Low-income Households

Bob Russell Excerpts

Tuesday 14th September 2010 Westminster Hall

[Ms Buck]

I am grateful to the hon. Gentleman for his comments. I will not shy away from it: there was internal debate within the Labour party, both in the run-up to 1997 and subsequently, on what reform agenda was needed and how it would be carried forward. As can be traced through numerous speeches in Parliament and elsewhere, I was not always in agreement with the priorities of either Tony Blair or Peter Mandelson. It is historically inaccurate to claim that the welfare state was not subject to significant reform throughout the 13-year period. One of the earliest, and fairly controversial, proposals was on incapacity benefits; it was voted on in 1998. The first clash that took place after the 1997 Government were elected was over lone-parent benefits. Housing benefit was subject to a number of changes. My hon. Friend the Member for Bishop Auckland (Helen Goodman), who was a Minister at the time, will confirm that I beat a path to her door to exercise my concerns about what the Labour Government were proposing on housing benefit reforms, which I felt then and feel now were wrong, but which have been picked up on and exaggerated by the Government.

On the more positive side, the whole tax credits agenda was clearly designed and had an impact on work incentives. The idea that there was no reform agenda is complete nonsense. The reason why welfare reform, particularly in relation to work incentives, has not satisfied the incoming Government is that it is extremely difficult to achieve reform that both makes it easier to work and does not increase poverty. Clearly the new Government have come down on one side of that equation. The simple facts are that inequality soared under previous Conservative Governments. As measured by the Gini coefficient—I do not think that we can argue against this—there was a very sharp upward curve on inequality throughout the mid to late 1980s; it levelled off a little during the 1990s. During the first two terms of the Labour Government, real progress was made on turning the curve down again. Levels of inequality flattened out and then turned up again in the last term of the Labour Government, not least—but not solely—because of the impact of the financial crisis.

In its pre-election briefing, the IFS said:

“The tax and benefit measures implemented by Labour since 1997 have increased the incomes of poorer households and reduced those of richer ones, largely halting the rapid rise in income inequality we saw under the Conservatives.”

[Bob Russell (Colchester) (LD)]

Will the hon. Lady confirm that the gap between rich and poor is greater in 2010 than it was in 1997?

[Ms Buck]

I will not make a similar error to that being made by the Conservatives. I will not say that absolutely everything that the Labour Government did was perfect, and that they achieved every single goal and target that they set for themselves, whether on child poverty or on reducing income inequality; they did not. However, it is also nonsense to use the hon. Gentleman’s line to make the case that the Labour Government’s investments, whether in employment growth or in tax and benefit changes, did not slow down and flatten out the rapid rise in inequality that took place throughout the 1980s and into the 1990s. That would be to claim that all the investment in tax credits, increased child benefit and the national child care strategy failed, and it absolutely, clearly and demonstrably did not.

--- Later in debate ---

[Mr Field]

That is a fair point. To be absolutely honest, the core problem that we all face is a lack of any explicit mandate for anything that is being done on the issue. For we Conservative Members who have been warning about the deficit and levels of public debt for many years, at a time when conventional wisdom was that we would stick to the outgoing Government’s spending plans, that is obviously a matter of some concern.

During the run-up to the general election, a spurious debate took place in which all parties danced on the head of a pin. Apparently, the necessity for £6 billion in cuts was a matter of Armageddon on one hand or sunlit uplands on the other. As the political class, we all took a decision to keep the electorate away from some of the harsh choices that would have been inevitable whoever won the election. That lack of an explicit mandate will cause difficulties in making the necessary case for deficit reduction, a case that I have discussed many times in the House. It is of great importance that we reduce the deficit as responsibly and as early as possible, not just to impress the money markets.

I feel strongly that we will now face intergenerational conflict. Almost uniquely outside wartime, the children of the present middle-aged generation—I see several 40 and 50-somethings here—will have a less good financial situation than the one that we have taken for granted. In many ways, that is a terrible indictment of the debts that we are building up, and it is one reason why we need to reduce those debts. It will make this country a more acceptable place for our children to live in.

The hon. Lady and I both have sons. I worry for my son when he comes to adulthood at 20. I hope he will have the education and skills to make him a globally mobile citizen. He and many of the brightest and best of our young men and women may choose to vote with their feet. I fear that we are already seeing an element of that, given the huge levels of unemployment among our graduate population, many of whom have globally mobile skills that they may well use to go elsewhere. I took for granted the opportunities that were available to me when I left university in the 1980s. We need to bring back those opportunities as quickly as possible. Reducing the deficit and ensuring that debt is kept to a minimum will provide a level playing field for future generations.

