Fairness and Inequality

Debbie Abrahams Excerpts

Tuesday 11th February 2014 Commons Chamber

[Stephen Crabb]

I applaud the hon. Lady for her attempt to rescue the reputation of the former Chancellor of the Exchequer and Prime Minister. The truth is that the trajectory of public spending was already far too high, even before the banking collapse. There was a structural deficit that placed at risk the stability of the UK finances even before the banking collapse.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

Does the Minister not accept that official statistics show that the debt-to-GDP ratio was lower in 2008 than when we came into power in 1997? Those are the official figures.

[Stephen Crabb]

I am not sure that I recognise the figures that the hon. Lady gives.

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[Stephen Crabb]

I hear what the hon. Gentleman says, but the reasons that drive people to use food banks are complex and it is a mistake to try to single out any one cause. When I speak with food banks in Wales, they do not tell me that it is the benefit changes that are responsible in most cases. Household debt is a far more important factor.

[Debbie Abrahams]

I thank the Minister for giving way again; he is being very generous with his time. Citizens Advice has analysed why people are going to food banks and found that inappropriate sanctions as a result of welfare reforms and low pay are the key contributors.

[Stephen Crabb]

The hon. Lady talks about inappropriate sanctions on benefits. I recall hearing one of her Front-Bench colleagues say only a few weeks ago that the Labour party would be even tougher on benefits than this Government have been. I think that she needs to get some consistency with her Front Benchers on whether they support sanctions.

The best way to reduce economic inequality is to have a growing economy and to ensure that people are in work. Today, more people in Wales have gone out to work than at any time before, with economic inactivity at its lowest level since records began. However, the tragedy is that there are still 200,000 people in our country who have never worked a day in their lives. I hope that the hon. Member for Carmarthen East and Dinefwr agrees wholeheartedly that that represents an enormous waste of talent, potential and skill and that a small nation such as ours cannot afford to lose that potential. I hope that he shares my ambition for welfare reform to see those people who have been locked in worklessness brought back into the labour market to achieve their full economic and social contribution.

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[Guto Bebb]

I would reject that argument. We talk about VAT, we often forget the exemptions. If somebody is buying a new Ferrari, I have no problem with their paying £50,000 in VAT. If somebody buys their food in a supermarket, they pay 0% in VAT. If VAT were 20% on every single item, it would be a regressive tax. For those who spend a significant proportion of their income on food, or on household fuel, which is taxed at 5% rather than 20%, the VAT issue is not as clear cut as Opposition Members try to make it.

[Debbie Abrahams]

Will the hon. Gentleman give way?

[Guto Bebb]

Not at the moment.

When we talk about inequality, it is important to recognise that the Government’s work on pensioner benefits has significantly reduced pensioner poverty. We should also recognise that in a country such as Wales, with such a high dependence on self-employment, the Government’s moves to introduce a single-tier state pension will make a huge difference for those who are self-employed and will result in less inequality when people reach retirement.

The hon. Member for Carmarthen East and Dinefwr, who has now, unfortunately, left his seat, said that there was a need for more investment in a Welsh context. Let me be very specific about the situation in Wales. Since 2000 and 2001, the Welsh Government, supported by European structural funding, has invested billions of pounds in so-called initiatives to deal with Wales’s lack of economic progress. When people talk about the need for public sector investment to create wealth and employment opportunities, it is important to consider the case study of how European funding, spent under the guidance of the Welsh Labour Government—and under the Welsh Labour and Plaid Government for four years—was used through so-called interventions that were meant to create employment opportunities and ensure that we had a more equal society. That has failed dramatically and for the entire period of intervention by the Welsh Government and the EU, west Wales and the valleys have gone backwards rather than prospering.

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[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

I was not sure whether the hon. Member for North East Somerset (Jacob Rees-Mogg) agreed or disagreed that inequalities are bad. I certainly believe—and I can present evidence—that inequalities between rich and poor are bad not just for the people who experience them, but for society as a whole. A large swathe of international academic evidence shows—most poignantly in “The Spirit Level”, published a few years ago—that the gap between rich and poor is bad for everyone in society. Inequalities affect life expectancy, mental health, social mobility, educational attainment and the extent of crime. So I start from the premise that inequalities are bad.

In my previous life in public health, I worked on socio-economic inequalities and their impact on health inequalities, which is what I want to discuss today. Again, I was not clear from what the hon. Gentleman said, but he talked about the separate position of the state and the responsibility of individuals within society. I believe—again, I think there is evidence to support this—that the Government set the tone for the culture of a society, in both their explicit and implicit policies, and how we divvy up spending reflects those policies.

