Inequalities

Viscount Hanworth Excerpts

Thursday 13th June 2019 Lords Chamber

[Viscount Hanworth (Lab)]

My Lords, a stark appraisal of the state of the nation was provided in November 2018 by the report of the Australian economist Philip Alston, in his role as the United Nations special rapporteur on extreme poverty and human rights. His critique was met with surprise and disbelief by leading Conservative politicians, who were unable to recognise the truth of his assertion that our inequalities are dividing Britain as never before and that current social policies are causing widespread misery and distress. Given that the measure of average per capita real income has been increasing throughout most post-war years, it was unimaginable to these politicians that the hiatus in the growth of the economy that we have been witnessing since the financial crisis could have driven so many into poverty.

The dismissal of Alston’s findings was all the more startling for coming from the politicians responsible for years of unnecessary austerity, who have made savage cuts to the welfare budget in the process of imposing the so-called regime of universal credit. However, among European nations, Britain has one of the highest levels of inequality. As measured by its Gini coefficient, its inequality is exceeded only by that of Romania, Bulgaria and Lithuania, all countries with high levels of rural poverty.

As has been mentioned, it has been revealed that 14 million people, a fifth of the population, live in poverty. Four million of these are more than 50% below the official poverty line and 1.5 million are destitute and unable to afford basic essentials. Local authorities, which have traditionally played a major role in providing housing and sustaining the welfare of our citizens, have been starved of resources by destructive government policies.

The social divisiveness that characterises contemporary British society is the antithesis of the solidarity that characterised the wartime years and the early post-war years, which is still in the memory of many of us. That solidarity was gradually eroded over a quarter of a century, partly in consequence of perpetual industrial strife. When Margaret Thatcher came to power at the end of the 1970s, she was able to declare war on the unions that had been a major factor in maintaining the incomes of working people. It was during this period that the inequalities in income that we see today began to emerge. The large reduction in taxes of high-income earners that were a feature of the Lawson budgets of 1986, 1987 and 1988 were factors in a rapidly increasing inequality which occurred at a time when the wages of working people were stagnant.

The defeat of the unions was assisted by the process of deindustrialisation that proceeded throughout the Conservatives’ period in office. It was hastened by the insistence on maintaining a high value of the pound, which made it unprofitable to export manufactured goods and made imported goods cheaper and more attractive. The deregulation of Britain’s financial markets in 1986 at the end of the second Thatcher Administration began the process of a rapid divestment of Britain’s ownership of its commercial and industrial assets, from which our financial sector continues to profit. This process was responsible for elevating the value of the pound, which was further to the detriment of British industry. It also sowed the seeds of the financial crisis of 2008, the dire effects of which still dominate our economy and society.

British workers have been denied gainful employment while the richest members of society, who reside mainly in the financial sector, have seen runaway growth in their incomes. The present-day Conservatives have adopted the social and economic nostrums that prevailed during the Thatcher Administration. They have continued to place public services in private hands and sought to address the crisis in housing with help-to-buy measures that serve only to raise house prices and enrich construction companies. The help has been aimed at young, middle-class families of a kind who might comprise the sons and daughters of Conservative politicians. At the other end of the income spectrum, they have imposed the so-called bedroom tax, aimed at increasing occupancy of the wholly inadequate supply of social housing.

At present we do not have the high levels of unemployment that beset the middle years of the Thatcher Administration. Instead, large numbers are employed in the low paid, insecure and demeaning jobs of the trickle-down economy, also described as the gig economy.

The absurdities of Brexit pose a further threat to the livelihoods of working people. If a hard Brexit materialises, the foreign owners of British industry will curtail their investments, if they do not cease their operations altogether. The effect will be a further impoverishment of a large proportion of our population and an increase in inequality in Britain to an extent not seen since the early years of the 20th century.