Fairness and Inequality

Baroness Burt of Solihull Excerpts

Tuesday 11th February 2014 Commons Chamber

[Mr MacNeil]

My speech is about making lives better for people wherever they are from and wherever they are worldwide. That is the important point to bear in mind.

The “Working for Poverty” report even touches on the untouchables of our society—football clubs. It states:

“Research from Citizens UK shows it would take a full-time cleaner 13 years to earn what top footballers earn in a week. Football clubs are important institutions in communities across the UK. They should be setting an example to employers nationwide.”

I must praise the columnist for The Observer Kevin McKenna who, like me, is a supporter of Celtic football club in Glasgow, the richest team in Scotland. Sadly, a few months ago, Celtic refused to pay the living wage to all its staff at the ground. It turned Mr McKenna’s stomach that those subject to such wage inequality could rub along, shoulder to shoulder, with people earning tens of thousands of pounds a week. That has also turned the stomachs of many football fans, especially given that Celtic had cashed in on the story of Brother Walfrid, a Marist brother who now lies at rest in Dumfries, who started Celtic as a means to help the poor of the Glasgow east end in the 1880s. I do not mean to single out Celtic, but to give an example of the toleration of those in even rich organisations for the shocking pay levels given to people the whites of whose eyes they see daily. Frankly, it removes the shine, lustre and glitz from the big football clubs of our land when we realise that gritty reality and see it up close.

[Lorely Burt (Solihull) (LD)]

I have every sympathy for what the hon. Gentleman is saying, but what is his party’s policy on tackling the scourge of overpaid football players?

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[Guto Bebb]

Thank you.

This has been an interesting and passionate debate thus far, but I would like to pick up on a few points made by the hon. Gentleman about the minimum wage. Members across the House will share the aspiration to increase the minimum wage, but to accuse the Prime Minister of inaction when he has simply stated a need to consider the facts is slightly unfair. On Friday, I met a number of constituents who run small hotels in my constituency. Not a single one of those six businesses had posted a profit in excess of £15,000 for the past three years, yet they all employed people and each paid slightly above the minimum wage. They want to do the right thing and retain their staff, but when talking about prosperity and creating jobs, we must ensure that anything we do with the minimum wage does not destroy the very thing that helps people out of poverty, which is having a job.

[Lorely Burt]

I understand the hon. Gentleman’s point about the minimum wage, but is he aware that were the Government to adopt the Liberal Democrat policy of increasing the threshold at which people start to pay tax to the minimum wage, that would achieve the living wage?

[Guto Bebb]

There is certainly an argument that to increase the minimum wage when, as things currently stand, the Government have already taken tax out of the minimum wage, would look as if they were kicking businesses for the sake of kicking them. I have supported the fact that the Government have increased the personal allowance dramatically, which has made work pay for people in many circumstances, but my point is that taking time over a decision is not something we should be ashamed of. Indeed, we should be proud of taking time to make the right decision on something that is so important for a constituency such as mine, where 27% of the working population are either self-employed or work for small businesses.

I must take issue with a few points raised by the hon. Member for Carmarthen East and Dinefwr (Jonathan Edwards) in his opening remarks. He began his speech by talking about Hywel Dda, who was indeed classified as one of the better Welsh kings. I was, however, surprised to hear the hymn of praise to a royalist from an avowed republican. Indeed, in terms of Hywel Dda, or Hywel the Good, being good, perhaps the true title should be Hywel the not-so-good. In addition to being the man who classified and created Welsh law, he also ordered the execution—the murder, I should say—of his brother-in-law in order to take over the kingdom of Dyfed, which is the current constituency of the Under-Secretary of State for Wales, my hon. Friend the Member for Preseli Pembrokeshire (Stephen Crabb). Furthermore, so as to extend his kingdom to the north and take over the whole of Wales, he also dispossessed the two sons of Idwal Foel from Gwynedd. When giving examples, I think we must put the man in the context of his time. It is interesting to highlight, however, that the Hywel Dda laws were in many ways ahead of their time in trying to achieve a level of equality between the sexes—not something that we saw in other parts of the United Kingdom for a very long time.

