HC Deb 15 February 1971 vol 811 cc1566-78

Motion made, and Question proposed. That this House do now adjourn.—[Mr. Hawkins.]

10. 31 a.m.

Mr. Michael Meacher (Oldham, West)

I am most grateful for this opportunity to debate the disturbing increase in the number of wage earners in full-time work earning beneath the level of their supplementary benefit entitlement. The fact that in a technologically advanced and supposedly affluent society hundreds of thousands of families are forced to subsist beneath the State-accepted poverty line, despite the breadwinner's submission to a full week's work at tedious and often demoralising employment, puts at issue the whole question of social justice in our society as well as the efficiency, or even the validity, of the structure of incentives underpinning our entire economic system.

That the number of these families may be growing fast is a cruel reflection on the unfettered growth of inequalities within the capitalist system. That the increase may in part directly flow from deliberate Government policy is a matter for most searching analysis, followed by urgent and resolute action.

Fragmentary though the evidence certainly is, I believe that it is enough for one fact to stand out unmistakably, namely, that throughout the last two decades, irrespective of the colour of the Government, the number of the working poor has continued to climb remorselessly. By reworking the figures produced by Professors Townsend and Abel-Smith from their examination of Ministry of Labour budget surveys, it can be calculated, I believe, that in 1953 the number of households in which the breadwinner was in full-time work yet earning less than the national assistance scale rate plus rent appropriate to his family rose to, perhaps, about 35,000, comprising about 170,000 persons.

The application of similar reworking techniques to figures drawn by the same authors from Family Expenditure Survey data in 1960 reveals that working households in these same income categories had by them grown to, perhaps, 65,000, involving a total of 300,000 persons.

By 1966, the official Ministry of Social Security Reports, "Circumstances of Families", demonstrated that the number of households, including single-parent families, living beneath the new supplementary benefit level plus rent had mounted to about 190,000, embracing about 900,000 persons.

As recently reported by Mr. Frank Field, the director of the Child Poverty Action Group, in The Times of 23rd January, the figures put forward by the Secretary of State for Social Services himself on the Second Reading of the Family Income Supplements Bill on 10th November last—this is col. 217 of HANSARD—suggest that the rise in the number of the working poor countinues unabated. The right hon. Gentleman said that the family income supplement would help 110,000 couples with children, excluding the wage-stopped, and 54,000 single persons with children, but he went on to say—this is cols. 226, 228 and 230—that the new benefit would help over half the households below the supplementary benefit level. Further, he said—this is col. 227—that the Measure brings help to only between one-half and one-third of working households below the supplementary benefit level".—[OFFICIAL REPORT, 10th November, 1970; Vol. 806, c. 227.] I take it that that was a mistake, and I shall be glad to have confirmation of that in due course.

Even on a more conservative basis, however, the Minister seemed to indicate that the number of working poor had risen by last year to about 300,000 households, comprising, perhaps, 1,300,000 persons. Moreover, since the Secretary of State's estimates of earnings clearly related to the supplementary benefits levels existing prior to the latest increase on 2nd November last, the number of full-time workers forced to subsist below the State poverty line must be still greater today, and I believe that the total of members of their families must now be steadily approaching 1½ million, or 3 per cent. of the entire population.

It must be admitted at once that, while the estimates I have given have been calculated from the most precise material available, they are indicative only due to the margin of error arising from comparing data compiled by different methods and requiring a variety of technical adjustments and assumptions. Their status should, perhaps, be seen as informed guesses. However, having entered that caveat, I insist that the evidence is steady enough and consistent enough to render the picture of the general trend irrefutable.

It is a sobering but undeniable truth that the working poor have become poorer under Administrations of both parties. Above all, both the scale of the problem today, touching, perhaps, one in every 40 persons in this country, and the speed of development of work-poverty—almost a tenfold increase in two decades—are an afront to the conscience of any civilised nation.

Some of the reasons for this shameful situation are writ deep into our industrial system. The Incomes Data Services report of 19th August last year revealed that low-income workers not only receive much smaller awards than the better paid but the gap between awards for them is much longer as well. While many groups of skilled workers now frequently seek a second rise within any 12-month period, over half the low-paid covered by that report had to wait well over 12 months. Canteen workers, for example, had to wait 22 months for an increase, café workers 24 months, and public house workers 40 months. Indeed, since July, 1965, canteen workers have had one pay increase of 8 per cent., yet prices during that time have increased 20 per cent.

