HC Deb 10 July 1995 vol 263 cc626-721
Madam Speaker

I have selected the amendment in the name of the Prime Minister.

3.39 pm
Mr. Donald Dewar (Glasgow, Garscadden)

I beg to move,

That this House condemns Government policies that have widened social division, led to damaging inequality and brought insecurity to millions of people; believes that the abolition of the Department of Employment signals the complete lack of Government concern about unemployment, insecurity at work and skill shortages; and believes that the Government must take action which promotes employment opportunities, particularly for the long-term unemployed, increases the skills and adaptability of the workforce and protects the low paid through a national minimum wage. I have decided to be a determined optimist on this occasion, and am hoping that, over the next few hours, there will at least be a measure of agreement on the nature of our problems. I am a realist, and I recognise that, when we turn to solutions, it is likely that there will be disagreement and some debate; but on the nature and essence of the problems, I very much hope that we can at least recognise what is happening to our country.

Perhaps I should make a proposition to Conservative Members, which I do not think is too ambitious: low pay, social division and growing inequality are a scourge and an offence. Perhaps rather uncharacteristically, I could pray in aid the late Sir Winston Churchill. I offer a piece of Churchill memorabilia, and am happy to throw it into the debate free, gratis, for nothing, and with no claim on continuing loyalties.

Sir Winston Churchill, when President of the Board of Trade, on Second Reading of the Trade Boards Bill of 1909, said: It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions. It was formerly supposed that the working of the laws of supply and demand would naturally regulate or eliminate that evil … But where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer by the worst; … where those conditions prevail, you have not a condition of progress but a condition of progressive degeneration … the degeneration will continue, and there is no reason why it should not continue in a sort of squalid welter for a period which compared with our brief lives is indefinite."—[Official Report, 28 April 1909; Vol. 4, c. 388.] Depressingly, that is, it seems to me, still relevant. Sir Winston talked about an indefinite degeneration. In many ways, in comparative terms, those are indeed the problems that we still face.

Mr. Andrew Robathan (Blaby)

I am delighted to hear the hon. Gentleman quoting Sir Winston Churchill, who is, of course, the hero of many Conservative Members. It is, however, some 86 years ago since those words were spoken—in the lifetime of our grandparents and our great-grandparents—and I think that some things have changed a little since then. Will the hon. Gentleman enlighten the House and tell us, in real terms and in cash terms, what the average industrial wage was in 1909 in comparison with now?

Mr. Dewar

I can tell the hon. Gentleman that average wages are not what the debate is about. I accept entirely that average wages have risen, and no doubt the Minister will make that point very effectively and eloquently when he replies. I am drawing the attention of the House to the fact that 328,000 people in Britain earn less than £1 an hour. Some 1.143 million earn less £2.50 and, as the hon. Gentleman will recognise and will be concerned about, the vast majority of these are women. Women are particularly badly hit by low pay, with more than 670,000 of them falling below the £2.50 an hour limit.

In my view, those figures certainly justify the relevance of the Churchill quote, and I make no apologies for reminding the House that it was a problem seen by someone in 1909, whom the hon. Gentleman is right to say he admires greatly, someone who predicted that the problem would be continuous because of the imperfections of the market mechanism for a very long time. Sadly, he has proved to be right on that matter.

Dr. Robert Spink (Castle Point)

The hon. Gentleman is an assiduous Member and I know that he will want to set the scene properly and accurately. Will he therefore accept the fact that 75 per cent. of those who are classified as being on low pay live in a household where there are two or more wage earners? If he thinks that low pay is so bad and wants a minimum wage, will he tell the House where the Labour party would set that wage, because that is the only context against which this debate can have any credibility whatever?

Mr. Dewar

I am glad to say that my judgment of the success of the Labour party is not its credibility in the eyes of the hon. Member for Castle Point (Dr. Spink). I like to think that, on occasions, we impress him, but I am trying to reach an audience wider than one Back-Bench Conservative Member, who is no doubt well briefed for this debate. I congratulate him, however, on his assiduity. He should not despise the point that many people have to earn a second income to raise to a decent level—

Lady Olga Maitland (Sutton and Cheam)

He did not.

Mr. Dewar

The hon. Member for Castle Point seemed to belittle my point, and to suggest that there was no real worry about low pay for women if they lived in households in which other people had a job. Such households are often still poor, and both wage earners may struggle. I do not take the view that it is all right to have unsatisfactory and offensive levels of pay simply because a second income is involved, because that second income is often an essential platform on which to build an escape from poverty, and a lifeline to opportunity in our community.

Several hon. Members


Mr. Dewar

I must make progress, but I will give way to the hon. Member for Finchley (Mr. Booth).

Mr. Hartley Booth (Finchley)

The hon. Gentleman is generally fair to the House. Does he accept that a comparison with the first decade of this century is fallacious? Today, we have, alongside the £1 per hour wages to which the hon. Gentleman referred, a whole panoply of social security to back up each individual.

Mr. Dewar

I must confess that, if the hon. Gentleman is putting forward the general proposition that people who quote Sir Winston Churchill are saying nothing that is relevant, or has anything to do with modern politics, I look forward to hearing Conservative Members protesting against speeches on many occasions. When I came across the quotation, it seemed remarkably relevant to the problem we have. Of course the context has changed, and of course the figures have changed, but the essential social problem remains, and it is one to which we should turn our minds.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Is it not instructive that, in this orchestrated set of interruptions, it is clear that, for the Conservative party, the fact that women are underpaid and often forced to take low-paid and unskilled jobs is not a matter of worry, but a matter of congratulation? They bitterly resent the fact that women are forced into such a position.

Mr. Dewar

There is, indeed, a general tendency by Conservative Members to underestimate the contribution that women now make. They have a major input and are a major part—soon to be the largest part—in the work force. I do not make a general accusation, because that would be unfair, but I point out that there are still a few people around who see a woman's job as a nice little interest and a little bit of pin money. We should not take that view these days.

Lady Olga Maitland

We are talking about the important subject of women and part-time work. Does the hon. Gentleman agree that part-time work is a blessing for women, because, among other things, it fits in with their family commitments, and because it often becomes full-time work when they are ready to take it up?

Mr. Dewar

I am extremely anxious that women should have the opportunity of getting both part-time work and full-time work if that is what they want. I do not undervalue the importance of part-time work, which gives flexibility, as it melds with household duties and other interests. However, even though it may be a blessing, as the hon. Member for Sutton and Cheam (Lady Olga Maitland) put it, it should not be a charter to allow exploitation. That is unfortunate.

The hon. Lady has drawn herself to my attention. She is one of the Conservative Members who, on occasion, has an unrealistic view of these matters. She may remember a debate on 8 July 1994 in which she intervened to make a point about the number of people who were on benefit and who had televisions, freezers and so on in their homes. She then asked: Does he"— she was referring to me— agree that it is a problem not so much of people living on a set income, but of how they manage their budgets? A person in one flat may manage perfectly adequately while someone else may not. Surely we need to teach people the art of household management."—[Official Report, 8 July 1994; Vol. 246, c. 607.] There is a certain unreality about that view. [Interruption.] Conservative Members should not wave at me. The hon. Lady's view is totally unrealistic when it is compared with the experiences of my constituents and the constituents of many hon. Members who must cope with the problems we have been discussing.

Several hon. Members


Mr. Dewar

I can see that my optimism about getting some initial agreement about the nature of the problem has perished.

Dr. Spink


Mr. Dewar

I recognise that the hon. Member for Castle Point (Dr. Spink) is a sincere Conservative. I am told—although I have not checked it personally—that the Conservatives lost every seat they held on the district council in his constituency in the elections. Therefore, the hon. Gentleman should go away and think about his position and his party's policy before he comes eagerly back to the fray. I have let him in more than once, and I hope that he will be content with that.

There is obviously not going to be agreement, but my view is that, if we follow present trends, there is a real danger that social cohesion will be challenged, undermined and put at risk by what I described—I stand by the description—as evils.'

There are always healthy arguments about salary. I remember with pleasure the Secretary of State's evidence to the Select Committee on Social Security on 25 January. The right hon. Gentleman was perhaps led astray by questioning, although he led himself astray to some extent, about our salaries—always a matter of prurient interest to the House. He said: When I was a backbencher I thought that, on the whole, MPs should probably be paid less to encourage them to have outside interests, which I believe enriches Parliament". I liked that, because I like plays on words, and we can agree that such a scheme would probably "enrich" Parliament in a very narrow sense. But I doubt whether it would enrich the life of Parliament.

I was entertained to see that the Secretary of State went on to say that Ministers should be paid more and back-bench Members less, and added: Now I am a Minister I hold both views even more strongly. There is a man of courage, although whether he is in touch not just with Lord Nolan but, more importantly, with the world outside, I would beg to doubt.

I was interested to see the evidence given to the Nolan committee by the right hon. Member for Norfolk, South (Mr. MacGregor) just after he had left ministerial office and picked up—no doubt to his and the company's benefit—a directorship. He said that to bar Ministers from directorships in companies with which they may have had some dealings during their ministerial office would expose them to the risk of comparative poverty on leaving their posts. I thought that I would just read that out, as a touching human gesture.

I would argue that there is every importance in recognising both where we are heading and the growing inequalities in society. I recognise that we are not here today to have a reprise of old arguments which we have made at the Dispatch Box on more than one occasion. I know, for example, that the Secretary of State has severe doubts about the findings of the Rowntree report, and went to great lengths to discredit its authors and rubbish its conclusions. As so much of the report's material was taken from research conducted by the Department, he was in effect mounting a root-and-branch attack upon the Department's statistics and methodology. That is something for him and the Department to sort out.

An enormous amount of evidence is massing—not just the Rowntree report—from many sources that we have growing inequality at the same time as we, like every western country, are seeing many people increase their prosperity as average earnings move up. We know that 14 million people now have incomes below half the average earnings, compared with 5 million in 1979. More than 10 million people are now dependent upon income support, which is probably an increase of a multiple of two or three since 1979. Since 1979, wages for the lowest paid have hardly changed in real terms, while they have increased greatly for those at the top end of the scale. This divergence and moving apart ought to worry all of us. One of my concerns—

Mr. Nigel Waterson (Eastbourne)

I am grateful to the hon. Gentleman, who has been liberal about giving way. Has he seen the report of the Institute for Fiscal Studies entitled "Why Peter Lilley was Right", which concluded that the poor have not been getting poorer?

Mr. Dewar

Yes, I was interested in that conclusion, and of course I have looked at the report. As the hon. Gentleman knows, the IFS has produced a number of reports—he has obviously read widely through them. He will remember that the one to which he refers studied outturn and expenditure patterns, rather than income patterns. As he will have noted carefully, it did not take into account income saved or invested, which gave a rather incomplete picture.

Building on the substantial evidence on my side of the argument in other IFS work, I remind the hon. Gentelman of the author's conclusion that the gap between the richest and the poorest in terms of both income and expenditure widened over the period. Even though that report, which the Minister optimistically said "blows a hole" in Labour's case, concluded that the figures were not as startling as those in the IFS report of between six and nine months earlier, it reinforced the same pattern and general picture.

If the hon. Member for Eastbourne (Mr. Waterson) is trying to say that there is not growing inequality in this country, he is on very weak ground indeed. I suspect that some of his braver colleagues would argue that it does not matter if the rich get richer and the gap grows greater.

Mr. Alan Duncan (Rutland and Melton)

indicated assent.

Mr. Dewar

The hon. Gentleman is always there on cue—a small, dynamic figure shouting his case in the second row from the back of the Back Benches, where he will probably remain for some considerable time.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Gentleman give way?

Mr. Dewar

I cannot resist it.

Mr. Jenkin

If the hon. Gentleman insists that poverty is increasing, is it not incumbent on him to tell the House which income group's spending has fallen since 1979?

Mr. Dewar

The hon. Gentleman should look at some of the Government's statistics. He will be familiar with those for households below average income, about which there is an interesting argument. The Government maintain that the statistics are unsound, because the bottom decile of households contains farmers, taxi drivers and accountants. All I can say is that I hope that their affairs will be investigated with the rigour that we are told is being properly applied to benefit fraud. If so, I think that there will be a considerable increase in prosecutions in the courts.

The answer to the hon. Gentleman's question is that a large number of households are in the bottom two deciles, even when we have made every conceivable allowance for the small and rather errant group who are stranded at the bottom of the pile.

The Minister suggested that there was great movement in and out. We are given that impression as many pensioners have moved out because of the maturing of occupational pension schemes—

Mr. Jenkin


Mr. Dewar

Yes—good, indeed. A large number of families—including a large number who live in my constituency and those of my hon. Friends—have become trapped there, however, and have lost hope, are dependent on benefit and are offered nothing by the fiscal and economic policies of this Government. The level of alienation that is beginning to emerge ought to be a worry to every one of us.

The trouble with the Secretary of State, or with many of his hon. Friends, is that they tend to adopt the Government's statistics as absolute truth when it suits their case, but, as soon as we get a series of Government statistics that do not, they are rubbished with great energy, and we are told that they are "unsound and misleading."

The shape of the statistics leaves us in no doubt that the general proposition is that gaps have widened, with social consequences which every one of us can see—whether in the health, education, or social mobility statistics—and which are opening up real dangers for our society.

I have spent most of my political life denying that there is an underclass. I do not believe that we have reached that situation, but I seriously worry that, if present trends go unchecked, I will find it harder and harder to make that case. Once I have reached the point where I can no longer do so, we will be facing very real penalties in the form of economic efficiency, lost talents and a threat to social stability.

Some old texts are still horribly relevant. Some texts may not be familiar to those on the Conservative Benches who recognise the words of Sir Winston Churchill. I cannot resist giving the House a short quotation from R. H. Tawney, who wrote in the 1930s about what he described as the "tadpole theory". He said: It is possible that intelligent tadpoles reconcile themselves to the inconveniences of their position, by reflecting that, though most of them will live and die as tadpoles and nothing more, the more fortunate of the species will one day shed their tails, distend their mouths and stomachs, hop nimbly on to dry land, and croak addresses to their former friends on the virtues by means of which tadpoles of character and capacity can rise to be frogs. The point that he was making was that it is dangerous if a society embraces the tadpole philosophy and we reach the position where the consolation that it offers to social evils consists in the statement that exceptional individuals can succeed in evading them.

We are very near the position where, if one is outstandingly able or unusually lucky, one can escape from the social evils that surround too many of our citizens. But if one is not exceptional in one of those two ways, one is lost, trapped, and in a real sense remaindered in society. That is the same argument as Sir Winston Churchill was making when he said that one would imagine that the market would put that right, and then went on to point out that the market does not put it right. That is why leaving present trends to develop is such a damaging and wrong-headed thing for any Government to do.

Unlike many of his agitating Back Benchers, I give the Secretary of State credit for knowing that that is a real difficulty which we should fear. I read his Birmingham diocesan speech, which was much commented on, and his speech to the Northern Ireland Conservative Political Centre. The speeches to which I have referred are rightly concerned not just with social deprivation but with the low-wage pressure that bears down constantly on the unskilled and manual workers in our midst.

Let me give the right hon. Gentleman a quotation: The dispersion of earning power has had unattractive social consequences … It lies behind or is intertwined with many of our social problems. It may play a major part in the break-up of families, the growth of lone parenthood and a growing welfare dependency. It may even play a part in explaining delinquency and crime! I would not disagree with those sentiments, which have been expressed on many other occasions by Labour Members and some Conservative Members. So despite all that has happened in the past quarter of an hour, there is an element of agreement, at least between the Secretary of State and myself, about what we should be considering in order to solve the problem.

May I give another quotation, because I like having friends on my side? Lord Lawson of Blaby, who was speaking to the Social Market Foundation in London on Monday 20 June, delivering, according to the headline, a verdict on Government economic policy"— a cheery event, I should have thought—said: a small reduction in real earnings, although unattractive to those involved, is in itself a price well worth paying to bring down unemployment. That is a controversial view, but that was also his view as Chancellor. He went on: What I did not consider, however, ten years ago, was the possibility that this process might involve levels of pay for the least skilled that a fundamentally wealthy society would rightly consider too low to be acceptable. That is one of the problems. Right-wing economists as well as right-wing politicians are now worried about the continuing pressure that is driving down wage scales for those people, and greatly exacerbating the problems to which I have referred. It is against that background that I want briefly to discuss this issue.

Dr. Spink

The hon. Gentleman implied earlier that I despise the low-paid. I hope that he will be characteristic and withdraw that implication, because he clearly does not think that that is so, and it is not. Which does the hon. Gentleman believe is best: low pay or no job?

Mr. Dewar

I was unfair to tadpoles and to the hon. Gentleman, because they are not like for like, and therefore the comparison should not be made. The choice he offers me would be an interesting subject for discussion if it were a choice.

If the hon. Gentleman could establish that there is an inescapable choice between having some level of minimum wage but no jobs and having lots and lots of jobs but no minimum wage, I would be in a difficult situation. However, as he well knows, he cannot establish that that is the choice. He should not try to simplify the argument to help himself and then present it as a truth to the rest of the House.

Mr. Gerald Kaufman (Manchester, Gorton)

If the hon. Gentleman were right, would it not be an appalling commentary on 16 years of Conservative government and alleged economic success that there was a choice between low pay and no job?

Mr. Dewar

My right hon. Friend is absolutely right. It is one of the mysteries of British politics how Conservative Ministers, who have been in power for many years, can suddenly discover problems and announce that they are tackling them with great energy, even though those problems have been happily running along unchecked for the past 15 years. We had a small example of that this morning from the Secretary of State. That is not the subject of this debate, but we shall no doubt return to it on another occasion.

My simple message is that there is exploitation, which is an unpleasant phenomenon. I took the bother of checking on some jobcentre advertisements in my constituency. I know that Labour politicians are wont to do that, but it is a matter of illustrating a simple truth. I saw advertisments for a catering assistant at £1.23 an hour; for a hairdresser at £78 for a 43-hour week; and for counter or shop assistants at between £2.00 and £2.50 an hour. On a simple moral level, there seems to be strong cause for concern.

The Secretary of State will say—and I agree with him—that work must be worth more than benefit. Low wages strike at that principle. At the extremes of the figures that I have announced, low wages can be a disincentive for those who should be searching for work.

Mr. Duncan

Will the hon. Gentleman give way?

Mr. Dewar

No, I must push on, but I welcome the Under-Secretary of State for Social Security, the hon. Member for Hertfordshire, North (Mr. Heald), to his new job. I had thought that he was a Whip, but he is a lordly creature compared with a Whip. I congratulate him on his promotion.

There are a number of arguments about the minimum wage with which I shall deal. It is alleged that only a small percentage of households would benefit from it. There is some truth in that. Unfortunately, 40 per cent. of households have no earner. However, of households with earners who would benefit—the only ones that are relevant to the minimum wage argument—a substantial percentage would do so.

If we consider the bottom three income deciles of earning households, we find that, in every case, whatever calculation is made and whichever survey we take, over 50 per cent. would benefit from the introduction of a minimum wage set at a variety of different levels. Perhaps the most obvious evidence of that is from the British household panel survey, with which some hon. Members will be familiar.