As I said, considerable evidence shows that the systematic, socially produced differential distribution of resources and power—I mean income, wealth, knowledge, status and connections—is the key determinant of health inequalities. Mortality and morbidity increase as people’s social position declines. My constituency contains an affluent part, in Saddleworth, although there are pockets of deprivation, as in every community, and a poorer part, in Oldham East, and that differential is reflected in a 10-year difference in life expectancy, which is a situation that can be replicated across the country.

That social pattern of disease is universal. It is produced by social processes influenced by Government policies, both written and unwritten, rather than by biological differences. There is no law of nature that decrees that children born to poor families will die at twice the rate of children born to rich families. We should, however, take some comfort from the fact that those inequalities are socially produced and, as such, neither fixed nor inevitable. That means that we have some hope of doing something about them.

I am very concerned about the direction of Government policy, which, although largely driven by the Tory party, is to a large extent supported by the Liberal Democrats. The Health and Social Care Act 2012, for instance, completed its passage because it was propped up by them. One of the key objectives of the original policy was to reduce health inequalities, but there is absolutely no evidence that this privatisation Act will do anything of the kind. The Government have tried to suggest that increasing competition in the NHS will improve quality and reduce the number of inequalities, but I recently organised an inquiry in my capacity as chair of the parliamentary Labour party’s health committee, and eminent academics were saying exactly the opposite. One was

“shocked to see the move to wholesale competition and Any Qualified Provider as a primary driver in NHS reforms on the basis of”

very few observational studies conducted by the London School of Economics and others. Another said that

“clearly different drivers are motivating the private healthcare sector”.

In the US, there is both under and overtreatment, and huge disparities in health care. We know that the Government are already putting out to tender seven out of 10 contracts.

Before the Health and Social Care Bill became an Act, directors of public health and public health academics wrote that it would exacerbate inequality rather than reduce it, but the Government pressed on, and they continue to press on. The implications of the EU-US trade negotiations are of particular concern, because the Government have still not committed themselves to exempting the NHS from the free trade agreement. We will challenge them vigorously on that.

The recent debacle over NHS resources allocations is another example of the Government’s total lack of commitment to reducing health inequality. We saw the writing on the wall back in 2012, when the former Secretary of State for Health—the present Leader of the House, the right hon. Member for South Cambridgeshire (Mr Lansley)—reduced the health inequalities weighting from 15% to 10%, which would have a direct impact on areas where health was particularly poor. Following last year’s consultation about how NHS resources should be allocated, the Government were prompted to withdraw their previous policy and include an element that took account of deprivation in order to avoid another furore, but there are still major problems in connection with the allocation. A recent analysis undertaken by academics shows that the Labour Government’s health inequalities weighting saved lives: three lives per 100,000 in the population. I am extremely concerned about the new formula, and about its failure to take inequalities into account.

However, health policy is not the only problem. Other Members have already mentioned the Government’s economic policies. Although the personal allowance has been increased, the cut in tax credits means that 40% of the worst-off members of the population will be about £1,500 worse off. Those policies are doing nothing to reduce the economic inequalities that ultimately lead to health inequalities.

The Government are reducing access to education by trebling tuition fees and by scrapping education maintenance allowance, which was a key funding mechanism to enable young people from deprived areas to buy books and travel to college. They have now been denied that.

[Nia Griffith]

Will my hon. Friend join me in congratulating the Welsh Government on protecting education maintenance allowance for the poorest families, for the reasons that she has outlined?

[Debbie Abrahams]

I will indeed. I also want to pay tribute to Oldham college, which has introduced its own system to ensure that people from the poorest backgrounds can still attend college without being financially penalised.

The Government are restricting access to justice through their legal aid changes. Inequalities are also being created through job insecurity resulting from zero-hours contracts. The swathe of policies that the Government have introduced have done nothing to reduce inequalities. On the Government’s so-called welfare reforms, I absolutely detest the divide and rule narrative that has been deliberately introduced in an attempt to vilify people receiving social security as the new undeserving poor. The pejorative language of “shirkers” and “scroungers” has been really disingenuous, and the Government are distorting statistics to try to prop up their welfare reforms. That is absolutely shameful.

Collectively, the impact of public spending cuts is significantly greater in deprived areas. Academic studies also show the relationship between public spending and, for example, life expectancy at birth. The immediate impact of these socio-economic inequalities on health inequalities is already showing. Following the 2008 recession, there was an increase in male suicides, with an additional 437 suicides registered in the UK in 2011, roughly mirroring the increase in unemployment. It will take time for health conditions such as cancer and heart disease to develop. There is always a time lag between such conditions and their immediate precursors. We also know that the protective, positive factors that can mitigate these negatives are being eroded.

