Fairness and Inequality

Richard Fuller Excerpts

Tuesday 11th February 2014 Commons Chamber

[Jonathan Edwards]

In that regard, the Democratic Unionist party and Plaid Cymru share a common vision, in that we need to empower our respective Governments to deal with the economic and social challenges that our people face.

I want to set out how and why this inequality has been allowed to take a grip and, indeed, been actively pursued by the powers that be. I will also set out how that can be reversed, and how places such as Wales can become more prosperous and egalitarian societies. We have seen the over-concentration of power, status and influence in a narrow and unrepresentative financial elite over the past three decades. That has allowed greed, avarice and hubris to take hold among the elite’s own ranks, while poverty, destitution and exclusion have risen among much of the rest of society.

The uneven economic development of the UK and the concentration of so much wealth and power around London and the south-east distort much of the UK’s public life. They influence and shape many of the political, media and business perceptions about what is good for the entire UK, and lead to geographical polarisation and a super-concentration by Westminster politicians on certain sectors of the population whose opinion is seen as worth courting and listening to.

[Richard Fuller (Bedford) (Con)]

I am listening with great interest to what the hon. Gentleman is saying. Does he think that that concentration of power and authority in London and certain other parts of the country was a natural change that occurred as a result of global changes and that the Government did nothing to mitigate it, or does he think that it was a result of active Government policies over the past three decades?

--- Later in debate ---

[Stephen Crabb]

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

[Richard Fuller]

Will the Minister assure the House that he understands the figures even if the Opposition do not, and that between 1995 and 2010 the total indebtedness of the UK went from twice the size of the economy to five times the size of the economy, making us the most indebted major economy in the world?

[Stephen Crabb]

My hon. Friend explains it very well for the benefit of Members of all parties. Under the previous Labour Government, the trajectory of public spending was set on a reckless course, and when the banking crisis hit, the true consequences were felt by hard-working families throughout the country.

--- Later in debate ---

[Mr MacNeil]

Very good, Mr Deputy Speaker.

It is a slight concern of mine, however, that the captains of industry, as they get called, or the high-bonus City bankers or hedge fund managers, have never had that experience at a young age and have not engaged meaningfully with sympathy for the situation that others may be in as they gobble all the chocolates of productivity that our economy has produced, believing instead that they are self-made men and self-made women who worship their own creators.

[Richard Fuller]

Before the hon. Gentleman moves on from his Milk Tray doctrine of equality, will he accept that very many of us do learn those lessons in school and do not necessarily need the Government to act for us to fulfil our responsibilities as individuals? What would he say about considering ways to exhort people who have wealth, regardless of the taxes they pay, to give more to others?

[Mr MacNeil]

The hon. Gentleman’s intervention is laudable, and I understand what he says, but I disagree. The consensus post the great depression of the 1930s showed the importance of regulation, and that lesson was probably forgotten by the 1980s in the era of the Reagan-Thatcher deregulation that led up to the precipitous problems that finally exploded six years ago. In the absence of regulation, people have to look into their own hearts, but sometimes we can spend far too long doing that. The rule of politics, Parliament and Government is to ensure that we have the structures whereby all can benefit and they are not just dependent on the whim of some well-meaning individuals who may be a minority among the wealthy and could direct their contribution in the wrong way.

Before I get to the body of my speech, I have a final example of something that I think informs the human condition, namely the observations of anthropologists on hunter-gatherer societies. I hope this will also inform the debate, because I think that inequality is essentially about human choices—perhaps even bias—whether they be conscious or subconscious.

Anthropologists note that hunter-gatherer bands did two main things: they hunted and they gathered, hence, of course, the name—there is no need to be a Nobel prize winner to spot that. The crucial observation is that they treated the products of the hunt and the gather very differently. The products of the hunt were shared out almost instinctively, with many people who might not even have been on the hunt getting a share. Anthropologists explain this as the sharing of luck and good fortune, with those on the hunt realising that they might not have had a successful hunt in different circumstances and that, given the way in which the society of the day was arranged, they might earn the good will of others who might be lucky on another day.