What do the Government propose to do to channel wage awards disproportionately to the lower-paid and also to ensure that the gaps between awards are geared in their favour rather than against their interests?

More specifically, the Government cannot escape responsibility for themselves partly aggravating this desperate problem of wage poverty. I do not refer here merely to the fact that central and municipal government notoriously employ the largest number of low-paid workers in this country, though I shall at the same time be glad to know what the Government propose to do to reverse that depressing situation. Nor am I referring here to the fact that by tipping the unemployment scales towards the one million mark the Government are inevitably hitting hardest the least skilled and lowest paid who are all most likely to go to the wall first. I refer, rather, to the deliberate choice of the Government to concentrate their policy on de-escalating what they regard as inflationary wage claims exclusively on the public sector. Since it is well known that the lowest paid are particularly to be found in this area of the economy, such a policy can only result in pushing the lower paid directly into poverty.

The truth of this is clearly demonstrated by the fact that many groups of workers in the last year who obtained wage awards which the Government now reject as inflationary were still, at the lower grades, if they had average-size families, left below the supplementary benefit level.

I can illustrate this by giving a few examples. Of the 50,000 pottery workers who obtained an 11 per cent. increase and then got £11 a week, those with only one child were beneath the State poverty line. The 350,000 farm workers got 16 per cent., but with three or more children they would still be in poverty. With the same size family were some of the 200,000 retail co-operative workers who got 20 per cent.

About 53,000 telephonists got 12 per cent., but they were still in poverty if they had four or more children, and with a similar size family so were some of the 100,000 textile workers who were awarded 10 per cent. The same applied to some of the 71,000 paper and board workers, who got 11 per cent., and some of the 300,000 miners who got 12 per cent. Even some of the 120,000 who obtained a huge 30 per cent. rise were still in poverty if they had five children.

Perhaps the point is spelled out most forcibly by saying that if the 280,000 railway men with a basic £15 4s. a week were to obtain a 10 per cent. rise currently, those on basic rates would still be in poverty if they had four or more children.

The present situation is, therefore, desperate enough to call for urgent remedies. I am, fundamentally, asking how the Government propose to prevent their anti-inflationary policies from biting hardest on the most vulnerable sections of the community and so accelerating the already deeply disquieting phenomenon of mass wage poverty.

Will the Government put in hand a policy for incomes—call it what they will—which will disproportionately assist the lower paid workers? In particular, will the Government begin to replace the tyranny of percentages which threaten to make the poverty of the working poor permanent and absolute? Will they reconsider their commitment to raise family allowances, since by this means alone can it be adequately ensured, without the barrier of a means test, that the low paid are lifted out of poverty without disincentive to their earning power?

Since our information on the whole crucial question of wage poverty is still regretably fragmentary and inchoate, will the Government institute a standing commission on poverty to monitor the facts, particularly regarding the wage system in relation to family responsibilities, and to make recommendations until this scar is finally erased from our national life?

10.43 a.m.

The Minister of State, Department of Employment (Mr. Paul Bryan)

I acknowledge the importance of the subject which the hon. Member for Oldham, West (Mr. Meacher) has raised, and I appreciate his sincerity and interest in the issue.

I hope he will forgive me if I say that I found the terms of the subject he wishes to raise rather imprecise. There must be few, if any, single people or childless married couples working full-time who are earning less than the supplementary benefit level, and I question whether even the hon. Gentleman, through his researches, could find the evidence of a disturbing increase in their numbers. I assume, therefore, that the intention was to express concern about the number of families with children living below the supplementary benefit level where the breadwinner is in full-time work.

Mr. Meacher

Is the Minister aware that his right hon. Friend said on Second Reading of the Family Income Supplements Bill that there were 110,000 couples with children and 54,000 single persons with children in full-time work but below the supplementary benefit level? That is the nature of the problem.

Mr. Bryan

Nevertheless, I think the hon. Gentleman will agree that the terms of his subject for this Adjournment debate are somewhat sweeping and that the area in which he is interested is a far narrower one. I will try to restrict my remarks to that area.