The key argument that is put up is that the minimum wage will cost jobs. I say this gently to hon. Members, but there is no clear and convincing evidence of that. If an unreasonable minimum wage is set—and one can make that judgment only in the circumstances of the time at which it will be set—it will no doubt cost jobs. That is like saying that, if the Government make a mistake with taxation or national insurance contribution policy, or any other major economic decision, the results could be disastrous. It does not mean that the policy is wrong and should not be followed. There is no evidence that a sensible and flexibly applied minimum wage will cost jobs.

Lady Olga Maitland

I urge the hon. Gentleman to clarify the minimum wage. What does what he calls a not unreasonable level mean? If it is too high, it will undoubtedly mean that employers will not be able to employ other people; if it is too low, he will be perpetrating a great con on the world outside by suggesting that he is trying to do something for the low-waged when he is not.

Mr. Dewar

I agree with the hon. Lady 100 per cent. If we set the rate too low or too high, it is likely to be ineffective, or it may have some unfortunate by-products. That is no doubt true of the Chancellor's tax policy. The hon. Lady may have a personal opinion about what the Chancellor should do in November 1996, but I imagine that, if she asked him such a question, he would tell her not to be silly, and not to bother him with futile questions. What I infer from her question—this is something I welcome—is that, if we cast the rate at the right level, it will do the job effectively.

Conservative Members should consider the international experience and the international comparisons. As many hon. Members will know, there is at the moment an argument in America, led by the research of David Card and Alan Krugger of Princeton university, which suggests that there are in fact positive labour and employment consequences from the introduction of a minimum wage.

The researchers compared states where the level of the minimum wage varies. There is, of course, a move by the American Government as a result to put up the minimum wage from $4.25 an hour to $5.15. It all depends on getting it through a Republican House where the Government are not in control, but that is the judgment of the Clinton Administration, and it is largely supported by American evidence and research.

Several hon. Members


Mr. Dewar

I shall give way to one or two hon. Gentlemen, but, as someone said, rather daringly, I was over-liberal in letting people intervene. I must live down that reputation for a few minutes.

Mr. Denis MacShane (Rotherham)

Will my hon. Friend give way to me?

Mr. Dewar

No, I have to be entirely consistent in these matters.

I mentioned the American experience, but what about the British experience? The Government undertook a careful inquiry into the Agricultural Wages Board, and a reprieve from death row was issued. Indeed, I believe that the Secretary of State for Education and Employment was involved in that, although it may have been just before her time. In any event, she will know all about it. The conclusion was that there were no adverse labour market consequences, and that the Agricultural Wages Board should survive. I think that it should, and for strong reasons.

I referred to the position of women in society. Probably three quarters of those affected by a minimum wage would be women. The following fact might attract some people to the notion of a minimum wage. For the purpose of modelling alone, let us assume a minimum wage of, say, around £3 or £3.50. I have not done the modelling, so I take the figures used by those who have. In fact, I am using the figures of the IFS, in case some people think that they are those of some kind of kept research team of mine. I wish that I had such a beast.

The IFS discovered that a minimum wage of around £3.50 would mean that a large number of women would be brought into the national insurance contribution net, much to the benefit of the Chancellor. It would also have the effect of bringing them into benefit and pension contributions and into a level of social security that is not available to them at the moment. In the present complex and unstable situation in which many of our citizens have to live because of changing social habits and values, that is an important point to bear in mind. It is a substantial spin-off.

The Secretary of State's eyes light up with sincerity when he talks about Britain's job creation prospects—the Mais lecture was full of them about 18 months ago. However, our job creation levels are disappointing when set against those of the United States. It is very unfair to pick out one factor and assume that it is in some way responsible for that, but let us put it this way: it is not a damning indictment of a minimum wage that the better record has been achieved in the United States, a country which has had a minimum wage for a long time. If we look at the European scene, it is very much a case of everyone being out of step except our Peter. I suggest that he should think again.

The Secretary of State for Social Security (Mr. Peter Lilley)

Will the hon. Gentleman tell us why unemployment, measured according to a common definition, is greater in France and Spain than it is in the United Kingdom?

Mr. Dewar

No doubt that would require complex analysis—[Interruption.]—but I can say to the Minister that in many countries, of which America is one, a national minimum wage has been combined with a very successful economic record.

It is interesting to note the first thing that Mr. Alain Juppe did when he became Prime Minister of France. His "dry" credentials are impeccable. He comes from a very much right-of-centre Government, from the presidency of Jacques Chirac. He is extremely worried about unemployment in France, and made that the main campaigning platform of his presidency. He hopes to improve the position, and one of the first things he did was to increase the minimum wage.

There was no suggestion of Mr. Juppé going around saying, "The British Government have got it right. My good right-wing colleagues across the channel in Downing street and in Richmond house are absolutely right. We must get rid of the wicked minimum wage, which is obviously responsible for our economic problems." No; the right-wing analysis—I emphasise, the right-wing analysis—in France is that the minimum wage should be increased. The Minister might want to consider that.

There is another important reason to introduce a minimum wage, and that is that there is in the Government's policies a strong emphasis on in-work subsidies. People who work will receive help. Almost 600,000 of those people are in receipt of family credit. As the House knows—conveniently, the figures were given in a reply to my hon. Friend the Member for Birkenhead (Mr. Field) on 12 June at column 420— in 1988–89, family credit cost £394 million. In 1994–95, it will be very nearly £1.5 billion.

Apparently, that is one occasion when that type of escalation is not unwelcome in the Government, because they have announced their new earnings top-up measure, which will cost £75 million over three years. If that is a success—I assume that the Government believe or hope that it will be a success—I am told, in a reply on 20 July 1994 at column 255, that extending it to all childless couples will cost another £65 million and bring in 70,000 people, and that extending it to single people, who are also being piloted, as I understand it, will bring in another 1.5 million people and cost £1.5 billion in additional cash.

Therefore, we are quite big now—even in the Conservative party—on in-wage benefits. I do not criticise that; it is not a matter for discussion in the debate, anyway. However, there is a clear common-sense argument that, in those circumstances, we should put a floor under wages to ensure that the long-suffering taxpayer does not pick up the bill as the bad employer repeatedly cuts wages and forces them down. There is a significant danger of that.

That is one of the powerful arguments recognised, interestingly enough, by the Financial Times, which is generally hostile, which has said that, if we are going to go down that road, obviously we shall have to reconsider the minimum wage. The argument was also recognised by The Independent in its leader on 31 August 1994, headed: Fear not the minimum wage", in which it says: Neither party should be frightened off by the Government's simplistic economic arguments. Combined with a tax and social security system that better promotes work incentives for people on low earnings, a flexible framework of minimum-wage legislation would help to make companies take a more appropriate share in maintaining the low paid, rather than thrusting the burden on an over-stretched state benefits system. That is a powerful argument, which the House should consider.

Many other things must be done. I believe that everyone in the House recognises that we should not regard the welfare state as an argument about a payment of last resort, grudgingly granted by a reluctant system. We all pay lip-service, to varying degrees, to incentives and training opportunities that try to inject hope and movement into the benefit system.

Of course, as the Minister will say, there are signs of activity and signs of conscience on the Government's part. I submit that they are half-hearted, and bear the stamp of political calculation based on that principle of essential minimum. For example, the back-to-work bonus is jam tomorrow, or perhaps jam never, for those who are not fortunate enough to find full-time employment. The national insurance contribution holiday is worth only about £6 a week, and I suspect that it will have little impact.

Perhaps the attitude of the Government can be summed up by the rather casual abolition of the Department of Employment, without any real discussion or debate. I rather suspect that it was a popular and populist move because it evicted the right hon. Member for Enfield, Southgate (Mr. Portillo) from an economic portfolio. It leaves him sidelined and living in the giant shadow of the Secretary of State for Foreign and Commonwealth Affairs, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind). I suspect that that will at least be popular with the Chancellor of the Exchequer, who will feel a little safer as a result.

What it will do for the sales of videos at the Conservative party conference next year, I do not know. was interested to note that the right hon. Member for Southgate outsold everyone else by 2:1. I am glad to notice that, gallantly if still a long way back, the right hon. Member for St. Albans (Mr. Lilley) came in second place. That probably does not tell us anything about the excellence of the videos, but it tells us a great deal about the Conservative party conference.

Mr. Gyles Brandreth (City of Chester)

Normally when I rise to speak, the hon. Gentleman likens me to some character from Dickens. Last time, it was Uriah Heep. I am Micawber-like today, waiting for something to turn up in terms of policy.

We have had from the hon. Gentleman 45 minutes of entertaining badinage, which was very stylistic but had no content. He mentioned one of his constituents going to the jobcentre and seeing a low-paid job. What would he say to that same constituent if he came to the hon. Gentleman's surgery and said, "You advocate a minimum wage. In today's society, this is what I am being offered. In your society, what would the minimum wage be?" The hon. Gentleman must answer his constituent.

Mr. Dewar

I am glad that I have been entertaining. The hon. Gentleman is in entertainment himself, so his accolade is one that I value. I would explain to my constituent the need for a national minimum wage and how it would operate. I would ask him to endorse the principle. If he came from my constituency, I expect that he would do so enthusiastically. I would then, as I intend to do now briefly to the House, suggest that there were a number of things that we should do and should not do.

Let us start with just one thing that we should not do. We should not follow the Government's example of continuing to cut the training budget. In England next year, the budget will fall by 8 per cent. in cash terms and 11 per cent. in real terms. I would tell my constituent that, if he wished to judge the sincerity of the Government's talk about unemployment and equipping people to compete in the employment market, he should look at what they are doing to the training budget.

I would then recommend to my constituent the package of measures that the Labour party suggested at the time of the last Budget. We would have taken those measures, but the Government did not take them. Our package followed the Government in suggesting a national insurance contribution holiday for employers who took off the unemployment register people who had been on it for more than one year. When I first saw the proposal for a tax allowance of £75 a week, it looked, to say the least, ambitious, but it would be a real incentive to take into employment people who had been on the unemployment register for more than two years.

When the policy was costed, it was found that, after some initial costs, the tax allowance would be self-financing in the second year.

Mr. Lilley

indicated dissent.

Mr. Dewar

The Secretary of State shakes his head, but that is what reputable economic forecasters and modellers have suggested. When the Secretary of State introduces anything, he produces figures which he expects us all to accept to show that the policy is self-financing. For example, we were told that the disregard for child care costs against family credit would cost £240 million, but that £220 million of that would be recouped, and the scheme would be almost self-financing.

The secret of such measures—I am arguing that case—is that, if we can move people into work, they pay national insurance contributions, and perhaps pay tax. They are certainly not paid benefit. The Government can afford to be generous and not be half-hearted. They could try to make an impact on the unemployment problem.

I would explain such measures to my constituent. I would also point to quality child care for three and four-year-olds whose parents wished to take up that option. I would point to the disregard for working parents, which the Labour party has outlined, and the measures that we have proposed to produce some movement in the construction industry, create employment and at the same time tackle social problems.

My only problem might be that, if my constituent had a short-term attention span and wanted to get away to other things, he might find the meeting rather long. However, I think that he would be favourably impressed. He certainly would not be impressed by what has happened in this country in the past 10 years or so.

Let me conclude by saying that social problems have to be tackled. They cry out to be tackled, and we ignore them at our cost.

I am often accused of peddling the politics of envy, but I am not interested in the politics of envy—although I will give the Secretary of State an opening by saying that some of what has happened in the privatised utilities is blatantly offensive, raising ethical and moral problems that are perhaps even more pressing than any economic issue to which they attach.

In many instances, the Government's actions have handed people, on a plate, an opportunity for personal enrichment beyond what most would consider to be the bounds of reason. Few of those people could even be said to be at the cutting edge of entrepreneurial risk, and to have justified their gains on grounds of hazard. I would find it difficult to put such an argument in relation to the hierarchy of National Grid, to take just one example.

That is part of a wider picture. Perusal of the Financial Times shows how commonplace it is for people to take—in the form of share options, pension contributions and substantial salaries—sums that will inevitably provoke anger and bitterness among those who, for reasons that I understand, are being asked to show restraint and to accept pay limits that are very modest even in relation to the likely rate of inflation over the next year or two.

Let me give a passing example. The fact that Lord Young of Graffham, that splendid child of Thatcherism, takes the amount that he takes from Cable and Wireless while at the same time complaining about the greed of teachers has an important effect on national morale and the social cohesion that I mentioned earlier.

If we want people to pull together, we must pay attention to the symbols of our time that have been allowed to rise unchecked. If we are to deal with alienation, that will constitute a good investment in economic efficiency. We must tackle the loss of talent, the negative costs of bitterness, and the increasing instability to which the Secretary of State himself referred in the speech from which I quoted earlier.

The other day I read a book bearing the HMSO imprint but produced by the Scottish Consumer Council. It is called "Poor and Paying for it", and it examines the increasing inequality of opportunity, and other problems, of the low-paid in Scotland. It quotes a young mother from Wester Hailes, who said—with a simplicity that struck me as unanswerable— If you've no money you cannae buy things and do things. Many of my constituents—not just those on benefit, but those on low wages; some of the most serious poverty is experienced by large families on poverty pay—are faced with that deadening truth, that you cannae buy things and do things. I believe that we shall all pay a price if we do not soon have a Government who are prepared to recognise the damage that is being done, and to do something about it.

4.27 pm
The Secretary of State for Social Security (Mr. Peter Lilley)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the increase of 38 per cent. in average incomes and the rise in spending of all income groups since 1979; welcomes the fact that the United Kingdom has fewer people claiming unemployment benefits and more jobs than any other major European country; welcomes the creation of a new Department for Education and Employment to improve further Britain's skill base and competitive position; applauds the £700 million package of measures to improve incentives to work for those on benefits and increase the rewards of work for lower-paid families; welcomes further initiatives, such as the Jobseeker's Allowance, the Back to Work Bonus, and the pilot of an Earnings Top-up for childless people on low earnings; believes that supplementing low pay to help people into work is preferable to destroying jobs through a statutory national minimum wage and the social chapter; and recognises that improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy.". I am genuinely grateful to the Opposition for calling the debate, which gives us an opportunity to expose the multiple fallacies that they have been peddling about inequality, employment and the minimum wage.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked us to try to agree on the nature of the problem. He immediately went on to quote Winston Churchill, and to suggest that we faced a problem similar to that faced by Churchill in 1911. To be fair to the hon. Gentleman, he became a bit more up to date when he referred to my Ulster lecture on the dispersal of earning power.

I hope that the hon. Gentleman agrees that the low earning power of the least skilled is a problem throughout the western world. That problem is a consequence of the displacement by modern technology of many jobs that depended on brawn rather than brain, and of the fact that trade has brought into the international marketplace a great number of very low-paid but able workers to compete with ours. It is nonsense to suggest, however, that the cause of the dispersal of earning power has something to do with an increased meanness among employers—or, indeed, that those who are paid reasonably have the good fortune to be employed by generous employers, while the low-paid have the misfortune to be employed by mean employers. The fact is that, in a competitive market, employers are compelled to pay an amount that roughly reflects the value that people can contribute to the process of producing goods and services and they cannot pay more than that value or they go bankrupt. A national minimum wage simply means that anyone whose earning power is limited by an inability to contribute as much as the minimum wage will not have a job.

The basic problem, which I hope hon. Members on both sides of the House will agree exists, could be tackled only by improving people's earning power through better education, training and skills, which are often acquired at work—so we should not drive them out of work through a national minimum wage or the social chapter—through in-work benefits to help supplement their earnings, and through deregulation that will reduce the other costs that reduce employers' ability to earn.

That should be our starting point, but it obviously is not because the Opposition come up with policies that are incompatible with that analysis. With your permission, Mr. Deputy Speaker, I shall take the issues in the order in which they appear in the Opposition motion. They begin by referring to "widened social division" and "damaging inequality". Since even before the Rowntree report appeared, the Opposition have been using figures relating to the incomes of the bottom 10th of households to suggest that low income is a static condition from which people cannot escape, and that the poor are getting poorer. Unfortunately for the Opposition, the recent Institute for Fiscal Studies report does blow a hole in that thesis. That report showed that low income is not a static condition from which people never escape. On the contrary, up to half of those who were in the bottom 10th of incomes in 1991 had risen out of that band a year later. Overall, the incomes of those in the bottom 10th had risen by a quarter over that year.

Moreover, as measured by their expenditure, the standard of living of households in the bottom 10th of incomes, far from falling since 1979, has risen by 30 per cent. in real terms. That evidence is supplemented by that from the new earnings survey, which gives figures for the movement out of the bottom 10th of earnings over a longer period. They show an even more dramatic picture. One in 10 of those in the bottom 10th of earnings five years ago have succeeded in reaching the top 10th of earnings today. In short, far from the poor getting poorer, many of them have been getting richer and most of them have been getting less well-off.

Mr. Kaufman

Yes, that is true.

Mr. Lilley

Most of them have been getting less poorly off.

The Opposition, however, are not solely or even primarily concerned about the bottom 10 per cent. They are far more concerned to stir up resentment against the good fortune of the top 10 per cent. It is against them that the politics of envy have been deployed. It is true that the top 10 per cent. have seen a more rapid increase in their incomes than the national average—I willingly concede that—but who are these bloated plutocrats whose well-being has allegedly been obtained at the expense of the least well-off? Let us get one thing clear: they are not all Cedric Browns. The hon. Member for Peckham (Ms Harman) might try and suggest that they are, and the handful of highly publicised cases of privatised industry directors may be distasteful, but the total impact on the top 10th is negligible because more than 5 million people are in the top 10th of households.

The Rowntree report produced what it called a "UK Income Parade". It drew out 50 households from the survey that it was using for its research. They represented different income distribution points from bottom to top. It said that, if people's heights had reflected their income, we would see a parade of dwarfs and a few giants". It is worth seeing who the giants are, according to the Rowntree report. At the threshold of the top 10th of incomes we find a household comprising a single man who lives in a council house and who has a take-home pay of £311 per week. In the view of the Opposition, he is getting on towards being stinking rich. In the middle range of the top 10th of incomes we find a 57-year-old freelance journalist earning £30,300 per year gross, whose wife works part time as a manager of a day centre on a weekly wage of £115. Alas, like all the cases in the report, he is anonymous. It would be poetic justice if he wrote articles for The Guardian denouncing the widening social divide and damaging inequality without realising that he had been selected by the Rowntree report to typify the stinking rich. The biggest giant in the parade is a 60-year-old man earning £47,300 gross, whose 58-year-old wife is on invalidity benefit.

It is not possible to tell from the Rowntree report what the wage earners in other representative households in the top 10th do. However, judging from their salaries, they could include a police officer married to a senior nurse, a head teacher of a large comprehensive married to a primary school teacher, or a Member of Parliament married to his secretary. Labour believes that they are the sort of people whose salaries are too high and whose taxes are too low. According to Labour, they are the cause of damaging inequality and social division. When Labour Members talk about soaking the rich, they should make it clear that they mean taxing the middle classes. It is not just the Cedric Browns who are in the firing line: journalists, policemen, teachers and nurses will be the real victims of Labour's politics of envy.

Labour Members are divided in their views about redistribution. The hon. Member for Birkenhead (Mr. Field)—who, alas, is not present in the Chamber—recently wrote: There is no general ground swell amongst middle-class groups for redistribution of wealth to the poor … Politicians who maintain otherwise are a public menace distracting from the real task. Six days earlier, the hon. Member for Garscadden had written in The House Magazine: An element of redistribution is a vital investment in social stability which matters for us all". I shall leave it to the two hon. Gentlemen to fight among themselves about what the Opposition policy should be and who is or is not a public menace—but if the cap fits, wear it.