I appreciate that others want to speak. I will say a bit about some things that are happening in central London specifically. Due to the grave financial situation inherited by the coalition Government, all of us, whether in business, in households or in local and national Government are, understandably, being forced to tighten our purse strings. My local authority, Westminster city council, is no exception. One clear priority in Westminster is the most vulnerable in our community. Hopefully, that is a benefit of having two Members of Parliament for Westminster, one on each side of the political divide, to make the case.

It is easy to characterise my constituency in particular as extremely wealthy. The hon. Member for Stretford and Urmston (Kate Green), whom I have not had a chance to meet, is an erstwhile constituent of mine, and indeed a former candidate for the Barbican in 1997. She will recognise that although the Cities of London and Westminster contain pockets of incredible wealth, there is a lot of poverty not far from the surface. An important part of my job has always been to provide a voice for the most vulnerable in my community.

[Bob Russell]

I thank the hon. Gentleman for drawing attention to pockets of poverty, which are different sizes in different parts of the country. If housing benefit is cut and people cannot afford to pay the rent, what happens to them?

--- Later in debate ---

[Bob Russell (Colchester) (LD)]

It is a pleasure to serve under your chairmanship for the first time, Ms Clark, and I congratulate the hon. Member for Westminster North (Ms Buck) on securing the debate. As the schools have just gone back, and as we are talking about low-income households, I would like to point out that for almost one in three families there was no holiday away from home—not even a single day trip to the seaside for one third of the nation’s children. That is the reality in the UK, one of the world’s richest countries, where the divide between rich and poor has widened over the past decade. That is where we are, and I sense that things will get worse. I am grateful to a charity called the Family Holiday Association for that information. The hon. Lady and the hon. Member for Cities of London and Westminster (Mr Field) may wish to get hold of a university of Westminster study published in April last year which can expand on it.

I intervened in respect of housing benefit because I believe that if people have to spend more money on rent—assuming that they have more money to spend on rent—they will have less money to spend on food, clothing and services. The knock-on effect—the downward spiral of less money churning through the environment—will have an impact on their local economy.

The stark fact is that, for the past 30 years, it has been impossible to tell the difference between successive Governments when it came to the provision of what we now call social housing, but which I still refer to as council housing. It is obvious that if housing stock is not provided to house the people, supply and demand will get out of kilter. That is why 30 years ago in Colchester there was no such thing as a housing crisis but there is one now. That is why local churches in my town have had to start a food parcel scheme to help desperate people who need something to eat.

A hallmark of a civilised society is that all its citizens are fed, housed and clothed, but the reality in the world’s fifth-richest economy—even in our great capital city—is that there are levels of poverty which will grow. It is to the lasting shame of the previous Government that they left office with 3.9 million children living below the official poverty line.

My role is to try to influence the coalition Government to make the situation better, not worse. The Minister will recall that we have already had a debate on this subject. On 9 June, I pointed out the high level of child poverty. According to Barnardo’s, if we take housing costs into account, 3.9 million children live in households that are below the official poverty line. I was shocked by a disturbing extract from the “Hard Times” report published by Save the Children in 2006—four years ago:

“One third of British children are forced to go without at least one of the things they need, such as three meals a day or adequate clothing.”

I raise housing benefit because, inevitably, the cuts will lead to low-income families being forced out of their neighbourhoods. That is not ethnic but economic cleansing. It has no place in civilised society, and the coalition Government must not take any measures such that they could be accused of it.

Barnardo’s stated in June, before any public spending cuts:

“The poorest families in the UK are struggling during the recent economic crisis and are very likely to bear the brunt of forthcoming spending cuts. Barnardo’s proposes pragmatic, cost-effective solutions to redistribute money to the poorest families without the Government spending a single penny extra.”

Save the Children stated:

“It makes financial sense to end child poverty—the Joseph Rowntree Foundation estimates it costs the taxpayer £25 billion a year.”

Putting to one side the obvious reasons why a civilised society should not tolerate child poverty, Save the Children made the financial case for ending it. It is obvious—“obvious” is not a word that the Treasury uses or understands—that, in the long term,

“huge amounts would be saved from not having to pick up the pieces of child poverty and associated social ills.”

I will end with the plea that I made to the Minister on 9 June, because it is probably more valid now than it was then:

“I therefore invite the Minister to have a meeting with Save the Children, Barnardo’s and the other charities that do so much work to help children, to discuss what needs to be done. Working together, as a big coalition of people with shared interests, makes sense. It would make further sense if there were a permanent standing committee, for example, involving Government and those organisations, to help with formulating policies and strategies, in the spirit of joined-up government across all Departments. I also seek a pledge from the Minister”—

for the second time—

“that there will be no delay and no dilution of the provisions set out in the Child Poverty Act 2010, including measures on the poverty reduction target and setting up the child poverty commission, which are a matter of urgency.”—[Official Report, 9 June 2010; Vol. 511, c. 31WH.]