Inequalities

Lord Davies of Stamford Excerpts

Thursday 13th June 2019 Lords Chamber

[Lord Davies of Stamford (Lab)]

My Lords, I add my congratulations to my noble friend Lord Dubs. He always thinks very carefully before he takes any initiative in this Chamber and regularly brings to our attention some of the moral issues which lie behind the decisions we take and the work that the Government do. That is an extremely valuable contribution, as was his speech today. I agree with an awful lot of what he said, not least what is in my view the moral obloquy of cutting taxes at a time when we are reducing spending on vital public services such as social care, the NHS and, as my noble friend Lord Adonis just explained, education.

It is important to be rigorous in a debate such as this, and we must distinguish clearly between the two subjects of inequality and poverty, which too easily get mixed up. They are in fact very different concepts and can well contradict each other, or there can be trade-offs between them. A policy designed to cut inequality may well produce more poverty. For example, tax rises may have that effect. On the other hand, a policy designed to reduce poverty—for example, tax cuts—may actually increase inequality. One must be careful what one is doing here.

The second proposition I put to the House is that there is no way in which you can intervene directly on inequality. It would be a nice idea if you could, but actually you cannot. You cannot have the state laying down people’s income or how much capital they should be allowed to possess. I do not think anyone is seriously suggesting such a thing. You could of course introduce something like a Cuban revolution, or a Chinese revolution, when people appeared to become more equal but at the expense of starvation. I do not think anyone is likely to be tempted by that approach.

Equally, you cannot increase levels of taxation unreasonably, because people will just go abroad—they will disappear and take their businesses with them. My eldest son, who is the only member of my family who pays tax at a 50% marginal rate, tells me that there is something very psychological about that rate. His employers are very keen for him to relocate to the United States and he would gain considerably from doing that. He does not want to do that, but he feels—and he speaks for a lot of people, because he has contemporaries who are similarly fortunate in their incomes—that people have a psychological barrier about 50% and if you go beyond that, you get some very counter-productive effects. One must be very careful about not making that sort of elementary mistake.

The fact that you cannot really deal with inequality directly is perhaps not so tragic, because I do not think that inequality is anything like as important as poverty. Some people will immediately think that that is just my personal normative preference. I hope that I can persuade the House that it is rather more than that; that it is rather more objective.

The fact is that if most human beings were as concerned—let alone more concerned—about where they stood in a relative table of income and wealth as they are about the absolute purchasing power and wealth they enjoy, they would logically be as satisfied with the thought that some wealth or income had been taken away from somebody else as they would be by knowing that they were themselves going to be made richer in absolute terms. That is such an absolute absurdity that I do not think anyone would seriously contemplate the idea. It would also be a threat to the whole concept of human rationality, so I do not think that we need fear saying that it is poverty, or the reciprocal of poverty—wealth, the purchasing power of individuals—that concerns people most. Nobody cares very much if someone else has a Lamborghini, but I do not think I speak only for myself when I say that I would be very upset if someone took away my modest motor car. I have absolutely no desire whatever to have a Lamborghini; I would not know what to do with it if I did.

Pursuing that view, we must maximise growth and therefore be more able in future to deal with the demands of both our public services and our private aspirations. If we do that, we will almost certainly increase inequality. That has always been the case. There is a sound economic reason for that: growth requires investment, which requires taking risks—some of which are very high—but no one will take those risks unless commensurate rewards, which can be very high, are available. So, in a period of successful growth, people become disproportionately rich. That has been the case throughout the economic history of the world. Of course, it is equally true in India or China as it is here or in the United States. We just have to live with that.

In those circumstances, the best policies that we can pursue are the indirect ones. I agree totally with my noble friend Lord Dubs about transparency, workers’ directives and publishing individuals’ income and tax statements. I believe very much in workers’ directives being on the remuneration committee agenda in public companies. Private companies and private equity firms should take the same responsibility for disclosing their profit and loss account, cash flow and balance sheet. Moreover, we should continue in line with the Labour Party’s glorious record—such as on education—especially in passing the Equality Act, which made life so much easier for people. Last week’s news that 60% of Oxford and Cambridge entrants now come from state schools is a return on the investment we made 10 years ago.

[Baroness Verma (Con)]

My Lords, I start by thanking the noble Lord, Lord Dubs, for securing this incredibly important debate. As he and other noble Lords have said, this issue is incredibly complex. Inequalities come in all shapes and sizes.

I want to focus on something that brought this issue home to me. During the recent mayoral elections in Leicester, I came across a large part of my city’s population that cannot read and write in English or speak it. For that very reason, they are unable to engage some of the services that may be available to them. I saw this predominantly among communities where women, in particular, were at home and did not know what social care or healthcare they could access. It was really worrying. Today, in the 21st century, every single person in this country should be able to communicate for themselves if they require something so that they can engage socially or communicate if they fear something. Coming across a large population of such people in my home city worried me.

Next Saturday, my mother will celebrate her 80th birthday. She has been in this country for nearly 60 years; she came here when I was a baby of nine months, so work that one out. She was determined to be part of the society that she had come to because it offered her so many options for liberal living. When I was campaigning in Leicester, I was concerned at the huge population not taking advantage of that liberal living. They did not have the ability to go out and access jobs or engage with their children’s school lives because they could not communicate. These are all barriers to equality and opportunity; I know that we have also spoken a lot about austerity today.

[Lord Davies of Stamford]

I agree with every word the noble Baroness says. Is not part of the solution that FE colleges in cities should be obliged to provide teaching of English as a foreign language?

[Baroness Verma]

If you are a citizen of this country, you should have access to learning English. If you do not come into this country with English skills, you should be able to access them.

I am deeply worried that cultural discrimination already exists in some communities; I put my south Asian community at the forefront of this issue. We reinforce it by not enabling people to break out; they do not know where to go or how to fight the inequalities that they face both internally and, no doubt, externally. I mentioned my mother because my dad was a typical conservative Sikh; he did not want my mum to learn to drive or go out on her own to night school. When he passed away very suddenly 12 years ago, my mother had to cope. Thank God, she did exactly what good mothers should do: ignore what their husband says. She went out, learned to drive, learned English and was able to communicate. Today, 12 years on, my mother can toddle off and do what she wants when and how she wants, and nobody can stop her. However, I fear that isolation and inability will stop too many people across the country, particularly from my community, when they find themselves having to learn to cope. I fear for my community.

To finish, I hope that my noble friend the Minister will encourage colleagues across government to ensure that the discussion around the need for English to be learned in this country is made relevant.