Mr. Dewar

Dear me—a phrase maker. The right hon. Gentleman is constructing an imaginary Labour economic policy. No doubt he derives some satisfaction from that and it furthers his cause, because he can then knock it down. However, I do not know of anyone who has said that we shall "soak the rich", and certainly not the sort of people to whom he referred.

In my speech, I was very careful to say that the abuses and offences that have emerged—and to which the Prime Minister has admitted—in the private utilities and certain other sectors of the economy pose an ethical and a moral problem rather than an economic problem as such. We believe that it is very bad for the morale of this country to allow that practice to go on unchecked. We also believe that the emphasis should be on opportunity and giving people a chance—which the market does not at present afford—to better themselves and to improve their quality of life.

Mr. Lilley

I believe that I am correct in saying that the hon. Gentleman referred to the Rowntree report and the figures it cites—he certainly did so in a previous debate—which he appeared to endorse. They are based on an analysis that the top 10th of income earners are getting more and the bottom 10th are getting less. The hon. Gentleman referred today to the widening division, but if he is simply talking about the division between half a dozen privatised industry directors and the 5 million people at the bottom of the income scale, he is clearly misleading people, to say the least.

Mr. David Nicholson (Taunton)

The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to people being able to better themselves and improve their quality of life, and in his speech he talked about frogs and tadpoles—I have been meditating on that fable ever since. Does my right hon. Friend agree that, thanks to the Government's efforts, in the past 10 to 15 years many people have been able to better themselves through participation in higher and further education?

Mr. Lilley

My hon. Friend is absolutely right. At the time when he and I entered Parliament, we set the target of increasing the number of people in higher and further education from one eighth to one third by the end of the century. We have already achieved that proportion of school leavers entering further and higher education.

The next issue raised in Labour's motion is the merger of the Department of Employment with the Department for Education, which the motion alleges signals the complete lack of Government concern about unemployment". That is the precise opposite of the truth. I shall leave my right hon. Friend the Secretary of State for Education and Employment to rebut that allegation in detail. Suffice it to say that the best key to a good job is the skills and educational attainment to contribute to the production of goods and services. Employment training and education are therefore intimately linked. It is right that Whitehall's structure reflects that, and it is absurd that the Opposition should want to dismantle it.

Mr. Dewar

I quoted figures, which I understand are accurate, about the reduction of the training budget this year as against next year. I believe that that will continue a trend that has existed for some time. How does the Secretary of State explain that reduction, in terms of the commitment that he is parading?

Mr. Lilley

We believe in increasing the total quantum of training and the total quality of training and education in the economy. The vast bulk of it applies in work. The key for many people is getting jobs in which they can build skills and expertise. We are more keen on that than on simply setting up ever more schemes, as the Opposition would like us to do.

The third issue raised by the motion is action which promotes employment opportunities", which is precisely the action that the Government have been taking, with growing success. It is also just what Opposition policies would undermine.

Our success is best measured by comparing our performance with our partners in the European Union, who already implement the policies that Labour advocates. Unemployment in the United Kingdom is below the EU average and falling faster than elsewhere. Britain has a higher percentage of people of working age in work than any other major country in the European Union. Moreover, the number of people in work rose by more than 1.5 million in the UK between 1979 and 1990—the last two peaks in the Organisation for Economic Co-operation and Development cycle—while it fell in the rest of the European Community.

Opposition claims that falling unemployment in Britain is not leading to more people in work are not true. Over the past 12 months, the number of people in work has risen by nearly 300,000. Claims that those extra jobs are all part-time, female, low-grade jobs are equally false. Only 5 per cent. of those extra jobs have been taken by women working part time. Two thirds of all the jobs created over the past year have been full-time jobs, and 70 per cent. have been taken up by men. The most rapid expansion has been in professional and managerial jobs.

Our success in generating more employment opportunities is based on a threefold strategy—first, improving education and training by ensuring that the right subjects are taught through the national curriculum, which Labour opposed; raising standards through testing, which Labour opposed; through parental choice, which Labour opposed; and through publishing school performance, which Labour opposed.

The second leg of our strategy is to improve competitiveness by avoiding the burdens of the social chapter, reducing payroll taxes where possible and deregulating enterprise. Labour would destroy competitiveness by opting into the social chapter. The third element of our strategy is to increase work incentives through in-work benefits.

Family credit already helps to make work worth while for 600,000 parents. Last week, I published the Green Paper on our plans to test a new earnings top-up benefit for people without dependent children who have limited earning power. There is a case for making work more attractive for such people—to encourage people to get on to the employment ladder, since most skills and experience are acquired in work.

If that pilot study is successful, it should benefit the least well-off. It should also benefit the taxpayer, because it costs more to keep people out of work than to top up earnings in work. The figures that the hon. Member for Garscadden quoted were from some while back and related to the possible extension of family credit to all people without families. On the basis that we are proposing, the cost—even assuming no offsetting reduction in unemployment—will be one third that which the hon. Gentleman claimed.

Mr. Dewar

I am sorry to interrupt the right hon. Gentleman again, but this is an important point. I accept his correction in respect of the cost. Our case is that there ought to be a floor under wages, to stop employers setting lower and lower wages for people entering the employment market, leaving a greater and greater strain to be taken by the taxpayer. Does not the right hon. Gentleman acknowledge that danger? Will checks and balances be built into the system, to prevent such a thing happening? It would help the right hon. Gentleman's case—I put it no higher than that—if he could satisfy the House that there is no such danger.

Mr. Lilley

We are undertaking a pilot study, which is a major departure from social security policy and a sensible one, to ascertain whether such a benefit would assist not only the people who receive it but the whole economy. The test will be whether it helps people back to work, improves their take-home pay in work and encourages job creation. If the answer to those questions is no, with wage reductions offsetting the benefits to employees and no growth in jobs, we shall examine those factors. If the hon. Member for Garscadden is not 100 per cent. sure—and I submit that no one could be 100 per cent. sure—of his case for a national minimum wage, why does not Labour propose testing it on a pilot basis?

Ms Harriet Harman (Peckham)

The case for minimum wages was proven by the wages councils.

Mr. Lilley

The hon. Lady can try to make that case later and see whether the House finds it credible.

Ms Harman

The Secretary of State asked whether there could be a pilot scheme for a floor under wages by law. We had such a scheme from 1909, under the wages councils, until the Government abolished them. We do not need a pilot scheme, because we know that a floor under wages is necessary.

Mr. Lilley

Given that since our reforms, including those affecting wages councils, the UK has been more successful in increasing the number of jobs than most other countries, the suggestion is that the test has gone not in the hon. Lady's favour but in ours, and it should strengthen the economy as more people will be working and fewer kept idle.

Our approach is the opposite to that of the Opposition, who have consistently criticised in-work benefits. A national minimum wage would cut off the bottom rungs of the employment ladder and reduce opportunities for people to get into work and to increase their earning power through the expertise and skills that they may then acquire.

The final element of the Opposition motion is the claim that a national minimum wage would protect low-paid people. Any hope that a national minimum wage would help the lowest-income households is fallacious. Only 3 per cent. of families in the bottom 10th by income contain a full-time worker on low pay. The bulk of low-income households are on benefit, self-employed, retired or have large families. By contrast, many of those earning low pay are providing a second income in households with quite high total incomes. As a result, the Institute for Fiscal Studies calculates that, even before allowing for job losses, a national minimum wage would actually help the best-off 30 per cent. of households more than the least well-off 30 per cent. I cannot really believe that that is Labour's objective, although I may be mistaken.

There are three questions on the national minimum wage that the Opposition must answer if they are to be honest with the electorate. First, at what level would they pitch it? We have been given no answer today. Secondly, to what extent would the Opposition expect or allow differentials to be restored for wages above that level? Thirdly, how many jobs do the Opposition believe would be destroyed as a result of their policy? What distinguishes new Labour from old Labour is its refusal to answer or even to deal with such questions.

This is not a new issue. Barbara Castle, as Secretary of State for Employment, set up an inquiry into a national minimum wage. Her conclusion was unequivocal: The introduction of a national minimum will add to labour costs. This could in turn increase the level of unemployment … The alternatives would either be a substantial increase in costs or, more likely, some reduction in employment both for men and still more seriously for women, with the worst impact falling on the least prosperous areas". So the Government of that day ruled it out.

The last Labour Government likewise rejected the idea. The former Chancellor, Lord Healey, is on record as warning his party in his best silly-billy manner: Don't kid yourselves—the minimum wage is something on which the unions will build differentials. Then, in the 1980s, the hon. Member for Birkenhead—

Mr. MacShane

Is that now the difference between old Tories and new Labour? We pray in aid Sir Winston Churchill; they pray in aid Barbara Castle.

Mr. Lilley

I suppose it is. The interesting thing is that new Labour seems to have disowned every previous Labour Government—and quite a few current Labour spokesmen.

In the 1980s, the hon. Member for Birkenhead, Chairman of the Select Committee on Social Security, published an excellent book called "The Minimum Wage—Its Potential and Dangers". In it he wrote: The employment consequences of implementing a National Minimum Wage are serious, but if the trade union movement decided on a policy of re-establishing differentials, the effects would be little short of disastrous. More recently, in his characteristically robust way, the right hon. Member for Kingston upon Hull, East (Mr. Prescott) has said of a minimum wage: I knew the consequences … were that there'd be a shakeout—any silly fool knew that. In short, not just this Government but all previous Labour Governments—and, until now, the Opposition—have always accepted that a national minimum wage would destroy jobs. But just recently the Opposition have done a volte face. On the basis of a survey involving telephoning 400 fast-food outlets in New Jersey, they now claim that a minimum wage can increase jobs. That really does sound like a drowning man clutching at a straw. The OECD has examined all the evidence from the United States, and it is clear that the weight of the evidence from there and elsewhere suggests that minimum wages destroy jobs.

The hon. Member for Garscadden said that the American experience of the past few years, despite the existence of a minimum wage, was successful in creating jobs and proved that a minimum wage was no obstacle to that; but of course over that period the real value of the minimum wage has fallen by a third. So its impact in terms of job destruction has been declining. Small wonder, then, that America has been doing increasingly well.

Mr. Dewar

I really think that the right hon. Gentleman is overstating his case in a way that does him no good. Despite what he has said, there are many countries—we have discussed one or two of them: America, France, and there are many others—with minimum wages and with no intention of retreating from them. And some countries in eastern Europe—not necessarily a good parallel, I admit—are thinking of moving to a minimum wage system, on the basis of evidence from western Europe and north America.

I agree that there is a conflict of evidence, but there is a large body of evidence to the effect that there are no adverse labour market or employment consequences. Indeed, in a parliamentary reply on 4 November 1992, the Department of Employment was good enough to list a large number of those countries.

Mr. Lilley

When I asked the hon. Gentleman why France and Spain, which differ from us in having a minimum wage and the social chapter, suffer from higher unemployment, he was unable to give me a single reason—he said that the question would need complex analysis. But it is a prime question that any advocate of a minimum wage ought to have asked himself, and answered, before choosing to inflict it on his own country.

The hon. Member for Garscadden claims that there is no suggestion in France that the minimum wage is a problem. That is to ignore the fact that the previous Prime Minister, a member of the same party, proposed a reduction of the minimum wage for young people and withdrew that proposal only in the run-up to the election because it was proving politically unpopular. He withdrew it in the face of political agitation—

Mr. Dewar


Mr. Lilley

The hon. Gentleman has already intervened three or four times. If he failed to make his points in his own speech, that speaks for itself.

The Labour party now bases its case on studies that tacitly assume that in some areas some firms are effectively the only employers of unskilled labour and can therefore depress wages below the market clearing level. A minimum wage can be harmless only in those limited circumstances, and to the extent that it is geared to offsetting such power. Labour's research certainly cannot be used to justify a statutory national minimum wage.

A more logical approach, for anyone who believes Labour's research, would be to encourage more competition from more new businesses and to bid up wages to the market clearing level in the areas where they are artificially depressed. But Labour does not even seem to recognise the implications of the research on which it leans so heavily.

One thing is clear: the level at which the minimum wage is set would be crucial. Once it is known, academics can work out the implications. More importantly, employers and employees can work out whether they would move from low pay to no pay. That is presumably why the shadow Employment Secretary has decided to refuse to tell us what the level would be. We are told that it will not be set until after the next election.

That rather cynical ploy has backfired, however. The hon. Member for Nottingham, South (Mr. Simpson), secretary of the Campaign Group, said: it would be to our advantage to be a party that says what it means and means what it says, and that means something specific about the starting level of the minimum wage. The ploy has also caused alarm among the brothers—and other relatives—in the trade union movement. They fear another retreat, so they want a firm commitment to a specific minimum wage. Indeed, Mr. Jack Dromey, a recent contender for the leadership of the Transport and General Workers Union, has urged the unions to campaign to persuade Labour to adopt a minimum wage figure of between £4 and £5 an hour before the election. No one is better placed to persuade Labour than Mr. Dromey. He is, after all, the husband of Labour's shadow Employment Secretary. Perhaps I should call him Mr. Harman in politically correct circles. One can imagine the pillow talk in the Harman household. After a hard day's campaigning in the Labour movement, he returns to the household and says to his spouse, "Couldn't we be united for £4 or £5 an hour?", at which Mrs. Dromey turns away with a sigh: "These numbers give me a headache—you'll have to wait until after the election."

The fact is that the Labour party is refusing to answer the questions that any honest party should answer if it is to come clean with the electorate—

Ms Harman

The right hon. Gentleman is giving me a headache now.

Mr. Lilley

That is not so much of a problem in my case. I fear that none of the blandishments from people in the Labour party, least of all from Mr. Harman, will work. The Opposition are in retreat, on this issue as on so many others, at least until the next election. They have retreated on nationalisation, and changed clause IV. They have retreated on tax, and abandoned John Smith's plans. They have retreated on nuclear weapons and on trade union reform, and they are retreating here because we are winning the arguments.

It is a tactical retreat, however. The right hon. Member for Sedgefield (Mr. Blair) has adopted the tactics of the man who walked backwards into a cinema in the hope that the attendant in the box office would think that he was leaving. But I believe that the electorate will see what the Opposition are up to and will realise that this is only a temporary retreat.

The Labour party offers new rhetoric for old policies. Scratch the soundbites and we find the politics of envy posing as egalitarianism, a job-destroying minimum wage masquerading as help for the low-paid, and a policy that will deepen dependency pretending to be an offer of help to those coming off the dole. By contrast, we offer a hand up as well as a handout, opportunity instead of envy and the chance for people to gain their first experience of the workplace. The debate offers a welcome chance for the electorate to compare the cynical politics of the Opposition with the practical policies that we, the Government, spell out day after day.

4.59 pm
Mr. Gerald Kaufman (Manchester, Gorton)

In his closing words, the Secretary of State spoke about the electorate's views on the debate. If my constituents had been able to listen to the right hon. Gentleman's speech—it contained the cheapness that we expect of the person who made a xenophobic speech at a recent Conservative party conference, and did not fall below his usual level but kept up to that which we expect—they would have been left bewildered and dismayed but with the knowledge that the Secretary of State is the man who is responsible for their having to survive day after day in grinding and hopeless poverty.

I represent tens of thousands of people who live in great poverty. I represent many thousands who are unemployed. That the Secretary of State should make a debating speech based on stale statistics when my constituents are looking to Parliament for some hope and some salvation tells us why the Government are running out of time and why they will be rejected by the electorate as soon as it has an opportunity to do so.

My constituents live in terrible poverty. Of the 634 constituencies in Great Britain, Gorton is No. 35 when it comes to unemployment. Male unemployment is 21.8 per cent., which is more than double the national average. Overall unemployment is 15.5 per cent., which is almost double the national average. In Gorton, 38 per cent. of the unemployed have been unemployed for more than a year and 35 per cent. of the unemployed are under 25 years of age. Youth unemployment in parts of my constituency reaches 47 per cent. The Government respond to that situation with the cheap and facile remarks that were made by the Secretary of State.

People are desperate for a job; when they get a one, they have to live as the victims of their employers. I wrote to a Secretary of State for Employment about one of my constituents who is a security guard. He works 64 hours one week and 72 the next. He is paid no overtime and is not permitted to join a trade union to get the protection that it could offer. His employer reduced his hourly pay from £3.02 to £2.35. I wrote to the then Secretary of State for Employment and asked what recourse my constituent had in that appalling predicament. He was working all the hours God sent, yet saw his pay reduced.

The then Secretary of State wrote to tell me that the man could resign his job. That would have been extremely useful, bearing in mind that he lives in a constituency in which about a quarter of the males are unemployed. He would not have had much hope of other employment. Furthermore, if he had taken that course, he would not have been eligible for the benefit that comes when a job is lost involuntarily. That was the studied advice of the Government to one of my constituents who was being exploited by his employer, as so many of my constituents are.

Many of my constituents live in poverty that it is fair and accurate to describe as abject. A third of the population of Manchester has to have recourse to income support; my constituency is poorer than the Manchester average. In Manchester, 43.7 per cent. of households rely on housing benefit, which is one of the indices of poverty. On that index, Manchester is the poorest city in the country. My constituents are poorer than the people of Manchester as a whole. The proportion of them who live on housing benefit is even higher than the 43.7 per cent. in Manchester.

In Manchester, 24.8 per cent. of children have to have free school meals. As I have said, my constituents are poorer as a whole. Thirty per cent. of households in Manchester have lone parents with children. Indeed, 29 per cent. of the children in the city live in that circumstance. How are those women—overwhelming they are women—to survive? How are they to get jobs in an area of extremely high unemployment? How are they to bring up their children in a way that will keep them off drugs, off the streets and out of crime? How are they to achieve all that when they are living in a literally hopeless situation?

I read in the newspapers this morning that the Secretary of State is to conduct a drive against bogus applications for social security benefits. My constituents are as firmly against bogus applications for social security benefits as anyone else. It would be a good idea if the Secretary of State also conducted a drive to ensure that honest people who are truly eligible for benefits knew how to get them and were assisted to get them.

Some of my elderly constituents are being deprived of benefits. Although we try to tell them that benefits are available, the Government do not make a determined effort to let them know what they can get. A couple in the Fallowfield area of my constituency—they are both aged 85—do not receive income support. The wife receives the higher rate of attendance allowance. Their joint pensions amount to £119.06. It was found that, because they were not aware of the benefits for which they could apply, they were worse off by £51.65 a week. It would be a good idea for the Secretary of State to do something positive and determined to ensure that such people receive the benefits to which they are entitled. In all conscience, the benefits are not very large, even when they are increased.

An 87-year-old woman in the Gorton area of my constituency has never claimed income support because she has "been frightened to". I quote her words. What sort of Government are we living under when an 87-year-old woman is frightened to apply for a benefit for which she qualifies? She has been living on £59.49 a week. It transpired that, if she had been properly advised by the Benefits Agency, she could have been receiving another £75.76 a week.

A couple in Levenshulme in my constituency have been living on £118 a week. When investigations took place, it was found that that couple could get their benefits increased by £57.60 a week.

Why do not the Government go out of their way to try to assist people in that position? Why do not they try to introduce a culture of benefit in which a woman in her 80s is not afraid to apply for the benefit to which she is entitled?

