of poverty.

[Several hon. Members rose—]

[Amber Rudd]

I will make a little more progress and then take some more interventions.

I was referring to the information from the IFS that the hon. Member for Wirral West cited. It went on to say that household incomes are now more evenly distributed than 25 years ago. However, improving opportunities for those on the lowest incomes will always be a priority for a one nation Conservative Government.

[Sarah Jones (Croydon Central) (Lab)]

About 1.3 million children living in poverty in this country at present are in the private rented sector. Many of them would be lifted out of poverty if we had more council housing, which is far cheaper to live in. Does the Secretary of State agree that we need council building again and to build more homes that are more affordable, so we can lift those children out of poverty?

[Amber Rudd]

I certainly agree with the hon. Lady that we need to do more to provide more housing for people on low incomes, and this Government are committed to ensuring that we do build more houses, that we make more available and that we make more houses available at prices within the local housing allowance, which has also been a challenge.

[Jim McMahon (Oldham West and Royton) (Lab/Co-op)]

Is not the truth, however, that as well as the pound that people have in their pockets being worth less now than before, the social and economic contract of this country has been completely smashed apart? The idea that if you roll up your sleeves and work hard you can get on in life and have a better life for you and your children is no longer true for millions of people in this country.

[Amber Rudd]

The hon. Gentleman paints a very bleak picture, but the facts that came out on Tuesday demonstrated that monthly incomes are rising faster than inflation. There are jobs being made available and inequality has started falling since 2010.

[John Woodcock (Barrow and Furness) (Ind)]

The Secretary of State is being generous in giving way. Does she agree that, if the Government are sincere in wanting to accelerate progress in reducing poverty, it would be madness to advocate a tax priority of cutting income tax for those earning more than £50,000 a year? She must oppose that.

[Amber Rudd]

The tax cuts by this Government that I am most proud of are those that have taken the lowest paid out of tax altogether. Thirty million people have received a tax cut under this Government. We brought forward the threshold, which is now at £12,500, a year early to make that point and so that people on the lowest incomes do not pay tax at all.

[Ruth Cadbury (Brentford and Isleworth) (Lab)]

rose—

[Amber Rudd]

I am going to make some more progress.

Let me set out how this Government are supporting social mobility and helping people to improve their lot. We know that social mobility support has the greatest potential at the earliest time in life. That is why we introduced 15 hours of free childcare for disadvantaged two-year-olds. This is on top of the 15 hours of free childcare offer for all three and four-year-olds, which we doubled to 30 hours for working parents. This is more provision of childcare than at any time under Labour.

We are investing in our world-class education system. Core funding for schools and high-needs education has risen from almost £41 billion in 2017-18 to £43.5 billion this year. Since 2010, the proportion of children in good or outstanding schools has risen from 66% to 85% in December 2018.

[Mr Jim Cunningham (Coventry South) (Lab)]

We talk about help for childcare but, in actual fact, local authorities and childcare facility people are only getting £5 for every child, which is less than the cost. Surely the Secretary of State has to do something about that. Earlier, she mentioned the fact that wages were increasing, and they are, but they are increasing from a lower base because we have had 10 years of wage stagnation in this country. That has to be taken into account.

[Amber Rudd]

I gently remind the hon. Gentleman that we came in in 2010 to an economic crisis, and the fact that we have seen an increase in people’s wages over inflation in every month for the past 13 months is something that we should celebrate. The fact that we now provide 85% of assistance for people who need it for their childcare costs, compared with the 70% they received previously, should help people to access the work that they want and the support for childcare that they need.

We are also overhauling technical education, with investment of an extra £500 million a year once T-levels are fully rolled out. The UK has a long history of providing world-class university education. We have four of the 10 top universities in the world, more women than ever before are studying STEM—science, technology, engineering and maths—subjects at university, and disadvantaged 18-year-olds are now entering full-time universities at record rates.

For most people, full-time work is the best route out of poverty, so it is vital that we help welfare claimants to find jobs, to progress and to work. That is why the Government designed universal credit, which removes the legacy system’s disincentives to entering employment by ensuring that work always pays more than being on benefits.

Once fully rolled out, universal credit will cost £2.1 billion more per year than the system it replaced.

[Ruth Cadbury]

The Secretary of State talks about rising wages and full-time work, but is she aware just how many families depend on zero-hours, inconsistent and unsociable hours work while their costs, including rent and council tax, are rising? They are having to find childcare out of normal hours and they cannot make ends meet. Those people’s incomes are not improving, given all the other costs that they face.

--- Later in debate ---

[Amber Rudd]

The number of people on zero-hours contracts has started to fall. This Government are always going to respond to the changing labour market and to regulate to ensure that it works for people. It was this Government who made sure that no zero-hours contract employer could say that someone could have only one contract. We legislated against that, so that people could have more independence on zero-hours contracts.