What is meant by the supplementary benefit level? A family with the breadwinner in work may be said to be living below supplementary benefit level if its net income is less than its needs. The income should be that of man and wife, including, of course, family allowances; earnings should be those actually received, less statutory deductions and the cost of travelling to and from work. The needs based on the rates approved by Parliament, should take account of the number and ages of dependent children and actual housing costs. It is clear, therefore, from this oversimplified description that there is no uniform supplementary benefit level applying to all wage-earners or even to all wage-earners with families of the same size.

In this context, family incomes must be compared with family needs, including housing costs. Family incomes by themselves do not provide the measure of the number of people living below supplementary benefit level, and this is even more true of wages data which do not even fully reflect family incomes. For example, wages data may relate only to basic wage rates and not to actual earnings received, and they take no account of subsidiary occupations or wives' earnings.

The report entitled "Circumstances of Families" by the then Ministry of Social Security estimated the numbers living below supplementary benefit level in 1966. My right hon. Friend the Secretary of State for Social Services is anxious to provide more up-to-date information, and his officials have for some time been working on an analysis of family expenditure survey data with a view to producing reliable estimates.

Anybody familiar with the earlier report will recognise how difficult art undertaking this is, and that it would be irresponsible of the Government to publish any figures until they are satisfied that they are as reliable as they can he made. I can say, however, that the studies to date provide no evidence to support the conclusion that there has been an increase since 1966 in the number of wage-earners whose families are living below supplementary benefit level.

In considering the validity of statistics, it is important to wait until this inquiry, which will be the deepest and certainly the most comprehensive we have had, is completed, and then we can have a meaningful debate; though this small debate is, of course, useful. Hon. Members who are interested in this whole sphere will wish to have a bigger debate at that time. I must briefly comment on the recent estimates made by the Child Poverty Action Group, which received wide publicity. We appreciate that the hon. Gentleman has been closely associated with those findings, and he repeated some of them today. The Child Poverty Action Group calculations start from a statement by my right hon. Friend the Secretary of State for Social Services during the Second Reading on the Family Income Supplements Bill that it would help between one-half and one-third of working families below the supplementary benefit level. However, as was made clear by my hon. Friend the Under-Secretary of State to the Department of Health and Social Security later in the proceedings on the Bill, this was a slip. I confirm what the hon. Gentleman asked me to confirm. The correct proportion, which was given by my right hon. Friend on a number of other occasions in the debate, is over one-half. However, the Child Poverty Action Group has chosen to base its calculation on the incorrect figure, it appears. It then makes the more series mistake of assuming that all the families who receive family income supplement will be below supplementary benefit level; and it thus reaches the conclusion that the number of families now living below supplementary benefit level will be between two and three times the number stated by my right hon. Friend to benefit from family income supplement.

In fact, many families who receive family income supplement will be above supplementary benefit level; because, as I have explained, supplementary benefit level is not a fixed amount but varies according to the individual's rent. This means, broadly, that the people above supplementary benefit level who benefit from family income supplement will be people with below-average rents; and people below supplementary benefit level who do not benefit from F.I.S. will be people with above average rents. The latter will stand to benefit from the national rent rebate scheme recently announced by the Secretary of State for the Environment.

Consequently, the calculations which the Child Poverty Action Group and the hon. Member have made are as they stand entirely fallacious. There is no reliable evidence to support the figures or the statements the hon. Gentleman has made.

Going a little further afield, family poverty amongst the working population does not arise only from low pay. It is connected, but it is not necessarily the ruling factor. It can arise also from family circumstances such as the size of the family, and from exceptional expenditure on, for example, housing costs. It is therefore possible for a worker to receive a reasonably high wage but still to be below supplementary benefit levels because he has a large family or is paying a high rent in relation to his income. It would be quite unreasonable to expect employers to pay wages according to the varying family circumstances of his employees.

We need, therefore, a broad strategy of attack on the problem of family poverty, and cannot expect that increasing the wages of the lowest paid will solve the problem in itself.

Although I have had to take issue with some of the statistics and arguments the hon. Member has used, I would not want him to think that we are at all complacent about the problems of low pay and family poverty. Indeed the action we have taken demonstrates our determination to tackle this problem. Anybody who knows my right hon. Friend will acknowledge the great sincerity of his approach to this subject.