I understand that the Secretary of State is—I agree with him on this—opposed to the introduction of an identity card, but in Cabinet he is arguing for the introduction of an identity card for people on benefit. I beg him not to proceed. If he does, he will codify for ever the fact that we have two nations—those who are on benefit, and those who are not. We would have inferiors and superiors, based not on merit or virtue but circumstances and misfortune. It would be a very black day if we were to separate our constituents, whatever our party, into two groups.

Because of the poverty in my constituency and because of unemployment—and not because of a dependency culture but because of a need for benefit, which does not prevent people from living in poverty—we have health problems of which those who live in and who represent the more affluent parts of the country are simply unaware.

Mr. Barry Porter (Wirral, South)

I agree with the right hon. Gentleman that it would be entirely appropriate for people to be given as much information as possible so that they can claim the appropriate benefit, but would not the suggested card go a long way towards meeting that desire? If people have the card, it would be up to the appropriate authority to ensure that people received the benefits to which they were entitled. I thought that that was the argument.

Mr. Kaufman

Let us take the 87-year-old woman who was frightened to apply. I do not know what good a card would do for her, or is the hon. Gentleman saying that everyone on a retirement pension should have a smart card? If everybody on a retirement pension was, therefore, regarded as an inferior member of the community, millions of pensioners would rise up in anger against the suggestion.

I shall, for a moment, consider health in the city of Manchester. As everybody knows, poor health often derives from poverty. The poverty and ill-health indices of the wards in our city correlate. In our city, the incidence of an array of illnesses and diseases is far higher than it is in the country as a whole. If England and Wales is an index of 100, the incidence of ischaemic heart disease in Manchester is 161 for males and 173 for females. For lung cancer, it is 214 for males and 204 for females. For cerebrovascular disease, it is 186 for males and 144 for females.

The mortality ratios in the city for all causes, remembering that the national average is 100, is 163 for men and 148 for women. If babies and infants in Manchester had the same experience as the average for England and Wales, the total number of still births and deaths in the first year of life would be 75 instead of 104—nearly 30 more. If one takes the weight of children at birth, which is a strong index of poverty, one finds that 6.7 per cent. of children born in England and Wales weigh less than 2,500 g. In the city of Manchester, the figure is 9 per cent. In the Gorton, South ward in my constituency, it is 9.8 per cent. In the Levenshulme ward it is 10.71 per cent. In the Rusholme ward it is 10.29 per cent.

Those are all indices of poverty. They are indices of women who are fighting to get a decent diet, fighting to survive, and giving birth to babies who are smaller than the average and thus subject to a greater risk of ill health—if they survive at all.

Poverty has an effect on childhood mortality rates in the city of Manchester. The rate of perinatal mortality in England and Wales is 7.5 per cent. In Manchester, it is 9.9 per cent. The rate of still births in England and Wales is 4.2 per cent. In Manchester, it is 6.4 per cent. The rate of infant mortality in England and Wales is 6.5 per cent. In Manchester, it is 8.4 per cent. It is important that I repeat that, by and large, the figures for my constituency are worse than those for the city that I represent.

Mr. Alan Howarth (Stratford-on-Avon)

I am grateful to the right hon. Gentleman, who speaks feelingly on behalf of his constituents, for giving way. Is he aware that international research material, assembled and reported on by Richard Wilkinson of Sussex university, demonstrates that societies in which there are greater inequalities of income experience worse indices of ill health and early mortality than societies in which the income differentials are less wide, and that the kind of poverty that he is describing is detrimental to the interests and, indeed, the health of us all?

Mr. Kaufman

I am deeply concerned, as anybody who represents and lives among the people about whom I am talking must be, as there is not just the problem, the sadness, the desolation of individual poverty and suffering, but the loss to the country because of what is happening.

I shall give an example of what my constituents have to put up with, to demonstrate to the House that what happens in Gorton and elsewhere in Manchester is not an accident but a consequence. It is a consequence of the unemployment, of the low income. It is a consequence of inadequate medical provision. We have in my constituency the Gorton medical centre. It operates from something that scouts would be ashamed to use as a hut. It has been condemned as unfit by the Health and Safety Executive. The doctors in the medical centre have put forward a plan for its rehabilitation, which would cost £150,000. So far, that money has not been made available. I have had discussions and correspondence with the right hon. Member for Surrey, South-West (Mrs. Bottomley), who has just ceased to be Secretary of State for Health, and nothing whatever has been done to put it right.

There are 9,000 people on the patient lists of the Gorton medical centre. I have visited it on a number of occasions. The waiting room is so small that there is not room for everybody to sit or even to get in. Pensioners, pregnant women and women with babies have to stand, or even to stand outside in the street. We need £150,000 and the money is not coming, yet in March the High Court found that the very family health services authority that is refusing to provide the money had unlawfully spent £250,000 on employing what it calls eight facilitators. The authority has broken the law and it has wasted £250,000—way beyond the amount needed to put the medical centre into decent condition.

I have not only written but spoken to the previous Secretary of State for Health about this, yet almost four months after the High Court found that the money had been unlawfully spent, nothing has been done either to put the matter right or to penalise the people who broke the law just as much as muggers and other criminals break the law. Some £100,000 more than we need for my medical centre has been wasted, and nothing has been done about it. It is all very well for the Under-Secretary of State for Social Security, the hon. Member for Monmouth (Mr. Evans), to smirk. I hope that if he had such a situation in his constituency, he would raise the matter on the Floor of the House. As a junior Minister, he sits smirking at a matter that is extremely important to 9,000 of my constituents and their families.

The Parliamentary Under-Secretary of State for Social Security (Mr. Roger Evans)

The right hon. Gentleman's comment that ultra vires acts were akin to mugging was surely slightly fanciful, or will he now extend such condemnation to, for example, the Clay Cross councillors?

Mr. Kaufman

I did condemn the Clay Cross councillors when I was a Minister in a Labour Government. When we introduced a Bill indemnifying certain councillors who had refused to apply the Housing Finance Act 1972, I excluded Clay Cross councillors because I did not believe that they were worthy of indemnification. The sniggering and cheap little Minister is wrong in his sniggering, cheap little intervention in my speech, in which I am talking about decent people who want decent health care.

There are other aspects of poverty in my constituency. We now have no local authority public housing programme, and private sector housing has halved, so we have people living in appallingly poor accommodation. We have people who, as a result, find that their marriages are being broken up. We have people who, as a result, are having to move out of the area and to apply for accommodation under the homelessness provisions which, under this Government, are turning some people into millionaires. We do not have much growth industry in my constituency, but the one growth industry that we do have is homelessness. We have people who are taking money from public funds and using it to grow rich out of the misery of people who cannot find a decent home.

This debate is about differences in life styles and about differences in life chances. My constituents are deeply deprived of the chances in life that would enable them not only to live contented, fulfilled lives, but to make a contribution to the country. Let us be clear about this. My people in Gorton are as richly talented as anybody else in the country. They have an ability to contribute to this country just as much as the constituents of Ministers and, when they are given the opportunity, they make that contribution. I have people who have set up a company that has developed an invention in which they are interesting major companies. They are doing their best. I have a teenage Asian constituent who has won a film-making prize and who will, I hope, make his way in the film industry.

My constituents have a great history of contribution to the national economy. If one goes to the railway museum at York, one sees superb, gleaming locomotives which have on them plates saying "Made in Gorton". Locomotives cannot be made in Gorton now because there are no suitable factories—in fact, we have few factories of any kind. It would be tragic not only for my constituents, but for the country, if the people who sent me to Parliament were not able to make in future the contribution to the country's prosperity and liveliness that they have been able to make in the past.

I devote myself to these issues to a large degree because my heart breaks when I meet people at advice bureaux and when I meet people in the street and see what lives of desperation and desolation so many of them live. I regard it as my function, in so far as I have a function of any relevance, to come to the House to speak for the people whom I represent. I shall continue to do so until we have a Government who put them first.

5.24 pm
Sir Michael Neubert (Romford)

The right hon. Member for Manchester, Gorton (Mr. Kaufman) has painted a bleak picture of the constituency and the city that he represents. As the House knows, I am a London Member; I have lived and worked in or around London all my life. I cannot judge whether the right hon. Gentleman's picture of Manchester is accurate because I do not know that city as well as I know my own. I can say that it must be a dispiriting experience for the right hon. Gentleman as he prepares to retire from the House and to enjoy a leisurely—

Mr. Kaufman

I appreciate the hon. Gentleman's kind words. However, I have been chosen as candidate for the next election. The boundaries of my constituency are completely unchanged and I had a majority of 16,279 at the previous election. I have, therefore, a reasonable hope of being returned at the next election.

Sir Michael Neubert

Talk of retirement may have been a result of hope rather than actuality. I congratulate the right hon. Gentleman on his good fortune; he will be here for a few years more. None the less, it must be dispiriting, after his many years of service to the House and to his constituents, that things should be so bad in his constituency. He must ask himself how the situation has come about. It cannot be accepted that it has come about as a result of 16 years of Conservative Government and that no part has been played by local government in creating the culture that the right hon. Gentleman has so vividly described.

I also find it extremely difficult to judge by individual cases, such as the lady whom the right hon. Gentleman mentioned, who was frightened of applying for income support. He gave no explanation of why the lady should be frightened. I have never come across such a person. We have a substantial welfare state to provide for people in need, as this lady obviously was. What I have found among the older generation is a residue of the spirit of self-reliance and independence which sometimes persuades elderly people that they should not claim from the state even though they are entitled to do so. I am sure that the right hon. Gentleman has educated the lady about her entitlements and rights and that he has dissuaded her from believing that she should not claim money to which she is entitled. I believe that it is a misnomer to say that she is frightened and that it is a slur on our social security system.

I also speak as someone who finds it hard to believe in the right hon. Gentleman's remedy. The only remedy he offered was to embrace and to continue to support the Labour party which, if anything, promises to aggravate the situation he has described rather than to reverse it. As I shall explain, there are two important aspects of employment policy with which the Labour party would threaten the existing level of employment in Manchester. We agree on one thing—that the relative degree of poverty is closely associated with unemployment—so anything that increases unemployment in Manchester would be a disaster. I believe that that is the direction in which the Labour party is heading.

I comment on one or two aspects of employment policy as chairman—perhaps I should say former chairman—of the Conservative Back-Bench employment committee. When I saw the outrage with which the hon. and learned Member for Leicester, West (Mr. Janner) greeted the announcement of the Government's decision to change the structure of the Department of Employment and to merge it with the Department for Education—on Thursday, he called it a "blazing scandal"—I was wryly amused.

Mr. Greville Janner (Leicester, West)

I shall say so tonight as well.

Sir Michael Neubert

I am sure that, as the hon. and learned Gentleman says, he will make a similar case tonight.

The motion refers to the Government as having brought insecurity to millions of people. That motion should be resisted. It must be conceded that the career prospects of one or two people—such as the hon. and learned Member for Leicester, West and the hon. Member for Peckham (Ms Harman)—have received a setback, and that would not be the first career setback in the Harman household in recent weeks.

The merging of the Department of Employment with the Department for Education is a rational and logical development, as employment and education are natural allies. Some years ago, the historian Corelli Barnett made the point that this country had not placed as great an emphasis on vocational education as other countries in Europe, and that is certainly true. In bringing the functions of employment services and education together, we can provide the greatly needed bridge between vocational and academic qualifications.

Unfortunately, in the 1970s, some teachers—although not all—were the worst possible advisers for their pupils. They said, "Look at the world. There are millions of people out of work. What is the point in working for exams?" However, the opposite is the case. When there is a high level of unemployment, skills are very much in demand, and the higher the level of skill, the better the chance one has of employment. Those few teachers who advised their pupils in that way did them a grave disservice and betrayed them. Qualifications will be increasingly important in getting a job. The merger has underlined and reinforced that point.

I hope that the merger will result in greater public understanding of the connection between qualifications and getting a job, as that would be of great benefit to Britain. Changing technology requires continuous education, and I very much welcome the change of the structure of government. My right hon. Friend the Secretary of State for Education and Employment is the ideal person to bridge the two worlds. With her experience in both Departments, she will make a great success of her new post in the Government. I wish her the very best of luck.

The Opposition motion states that the Government's policies have "widened social division". There are divisions in this country, an important one being the division between those in work and those out of work. Like my right hon. Friend the Secretary of State, who opened the debate, I am astonished that the Labour party has chosen this wide theme for an Opposition Supply day. The debate enables us to point to the Government's success in reducing unemployment by 660,000 since 1992, while at the same time giving us a chance to point to the Opposition's policies, which would have the opposite effect. The Opposition's policies of adopting the social chapter and a national minimum wage would increase unemployment.

The Opposition amazingly have given the Government an opportunity to speak on the theme where they score well, as well as allowing us to concentrate on the area where the Opposition are weakest and most vulnerable—the threat to employment embodied in the social chapter and the national minimum wage. Like anyone in life, I believe in taking the opportunities that are offered, and I should like to speak on some aspects of the matter.

The Government—almost uniquely in Europe—have achieved success in reducing unemployment. I have mentioned the figures since 1992, and unemployment has fallen in nearly every month for almost three years now. That is a greatly encouraging trend. There are fewer people claiming unemployment benefit in this country than in any other major European country. Similarly, 69 per cent. of adults in this country have jobs, and that is more than in any other major European country.

There is a wide range of schemes to assist the long-term unemployed, and we can all agree that they are probably the most serious problem. When Social Affairs Commissioner Papandreou came to the House two or three years ago, one of the things that she said which impressed itself upon me was that, out of the then 17 million unemployed in Europe—an enormous number, which has now increased to 20 million—35 per cent. were thought never to have had a job. That is a serious social scourge that faces this country, but not this country alone.

The suggestion has not been made so far in the debate that the rising rate of unemployment in Europe is due to the recession that has affected Europe and the rest of the world. The Opposition have suggested that, in some way, the Conservative Government were uniquely responsible for the high levels of unemployment in Europe. We know that the reverse is true, and that this country is making greater headway in employment than other comparable countries. Our unemployment is now two percentage points below the average for Europe.

Anyone without a job can have greater confidence about his prospects under this Government than he could possibly have if a Labour Government were to be elected at the next general election. All of this success would be at risk following the election of a Labour Government. Progress has been made possible by our flexible labour market, which would no longer be in place if we were to opt back into the social chapter. The opt-out negotiated at Maastricht made the United Kingdom, in the words of Jacques Delors—someone whose advice the Labour party has been quick to take on previous occasions—a "paradise for inward investment". So it has proved.

During Welsh questions this afternoon, we heard a list of investments in Wales which have come about as a result of the prospects in this country. The recovery that we are making from this particular recession is an economic recovery, based not on an artificial boom in house prices but on investment and manufacturing exports. That provides a sound basis for continuing and solid prosperity.

There are now changing patterns of employment. We are able to reflect those work practices because we are not saddled with the obligations of the social chapter, which are proving to be such a burden in other countries with whom we compete for world markets. As we are not saddled with the social chapter, we can adapt our employment needs to the work available and to the markets in which we have a share.

Deregulation is one of the major themes of the Government, and easing the burdens on business is vital, but both the Labour and Liberal Democrat parties would opt back into the social chapter if they had the chance, as they both favour—with differing degrees of enthusiasm—a national minimum wage.

Before I develop the subject of the minimum wage, I shall deal with that of the long-term unemployed. Somebody in the debate should put on record those schemes that are available to them. That long list includes the training for work scheme, the jobfinders grant, the 1–2–1 scheme—which has been extended nationally from April 1995—and workwise, or worklink in Scotland, which offers 38,000 places. There is the long-established system of jobclubs and jobplan workshops, and the job interview guarantee programme, which was piloted in inner city areas, has been expanded to every area in the country.

The restart programme helps people who have been unemployed for more than two years to build motivation and self-confidence. Community action helps the longer-term unemployed—those out of work for 12 months or more—back into work through part-time work experience. The workstart pilot scheme provides subsidies to employers who recruit a person who has been unemployed for two years. Finally, employment on trial is available for people who wish to try out new lines of work. It means that a person who has been out of work for at least six months who takes a job but chooses to leave it between the first six and 12 weeks will not, when making a benefit claim, be disqualified for unemployment benefit, and will not have his income support affected.

That is a wide-ranging programme of special measures to help the long-term unemployed, and the Government should be congratulated on targeting that need and on their ability to see it through.

Mr. Ken Purchase (Wolverhampton, North-East)

One listens with interest to the list that the hon. Gentleman is reading, and it is worth having it on the record. Is it not also worth having on the record the fact that in many constituencies—including my own—the ratio of jobseekers to vacancies during the period in office of this Government has been of the order of 20 or 30 to one? In my constituency, there are still 15 males wanting work for every vacancy that is available to them. Is not a precondition of those schemes that there must be a job at the end of the training period? Is it not important that such frustrations are not felt and that people do not find that, having gone through the course, there are no vacancies for them to go to?

Sir Michael Neubert

Yes, those people who had trained and qualified to take on such a job would be acutely frustrated if there were no jobs to go to. Figures show that a high percentage achieve work as a result of the schemes, which are very practical. As the Secretary of State said, we are concerned not so much with numbers as with the outcome—people gaining employment—and we must remember that employment is rising and is at a high level.

There will be some pockets of unemployment. The hon. Member for Wolverhampton, North-East (Mr. Purchase) is beginning to sound like the right hon. Member for Gorton when describing another major British city. One must examine the reason for such pockets and how they can best be helped. The Government certainly do not lack the will or the resources to deal with problems that are European in character and worldwide in origin in many cases. At the end of the 20th century, finding work for everyone who wants it is a major problem, but the hon. Gentleman could do one thing to assist the employment position in his constituency—he could abandon his party's commitment to a national minimum wage. If things are bad now, without question such a wage would make them worse.

To me, it is common sense that, if a person is to be priced into work, there will be a level at which employing them is affordable. Above that level, the employer could not afford to provide the service or make the goods to create employment for that person. The national minimum wage would, therefore, set a limit on the number of people who could be employed.

Mr. MacShane

Will the hon. Gentleman give way?

Sir Michael Neubert

I had started to mine a profitable seam, but I will give way.

Mr. MacShane

I am grateful, and perhaps I will open up a new seam for the hon. Gentleman. In that case, why does every European country that has a national minimum wage—we are not talking about the United States—show a fall in unemployment equal to, or greater than, the fall in this country?

Sir Michael Neubert

I am not sure that that is the case. My argument is based first on common sense, but I will give the House some figures that might interest the hon. Gentleman, with his European perspective.

One thing that concerns me about the national minimum wage is the effect that it would have on the young. This is not a matter of argument between the parties. It would bear disproportionately on those starting out on their working lives. At present, youth unemployment is 16.5 per cent. in the United Kingdom, but it is 23 per cent. in France and 38 per cent. in Spain, which both have a national minimum wage.

I am not sure whether Opposition Members are arguing against the impact of such a wage on employment. If they are, I must quote their leader, who said in The Independent on 27 June 1991: Econometric models indicate a potential jobs impact. That is a roundabout way of saying that jobs would be lost as a result of the introduction of a national minimum wage.

Dr. John Reid (Motherwell, North)

That depends on the level at which it is set.

Sir Michael Neubert

The bone of contention between the parties is that the Labour party refuses to state at what level it would be. It amazes me that Labour is so reticent on that point; it was not in its manifesto in 1992. Then, the Labour party was prepared to put a figure to the minimum wage, which was to be set at £3.40 an hour. "Opportunity Britain", which was Labour's final policy review document before the last general election, said that the wage would start at 50 per cent. of median male earnings, increasing to two thirds the median male hourly rate.