The benefits of universal credit are that, because of the real-time information, people are given the correct support once they interact with their work coach and with their page, so I hope that they will see the benefit of that. We have built a welfare system fit for the 21st century that not only supports people in need but provides a springboard into work. Every extra hour worked is rewarded, and tailored work coach support helps claimants to find the right job for their circumstances.

[Marsha De Cordova]

Will the Secretary of State give way?

[Amber Rudd]

Not just now.

I have heard success stories from people across the country who have been supported into their dream jobs through the hard work of my colleagues in jobcentres. I sometimes think that Opposition Members underestimate the great work that the work coaches do. When I go round and talk to them, they take very personally the assistance that they can give to individual members in hon. Members’ constituencies, the way they can signpost them to the additional help they can provide and the personal support that they give them. When I asked one of them recently what aspect of universal credit they would change, they replied, “Our reputation.” So many people talk down universal credit, but the person-to-person work that is done in the jobcentres is actually very sympathetic and constructive. We continue to roll out universal credit, and it will provide additional opportunities to people who access it. That is why the Joseph Rowntree Foundation has reported that universal credit is likely to help an extra 300,000 members of working families out of poverty, the majority of whom include someone who works part time.

I recognise that my Department, working with colleagues across the Government, must continue to open up new opportunities for workers as the labour market responds to automation and new forms of work, so we will face the challenges of a changing labour market head-on and continue to support everyone to thrive in work while of course providing support for those who cannot work. Indeed, under universal credit, 1 million disabled people will receive approximately £100 more per month than they did under the legacy system.

[Marsha De Cordova]

I thank the Secretary of State for giving way. She has mentioned disabled people and the fact that 1 million are better off, but does she agree that the abolition of the severe disability premium meant that a number of disabled people were left worse off? It was left to the courts to make a judgment stating that those disabled people were wrongly treated. Will she now commit to separating out the managed migration regulations to ensure that disabled people who lost out on the severe disability premium have their money back paid immediately?

--- Later in debate ---

[Amber Rudd]

The hon. Lady raises a good point. We are considering how best to respond, ensuring that we put the interests of the clients first. I also point out that we are spending £2 billion more on disabled people than was spent under the legacy system.[Official Report, 18 June 2019, Vol. 662, c. 3MC.]

I will now say a few words, if I may, about health. Everyone in this House is proud of our health service. The Commonwealth Fund ranks the NHS as the best healthcare system globally. Our long-term plan for the NHS commits to tackle health inequalities, and we will target a higher share of funding towards areas with high health inequalities—worth over £1 billion by 2023-24.

[Graham Stringer (Blackley and Broughton) (Lab)]

Professor Dame Sally Davies, the chief medical officer, drew attention in her most recent report to the fact that there has been no change in health inequalities, both regionally and by class, since the Black report was published in 1980. To go back to the right hon. Lady’s first point, that implicates all political parties over nearly 40 years for not having dealt with those inequalities. What does she think can be done about it?

[Amber Rudd]

Characteristically, the hon. Gentleman raises an important point. We know that different headwinds are at play here, and we know that social media is, in some respects, having a negative impact on health inequalities. My right hon. Friend the Health Secretary recently met with social media companies to see what can be done to control the harmful websites that are, for instance, part of the reason why we believe people may be committing suicide. My right hon. Friend the Home Secretary recently commissioned Dame Carol Black to review drug usage. Different things are going on here, but I reassure the hon. Gentleman that we are alive to wanting to improve health inequalities in this area, and we recognise that there is more to do.

We will set specific, measurable goals for narrowing discrepancies in health outcomes, and all local health systems will be expected to set out how they will reduce them in their area. That will ensure that we continue to provide world-class healthcare free at the point of use not just for this generation, but for generations to follow. As part of our long-term funding for the NHS, a five-year budget settlement will see funding grow by an average of 3.4% in real terms, because it is vital that anyone who suffers illness or cannot work knows that we stand ready to support them at times of need.

[Jim McMahon]

Will the Secretary of State give way on that point?

[Amber Rudd]

I want to make some more progress.

We continue to look for ways to help people out of poverty, which is why we have acted to increase the incomes of the poorest in society. My right hon. Friend the Chancellor has injected an extra £10 billion into universal credit since 2016, and that meant we could increase the universal credit work allowance by £1,000 in April, providing extra cash in the pockets of hard-working people in 2.4 million households.

[Neil Gray (Airdrie and Shotts) (SNP)]

While we all accept that the Government have taken some steps—I pay tribute to the Secretary of State for making some changes to universal credit since she has taken office—does she accept that the interventions from the Chancellor at the last Budget do not even make up for the cuts in the 2015 Budget?