[Mr MacNeil]

The hon. Lady is making a clear, thoughtful speech. She has touched on regulation, and on positive factors. Does she agree that one of the malign aspects of state regulation is the excessive regulation of trade unions, especially when the OECD has shown that strong trade unions can help to reduce inequalities? Does she also agree that this is one area in which the UK has definitely gone too far?

[Debbie Abrahams]

I am a trade unionist and I fully support trade unions.

On the current policy trajectory, the social pattern of health inequalities will continue. For example, the gap in life expectancy is set to increase, rather than decrease. In England, there is now a nine-year difference for men and a seven year difference for women. The Government’s indifference to inequality reflects their belief in the dated theory that reducing inequality reduces incentives and slows growth. That theory has had a number of iterations, but the converse has been shown to be the case. For example, Stiglitz produced evidence last year to show that inequality caused financial instability, undermined productivity and retarded growth.

The previous Labour Government did not get everything right, but I am proud that we achieved our targets on health inequalities. Our key successes were in achieving our objectives, first, to reduce health inequalities by 10% as measured by life expectancy at birth for men in spearhead areas, and, secondly, to narrow the gap in infant mortality by at least 10% between routine and manual socio-economic groups and the England average. That was quite a feat, and it has not been acknowledged by this Government. I am sure that the Minister will take an opportunity to mention it in his closing remarks. We did not get it right, but we are definitely moving in the right direction with the policy initiatives we have announced: strengthening the minimum wage; increasing support on child care; freezing energy bills; repealing the bedroom tax; providing support on business rates; and improving the quality of jobs.

[Mark Durkan (Foyle) (SDLP)]

Reflecting on not just the previous Administration, but the previous Parliament, does the hon. Lady agree that one of their collective achievements was the Child Poverty Act 2010, which was supported by all parties? The Welfare Reform Act 2012 was used to gut the key component of that Act by removing the key element of targets and annual reports. That was not done properly, by its inclusion in the original Bill, but by a Government-sponsored amendment in the Lords, which came back here and was not even voted on.

[Debbie Abrahams]

I share the hon. Gentleman’s concern about the increase in child poverty. The Labour Government made some strides in reducing that. As he will know, the Institute for Fiscal Studies estimates that child poverty will increase by 1.1 million by 2020 because of this Government’s policies.

Let me finish on a quote from my right hon. Friend the Member for Holborn and St Pancras (Frank Dobson), a former Health Secretary:

“Inequality in health is the worst inequality of all. There is no more serious inequality than knowing that you'll die sooner because you’re badly off”.

I hope that focuses all our minds.

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[Richard Fuller]

I am grateful to the hon. Gentleman for that helpful intervention. Let us assess the ability of Government today to fulfil that positive role. One of the most important aspects of fairness is the future that we bequeath to our children and grandchildren. It is a natural aspect of human behaviour to want to give the best start in life to our children and grandchildren. One of the worst aspects of the context in which we are operating today, as a Government and as a Parliament, is that under the previous Government, we built up the most significant amount of debt to pass on to our children and grandchildren. One of the most important aspects of what the Opposition call the cost of living crisis—my constituents think of it as trying to meet the family budget—is the debt that was left by the previous Government for this Government to deal with.

The Opposition like to talk about the level of Government debt at that time, but a Chancellor of the Exchequer is custodian not just of part of the economy but of the entire economy, and, before he makes a decision, he has to look at the strength of the economy. It is an incontrovertible fact that the level of indebtedness of this country in 1995—Government debt, household debt and corporate debt—was about two times the size of the economy, and when the Labour party left office, it was five times the size of the economy. We do not need to have a credit card to know that we have to pay off all that debt, and not just part of it.

[Debbie Abrahams]

Will the hon. Gentleman explain the decisions that were made in the Health and Social Care Act 2012, which had nothing to do with the debt? We recognise the economic context, although we could quibble about the causes and whether we reduced the level of debt. I believe that we reduced it while we were in power. None the less, the specific policies of the Act had nothing to do with that debt. They were choices that the Government would have driven through regardless of the economic context.

[Richard Fuller]

The hon. Lady is repeating the point that she made in her speech. I am sure that the Minister will want to address it now or later. Earlier on, she missed this major contextual factor, which is somehow the Government must be able to manage the economy while dealing with a substantial overhang of debt, and individual families are doing that as well. That is a root and crucial part of how we can achieve a more equal society. We cannot achieve an equal society if we permit Government to pass on massive debts to future generations without any liability themselves.