First, we introduced at the first opportunity the Family Income Supplements Bill designed to deal with the most urgent need of bringing assistance to the poorest families and bringing it as quickly as possible. It was estimated on the basis of figures available in November that F.I.S. will provide benefit for 134,000 couples with children including 24,000 unemployed on wage stop, and about 54,000 single persons with children—a total of 190,000 households containing about 500,000 children.

In other fields, too, we have framed our policies with the needs of the poorest members of the community very much in mind. There is our new housing policy, including the proposal to provide a national rent allowance scheme for all tenants of public and private housing except in the furnished sector. This will directly assist those families on low incomes faced with large rents which F.I.S. itself cannot tackle. Then there is the more generous exemption limits for families on low incomes from the health and education charges—again demonstrating our concern that selective assistance should be provided to those who most need it.

I should like to conclude by dealing specifically with the problem of low wages. This is not a new problem. It has always been with us. Indeed, there has been a remarkable stability over the years in the distribution of earnings of adult male manual workers. It is not the case that the lower paid in terms of wages alone are now any worse off in relation to the average wage earner than in past years, but neither has their position improved.

At this moment the N.B.P.I. is at work on three references specifically concerned with the problem of low pay in sectors where the average level of pay is low—contract cleaning, laundries and dry cleaning, and N.H.S. ancillary workers, which is really what the hon. Gentleman referred to. We hope that the reports on these references will improve our understanding of the causes of low pay on an industry by industry basis and the ways of tackling the problem. I understand that the board will complete its work before the end of March and publication of the reports should follow in April.

The previous Government sought to improve the position of the lowest paid through their statutory prices and incomes policy. I am not seeking to score party political points today, but despite the good intentions expressed in successive White Papers on prices and incomes policy, the fact is that there is no evidence which suggests that the policy in practice brought about any significant improvement in the position of the lowest paid groups.

There have been suggestions that low pay can be tackled through the introduction of a national minimum wage. We are considering this possibility in the light of the report of the inter-departmental committee published in 1969. But, as our predecessors found, this is a complex issue with important economic and social implications which needs very careful consideration. Factors such as the effect on unemployment amongst the lower paid and the extent of the repercussions on the pay of other groups have to be taken into account. It is by no means a clear-cut issue, as the hon. Member will realise from his study of the detailed report published two years ago.

Others have suggested that the relative position of the lowest paid can be improved through the usual processes of collective bargaining by the negotiating of higher percentage increases for lower paid workers than for other groups. The T.U.C. has indicated that it considers that at the present time the position of the lowest paid should be improved through negotiations rather than through a statutory minimum wage.

We have sympathy with this approach, subject to one important point. The relative position of the lowest paid workers can be improved only if higher paid groups of workers are prepared to see the narrowing of differentials and do not put in claims for percentage increases in pay identical to the large percentage increases won by lower paid workers. Such a leap-frogging process cannot improve the position of the lowest paid. It can only be self-defeating and aggravate the inflationary process, leading to rising prices which hit particularly hard at the lowest paid workers.

This brings me to my final point. The Government's broad economic objective is to bring about a more rapid increase in growth and in the advance of real earnings and standards of life. But first we need to reduce the present excessive rates of increase in money earnings so that our growth prospects are not put at risk by rising prices. No group of workers stands to gain more than the lowest paid from the curbing of wage cost inflation, for the lowest paid tend to be in a weak bargaining position. They suffer most from the arbitrary redistribution of income caused by the inflationary spiral of excessive wage increases and rising prices. And no group stands to gain more than the lowest paid from faster growth and the additional real resources which become available to tackle the problem of family poverty.

We are determined to tackle the problem of family poverty over the lifetime of the Parliament, as we pledged before the election. We have taken the first steps in that process; and our studies of possible further steps may provide other lines of development.

Within the wages field we shall be considering the best way of tackling the problem of low pay in the light of the N.B.P.I. reports and our own studies of the possibility of a national minimum wage. And our general economic policy of curbing wage cost inflation as a basis for faster growth will operate directly to the benefit of those with relatively low earnings.

Question put and agreed to.

Adjourned accordingly at Eleven o'clock a.m. on Tuesday, 16th February.