That sharing, however, was not mirrored in the gather, and anthropologists reckon that that was due to the labour and endeavours of the individual graft and application of the gather.

--- Later in debate ---

[Guto Bebb]

Obviously, I do not accept most of the hon. Gentleman’s arguments; certainly, we should be careful about taking lessons from the Irish implosion. Ireland is probably one of the few countries to have a banking crisis even greater than ours. Many of the eastern European accession countries have managed to create vibrant economies by imposing low-tax regimes, and the whole of the UK should look carefully at those countries’ performance.

In the debate about whether we have a 50p, a 45p or a 40p tax rate, I remind Labour that it found the 40p tax rate completely acceptable for the vast majority of its 13 years in government. What is the purpose of income tax? That is a question that is often forgotten. Its purpose is not to bring down and punish the successful. If we believe in a more equal society, we want more money coming into the Exchequer, because that means we can do more to support the less well-off in society, but we have lost sight of that argument. If we reduce taxes and get more money coming into the Exchequer, that is something that should be welcomed. Time and again, it has been shown that when taxes are reduced, more often than not, the result is more economic activity and a greater success story.

[Richard Fuller]

Does it not strike at the economic illiteracy of the shadow Front-Bench team that they are far more interested in a headline tax rate than in raising revenue to pay for the public services people want?

--- Later in debate ---

[Richard Fuller (Bedford) (Con)]

The hon. Member for Oldham East and Saddleworth (Debbie Abrahams) brings to this House a wealth of experience and understanding from her previous work in the area of health, and I hope that the House listened carefully, as I did, to her comments about the interaction between differences in health and the perpetuation of inequality in our country. However, I did disagree with some points in her critique, which I shall discuss later; most importantly, there was an absence of a full understanding of the context in which this Government are taking actions to address fairness and inequality.

I, like many people, get somewhat concerned and uneasy when I hear politicians bandying around words such as “fairness”, “equality” or “inequality”. History has taught people that when politicians profess themselves in favour of fairness, they too often end up enriching themselves and those politicians who would rally people to the banner of equality too often end up repressing those same people once power has been given to them. So it was with some trepidation that I came to this debate, but the prospect of being able to listen to perspectives on those issues from Members of this Parliament from different parts of the UK attracted me, and I have not been disappointed, either by the opening speech or by those of other hon. Members.

Judgments about what is fair or not fair, or about the balance between equality and inequality, are best left to individuals and families. People are perfectly capable of making those decisions based on what they have learned from their parents and grandparents, on what they have been taught in school or, perhaps, on the lessons they have learned in their church, synagogue, mosque or temple. Politicians fall rather low down the list of people who can be persuasive on those topics. Nevertheless, we shall battle forth.

[Mr MacNeil]

I do not disagree in any way, shape or form that people can make assessments about what is iniquitous or unfair, but the hon. Gentleman needs to go further down the road, because when people see inequity and unfairness they do not have the power to do anything about it. That is when this place and national Parliaments around the world have to regulate, reform things and so on to make sure we have the situation we had after world war two: a better settlement for the greatest breadth of citizenry.

[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.

[David T. C. Davies]

My hon. Friend is making an excellent speech. Does he find it as extraordinary as I do that that debt was being racked up from 2001 onwards at an average rate of about £30 billion a year, long before the financial crisis struck?

[Richard Fuller]

I appreciate my hon. Friend’s intervention. He is drawing our attention to the Government part of the debt, but I have to tell him that the stewardship of the economy by the Government was worse even before then. We, as people who can vote in Governments and as citizens, have to take that responsibility ourselves, too. We are responsible for what this generation does, whether it is our Government, our corporations or any other aspect of society, but we pass on those consequences to our children and grandchildren and they will inherit either a more equal and more prosperous society or a less equal and less prosperous society because of the decisions that we make as individuals and the way in which we hold our Government to account.

[Sheila Gilmore]

rose—

[Richard Fuller]

With respect, others wish to speak, so I will move on now to specific parts of the motion.