What has changed since? That was only three years ago. The Labour party lost the election and has correctly concluded that, by stating a level for the minimum wage and allowing others to calculate the job losses as a consequence, it lost the election and it will not do the same again. If Labour Members think that they will get away with going into another general election and facing the British people with an unknown quantity of job losses, they are mistaken.

Let me spell out what it would mean if we adopted the wage at the levels suggested in 1992. A minimum wage set at half median male earnings, with only a half restoration of differentials, would cost 800,000 jobs, which more than offsets the progress that we have made in reducing unemployment since 1992—the 660,000 reduction that we have achieved in that time. With full restoration of differentials, 1.6 million people would lose their jobs. Incidentally, my sources are Employment Department economists. A minimum wage set at two thirds of the median male hourly rate, with half restoration of differentials, could cost 1.3 million jobs and, with full restoration, that figure could rise to more than 2 million. Those are huge numbers. People's lives and livelihoods are in question but the Labour party refuses to come clean about the level of job losses, which is unacceptable.

In case Labour Members argue that there would not be an attempt to impose differentials, I can cite both Eric Hammond on 17 June 1991 and Bill Jordan on 10 April of that year saying that their unions would oppose any squeeze of differentials. We know that that would be the case. If hon. Members think that 1991 is too far back and that things have changed since then, one has only to refer to Denis Healey again, who made it plain that a minimum wage would become a floor on which a new tower of differentials would be built.

Labour party politicians are not prepared to say what they would like the national minimum wage to be, but others are not so reticent. We have already heard the view of the husband of the hon. Member for Peckham that it should be between £4 and £5 per hour. I believe that I am right in saying that Bill Morris of the Transport and General Workers Union today advocated that the Labour party set it at £4.15 per hour. We are told that a minimum wage set at £4 an hour—not £4.15 or up to £5 as Mr. Dromey would wish—would cost 900,000 jobs with only half restoration of differentials and 1.7 million jobs with full restoration.

Those matters are very serious, both for those in, and those out of, work. It will go against their interests if the Labour party is prepared to adopt such a policy and risk so many hundreds of thousands of people being out of work. The Opposition double the offence by not being prepared to say openly what they intend to do.

Unfortunately, a previous engagement will prevent me from being here for the summing up. I apologise in advance, but I promise that I will make that absence good by reading Hansard tomorrow. When I do, I hope that I come across a statement by a Labour Member of what the national minimum wage will be. Until we have that figure and know precisely the Opposition's policy, that policy will be regarded as humbug and hypocrisy, because they will be claiming to reverse the trends of recent years, yet pursuing headlong a policy that will aggravate the problem rather than improve it.

Mr. Toby Jessel (Twickenham)

Will my hon. Friend have a bet with me that, when he looks at Hansard tomorrow, he will find that no Labour Member has given a figure? I bet that no one will do it.

Sir Michael Neubert

If my hon. Friend will forgive me, I will not engage in that gamble. Like him, I suspect that I shall be disappointed, but the British people should know what the national minimum wage would be if it were introduced by a Labour Government because British jobs will be at risk from such Labour policy.

5.48 pm
Mr. David Chidgey (Eastleigh)

The heart of this debate is the need for the Government to concentrate their energy on promoting employability, trying to tackle long-term unemployment and trying to stem the tide of poverty.

The evidence of poverty in Britain is stark. We can bandy arguments about all night long if we want to, quoting one report or statistic against another, but by the most widely accepted definition of poverty—those with less than half the per capita income—the numbers who fall within the poverty threshold have almost tripled since 1979. That is a fact.

We can argue about figures that confirm or do not confirm widening social division. We can argue about whether the poorest tenth of households have suffered a 17 per cent. reduction in real disposable income, excluding housing costs, since 1979; and we can argue about whether the richest tenth's real disposable income has risen by 62 per cent.; but the real point is that a large number of families are trapped in that lowest decile, and are increasingly dependent on benefits.

Most hon. Members would agree that the overall conclusion of the Government's statistics is that the poverty gap is widening. It is important to recognise that poverty and unemployment are inextricably linked. The proportion of unemployed individuals with less than half the average income has increased in the past 16 years from about half those who are unemployed in 1979 to nearly three quarters in 1991—the latest figures that I have.

The implications—for example, the cost of family credit, which has more than doubled in the past four years from some £425 million to £1 billion—are a cause for great concern to politicians. The fact that the social security budget is now nearly £90 billion—one third of all Government expenditure—must be a cause for concern when we think about how to tackle unemployment and reduce poverty.

The Secretary of State, who is unfortunately no longer here, was right to point out recently that those who depend on benefit—some 40 per cent. of British households—do not live comfortably, courtesy of the state. Policies aimed at withdrawing entitlement without first putting in place measures that will free those who are trapped in poverty by developing skills and directing investment where it will promote employability can only deepen poverty and social divisions.

The Secretary of State was right to be concerned about the spiralling cost of benefits. Increasing benefits alone cannot reduce poverty, but will increase benefit dependency, a scourge in our society, where people now find that living on benefit is an easier way to make their lives work than getting into employment and earning a wage on which they can live. Furthermore, for those on poverty wages, increasing benefits offers unscrupulous employers an opportunity to drive wages down even further.

I think that I am right to say that the Government recently claimed that the abolition of wages councils led to pay increases. I challenge that claim, because the Government's evidence was based on a small and selective sample.

A more detailed analysis shows that the wage rises that the Government quoted relate to the retail sector only, and that in the year following abolition, pay rates fell in real terms by over 7 per cent. in the clothing manufacturing industry, nearly 6 per cent. in restaurants, and over 5 per cent. in hotels. We should look more deeply into the matter. Evidence in the new earnings survey, which is based on a far larger sample, shows that wages fell in nearly all ex-wages council sectors.

There is clear evidence from advertisements in jobcentres that the abolition of the wages councils has caused a downward pressure on pay rates. A third of all vacancies in wages council sectors not covered in the surveys quoted in the statistics were on offer at rates below the previous relevant wages council rates. We must challenge the concept that abolishing the wages councils has led to a growth in jobs. Lower wages have not translated into a growth in jobs. The yearly net increase in full-time equivalent jobs has fallen from some 18,000 in the year before the abolition of the wages councils to only 8,000 in the following year.

The Government have ignored the warnings given at the time by both workers and employers' representatives alike that the abolition of wages councils would lead to instability in the labour market. There is clear evidence that the result has been to force down already low wages, driving more people into the poverty trap and allowing unscrupulous employers to gain advantage over employers who treat their workers reasonably.

We seem to be having an on-going national debate, both within and outside the House, on the benefits or otherwise of a statutory minimum wage. This is a good opportunity to try to clarify policy objectives and see how one can rein in the worst excesses of the labour market.

I hope that both sides of the House will enter into the spirit of a debate that attempts to find some truth rather than merely trot out dogma. There are as many expert opinions as studies on the benefits or otherwise of legislating for a floor under low wages. Ministers will be familiar with every dotted "i" and crossed "t" of at least 26 studies undertaken since 1981, which provide politicians with every opportunity to cherry-pick the conclusions that happen to suit their particular dogma.

A good example was the Treasury economic models, which were commissioned by the Government and which led them to claim that a national minimum wage would cause job losses of 2 million—provided that the national minimum wage chosen was two thirds of the median wage. As was said earlier in this debate, one can choose a national minimum wage rate and measure the amount of unemployment that it would cause. It is a question of how it is treated and of treating it sensibly.

Mr. Peter Ainsworth (Surrey, East)

The hon. Gentleman appears to be in danger of falling into the old Liberal trap of straddling the fence. Why can he not give unequivocal support to the words of the leader of his party, who, in a speech last July, said: A national minimum wage would increase rigidities in an economy that we should be making more flexible; generate wage-push inflation; and force many onto the dole"?

Mr. Chidgey

I thank the hon. Gentleman for that intervention. I trust that he does not see me as an old Liberal, although I may be a little more middle-aged than some of my colleagues. I shall deal with his point a little later in my speech. I expected it to be asked, and I look forward to giving him an answer that will, I hope, satisfy him.

Mrs. Ann Clwyd (Cynon Valley)

On a point of order, Mr. Deputy Speaker. I apologise to the hon. Member for Eastleigh (Mr. Chidgey) for interrupting his speech, but it has just come to my attention that, during Welsh questions this afternoon, the Secretary of State for Wales, referring to me when I was not present in the Chamber, made a remark that is completely untrue. I have checked it with Hansard, and he said: She contacted my office this morning to say which question she wanted to ask before she was ordered to withdraw it. What protection does an hon. Member have against such a false statement? This matter will concern my constituents and my Welsh colleagues who were boycotting Welsh questions this afternoon. I think that the Secretary of State should come to the Chamber and retract that misleading and untrue statement.

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

That is not really a point of order for the Chair. The hon. Lady will be aware that Ministers and hon. Members are responsible for their own speeches and remarks. Had the Secretary of State been informed of the point of order that the hon. Lady intended to raise, he would probably have been in a position to confirm, deny or withdraw his remarks. It is a matter for him to decide.

Mr. Chidgey

May I gather my thoughts after that point of order, and return to the issue of a national minimum wage?

I seem to recall that, in rejecting a call for a national minimum wage, the last—or should I say late?—Employment Secretary recently called for Britain to enhance its competitive edge by creating products which owe more to human knowledge than to human muscle, as the basis of our prosperity in an increasingly competitive world. I could not agree more, but, at the lower end of the scale, how are we to explain to junior hairdressers, assistant hospital porters, waitresses and all those on poverty wages how they can bring added value to their tasks as part of the export drive? In the interests of social justice, it is time for a pragmatic approach that targets those on poverty wages, who are supported, all too often, by state benefits.

We need a policy of flexible minimum hourly rates which will lift the poorest out of poverty without causing inflation and unemployment. However, we also need to recognise the wider issue of improving, or at least maintaining, living standards, which depends primarily on increasing the skill levels of the work force and providing the added value vital to improve our competitiveness.

A low pay commission such as the Liberal Democrats have proposed could be created to recommend a regionally varied minimum hourly rate across the whole economy, in consultation with representatives of employers, employees and the local authorities. The level of a minimum hourly rate is, of course, the key factor, and one that has, as we have seen* left Labour purists floundering. Our low pay commission would use as a yardstick the average level of the former wages council rates, uprated as appropriate. That should be the starting point from which, we know from experience, the pressure on employment and inflation can be suppressed.

I shall deal with the events of the past week or so at the Department of Employment. The Opposition are greatly concerned that the decision to scrap the Department provides little or no comfort to the unemployed, especially the long-term unemployed. At the current rate of decline, the number of long-term unemployed will, sadly, still not have fallen below a million by the year 2000. Rather than dealing with those failures of policies that are supposed to tackle long-term unemployment, the Department of Employment has been subsumed in a variety of other Departments. It is a cause for concern to hon. Members as well as to those who are suffering from long-term unemployment.

Nearly half the long-term unemployed on the training for work scheme remain unemployed some six months after leaving it. Nearly 60 per cent. of all adults leave with no qualification, and two thirds leave with no job. That is a measure of the problem. I know that Ministers have discussed the matter with me across the Floor before.

The Government have set a target of reducing that figure of two thirds to 50 per cent. by 1998. That compounds the failure to invest in high-quality training, to address under-skilling in industry, and, most importantly, to improve the employability of the unemployed.

I am afraid that the Government are setting meagre targets for getting the low-skilled unemployed back into work. They seem to be more interested in short-term cost-cutting than reducing long-term unemployment. While they plan to cut the training budget by some £280 million over the next three years, and slash training for workplaces by 55,000—some 20 per cent. of all places—unemployment among the unqualified shows no signs of falling.

While the Government plan to cut the training budget by £280 million, unemployment costs more than £20 billion a year. It is not surprising that, in the midst of all that, our training and enterprise councils are becoming increasingly hamstrung in their efforts to achieve their objectives. Let me remind the House what those objectives are.

The central mission of the TECs is to act as employer-led bodies for economic regeneration, and that cannot be fulfilled without adequate funding to support local initiatives. To demand that TECs fund initiatives by making surpluses from the training for work programmes is fundamentally flawed. It forces down already inadequate and poor-quality training, and is forcing out business representatives, who are becoming increasingly disillusioned by stagnant policies that stifle their imagination. Instead of slashing training budgets, the moneys should be redirected into improving training quality and targeting long-term unemployment.

I have said before that the workstart pilots promoted and introduced by the Government have shown potential for providing employers with incentives to take on the long-term unemployed. Instead of linking the schemes to investment and training to provide skills for the unqualified, we have another round of pilot schemes, with the main aim, it would appear, of seeing how much the subsidy for those schemes can be reduced.

There is clear evidence that a benefit transfer scheme that provides both employers and the long-term unemployed with the incentive to invest in skills training would have a major impact on the long-term unemployed. We have long argued the case for benefit transfer schemes to transfer the benefits of the unemployed to employers on a sliding scale for a prescribed period while they are trained to be full-time productive employees who fully justify their wages.

The workstart pilots have underlined the potential for success for a national benefit transfer programme. Sadly, we have been offered only yet another round of pilots, providing some 6,000 places. All the while, unemployment costs the country more than £20 billion a year.

There is an overwhelming case for social justice, which can be achieved by putting a floor under those on poverty wages. We must improve the quality of training if we are going to increase employability, especially for the long-term unemployed. We must start to reduce the skills gap between the United Kingdom and our counterparts. We must be prepared to invest in initiatives to create economic regeneration by investing in our public infrastructure, our schools, our hospitals and our public transport systems.

We will support the motion tonight, not because we endorse or share Labour's ideological basis for a minimum wage, which seems to be the redistribution of income, but because we condemn the Government's complete lack of concern about unemployment.

6.7 pm

Mr. Alan Howarth (Stratford-on-Avon)

I was glad to listen to that thoughtful speech by the hon. Member for Eastleigh (Mr. Chidgey). It is a pleasure to follow him.

It poses no difficulty for me to agree to the proposition that social division leads to economic underperformance. One has only to recall the last winter of the last Labour Government in 1978–79, which is known in the folklore—and always will be—as the winter of discontent. It saw the final flowering of the policies of the now Lord Healey as Chancellor of the Exchequer—economic policies that were avowedly pursued in a class interest. As he mounted his assault on success, he even brought taxes on savings to a top rate of 93 per cent. Those efforts to govern in a class interest were hardly welcomed by the trade unions at the time. They were at war with the Government and with each other. Our society was in a war of all against all.

Life is very different and very much better in Britain in 1995. Not that we are without our social divisions—I shall come to those—but the divisions in our society are no longer remotely like they once were. There were divisions between the trade unions and the rest. The hierarchs of the CBI and TUC, to coin a phrase, are now at ease with each other and Conservative Members are looking forward to attending the TUC summer party tomorrow evening. It is a happier atmosphere.

The private and public sectors are not divided in the same way. Many public services are now delivered by privatised utilities, by work forces that may be directly employed in the public sector, by private enterprise firms or by people working in the voluntary sector under contract. We have seen a blurring of the old divisions.

However, perhaps the most conspicuous difference is that inflation is now under 3 per cent. and has been for the past 20 months—the best inflation performance for 30 years. It is in great contrast, if I remember correctly, with the average rate of inflation of 15 per cent. under the previous Labour Government. Inflation is the most deeply divisive economic phenomenon.

Mr. MacShane

Will the hon. Gentleman remind us what level the inflation rate reached under Mrs. Thatcher?

Mr. Howarth

We saw inflation rise again. The hon. Gentleman is quite right if the implication of his intervention is that it is at all times necessary for the Government to work to keep inflation low because inflation is such a divisive force. The inflation that we experienced in the 1970s set labour against capital, worker against worker, saver against earner and young against old. It was divisive and deeply damaging economically.

Sir Michael Neubert

This talk of years gone by brings back a memory. Although inflation went up under a Conservative Government, it at no time went above the average in the Labour years, when, if I remember rightly, it rose to 26.9 per cent. at its worst.

Mr. Howarth

My hon. Friend is absolutely right.

My right hon. Friend the Prime Minister has held out a vision to the country of a classless society and a politics of tolerance. We may not yet have entered that promised land but I believe that we have moved a long way. Our society is far less hierarchical and we suffer far less from intolerance and cruel taboos. So long as my party wishes to continue to pursue that destination, I shall travel happily with it.

The Labour party, far from wishing to squeeze the rich until the pips squeak, is apparently concerned to stroke those who are contented so that the pips positively squeak with pleasure. What it has to say to those who are less contented is less clear. That is an important point because there are many who, for good reasons, are less contented.

My right hon. Friend the Secretary of State for Social Security has spoken thoughtfully about the dispersion of earnings, and Mr. Will Hutton recently provided a broad description of our society as a 30:30:40 society.

The bottom 30 per cent. of people are marginalised, limping along in and out of work and heavily dependent on benefits. Among them are far too heavily concentrated members of the ethnic minorities, women—especially single mothers—and disabled people who still suffer excessively from discrimination. I welcome my right hon. Friends' introducing legislation in an attempt to reduce that utterly unjustified discrimination.

Another 30 per cent. of people are the insecure. They may be affluent but they are at the same time apprehensive about their future. The other 40 per cent.—the upper reaches—are secure and confident operators in what is increasingly a global labour market. It is they who inherit the earth. Incidentally, I am not entirely sure that it would be appropriate for them to do so without paying some inheritance tax, but that is perhaps a debate for another occasion.

Too many of our fellow citizens live on estates that are effectively ghettos. The right hon. Member for Manchester, Gorton (Mr. Kaufman) spoke about the experience of some of his constituents, and all of us take very seriously what he had to say about the people who are trapped in joblessness and the housing benefit poverty trap, people who are living in ugly surroundings without amenities and people who are living a life of hopelessness, as the right hon. Gentleman described them.

Seventy-five per cent. of people in local authority or housing association accommodation are among the poorest 20 per cent. of our society. We have had planning policies whereby we have designed and built estates instead of distributing the less advantaged, the less confident and the less capable more extensively. We thus have offensive juxtapositions of wealth and poverty, which may have something to do with the events on the Marsh Farm estate in Luton last week. Certainly there is a brittleness and volatility on those estates, and it behoves us to think carefully to find effective practical policies to improve conditions there.

People living in poverty on such estates experience a far higher incidence of crime, including mugging. Let us be very clear that mugging is a phenomenon associated with poverty and joblessness. If it has also to do with race it is because far too high a proportion of members of our ethnic minorities are poor and without work. I am sure that the Commissioner of Police of the Metropolis is well aware of that.

Such estates are especially prone to difficulties with drugs. We need at some point, and perhaps before long, to nerve ourselves to think seriously and constructively about whether it is right to criminalise the use of certain drugs at least and thereby institutionalise alienation from the mainstream of our society.

Too many of our young people are not only without jobs but are disaffected from the political process altogether. One of the most alarming statistics from the most recent general election—it is not a proven statistic but is suggested on a reasonable authority—was that only some 40 per cent. of 18 to 24-year-olds voted. If that was so, it expressed a disaffection from the mainstream of our national life which bodes ill for us in many respects, not least in terms of our parliamentary democracy.