[Amber Rudd]

The hon. Gentleman must acknowledge, as I said earlier, that we took on an economic crisis in 2010 that required some reduction in spending, and those changes allowed us to stabilise and grow the economy. There has now been an acknowledgment that some of that money can be put back, and I am pleased that the Chancellor was able to support us in doing that.

This Government introduced the national living wage, providing the biggest pay rise for workers in 20 years, and increased it this year to £8.21 an hour, and we have also increased the personal tax allowance to £12,500. We are acting to increase female employment and economic empowerment, reaching out to marginalised women and trying to eliminate the gender pay gap. We are spending billions to ensure that opportunity and growth are spread throughout the country through our stronger towns fund and our transport investments, but we will not stop there. We have committed to finding new and better ways to analyse and tackle poverty in this country.

The Social Metrics Commission’s “A new measure of poverty for the UK” report, which the hon. Member for Wirral West mentioned, makes a compelling case for why we should look at poverty more broadly to give a more detailed picture of who is poor, their experience of poverty and their future chances of remaining in poverty or falling into it. We are working with the commission and other experts in the field to develop new experimental statistics to measure poverty, which will be published in 2020 and, in the long run, could help us to target support more effectively. It is vital that we have evidence on the effects of poverty in order to tackle it, and in the run-up to the spending review we will examine what more can be done to address poverty, particularly child poverty, and to support social mobility.

[Danielle Rowley (Midlothian) (Lab)]

I am interested in hearing more about how the Secretary of State, or her Department, plans to measure social mobility and poverty because often it is based on income, rather than wellbeing. Constituents who come to my surgeries week after week are fed up of hearing from the Government in the media that poverty is going down and employment is going up when they are in such desperate situations and are seeing no more money. They are going to food banks and having a terrible time. All they hear about is all the success the Government are having and it does not reflect their lives. So how will the Department reflect people’s lives in reality more accurately?

[Amber Rudd]

I know there are people who have difficulties, and I listen to people in my Hastings constituency. I try to make sure that we respond as a Government, and I try to help them individually, but the Government cannot just base policy on anecdotes. We also have to look at the statistics and there are many different ways of doing that.

The hon. Member for Wirral West may quote relative or absolute statistics, but it is important to have an agreed basis so that we know we are measuring the same thing. That is why I have said we will look at the Social Metrics Commission’s “A new measure of poverty for the UK” report, of which she may approve because it looks not just at people’s income but at their actual spending. That makes a huge difference to people on low incomes. I urge her to look at the report.

[Jim McMahon]

I appreciate the Secretary of State’s generosity in allowing an intervention again. In that spirit, is the Department having cross-departmental conversations on the impact of other taxation? VAT, the most regressive indirect taxation, and council tax, the most regressive direct taxation, take 8% of a lower-income family’s income. Surely there should be such conversations across the Government.

[Amber Rudd]

We always have conversations across the Government. I work very closely with my colleagues across the Government to ensure that we devise the best policies to help everybody on low incomes. Those people need our support.

Supporting those on the lowest incomes and making sure that people’s life chances are not determined by their background or gender is at the heart of a one nation Conservative Government. For as long as we lead this country, we will always put social mobility at the centre of what we do and prioritise those most in need of financial support.

We believe that good government can empower people with a hand up, not just a handout, to get a good education, enter work and earn a decent wage. We have sought to keep taxes as low as possible, particularly for those on low and middle incomes, so that these people can keep more of the money they work hard for. We are not complacent about the challenges faced by the lowest earners in this country, which is why they are entitled to free childcare earlier in their child’s life than anyone else. Our increased national living wage and work allowances ensure that, once people are in work, they now earn more than ever.

It is the Government who are improving the situation for families across Britain. I urge all colleagues to reject the motion.

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[Neil Gray]

I think it is; Mr Alston’s report was comprehensive and spoke to the issues that we see in our surgeries daily. I invite the hon. Lady to Glasgow, where Mr Alston spent much of his time, and to which he dedicated much of his report, to see the impact of the problems I mentioned.

[Amber Rudd]

Mr Alston, of course, spent two days in Scotland, to follow up on the point made by my hon. Friend the Member for Chelmsford (Vicky Ford). I refer the hon. Member for Airdrie and Shotts (Neil Gray) to the leader in The Times of 25 May, which said:

“The failings of Mr Alston’s report are legion.”

It referred to his report as “nonsense”, and said:

“The government is vulnerable to many criticisms in economic and welfare policy”—

a point that the hon. Gentleman often throws at me—

“Yet poverty in this sense does not exist in Britain in the 21st century.”

I urge him to get a copy and read it later.

[Neil Gray]

The Secretary of State needs to look at the report and realise why Mr Alston was able to come to his conclusions on the evidence that he found during his visit to this country, rather than doing what she and her colleagues have done up to now: report personal attacks against a UN rapporteur who visited this country to draw conclusions about poverty and human rights.