Let me address the issue of austerity measures and why they are in place. First, there is the fact that we have accumulated too much debt. Another issue is the ripple effects of that debt crisis. As the Government deal with the overriding debt, individual families, especially those in vulnerable circumstances, are pushed to the edge and need to go to payday lenders and other high interest rate lenders to deal with the consequences of that macro-financial situation. The individual circumstances of individual households have to be taken into account.

The other issue—again, it is the legacy of what occurred in preceding years—is the way in which house prices have become detached from incomes. Shelter is running a campaign on the issue, and although it is an interesting point to raise, I think that it is about 10 years too late. In the Living Wage Commission report, to which many hon. Members have referred, there is an interesting chart—figure 1.21—which looks at the ratio of house prices to earnings for the years 1952, 1975, 1997 and 2012. For the entire period from 1952 to 1997, the ratio of house prices to income fell. In 1952, it was five times the average income, but by 1997, it was 4.1 times. In the period from 1997 to 2012, it rose from 4.1 times to 6.7 times; 100% of that increase took place in the period to 2007. If we look at the cost of living and the cost of housing—part of enabling people to own their own home, get on the property ladder and pay their rent—we see that the issue of inequality will take time to resolve, because it took us a long time to get into that mess in the first place.

The motion refers to women and relative pay. I want to draw to the attention of the House, not by way of answer but by way of contribution to the argument, the House of Commons economic indicators report for February 2014. It looks at the gender pay gap and it makes the broad point that the overall pay gap between men and women has decreased steadily from 1997, but in considering whether the gap will be perpetuated in the future, it examines the gender pay gap by age range. For women and men between 18 and 39, the pay gap oscillates between 1.4% and 0.3%. For women over 40, it oscillates between 12% and 18%, which raises a question for policy makers such as the Minister: is that issue to do with career breaks and will it persist over time, or is it the result of a fairly good news story, with younger women and younger men on average having access to the same sort of jobs and pay, so that in about 20 years’ time the differential will go down? I do not put that forward as an answer, because I do not know the answer, but as a contribution to the debate and to broaden understanding.

There have been a number of contributions about the working poor, poverty and the living wage. We have discussed raising wages from the minimum wage level to living wage levels, but too frequently that would result in a small pay increase for the individuals concerned. It is a transaction between the employer and the Government in terms of the interaction of benefits and compensation. To contradict my hon. Friend the Member for North East Somerset (Jacob Rees-Mogg), who discussed the free market in wages—it is a small difference—I would argue that if in the low-pay sector Government are topping up wages to the tune of £10,000 on a £13,000 wage, which is the case for a married person with two children earning the minimum wage, the free market is far from working. There could be a strong argument, not only from the point of view of public finances but in order to have a freer market, for urging the Government to increase the pressure on companies by removing that subsidy, which is supporting labour. However, I should be interested to hear more from my hon. Friend.

[Jacob Rees-Mogg]

Is my hon. Friend aware that someone working 40 hours a week in receipt of the minimum wage would pay over £2,200 a year in tax, which must be part of the problem? I include in that employers’ national insurance.

--- Later in debate ---

[Richard Fuller]

My hon. Friend is absolutely right. This Government have sought to reverse the level of tax that people on low incomes pay, unlike the previous Government. In addition, with the employment allowance, the Government have a tool to encourage employers to increase pay for people on low incomes, and I hope that the Chancellor will do something about that.

We talk a lot about improving skills, which is important, but that does not work for everyone. Not everyone will want to take on additional skills. One aspect of pay that during my career in business changed dramatically was the recognition of tenure. It used to be the case that by doing the same job for two, three, five or 10 years, not improving one’s skills but just getting better at what one did, an increase in pay could be anticipated. We have lost sight of that too much over the last 10 or 15 years. We have said it is just one rate for the job, with no regard to tenure. I ask the Government to look at tenure as part of a more widespread response to the persistence of low pay in this country.

In addition to the promotion of a living wage by councils, there is an important point about the commissioning that councils do. There have been reports in the media recently about the commissioning of various types of service by local authorities that impact on the pay that can be earned by individuals, which is also an important point for the Government to consider.