The family is fractured and, while family patterns have changed throughout our social history, we should be especially concerned about the number of children living in poverty and the increasing numbers of children taken into care and excluded from school.

We are not as yet one nation. Whether hon. Members are one nation Conservatives or one nation socialists—we need not detain ourselves too long today with the definition of those respective political species, or whatever may be the distinction between them—as we observe the social pathology that I have sketched, we can all agree that what is needed is a politics of healing; a politics to allay the insecurities and aggression in our society; a politics to reduce and bring to an end social exclusion; and a politics that gives priority to those who are least fortunate, the chronically unemployed, the homeless and the beggars on our streets who are a shame and a reproach to us.

Mr. David Nicholson

Does my hon. Friend agree that the way in which most of the national press treated the political issues raised by the recent leadership contest in the Conservative party shows how distant most of the scribblers are from the concerns that he is raising? Is not that a problem in itself?

Mr. Howarth

I agree. The debate was trivialised, and it is regrettable that it should have been so.

The British public are not out and out egalitarians but they have a strongly felt sense of fairness. They believe that it is the task of Government to hold our society together. They reject the politics of class conflict and the politics of casualisation. I believe that they are deeply uneasy about poverty. Average incomes have indeed risen substantially, and that is a great credit to my right hon. Friends during our long period in Government, but the people at the lower end of the income scale—we can argue whether the figure is 10 per cent. 20 per cent or even 30 per cent.—have not shared in the overall increase in prosperity.

We should consider carefully the condition of 16 and 17-year-olds not eligible for benefit and think carefully about whether it is right to pay a lower rate of income support and jobseeker's allowance to people under 25. I do not believe that my right hon. Friends have been justified in reducing benefit in the transition from invalidity benefit to incapacity benefit, and I am concerned about the reductions in benefit for the unemployed which will be introduced with the jobseeker's allowance.

We also need to consider carefully the condition of people aged over 55. There appears to be a watershed at that age. Beyond the age of 55, all too many of our fellow countrymen find themselves excluded, without opportunities in a range of fields.

My right hon. Friends should take very seriously the outrage that is felt at the avaricious insensitivity of company directors who enjoy the benefit of share options, whose remuneration committees award one another immense pay increases, even as large numbers of their staff are being sacked or placed on zero-hours contracts. The great majority of our fellow countrymen find that deeply offensive.

My right hon. Friend the Prime Minister has indeed condemned it, but I hope that all my right hon. Friends will condemn that style of management and that management ethic. I strongly hope that the Greenbury committee will produce a tough report on all of that, because it should realise that the reputation of private enterprise is at stake.

The British people may grumble about their council tax, but they raise a quiet cheer for the North Yorkshire dinner ladies.

My hon. Friend the Member for Rutland and Melton (Mr. Duncan) suggested, perhaps in a sedentary intervention earlier, that widening inequality did not matter. With great respect to him—I hope that he has an opportunity to contribute to the debate later, when he will no doubt make his case—I believe that it does matter.

Excessive inequality affronts everyone's sense of justice, and it is damaging precisely because it does demoralise. People who feel themselves to be the victims of unfairness are less willing, and feel less able, to make their contribution to society. The evil of that is that it transmits itself from generation to generation. It directly affects our economic efficiency and performance.

Mr. Duncan

Will my hon. Friend be any less able and any less willing to serve as a Member of Parliament because the First Secretary of State is so wealthy?

Mr. Howarth

As a Member of Parliament, I am paid £33,000 a year. I am an extremely fortunate person and a very well remunerated member of our society. There is no comparison between my position and the position of those who live in poverty, and we should worry about that.

My hon. Friend is under an illusion if he supposes that widening economic inequality is a price that must be paid for economic progress. We can find plenty of academic evidence that will support me in what I have said. If one considers the performance of the eight south-east Asian economies that grew most rapidly from the 1960s, one finds that rapid growth was accompanied by a narrowing of income differentials.

During the summer, my right hon. and hon. Friends will give much thought to the question whether there should be tax cuts this autumn. If the thought is—I believe that it is only part of what may be in their minds—that cutting taxes, whether on income or capital, would improve incentives, we would deceive ourselves.

It would not be rational, would it, for people to work harder because they found that they were able to take home more income for the same amount of work? I suspect that, where incentives are concerned, the reverse applies—that modest tax increases may provide an incentive, as people would work a little harder and a little longer to make up the shortfall in their income. At all events, I do not believe that we can associate tax cuts with improved economic performance, or that there would be any objective case in terms of the condition of the economy more generally.

Mr. Charles Hendry (High Peak)

Can my hon. Friend find a single example—anywhere, ever—of people working harder as a result of an increase in tax rates?

Mr. Howarth

If one tries to assess the way in which people might respond rationally, they are at least as likely to work harder to make up their income if they experience a small tax increase as they are if they experience a modest tax reduction. I would stick to that contention, but I will say—and I do not think that my hon. Friend would reasonably disagree with this at least—that, if we reduce our tax revenues, we shall thereby have less resources available to act to ease the poverty trap and so enable more of our people to do what they wish to do, which is to lift themselves out of poverty, become less dependent on benefits and contribute more to the economy. We shall have less resources for education and we shall have less resources for the health of the nation. All of those are necessary investments in the interests of improving our economic efficiency.

Mr. Nirj Joseph Deva (Brentford and Isleworth)

Is my hon. Friend aware of something called the Laffer curve—the S curve—whereby it has been demonstrated repeatedly that, by cutting taxes, the total tax revenue collected by the state Government or national Government has increased, thereby making available more resources for those people who are in need?

Mr. Howarth

I do not know how closely my hon. Friend has studied the history of the Reagan Administration, but he may find that that turned out to be a cruel disappointment. The Laffer curve did not quite curve in the direction that the Administration believed that it would.

Relative poverty has absolute effects. Our task is at least to check the movement towards widening inequality, and preferably to reverse it. We need to underpin incomes. Above all, we need policies—macro-economic as well as micro-economic policies—that are well designed to generate jobs because, if there is a way to solve the crisis of the welfare state, it is above all to get more people into properly paid, sustainable work. I do not underestimate the difficulty of achieving that, but that must be our cardinal object, and it is very much the strategy that my right hon. Friends seek to implement.

My right hon. Friends pin a good deal of faith on in-work benefits. Family credit is now being paid to about 600,000 low-paid workers. My right hon. Friend the Secretary of State has just announced that he is introducing an earnings top-up benefit. He is wise to begin by introducing that on a pilot basis. If he proves to be right that that new in-work benefit for people without children will enable them to, as he puts it, climb the first rungs of the ladder of employment, we shall all be delighted. I appreciate the arguments for what he sets out to do in terms of flexibility and responsiveness of the labour market and in terms of containing the growth of social security expenditure.

However, if we are to have regionally differentiated benefit—the Secretary of State suggested that in his pilot scheme there should be experiments with that—we must consider what the effects may be on the cohesion of our society. It may be that, especially if such benefits were to be administered by local authorities, it would be a means by which we would enable local communities to feel more responsible for their own members, and we could thereby enhance local cohesion. Whether regionally differentiated benefits would enhance the cohesion of our society as a whole is a different question. We must also consider whether unequal benefits are compatible with equal citizenship.

My broader anxieties about in-work benefits are that they tend to operate as a subsidy to bad employers to cut wages and that, if they encourage low pay, they tend to degrade, not only the lives of those who are low-paid, but their skills, such that our economic performance deteriorates compared with what it might be.

I am agnostic about in-work benefits. It is sensible to have a pilot scheme for a new benefit. We should review all the evidence as we accumulate it, not only for the new top-up earnings benefit but for family credit. However, when we review that, I hope that my right hon. and hon. Friends will be willing also to review such evidence as may be available on the operation of a minimum wage.

Although hon. Members on both sides of the House have spoken about a minimum wage with strong feelings and honest conviction, there is a shortage of evidence. It is far too important an issue to be appropriate for sloganising, and I hope that, in the forthcoming months and years, we shall be willing to consider carefully both in-work benefits and a minimum wage. I sometimes tease my right hon. Friends by suggesting that the minimum wage is, in a sense, a privatisation of welfare, so they ought not absolutely to set their face against it.

I suspect that in time we will find ourselves with a system of in-work benefits capped by the Treasury, because it will not tolerate the enormous growth in spending on such benefits that will otherwise occur, but complemented by a minimum wage negotiated differentially, region by region and sector by sector. If that has overtones of the 1970s, if it sounds remarkably similar to the corporate state and incomes policy, it may be that originality in policy-making is rarer than modernisers in the Labour party or radicals in the Conservative party may suppose.

I commend the range of initiatives that my right hon. Friends in the Government have developed, including the national insurance holiday for employers who take on long-term unemployed people, the extension of housing benefit, the faster processing of family credit and the back-to-work bonus. Those are all commendable initiatives which I believe will carry advantage with them. Against that background, I remain puzzled and deeply worried about the decision that the Government have taken to reduce the period of eligibility for contributory benefit of unemployed people from 12 months to six. Not only the impoverishing consequences but the disincentive effects of that are plain to see. I find that a strangely perverse policy. However, we have had those debates and the Jobseekers Bill has completed its parliamentary passage.

The passage of the Disability Discrimination Bill remains to be completed so let me enter another plea to my right hon. Friends to accept after all that there should be a national disability council with real powers to provide advice right across the country and powers, on those rare occasions when it may be necessary to use them, to enforce the rights of disabled people under the legislation. That would be an extremely worthwhile way, not only to mitigate the social division caused by discrimination, but to improve economic efficiency. We want disabled people to make the fullest contribution that they can to our economy.

I should like to conclude by saying a word or two about education because it is so fundamental to personal opportunity, to the upgrading of our economic competitiveness, to the improvement of the civility of our society and to enabling us to break free of the costs of social failure. My right hon. Friend the Secretary of State for Education and Employment has just introduced an initiative in education for under-fives. She is right to give priority to early learning and to welcome the prospect of innovative public-private partnerships.

We have a choice in the provision of public services and social goods. We can either insist on present patterns of funding, in which case it is inevitable that services will continue to be underfunded, or we can seek to enlist new resources of private finance. We have gone a long way towards doing that in higher education and it is time that we overcame the taboo surrounding the admission of private finance much more extensively into our education system. So I welcome my right hon. Friend's initiative. I have my anxieties about her choice of vouchers as the means to implement the policy. I hope that she will be able to explain in due course how vouchers will not prove an unnecessarily expensive and regressive means of acting on the matter. I hope that she will not close her mind on the possibility of means-testing the voucher or taxing its value in an attempt to offset those effects.

If we are to enlist more private finance within our education system, we must equally move towards restoring the concept of an overarching education service. It is regrettable that the term "opting out" ever became current in our education parlance. The last thing that we needed was to dig new chasms between different parts of our education system. We need bridges and integration. If I was able to do one useful thing when I had the privilege to be an education Minister, it was that I not only continued the expansion of student numbers in higher education but made it possible for the polytechnics to have university status. We need to find better ways to integrate and make more cohesive our education system.

So if, in developing a policy for grant-maintained schools, the hon. Member for Sheffield, Brightside (Mr. Blunkett) seeks to ensure that grant-maintained schools are within the fold of the overall education service, that they keep their independence within a publicly-funded education system, that they retain the right to decide for themselves how best to use their funds—a fair share of overall funds—and that nothing is done to deprive them of the vitality that comes from that extra degree of self-government, I wish him well.

It would be extremely interesting to know what the Labour party proposes to do about private schools—what are known most inappropriately as the public schools. It is a great historical misfortune that in the first half of the last century the state failed to provide a public education system. In consequence of that, the newly prosperous middle classes organised themselves. They opted out of whatever the state system might have been. That has been a traumatically divisive experience for us. It continues to undermine the quality of educational experience for 93 per cent. of our nation's children.

In the 1960s, the Labour Government led by Mr. Wilson took a look at the matter. They set up a commission on public schools, but they then shied away from any action. I wonder whether, where Harold Wilson decided not to act, the right hon. Member for Sedgefield (Mr. Blair) will have the nerve to do anything.

Mr. Peter Ainsworth

Does my hon. Friend understand that what he has just said about the quality of education in the state sector is a profound insult to the many thousands of teachers who work in that sector and to the many thousands of people who have been through that sector and succeeded in their lives very well?

Mr. Howarth

I do not agree with my hon. Friend on that. I am the last person who would wish to insult teachers in the state sector. I said that the existence of the independent sector tended to undermine the quality of the education in the maintained sector. I believe that it does so because it effectively means that the parents of 7 per cent. of our children—parents who are particularly successful themselves and ambitious for their children—do not press for higher standards within that system. I willingly pay tribute to the remarkable quality of the work done by the overwhelming majority of teachers, but their task is harder than it would otherwise have been. Of course, if the Labour party were to act on the issue, it would be imperative that it should do nothing to undermine the excellence of the schools in the independent sector. The point is to try to make the public schools genuine public assets.

So I believe that our schools should as far as possible be part of a common system. That is important in the politics of healing to which I referred. It would help us to improve our economy. It would help us to improve the quality of our lives.

6.37 pm
Mr. Greville Janner (Leicester, West)

I hope that it will not ruin the future of the hon. Member for Stratford-on-Avon (Mr. Howarth) if I say what an excellent, important and interesting speech he made and that I agreed with the vast majority of it. The last time I said that of a Conservative Member's speech he was making his maiden speech. By tradition, one congratulates a person who makes a maiden speech. It is not a tradition, as the House may know, to congratulate hon. Members on the other side of the House on their speeches.

Because he stationed himself so well for television on the back row where the absence of a doughnut would not be visible, the hon. Gentleman missed seeing the faces of his colleagues while he was speaking. Ministers screwed up their faces in disgust.

Mrs. Teresa Gorman (Billericay)

I should think so.

Mr. Janner

The hon. Member for Billericay (Mrs. Gorman) concurs. The hon. Member for Rutland and Melton (Mr. Duncan), who departed when he knew that I was getting to my feet, and the whole array of Tory backwoodsmen scrunched up their faces and said, "How can this renegade possibly be sitting on our side of the House?" I, for one, will welcome the hon. Gentleman when he crosses the Floor of the House: the sooner he does so the better.

The hon. Gentleman also put an end to a series of Conservative speeches that reminded me of what the late Ernest Bevin said when I asked him what he thought of a debate that he had just heard. He said, "It was awful: clitch after clitch after clitch." I have never heard such a series of "clitches" as we endured earlier from other Conservative Members. When the hon. Member for Stratford-on-Avon began to speak, however, the House suddenly woke up. Here was a man who talked of outrage at executive pay, especially in industries and jobs where others were paid less and where services were declining. That is just what the Select Committee on Employment has said.

At this point, let me pay tribute to a Conservative Member whom I call my hon. Friend, because that is what he is, the hon. Member for Norfolk, North (Sir R. Howell), whose concern about unemployment—expressed from the right of his party—equals that expressed from the left by the hon. Member for Stratford-on-Avon. If the two of them were running the Conservative party, it might conceivably have a chance of winning the next general election, but they are both members of desperate minorities.

The hon. Member for Stratford-on-Avon talked of the problem of young people without jobs, alienated from the political process. He is entirely right. If he visited any of our constituencies and mixed with young people, that is exactly what he would find: people who have given up.

May I have the attention of the hon. Member for Stratford-on-Avon for a moment? He is not hearing the praise that I am lavishing on him, and I want him to hear it, because I suspect that it will be rare in his political life—certainly in his current seat. He is also right about people opting out of the political process and not voting.

My area contains what we call "blue belts"—areas containing nice housing, where people used to vote Tory but do not any longer, often because of the negative equity on their homes. In those areas there will be a general election turnout of between 75 per cent. and 80 per cent. In areas where people are really in trouble—the great estates in my constituency to which the hon. Gentleman referred, where unemployment is running at over 40 per cent.—if the turnout in a general election is between 50 per cent. and 55 per cent. we are doing well. That part of society is alienated.

The hon. Gentleman spoke of young people, and of people over 55. Tomorrow is my 67th birthday: that is 12 years above the limit set by the hon. Gentleman. Under the present Government, anyone of that age is written off. No one over 50 can get a job. Incidentally, I am losing my job; that is why the Government are getting rid of the Department of Employment. I have heard of using a sledgehammer to crack a nut, but it is unusual to use a nut to crack a sledgehammer. We can joke about what we do, but for ordinary people—young or old—there are no jobs.

The hon. Member for Stratford-on-Avon spoke of the minimum wage. Yes, there are problems connected with it, but it is essentially right. It must be examined carefully. The current problem afflicts not only the less well-off or bad employers: good employers are being undercut by cowboys and those who operate slave labour.

The hon. Gentleman also spoke of those who do not share in the country's prosperity. Again, he is right, but he did not mention the aged and the ill. For those who are both aged and ill, and who have no money, life is very bad. Those of us who look after our constituents know how awful it is.

The hon. Gentleman mentioned the offensive juxtaposition of poverty and wealth. Yet again he is right, but again Conservative Members scrunched up their faces, and the lady in orange—the hon. Member for Billericay—pushed up her spectacles in dismay at such an awful suggestion.

My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) talked of hardship and homelessness—and his views were echoed by the hon. Member for Stratford-on-Avon. The hon. Gentleman was right. What is the biggest category of complaint that hon. Members on both sides of the House hear in their surgeries? [HON. MEMBERS: "TOO long speeches."] Complaints about long speeches come only from Opposition Members, who had to endure the sort of speeches that Conservative Members make until we heard from the hon. Member for Stratford-on-Avon. No, most complaints are made about homes.

The gap is very great and, as the hon. Gentleman said earlier—we have been wallowing in history today—it used to be greater. Earlier today, I had the pleasure of welcoming to the House a man called Alan Hull. It will shock the tabloids to know that I spent a year living with a warder from Broadmoor. That may explain to a great extent why I am prepared to do what I am doing. We were evacuated to the country; there was an outside loo—no inside sanitation and no electricity. We carried the accumulator along to the hardware shop to get the radio to work. Things are better for most people today, but the gap is still very great.

Suddenly, as part of the great change of vision, the new Prime Minister—who just happens to be the old Prime Minister—tries to introduce a new look. In that process, the Government have abolished the Department of Employment. I remember Lord Denning saying, "We judges always ask ourselves questions, because it is the only way in which we can obtain intelligent answers." So I asked myself the question: why have the Government done that?

I told myself, "Well, it gives power to the Education Secretary." I understand that: she is extremely charming, and needed new power. She did not stand for anything, and she will now take over a good deal of work from the Department of Employment, but I do not suppose that that is why the Government acted as they did. They certainly did not act to please the Department of Trade and Industry: the gentleman who headed that has now moved to a new field, with no Question Time and no Select Committee of his own, although he is to be called deputy Prime Minister. Presumably he has got what he wanted.

Nor did the Government take such action so that the Secretary of State for Social Security could be saved from further appearances before the Select Committee on Employment—although, no doubt, that was a side benefit—or so that the Secretary of State for the Environment could increase his popularity, which is well known in the country, by a acquiring the Health and Safety Executive.

Why, then, did the Government act as they did? If the House and the nation do not know the answer, I shall tell them. It was because the Department of Employment— sometimes called the department of unemployment—was the only Government Department whose sole job was to look after people at work and people without work; the sole Department of State whose only job was to deal with employment. The Department had its own Employment questions and its own Employment Secretary, and—yes—its own Employment Select Committee.

