Poverty

Lord Bilimoria Excerpts

Thursday 22nd July 2010 Lords Chamber

[Lord Bilimoria]

My Lords, it is a great honour to follow the maiden speech of the noble Lord, Lord Boateng. As predicted and as expected, it was excellent. This is just a taste of what we in this House may expect to come from the noble Lord in the many years ahead.

Poverty is a cause which the noble Lord has spoken passionately about for years. In fact, in his maiden speech in the other place in 1987 he spoke of poverty in his constituency of Brent South. He played a leading role in establishing and launching the £450 million children’s fund designed to tackle child poverty—of which he has just spoken. In his young life—the noble Lord is still young; he has not yet reached 60 and middle age will come next year—he has achieved much as a passionate campaigner and activist, as a lawyer who is both a solicitor and a barrister, and he has achieved many firsts, including being the first black Cabinet Minister, as Chief Secretary to the Treasury in May 2002. During his victory speech as an MP in 1987, he famously said, “Today Brent South, tomorrow Soweto!” Of course, he was talking about South Africa being freed from apartheid, but he was also presciently talking about his future appointment as British High Commissioner in South Africa from 2005 to 2009, a role in which he excelled. He has made his mark throughout his career, and we are fortunate that he will continue to make his mark here in this House.

Soon in my role as president of the UK India Business Council I will accompany the Prime Minister on his visit to India, following up on what was said in the gracious Speech. I quote:

“My Government looks forward to enhanced partnership with India”.

Although I was born and brought up in India throughout my childhood, although I visit India several times a year, and although India is today a global emerging economic superpower with amazing capabilities in IT, aerospace and even in space, every time that I get off that plane I am hit by the dire, abject poverty. Sadly, 300 million people there live on less than a dollar a day, and many of those are not living, but merely existing. This poverty exists now as much as it did during my childhood in India and I console myself about the enormity of the problem and the challenges that this most diverse and complex country in the world, with a population of over 1 billion, faces.

Then I think about us here in the UK, one of the largest absolute economies in the world. Whichever way you measure it—absolute GDP or GDP per capita—we are one of the wealthiest countries in the world. We are relatively small, with 60 million people, yet it saddens me that we have such high levels of poverty and child poverty. According to Save the Children, 3.9 million children are living in poverty. There is no excuse at all for poverty in this country. After all, we have one of the most generous welfare states in the world. We have free education; people are entitled to free housing; those without work get an income to live on; and we have free healthcare from cradle to grave—all funded by the state. So surely poverty should not exist at all. And when I say poverty, I mean poverty of any sort, let alone the scale of the dire poverty in India.

Where are we going wrong and what should we do about it? One answer is that the welfare state is meant to address it and the Government are spending massive amounts on it. Public expenditure has reached 54 per cent of GDP, when it should be at around 40 per cent. This has led us to enter an age of austerity, as the Prime Minister put it. How can we maintain a safety net and at the same time work towards eradicating poverty? I am afraid that increasing taxes in the Budget, maintaining the 50 per cent higher rate tax, maintaining the non-dom levy, increasing VAT, and increasing capital gains tax, will not solve the problem. The Government are not meant to be Robin Hood—taking from the rich to give to the poor. We have seen that this does not work and that even in the boom time, with massive levels of public expenditure, poverty increased. The Gini coefficient that measures wealth and equality is the highest that it has been in 30 years, and over the past decade there has been no increase in the average income of the poorest tenth in our society.

The noble Lord, Lord Sheldon, recently asked a Question in this House: what proportion of wealth is held by the richest 10 per cent of the population? The Answer given by the Minister was 54 per cent. This was shown not to be out of line with other countries, with France on 61 per cent and the US on 69.8 per cent. I hope that the noble Lord will forgive me if I say that I strongly believe that the answer is not, as he suggested, to take action to reduce the level of wealth of the top 10 per cent. It is wealth generation that should generate opportunities for wealth creation. I have said it before and I will say it again that the job of the Government is to create an environment for business—in particular SMEs—to flourish and create the jobs that pay the taxes, that pay for the public services, that pay for the welfare that pays for those who genuinely need our help.