I also take issue with the comments by the hon. Member for Carmarthen East and Dinefwr about a proportional system of electing people leading to greater engagement with the political process. It is an attractive argument, but one that can be rejected simply by looking at the situation in Wales. We have 40 Members of Parliament who are elected on a first-past-the-post basis, and 60 Members elected to the Welsh Assembly, which uses a version of proportional representation. In a constituency such as mine, however, 70% of the electorate—

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[Mr Brown]

I have a copy of the report of the debate, so I am well aware of its content and of which Members contributed to it.

We may find little common ground today, but we can at least agree with the nationalist parties on the need for an inquiry into the impact of the coalition’s cuts on poverty throughout the United Kingdom.

The motion opens with the words:

“That this House notes that the United Kingdom is one of the most unequal states in the OECD, ranked 28 out of 34 countries for income inequality and the fourth most unequal country in the developed world according to some analyses”.

It is those last four words—“according to some analyses”—that present the problem. If we look at the OECD figures, we can see that the most recent ones are out of date. Definitions are provided for these figures, and statistics are also provided, but because different surveys and methodologies have been used, it is a real problem to get fully behind the figures and to determine what they are saying. In other words, statistics can prove one thing to one individual but tell a different story to another.

The coalition’s austerity measures have undoubtedly resulted in the greatest burden falling on low and middle-income families, while the richest have been given significant tax cuts to ensure that they do not feel the cold draught of the current economic climate. That is why Labour Members have consistently called for action to tackle the cost of living crisis caused by this Government. Such action would include freezing energy prices, taking real action to end exploitative zero-hours contracts, and strengthening the minimum wage now.

My right hon. Friend the Member for Morley and Outwood (Ed Balls) recently said that if Labour forms the next Government,

“we will restore the 50p top rate of tax”.

I know that that causes anxiety for Government Members, but we believe that, in tough times like these, those with the broadest shoulders should bear the greatest burden.

[Lorely Burt]

Will the hon. Gentleman tell the House for how many days the 50p rate of tax was in force during the 13 years Labour was in power?

[Mr Brown]

The hon. Lady knows as well as I do that it was a matter of days, but this also relates to the comments made by the hon. Member for Aberconwy about the impact of taxation on individuals. For most of that time, there was never a need for that higher rate of tax to be imposed. The hon. Lady knows that it was a Budget decision to raise the rate from 40p in the pound to 50p. Yes, that rate applied only for a matter of days, but the Labour Government had not felt the need to increase it at any other time.

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[Lorely Burt (Solihull) (LD)]

As a Member of Parliament from Solihull, I would not dream of presuming to talk about the very specialised problems of other parts of the UK, but I hope that I have a word or two to say about fairness and inequality. What was unfair was inheriting a £160 billion deficit from the Labour party. I appreciate that it was not all the fault of Labour. The banking crash all started with a company called Lehman Brothers, which makes one wonder what might have happened if it had been called Lehman Sisters. I can blame Labour for failing to regulate banks properly for 13 years, and then having to bail them out with a £500 billion rescue package. I can also blame Labour for allowing welfare spending to spiral up by 20% when the economy was growing. That has made circumstances difficult for our coalition Government.

I am proud of what the coalition Government have succeeded in doing. We have cut the deficit by a third, with more coming from the better-off, I hasten to say. Our flagship policy of raising the tax threshold at which people start to pay tax to £10,000 has taken 2.7 million people out of tax altogether, of which 60% will be women.

[Mr MacNeil]

The hon. Lady says that more tax is coming from the better-off, which is true, but are the better-off not getting a far larger slice of the productivity pie than they have in years and decades past?