Removing the Department of Employment means that Ministers go. The Secretary of State for Employment went off to the Ministry of Defence, which was a good place for him to go; but he was not replaced. It also means losing Employment questions, and the accompanying focus on employment. It means losing the Select Committee on Employment—and oh, yes, the Government wanted to get rid of that. It means losing the focus on employment at a time when unemployment is still—even by the Government's own figures—almost 2.5 million. Nearly 2.5 million people are on the unemployment register because they qualify for unemployment benefit.

But that is not the number of people who want jobs and cannot get them. We know from our constituencies how many people are desperate for work and are not on unemployment benefit, but they are not included in the figures. We know that the Government have moved no fewer than nine categories from the employment figures. People receiving sickness or invalidity benefit are out; so are students in full-time education, partners of those registered unemployed, single parents and those disqualified from benefit on grounds of unavailability or the fact that they are not actively seeking work.

Mr. Alan Howarth

Does the hon. and learned Gentleman agree that one of the possible advantages of bringing together the Department of Employment and the Department for Education, which I applaud, is that we can now reverse the policies that we have had to put up with, whereby unemployed people who sought to improve their skills through study were liable to be disqualified from benefit? That was surely a perverse incentive.

Mr. Janner

Perversity sometimes produces some good and if the bringing together of those two Departments produces that result, at least one benefit will have arisen out of what is otherwise a disgraceful change. I hope that the hon. Gentleman is right.

Expenditure on training has gone down. When we ask why, the Government say, "The number of unemployed has gone down, so of course we have lowered the budget." The reality, however, is that we have the worst trained work force in Europe.

People seeking part-time work no longer appear on the register and people who are in part-time work, even for an hour a week, are not registered as unemployed. Those aged 16 and 17 are off the register. Those aged over 55 who receive an occupational pension and ex-miners retiring under the redundant mineworkers pensions scheme are not on the register, so it is obvious why the numbers have declined.

Let me give the House one interesting example. In 1979, when the Government took office, 1.33 million people were on the unemployment register. That is still almost half the current figure, but that figure was worked out under the system that applied then.

Mr. Purchase

Fiddled is the word that my hon. and learned Friend is looking for.

Mr. Janner

The figures were worked out much more correctly than they are now because they did not have all the exclusions that we have now. If we apply all the exclusions and compare like with like, we find that the figure for 1979 would have been 1.07 million. That is not good. It still represents unemployment of 4 per cent., which is too high, but the correct comparison is that 1.07 million were on the unemployment register when this Government took office and that nearly 2.5 million are on it now, about which they boast, shake their heads from side to side, smile and are proud.

As the hon. Member for Norfolk, North knows, unemployment is an absolutely wicked waste of humanity, and of people's power and ability to serve. It is also a great waste of public money. It is awful having to pay people to be unemployed when one would be better off paying them to be employed and they would be much happier.

So we have an illusion. The Government have created an illusion that, with the Department of Employment gone, unemployment has also vanished and diminished.

I am looking forward to life one day as a professional conjuror, because magic is an art that I love deeply, recognise and respect. I do not, however, much like it in politics.

The art of misdirection means, Mr. Deputy Speaker, that you ask people to look in one direction and then do something in the other—you make things "disappear". As my grandchildren will show you, Mr. Deputy Speaker, you take an ordinary ball and vanish it. It is gone, but of course it is always there. You can make unemployment vanish by removing the Department of Employment, the Select Committee on Employment and Employment questions, but unemployment is still there, just as the ball is still there.

The Government cannot make unemployment vanish by removing the Department of Employment, by removing the Select Committee on Employment and its chairman and by making us all unemployed, while, at the same time, making many people unemployed in the Department of Employment, whom they sacked without warning, without care and without interest to what would happen to them. They just simply told them, "You are out" and that is what happened.

So the whole system is an illusion. It is the same illusion that I started with: the illusion of getting a new Government with the same Prime Minister. Any magician would be proud of that, but we know what has happened.

I have a friend called Paul Daniels, who is wonderful. I remember watching him a little while ago vanishing a huge motor cycle on stage: it was gone—brilliant!—but it was there. Everyone knew that the same motor cycle was there and that, in the next show, it would be on stage again.

That is what this lot are doing. They are a bunch of political conjurors. They are trying to create illusions. They may convince themselves, but the public will recognise them for what they are. The illusion is that, by destroying the Department of unemployment, they will remove people's concern about the number of people who are unemployed, and that by fiddling the unemployment figures not many people will be unemployed, when everyone in my constituency who happens to be lucky enough to be employed either has unemployed people in his or her family or knows people who are unemployed. The illusion is that, by removing the Select Committee on Employment and its direct questioning of the Government, people will forget about the issues that it has considered over so many years.

I pay tribute to the way in which all my colleagues on the Committee, of both parties, have worked together. We could not always reach agreement, although we usually did. I do not pay tribute to the Government, though, who, every time we produced a report, including the report on women, vanished it. Up it went into a pigeonhole. Occasionally we received a reply, but they did not even care to read the thing properly.

For the people in trouble in my constituency, and for the people who do not have jobs and cannot get them, this is a rough world. Just a few weeks ago, I advertised for a research assistant. I had more than 100 applications and had to turn down some marvellous young people who have been unemployed ever since they left university. Wonderful people cannot get jobs. It is not true that people are workshy and do not want to work; they want to work but they cannot get it. There are not enough jobs, which is a disgrace to our country.

Those people want to contribute to society and they cannot do so. They are the people to whom the hon. Member for Stratford-on-Avon referred—the alienated, the homeless, the aged and the young. We have a disgraceful and awful society. That is why this motion is a fair and good one and why this Government will lose the next election, whomever they may keep as their Prime Minister.

6.56 pm
Mr. Peter Ainsworth (Surrey, East)

It is a great honour, if a slightly daunting one, to follow that brilliant performance by the hon. and learned Member for Leicester, West (Mr. Janner). May I take this opportunity of wishing him a happy birthday tomorrow, and swift and many years' retirement as a conjuror? I should also like to say how sorry many of us Conservative Members—and I know Labour Members—are that the Select Committee that he has chaired for so long and with such élan will cease to exist, but I shall come on to the good reasons why that has to be so.

Like my right hon. Friend the Secretary of State for Social Security, I closely considered the motion before the House and it is interesting in what it tells us about the Opposition. It is a fairly characteristic piece of work. Having established a number of false premises, it goes on, through various permutations, to conclude with a recommendation that would undermine the very cause that the Opposition appear eager to promote.

The first false premise is this. The motion states: Government policies …have widened social division, led to damaging inequality and brought insecurity to millions". That is easy to say and, if it is repeated often enough, I dare say that it becomes easy for some people to believe. The fact that it is untrue is a minor detail and an irrelevance to be shuffled away and buried, probably under a mountain of soundbites, as the truth is less congenial to the Labour party, which has a vested interest in bad news.

Many statistics have been bandied around in the debate. We all know that statistics are not the sum of human happiness, but we also know that, across the board, real incomes have increased substantially since 1979, that real take-home pay is up, that both were stagnant under Labour, that pensions are substantially higher and that certainly those pensions are going to the least well-off who are entitled to receive them.

In addition, if quality of life can be measured in material possessions—and I am not sure that it can—there has been a dramatic improvement in the quality of life of the poorest people in this country under this Government. Telephone, car and video ownership and the ownership of washing machines and home computers have increased substantially—particularly among those in the bottom decile of society—under the Government. It is obviously important to look not only at statistics but at the real-life experiences of individuals. The reports of the Institute for Fiscal Studies are very important in that regard, as they have examined the bald statistics as well as 3,500 individual cases. Therefore, the institute's findings must command respect.

We are often led to believe that those at the bottom end of the income scale represent a fixed group of downtrodden individuals who are condemned to live semi-permanently in relative poverty. That is simply not so. The IFS report makes it clear that there is considerable movement into and out of the bottom decile. It suggests that about half of those who were in the bottom decile in 1991 had moved up and out of it by 1992. That is not a reason for complacency. I share the view of my hon. Friend the Member for Stratford-on-Avon (Mr. Howarth) that it is no fun to be in the bottom decile—although it is a darn sight better than the situation in 1911, as referred to by the Opposition spokesman, the hon. Member for Glasgow, Garscadden (Mr. Dewar). It is important to remember that there will always be a bottom decile; that is a mathematical fact and there is no escaping it. What is important is the absolute—and, to a lesser extent, the relative—standard of living of the people in that group.

The IFS report goes on to suggest that the net income of those in the bottom decile in 1991 was 25 per cent. higher in the following year. As net incomes have not risen quickly in recent times, that figure suggests very strongly that the gap between the poor and those on average incomes is closing. The IFS findings are also supported by an analysis of expenditure. A report published at the same time shows that the spending of the lowest 10 per cent. of income earners rose by 14 per cent. in real terms between 1979 and 1992.

Another curious fact is that many people who report either zero or negative incomes have higher than average spending patterns. There are all sorts of strange statistical quirks involved and, particularly in the latter context, I welcome enthusiastically the statement by my right hon. Friend the Secretary of State about fraud and the benefit system.

The truth is never as simple as the Opposition would have us believe. That is precisely why they have arrived at a bogus premise for the debate. The Opposition motion goes on to claim that Government policies have brought uncertainty to millions of people. That is not so; it is not the Government who have invented policies that have created uncertainty for many people. I do not deny for a moment that there is a pervading air of uncertainty, which I readily accept permeates not only this country, but most developed countries, and certainly the whole of Europe. However, I think that it has a great deal to do with a profound change in the pattern of work and work experience.

Some 30 years ago, it was possible for people leaving school or university to expect to stay with the same employers for the rest of their working lives. That is simply not the case any more. Job mobility has increased dramatically. It has brought with it variety and choice but, inevitably, it has also brought a great deal of uncertainty. That is not the result of Government policy; it is the result of policies developed by employers to meet the challenges posed by massive technological changes and increasing competitiveness at home and in global markets.

The Opposition motion implies that the Government could have somehow resisted the changes and the powerful commercial pressures. I do not believe that there is any reasonable way in which that could have been achieved. Albania attempted to resist external economic pressures, and I do not think that anyone would suggest that that country has experienced an explosion of economic growth and prosperity, which has benefited the least well-off in Albanian society. There are powerful economic forces at work and we must understand them if we are to deal with them.

I accept that uncertainty is present in society. That uncertainty feeds through into the housing market and makes it difficult to take long-term decisions, such as whether to take out a mortgage. It raises all sorts of important issues, not just for this country, but for other European countries. However, I believe that the answers to those questions lie outside the scope of the debate.

The Opposition motion then turns its fire on the Government's decision to merge the Department of Employment and the Department for Education. The motion claims that the abolition of the Department of Employment signals the complete lack of Government concern about unemployment". That is a load of codswallop. The merging of the two Departments formalises and focuses the relationship between education and employment that has always existed. The explicit binding together of the Departments recognises the fact that, although it will always be important to educate people for the sake of knowledge in its own right, we also have an overriding duty to educate young people for work. Closer links between employers and training centres, schools and colleges can only be mutually beneficial.

Much has been said in the debate about cuts in the training budget. It is very important to look at the Government's training policy in the round and not in isolation. A great deal more in-work training is now going on and the responsibility of employers in that regard is recognised more widely. I believe that the merger of the two Departments will help to drive forward the process of integrating training and education in the workplace. We are presented with a real opportunity to build on industry's existing involvement with the education system, to hone vocational skills in order to satisfy employers and employees alike, and to develop a competitive work force that is better able to generate the wealth that the nation will need in the future.

When faced with the opportunity to say, "Yes, it is not a bad idea," all that we hear from the hon. Member for Garscadden are sneers and trivialisation. That says a great deal about the Opposition's approach. They have missed the most important point about unemployment. Listening to Opposition Members speak in the debate, one would assume that unemployment had risen dramatically in this country and was somehow out of control. The truth is that unemployment has fallen by 660,000 since the end of 1992.

Fewer people in Britain are claiming unemployment benefit than in any other major European Union country. It has more people in work than any other EU country, and in the past 12 months, that number has increased by 300,000—faster than any other major country in the European Union. The reasons are the long-term benefits of major supply-side reforms introduced in the 1980s and continued under this Government in the 1990s; the end of the unions' stranglehold; the end of restrictive practices; greatly improved competitiveness by British companies; and a soundly based, growing yet low-inflation economy that provides the right background for economic development and job creation.

Britain's improved employment situation is also the direct result of specific Government policies to tackle unemployment, get people back to work and encourage them off the dole, and promote training in the workplace. Those carefully targeted and generous schemes include jobfinder grants, job plan workshops and restart courses. All have played their part in ensuring that Britain enjoys a relatively modest level of unemployment. Those are not just airy words, but hard policies. They represent, in the words of the Opposition motion, action which promotes employment opportunities, particularly for the long-term unemployed, increases the skills and adaptability of the workforce". A great deal is being done, but Labour chooses to ignore it.

The Opposition, having established a grossly misleading picture of poverty and unemployment in Britain in the 1990s, delivered their hoary old panacea—the minimum wage. We do not know where it would be set. We tried to find out this afternoon, but had no success. No doubt Mr. Dromey tried to find out, but had no success either. I can understand the Opposition failing to answer questions from members of the Government Front Bench or my hon. Friends on the Back Benches, but I fail to understand why the Opposition are incapable of answering straight questions from their friends in the trade unions. What do they have to hide?

It is a great pity that Opposition Members funked answering questions about a national minimum wage. I give the hon. Member for Peckham (Ms Harman) another opportunity, because it is not too late to redeem her honour and come clean about that important plank of Labour policy. If the hon. Lady wishes to tell the House where she would set a minimum wage, we would all be delighted to know. All I get is the hon. Lady's seraphic smile. If my hon. Friends try again later, they also will be met with a smile—if not quite so seraphic—from the hon. Member for Garscadden. We do not know what the minimum wage would be worth, if we were ever to find ourselves confronted by one.

We know for sure, however, that a minimum wage would be bad for jobs. We know that not just from my right hon. Friend the Secretary of State or because Barbara Castle, the Leader of the Opposition, the deputy Leader of the Opposition, the leader of the Liberal Democrats, the hon. Member for Birkenhead (Mr. Field), the Confederation of British Industry and the Organisation for Economic Co-operation and Development have said so. We do not need them to tell us that a minimum wage would be bad for jobs. A small family shopkeeper in my constituency who employs three people told me that if a minimum wage were introduced—and the shopkeeper of course did not know at what level, because Labour is not prepared to tell us—it would probably make that business unviable.

Underpinning the Opposition's motion is Labour's topsy-turvy approach to economics—a belief that the best way to help the worst-off is to spend money before it is earned, increase statutory burdens on industry and not reduce them, increase regulation and not cut it, hand power back to Labour's paymasters in the trade unions and increase the price of labour. Such a policy, according to the most basic economic manual, is guaranteed to reduce demand and to create more dependency, higher unemployment, less wealth creation and a country united only in its own decline.

7.14 pm
Mr. Andrew Miller (Ellesmere Port and Neston)

I intended to start by apologising for missing the Secretary of State's speech but as he will miss my contribution, that makes us even. I am glad that the Minister of State, Department for Education and Employment is in his place because we have at least one thing in common, having both been praised or criticised for our peculiar taste in ties. However, I do not have the same taste in shirts as the Minister.

Mr. Stephen Byers (Wallsend)

Thank goodness for that.

Mr. Miller

As my hon. Friend says.

I am particularly pleased that the Minister is present to hear my contribution because I want to bring to his Department's attention documents published by other Departments in the recent past that I hope that the Minister's colleagues have read avidly and understand. One document to which I shall refer gives the new Department specific responsibilities. At the beginning of the Secretary of State's speech, I noticed that the First Secretary was briefly in his place. I suppose that he was checking to make sure that the Secretary of State was following the right line, whatever that might be, and where he stands in respect of the productivity bonus that will presumably be paid at the end of this Session.

The Government's amendment to my party's motion states that the House welcomes the creation of a new Department for Education and Employment to improve further Britain's skill base and competitive position". A key policy document launched by the First Secretary in his former post only one month ago makes no reference to that incredibly important Government initiative. The two Departments were merged because the Prime Minister has run out of loyalists and people whom he can trust in key Departments. Contributions made today ranged from that of the hon. Member for Stratford-on-Avon (Mr. Howarth), who severely criticised the Government, to those made by extremely barmy Conservative Members to whom even the Government would feel nervous about giving any ministerial office. The two Departments were merged because the Prime Minister had run out of players whom he could trust.

The competitiveness White Paper "Forging Ahead"—I am not sure of the relevance of that title—contains Government statistics, and it is important to quote them because then we shall know exactly how to put together the jigsaw. It is interesting that claims made in today's debate do not square with earlier statements.

Page 102 describes changes in the structure of employment in this way: As a proportion of total employment, employment in manufacturing has fallen and employment in services has grown, as it has in other countries …Employment in manufacturing peaked in 1966. In 1971, 36 per cent. of employees worked in manufacturing. Now 20 per cent. do so. As much as 30 per cent. of this decline may have been due to contracting out". That may be so, but there is no evidence to support it. Certainly, the remaining 70 per cent. of the decline has taken place in the areas where our wealth-creating industries were located.

The document goes on to say: Banking, finance and business services employed 1.3 million people in 1971. Now these services employ 2.8 million. Over the same period, the number of employees in health-related services has risen by two-thirds, more than 600,000". I wonder whether the Government would like to rephrase that in the context of full-time equivalents? That would produce some real statistics, but the comparison has been conveniently left out.

The chapter on employment also contains a lengthy reference to deregulation and health and safety matters. In this area at least, employment issues should be dealt with on a bipartisan basis. We should all share the clear goal of improving the nation's health and safety, but the Government have developed a theory; they think that if they get rid of some important health and safety regulations, all will be well. It is easy for Ministers to produce the occasional peculiar example, but in general the argument used in the document cannot be sustained.

The Government say: Ninety-seven per cent. of the recommendations of Lord Sainsbury's task force have been accepted … implementation of six key EU directives on health and safety—the 'six pack'—is to be evaluated". That sounds like something to do with large quantities of lager, but the Government may understand the phrase better. They go on to say: A discussion document on health and safety for small firms and the self-employed will be published". If the logic of Lord Sainsbury's task force is pursued into the small firms sector, the Government are saying, in effect, that they intend deliberately to deregulate so as to improve the competitiveness of small firms. It follows that that will be done at the price of the safety of the workers in those firms.

Page 104 sets out the reasons why the Government have been so successful at reducing the number of strikes. The hon. Member for Surrey, East (Mr. Ainsworth) referred, I think, to the bad old days. The briefing from Conservative Central Office omitted a key piece of information, however. Only with that information can we make sense of the figures. Why do not the Government publish the parallel figures—the number of days lost through unemployment? I refer to the manufacturing potential of a huge number of people. Anyone with any sense can see the relationship between the number of days lost to strikes and the amount of unemployment in the economy. Conservative Members have admitted that in other debates, so I do not see why the Government's official papers conveniently ignore it.

The Minister of State, Department for Education and Employment (Mr. Eric Forth)

I trust that the hon. Gentleman is not trying to make a connection between manufacturing output and the number of people employed in manufacturing. That would seem strange in this world of productivity. Surely he must acknowledge that most of the successful economies in the world have undergone a reduction in the number of people employed in manufacturing while increasing their manufacturing output and exports—as we are doing.