I will not get into the debate about the rise of food banks under the last Government compared with now. Food banks provide a good service and I encourage people to support them as much as possible. I went to the food bank in Bedford and I pay tribute to the All Nations Church, to the Salvation Army and to the other Churches that run the food bank.

[Gordon Banks]

May I entice the hon. Gentleman to go into the matter of food banks a little? Has he seen the latest newsletter from the Trussell Trust, which somewhat contradicts the Minister’s position earlier? It says that 42% of all food bank users cite benefit-related problems as the reason why they use food banks.

[Richard Fuller]

I have not seen that report, but I have seen the data on those using the food bank in Bedford. For a large proportion of people the causes are related to benefit changes. I do not have the statistics, but within that group some people have been sanctioned for not complying with the benefit rules. Would the hon. Gentleman support policies that sanction people for not conforming with the benefit rules, or does he believe that they should not be sanctioned?

[Sheila Gilmore]

My constituents are not being sanctioned for not looking for a job, but for one-off incidents. One constituent rearranged an interview with the Work programme provider because of difficulties with her child’s school start times and was told that that was okay, but she was subsequently sanctioned. People are being sanctioned for minor infringements, almost on a whim.

[Richard Fuller]

I do not want the hon. Lady to conflate two things. If the 42% figure reflects the situation in Bedford, it is to do with the broader issues of benefits, which includes sanctions, changes to benefits and the specific examples that the hon. Lady mentioned, where the reason is fairly spurious or there is just a plain error. I do not believe such cases make up the 42% proportion, but they are part of it. But I am a Tory, so I understand that large bureaucracies forget the individual and people are caught by that. In my constituency—as I am sure the hon. Lady is in her constituency—I am creating a form with the local food bank provider so that when circumstances such as she describes occur, my office can be informed straight away. It is important that we as Members of Parliament use our power, when such spurious changes to benefits are made, to shorten the time that they take to resolve. For some of my constituents that can take six, seven, eight weeks or more, which is not correct if a sanction has been inappropriately applied.

[Gordon Banks]

I endorse what my hon. Friend the Member for Edinburgh East (Sheila Gilmore) said. I commend the hon. Gentleman on his work in moving things on for his constituents in respect of food banks. I do the same, as I am sure do many other right hon. and hon. Members, but I have had constituents who have been sanctioned because they have been ill and then, because they are sanctioned, they have no money to go to appointments, and are sanctioned again. That system is totally out of control.

[Richard Fuller]

I will not dwell on the matter. I have asked the hon. Gentleman whether he supports the process of sanctions. I would be interested to hear him explain in his speech what type of sanctions he supports and how he would implement them, if he had to take that responsibility.

The final part of the motion asks the Government to halt their spending cuts. If they halt that process, they have to look at increasing taxation. I am sure many hon. Members know that the ways in which we raise tax are moving more and more towards fewer people paying a larger proportion of tax, with 1% of the population paying 30% of income tax and 29,000 people paying 14% of income tax. On the one hand, this may be seen as an aspect of inequality. On the other, it may be seen as a fairly dangerous way in which a Government can raise money, in which case the shadow Chancellor’s proposal to increase tax rates again is probably inappropriate.

In some of the contributions from even those on the Government Benches, we convey the impression that the Labour Government were benign on tax. I draw the attention of the House and the Minister to what was going on between 2000 and 2010. It is in a House of Commons Library note called “Income tax: the additional 50p rate”, which looks at the top rate of tax, including social security contributions, between 2000 and 2010. It shows that in France that rate went down 10.6 percentage points, in Germany it went down by 5.8 percentage points, but in the United Kingdom between 2000 and 2010 that rate went up by 11 percentage points. So it is not fair to use the word that has been common in this debate or to maintain the perspective that somehow, under the Labour Government, the rich were getting off with low tax rates. The Labour Government were taxing people at a high rate. They started the process of a higher proportion of taxes being raised from fewer people, which results in a very difficult situation for people overall.

We have had an interesting debate and I look forward to hearing more contributions from hon. Members on fairness and equality. I have not yet been persuaded that politicians are best placed to determine that. I believe that individuals make their own judgments. I hope that by using some of the information that I have presented today, other contributions may be better placed to consider the issue.