However, in my eight years on the New Deal task force and then the National Employment Panel, it became very apparent to me that work was the best way out of poverty. Yet, sadly, millions in this country are in a benefits trap where generations in certain areas have not worked, because work often does not pay. The difference between welfare support and a 40-hour week on a minimum wage is £37 a week—hardly enough to inspire people in difficult times to seek jobs. For this reason, the welfare reform Bill is welcome in its efforts to simplify the benefits systems, remove barriers to work and attempt to lessen the hold of the awful benefits trap that exists in this country.

However, it is even more challenging when our schools are letting our children and our country down, where over a third of 11 year-olds leaving primary school have difficulty reading, and a fifth leave their secondary school without being able to read and write with confidence. This makes it very difficult for them to be employable.

In my role at Cambridge University as a visiting entrepreneur and a member of the advisory board, I was presented with a paper from Professor Radjou, Jaideep Prabhu and their colleagues on whether the UK can win in an age of scarcity. Their theory is: “more for less for more”—an approach that places emphasis on delivering more value for less cost for more people. If necessity is the mother of invention, as they say, scarcity is the grandmother of innovation. This is where a developed economy such as ours can learn from some of the amazing innovative models that have been pioneered in emerging markets such as India, Brazil and China.

We have such advantages in this country. We have the finest higher education in the world and cutting-edge research. One university, Cambridge, has produced almost 90 Nobel Prize-winners. Our greatest strength is our people. The Government alone cannot eradicate poverty, even with the best of intentions; we have to work together, and this is where NGOs working together can really help, as we have heard. The coalition Government’s answer of promoting the big society and getting communities to work together is fabulous. However, is it not ironic that a big society goes hand in hand with smaller government? It is about people coming together to care, share, help each other and prosper together.

This country used to have a glass ceiling. As recently as three decades ago, it was not a meritocracy. However, today this country is a true meritocracy. It enabled me 21 years ago, with £20,000 of student debt to pay off, to start up a business from scratch. This is a country with opportunity for all, and the poorest person is given hope by that opportunity.

Earlier this week, we in Parliament had a visit from Bill Gates, one of the wealthiest men in the world. He addressed Parliament on development. How inspirational that here is an individual giving away tens of billions of dollars. He changed the world through his business; now he is going to change it through his development work on the alleviation of poverty. I have a saying that achievement leads to inspiration; inspiration leads to aspiration; aspiration leads to achievement—and a virtuous circle follows. We can just imagine that if only we had that virtuous circle in every corner of this country, we would obliterate poverty and genuinely make it history.

Recently, I met those running a charity in India called the Akshaya Patra Foundation. The foundation has a vision that:

“No child in India shall be deprived of education because of hunger”.

Today, it reaches 1.2 million children every day, giving them lunchtime school meals. However, the sad reality is that it has had to adjust its practices. On Monday, after the day off on Sunday, it has to provide double the amount of food for the children because they have not eaten on the Sunday. That is true poverty, and it depresses me that this wealthy nation of ours has poverty in the 21st century. We should be ashamed of ourselves. Our people need to come together, helping one another to succeed. We need to raise the water level for all the boats to float and to get bigger, and that is going to take a huge amount of work from government and NGOs and from communities and citizens. A friend of mine defined luck as being when opportunity meets determination. We have the opportunity; we have to be determined as a nation.

I conclude by quoting Jawaharlal Nehru’s famous “Tryst with Destiny” speech made on the occasion of India’s independence in 1947, as it is pertinent to what we are talking about:

“The service of India means the service of the millions who suffer. It means the ending of poverty and ignorance and disease and inequality of opportunity. The ambition of the greatest man of our generation”—

he was talking about Mahatma Gandhi—

“has been to wipe every tear from every eye”.