[Lorely Burt]

I am not entirely sure what the hon. Gentleman means by the productivity pie, but over the same period of time a millionaire would have paid over £300,000 more in tax under the coalition Government than under the previous Labour Government. In addition, 24 million people have had a tax cut of £700 or more. Those are good things. In addressing unfairness, we seek to ensure that those with the broadest shoulders bear the greatest burden of the tax. The coalition helped 900,000 people out of poverty altogether between 2010 and 2012, so when Labour Members talk about increasingly harmful circumstances, it should be pointed out that poverty increased under the Labour Government and has decreased under this Liberal Democrat and Conservative Government.

We have also helped the rich to be relieved of more than their fair share of tax by increasing capital gains tax and closing pension loopholes. No company now will review its tax arrangements without considering the general anti-avoidance rule that we have introduced, which helps focus the mind because it concentrates on the spirit in which tax is paid, as well the fact. Sticking strictly to the law is no longer an excuse for not paying a fair share of tax. Under Labour, capital gains tax was 18%. We have increased that to 28%.

We fully appreciate that households are under great pressure and we have taken steps to remedy that—for example, by abolishing Labour’s fuel duty escalator, so that when the average motorist fills up their tank, they are paying £7 less to do that. No one denies that it is still expensive, but we are doing what we can to help.

Liberal Democrats have made a big contribution on fairness. There is now free child care for all three and four-year-olds, as well as for 260,000 two-year-olds. For parents who have children in child care, we have a £1,200 tax break coming down the line. We have frozen council tax and helped local authorities to achieve that. The average family will be paying around £600 less today in council tax than would otherwise have been the case. There are now 494,000 more women in employment and 100,000 more women in self-employment, which is an encouraging step. We will be introducing free schools meals for five, six and seven-year-olds, and as I have already mentioned, 60% of the 2.7 million women on low pay will be taken out of tax altogether.

[Mike Thornton (Eastleigh) (LD)]

Does my hon. Friend agree that it is a wonderful aim of the Liberal Democrat party that everyone on the minimum wage should be taken out of tax altogether?

[Lorely Burt]

Indeed. As I said to the hon. Member for Aberconwy (Guto Bebb), if our aspirations are realised and we can raise the threshold at which people start to pay tax to the minimum wage, we will achieve something very close to what is currently regarded as the living wage. That would be a tremendous help to the lowest-paid in Britain today.

The hon. Member for Brighton, Pavilion (Caroline Lucas), who is no longer in her place, mentioned women on boards. Although we do not subscribe to a compulsory threshold of 40%, it is encouraging to see that the percentage of women on boards has risen from 12% to 19% since 2010.

Pensions are an extremely important issue for women because they have been suffering as some of the lowest pension receivers in the United Kingdom. The triple lock is creating a lot of support for women, but it will make a big difference when we reach the citizen’s pension and women receive, as they deserve, the same amount a week as men, at £140 a week or whatever the equivalent will eventually be. There are many other Liberal Democrat policies coming down the line, such as flexible working and shared parental leave.

In conclusion, the Liberal Democrats will continue to work for greater fairness, not by stripping down the state, like our coalition colleagues, but by creating strong public services. We have stopped some of the more ambitious aspirations of our coalition colleagues, such as the Beecroft report’s proposals on firing at will. We have stopped schools being run for profit and stopped inheritance tax breaks for millionaires, and we are continuing to work to raise the threshold at which people start paying income tax.

We want more equality and more fairness, but we also want opportunity for everyone. The work we are doing, particularly in relation to young children, will make a big difference. We want everyone to have opportunity, but we also want to have a safety net. We are yet to persuade our coalition colleagues that our proposed mansion tax on properties worth more than £2 million is a brilliant idea, but I think that it will be. I understand from the research that we commissioned—I will now make my only reference to Wales and Scotland—that the millionaires’ tax will apply to no one in Wales, and we identified 17 mansions in Scotland. I think that is very fair, and I am sure that Welsh and Scottish colleagues in the Chamber will applaud that as a very fair tax for the people they represent.