Mr. Miller

That is not my point. I shall come to that in a moment in the context of my own constituency, which is a manufacturing base with severe employment problems resulting from Government policies.

The document that I have been quoting is an interesting read. One important paragraph has been referred to in a number of debates, here and during the Committee stage of the Pensions Bill, which finished its stages last week. It is the paragraph referring to the funding of an elderly population: In the West, governments play a key role in the provision of pensions. Ageing populations create pressure for higher expenditure on pensions, leading to higher taxes falling on fewer workers. And yet, in a world of global markets and capital flows, governments cannot increase taxes significantly without damaging national competitiveness. In these circumstances, individuals will not be able to look to the state to fund improvements in their living standards in old age. That is an important statement. In other debates, Conservative Members have made several attempts to explain away the meaning of that paragraph—but they fail to look at the whole picture.

The same page includes an interesting graph, based on World bank projections that show the ratio of people aged 65 and over to the working population. The graph shows that Britain will have an increasingly old population, but the analysis in the document fails to draw the right conclusions from the rest of the graph. It shows that many of our key competitors, especially those in the Pacific rim, face, in the next century, a massive problem with funding their aging populations. That is because the sections of their populations aged 65 and over are set hugely to increase as a proportion of their general populations—much more so than in this country. It is thus disappointing to find no analysis of the effects of this change on our competitiveness. It is a shame that the Government have missed an opportunity to describe what may result.

Page 34 lists the top 20 manufacturing industries, ranked by sales/UK demand in 1992. One pair of figures stands out from all the rest, showing a remarkable success, compared with the other industries listed, of our pharmaceutical and aerospace industries. There are some lessons from history to be learnt at this point. These are two industries with a well-established relationship with the state over the years, covering the expensive research and development of their products. That is why it made sense for them to invest in the longer term. The aircraft industry received launch aid; the pharmaceutical industry established a market because of its connections with the national health service. Consequently, the two industries thrived far more than the others referred to in the chart.

To show how obvious that point is, the footnote at the bottom of the chart tells us that at the bottom of the list are motor cycles, with 1992 sales equivalent to only one seventh of United Kingdom demand. The Minister will know, with his background of responsibility for education, exactly where the primary research was undertaken for modern motor cycle engines. It was carried out in a British university.

It was a great sadness—with hindsight I think that we would all agree—that none of the major British companies picked up the benefits that came with research and the evolution of the light alloy engine. The new industry could have been ours had the combination of the private and public sectors worked together more effectively to realise the potential that exists in the United Kingdom.

As for comparisons with other countries, how can we make progress while dogma drives policy? We fail straightforwardly to take into account Britain's interests when policy decisions are taken that bear on the structure of our economy. The results of incompetence over the past few years will have an effect on poverty and divergence, as described by my hon. Friend the Member for Glasgow, Garscadden (Mr. Dewar). How do the Government think that we shall see improvement when their policy is to promote poverty pay and conditions?

Many families will never escape from the trap that the Government have created. Low-wage pressure is creating social consequences that have been recognised by the Secretary of State. In my constituency—I respond to the question asked by the Minister in an intervention—there is the major manufacturing town of Ellesmere Port, where productivity improvements have been dramatic. Vauxhall, which was near to closure, is now enjoying daily productivity gains. The company's product range is incredibly successful. The transformation is welcome, of course, but, irrespective of the company's share of the market, the reality is that it is unlikely that the work force will increase significantly in the near future. Other manufacturers have significant shares of the market. They are competing for the same market and for world markets. The fact that Vauxhall has succeeded in turning round the company at Ellesmere Port and making it a world quality plant is a credit to the company, Vauxhall, the parent company, General Motors, the work force and the trade unions within the company.

Mr. Hendry

And Government policy.

Mr. Miller

It was partnership that made it happen.

The hon. Member for High Peak (Mr. Hendry) said from a sedentary position, "And Government policy." Would he like to tell me how Government policy helped Vauxhall when the world-beating V6 engine plant came into place? I can tell him—this is the truth—that the Government did nothing to assist that project. If it had not been for the work force and the parent company, the project would not have been developed in the United Kingdom. Cynical remarks from a sedentary position are not worth a light.

Mr. Hendry

Will the hon. Gentleman give way?

Mr. Miller

I shall not give way to the hon. Gentleman. I shall listen to his speech.

Mr. Hendry

On a point of order, Mr. Deputy Speaker.

Mr. Deputy Speaker (Mr. Michael Morris)

I hope that it is a point of order and not a point of argument.

Mr. Hendry

Is it in order, Mr. Deputy Speaker, for the hon. Member for Ellesmere Port and Neston (Mr. Miller) to ask me a question and then refuse me permission to answer it?

Mr. Deputy Speaker

That is entirely in order.

Mr. Hendry

It is bad manners.

Mr. Forth

It is a debate.

Mr. Miller

The Minister says that this is supposed to be a debate. I gave way to the hon. Gentleman and answered his question. I shall continue to respond to his intervention. The Minister did me the courtesy of making an intervention and not a sedentary interjection.

In the same area, the Shell petroleum refinery has shed thousands of employees during a period of increased productivity. The problem with the examples of Vauxhall and Shell, and other near-by manufacturing companies, is that the housing surrounding them was developed because of the evolution of the manufacturing sector in the town. The highest unemployment is now to be found in that housing. As a result, it represents the areas of greatest social strain.

The position is not unusual in manufacturing towns throughout the country. There is a belt of wealth creators in the manufacturing sector and increasing productivity, which is usually accompanied, but not always, by falling employment demands. The housing in manufacturing areas contains the greatest levels of unemployment. That creates potential for social tensions, which the hon. Member for Stratford-on-Avon talked about thoughtfully. My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) and my hon. and learned Friend the Member for Leicester, West (Mr. Janner) also talked about it. The Government must bear in mind the important social tensions that arise.

I was depressed when I opened an Employment Agency office in Neston in my constituency. The Department of Employment invited me to open the office but I think that it assumed that the leafy suburbs of the pretty town of Neston would be Conservative strongholds. It forgot to examine the parliamentary boundaries when it issued the invitation.

Neston is extremely attractive and has historically had lower levels of unemployment than elsewhere in my constituency. Unfortunately, unemployment had been rising in the town. I was deeply touched by a conversation with a graduate in the jobcentre. He was reading the cards and trying to find a job that suited his skills. He told me, however, that he was no longer looking only for a job that suited his training and education. He was looking for any job that would enable him to sustain his family's existence. As he had given three years of his life to benefit from a university education, and the state had contributed significant sums to help him obtain his degree, that was deeply sad.

I listened with interest to comments about changing technologies and set them against a speech made by a former Under-Secretary of State for Social Security, the hon. Member for Wanstead and Woodford (Mr. Arbuthnot) at a recent conference on government and computing. He described with great eloquence what the Department of Social Security is doing in terms of investment in information technology to handle a growing problem. It was a very articulate presentation from somebody who clearly has a detailed interest in information technology. What he did not say, however, was what the Government are doing about data collection; why it is needed; why we have a set of rules and regulations that mean that the Government collect data several times over rather than utilising the skills of all the civil servants involved to help people who are in the various traps that have been created by poverty.

There was an exchange earlier on between my right hon. Friend the Member for Gorton and my neighbour the hon. Member for Wirral, South (Mr. Porter) about the cards to be used in the Department of Social Security. None of that will be of any relevance unless the Government address the real issue of why data are being collected. It should be to help the applicant, not to hinder. The whole process of data collection in that area is, in my view, totally upside down. If the Government introduced a mechanism whereby data were collected through positive interviews instead of through the rather cumbersome forms that are used at the moment, we would not need to get into the kind of debate that is going on.

The Department is studying whether it is feasible to introduce optical character recognition into form processing. That is an important piece of technology and is valuable in terms of speeding up and making things more efficient. Instead of looking at that technology, why do not the Government look as well at the basic reason why those questions are being asked?

It is my contention—one can see this throughout the Benefits Agency and the Employment Service—that information is being collected in an attempt to trap people into admitting that they are defrauding the system in one way or another. It would be a far more efficient and better use of civil servants' time if the assessment at the various agencies was done by positive interview instead of through the cumbersome forms that currently exist. Reference has been made in the House time and again to the 34-page disability living allowance form. I think that there are 32 pages for the new incapacity benefit.

All that nonsensical data collection is designed to entrap people. If all that were reversed and the resources that that would release were put into collecting data face to face, first, one would remove fraud from the system much more effectively than by the current auditing methods, and secondly, it would ensure that the elderly lady to whom my right hon. Friend the Member for Gorton referred would have got her benefits through positive interview at the outset instead of being frozen out by the crazy way in which the system currently operates.

On training, the Government have, on a number of occasions, referred to what they intend to do, and it compares poorly with what happens in other countries. It is not simply what the Government are doing directly, where they always seek to claim credit. What they fail to look at is the way in which they "incentivise" the private sector to make a more positive contribution. One visit that I have made as a member of the Science and Technology Select Committee will stand out in the my mind, that to the Stuttgart area the year before last, when we went to a machine tool company.

We asked the company what was happening in terms of investment in research and development and in training, during what was obviously a difficult period for that part of Germany. As hon. Members on both sides of the House will acknowledge, the enormous costs of integration of the eastern Lander, with the general western recession that was going on, had put some of its high quality, high-cost products, such as Mercedes and so on, in difficulty for the first time in a long while. It was interesting that when asked what it was doing in terms of R and D and of training expenditure, the machine tool company responded by saying, "Increasing them, of course." It could not understand why on earth we felt it necessary to ask that question.

It is feasible for that company to do that within the structure of that particular regional economy because the combination of the role of the state and the private sector, working together in a much closer partnership than exists here, creating an environment in which it is possible for companies to convince their bankers that they have a serious future in the middle of a recession and that they can invest during that recession on the key facets of R and D and training.

I wish to comment on the remarks that were made about the minimum wage. The hon. Member for Surrey, East claimed that the Labour party policy would put his small shopkeeper out of existence. How can he really say that when he does not know what the level will be? It does not make a great deal of sense, because, equally, if he went to his small shopkeeper and scared him in the way in which he is trying with that story, and said, "Corporation tax is going to affect you next year and it will be three times the level it is now," the small shopkeeper would say, "But that is going to put me out of a job."

Mr. Peter Ainsworth


Mr. Miller

It is easy for Conservative Members to use something that will scare. The hon. Gentleman must admit, and I invite him to do so when I give way to him, that it would be unreasonable for us to say to the Chancellor, "Please tell us what the absolute rates of income tax will be for all bands in the 1996 Budget." It is equally easy for people to say that it is different, but it is not. It is an economic fact that the judgment can be made, based only on the information that is available at the time.

Mr. Ainsworth

I am grateful to the hon. Gentleman. It was not me who was claiming that that gentleman's business viability would be threatened, but the shopkeeper himself. I was not able to confirm that to him, because I did not know. The point that I was trying to make was that he, with millions of others who would be affected by a national minimum wage, has a right to know the level at which Labour would introduce a minimum wage. It is reprehensible of the Labour party to threaten a minimum wage without having the guts to say where it would clock in.

Mr. Miller

I am sorry if I misrepresented the hon. Gentleman. I would not want him to get into difficulties with his small shopkeeper. I invite him to go back to the small shopkeeper and say to him honestly, "I cannot, as the hon. Member for Surrey, East, give you any guarantees about the level of any form of Government taxation or minimum or maximum wages." It is impossible for such guarantees to be given. Those figures can be developed only at the time, in consultation with the social partners involved. Therefore, it is quite impossible to talk about a figure at this time.

Mr. Jim Cunningham (Coventry, South-East)

Does my hon. Friend agree that, in a recent interview on NBC television, President Clinton of the United States said that he would look to Congress for an increase in the minimum wage? Does my hon. Friend also agree that, when we had the minimum wage before, small shopkeepers did not go out of business, regardless of the level?

Mr. Miller

I did not hear the interview with President Clinton. However, on my most recent visit to the United States, I was impressed by the way in which the local minimum wage, at state level, was seen as a benefit to, and a stabilising factor in, the economy. It was considered that it had resulted in the state being less responsible for the eradication of poverty than was the case in this country. It is ludicrous that, in this country, the state has to sustain those who are paid poverty wages by their employers.

Mrs. Gorman

Does the hon. Gentleman agree that it is a fundamental law of supply and demand that if prices go up, consumption goes down? That applies to labour just as it does to tomatoes, beef or mortgages. If one increases wages artificially to a level that, by definition, is above a level of which some people disapprove, some will lose their jobs. The jobs will not melt away, they will be lost.

Mr. Miller

I presume, then, that the hon. Lady would have voted against the Equal Pay Act 1970. The truth is that that legislation, which on her theory would have had the same effect, did not reduce the amount of work available to women. I have heard the hon. Lady say, time and again, that the Government's success has been to increase the number of women in employment. The Government simply cannot have it both ways.

Mr. Jim Cunningham

Is not the hon. Member for Billericay (Mrs. Gorman) really arguing for something that her party has repudiated for the past 16 years—a prices and incomes policy?

Mr. Miller

My hon. Friend finds it difficult to follow the logic of the hon. Member for Billericay (Mrs. Gorman). As usual, she is somewhat confused. I shall not repeat the words used to her by Viscount Cranborne earlier this month. She is clearly confused, which must be a point on which Ministers and I would agree.

I refer the House to the last two lines in the Government's amendment, which asks the House to recognise that improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy. The opportunity will come only when the country has the opportunity to vote for a new Government. The reward will come when my right hon. Friend the Member for Sedgefield (Mr. Blair) is in No. 10 Downing street. Conservative Members will be those experiencing the dependency culture because of their politics of envy—[HON. MEMBERS: "Yours."] It is their politics of envy that we shall soon see. They will envy us being in government while they are not. A good number of Conservative Members who have contributed to this debate will be the unemployment statistics of the future and we shall then see where the envy really is.

7.53 pm
Mr. Alan Duncan (Rutland and Melton)

We have heard a lot of curious economics from Labour Members in this debate; perhaps none more puzzling than the speech, which lasted for 40 minutes, of the hon. Member for Ellesmere Port and Neston (Mr. Miller). He stated some curious concepts, which will astonish any Conservative Member who has a greater foundation of understanding of what really rules in the true world of economic decisions.

I can well understand why the hon. Gentleman was inclined to throw something of a tantrum when my hon. Friend the Member for High Peak (Mr. Hendry) called on him to explain the significant success of Vauxhall—a major supplier and a major employer in his constituency. The hon. Gentleman was too churlish to pay tribute to the Government and their policy of allowing enterprise to thrive, which must be given much of the credit for the success of that company.

The motor car industry has been a stunning triumph in the past 15 years. It has gone from an industry of subsidised, bankrupt concerns to one of massive employers and tremendous export successes the world over. That triumph has generated jobs, security and profitability in the constituency of the hon. Member for Ellesmere Port and Neston. The time has come when the hon. Gentleman should admit where so much of the credit properly lies.

The hon. Member also made a curious comment in which he equated days lost through strikes—a thing of the past—with days lost now through unemployment. No one can deny that a day spent on the dole is a waste—primarily for the individual, but also for the productive capacity that the individual would be able to display if he were employed.

What I did not hear at all from the hon. Gentleman was a proper solution to the predicament in which these people find themselves. Is he saying that the money spent on the dole should be transferred to a jobs subsidy? Is he saying that there should be subsidies for investment to get everybody back to work? What is he really saying about the market for labour? Does he have a solution to the plight of the unemployed over and above what the Government are doing, which is successfully reducing the number who are unemployed?

Mr. Miller


Mr. Duncan

I happily give way, although the hon. Gentleman would not give way to my hon. Friend the Member for High Peak.

Mr. Miller

What I was saying—

Mr. Jacques Arnold (Gravesham)

You had 45 minutes.

Mr. Miller

I am replying to the hon. Member for Rutland and Melton (Mr. Duncan).

I referred to the German economy, and I said that there was a far more successful partnership there between the private sector and the public sector, which created an environment in which the banks could be far more confident in the way in which they worked. I invite the hon. Gentleman to look at such examples before ridiculing my comments.

Mr. Duncan

When my hon. Friend the Member for High Peak and I were in Germany 18 months ago, the major employer, Mercedes, was laying off 15,000 of the 40,000 employees. Daimler now faces a loss, for the first time in living memory. There are many problems with the German economy. It is a great sadness that the likes of the hon. Member for Ellesmere Port and Neston will not give credit where credit is due, which would help the sense of security which is not as robust as it should be among the likes of his constituents, and, indeed, mine.

The hon. Member also said that there would be a problem with old age, and that that would have economic consequences in the United Kingdom. Indeed it will. He did not, however, then say that Britain has £500 billion-worth of pension funds under management, which is more than the figure for the rest of the European Union countries put together. We have made greater provision for old age than any other country in a comparable western setting.

Mr. Miller

Will the hon. Gentleman give way?

Mr. Duncan

I will not give way just now; I shall give way in a moment, if the hon. Gentleman persists.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) drew on the wisdom of R. H. Tawney in saying that tadpoles needed to turn into frogs. I was tempted to intervene, by and large to agree with him. He said that he wanted agreement in the House to rid the country of low pay, poverty and inequality. Well, I am in very generous mood, and I am content to agree with two out of his list of three. As he well understands, I consider that his obsession with inequality is an utter diversion, which detracts from the energies that are needed to rid the country of low pay and poverty.

The hon. Member for Garscadden wants tadpoles to turn into frogs. Whenever I see a frog, I am inclined to kiss it in the hope that it will before my eyes turn into the noble Baroness Thatcher. I have so far been unsuccessful. But she at least understands the difference between socialism and conservativism. I never saw more ferocity in Baroness Thatcher's eyes than when she explained to me that the difference between the two sides of this House was that she—and that means the Conservative party—liked to lift people up to their full potential, while the socialists wished to level them down.

No debate on aspects of social security is complete without a proper exchange between the hon. Member for Garscadden and me, but I regret that he was not prepared to give way to me at any stage today. [HON. MEMBERS: "He did."] He did not give way to me. The hon. Gentleman usually makes supremely confident speeches, but for the first time—[HON. MEMBERS: "He did give way."] No, the hon. Gentleman referred to me, but he did not give way.

The hon. Gentleman's attempt today to defend his party's policy of the minimum wage was the first time that I have ever seen him look uneasy at the Dispatch Box. I have never seen the hon. Gentleman equivocate so unhappily as he did in attempting to describe the proper consequences of this misguided policy.

I listened with particular interest to the speech of the right hon. Member for Manchester, Gorton (Mr. Kaufman), because I have heard him speak on the topic before. As we saw tonight, he speaks on the predicament and plight of his constituents with evident passion, and rightly so. But where we part is not in failing to recognise the plight of his constituents and in wanting to do something about it, but in the solutions that we would deploy to try to address the problem.

The Manchester of today is a far cry from that of a century ago, when the aptly named Manchester liberalism released all the strengths and energies which built the marvellous buildings, established the municipal pride and introduced new-found wealth into a proud city. Those energies now seem sadly to have been lost. I do not think that the constituents of the right hon. Member for Gorton are victims of 15 or 16 years of Conservative government. Rather they are victims of municipal socialism, which has gradually risen in the past 50 years.

I have yet to receive from the hon. Member for Garscadden a detailed critique of my book, which I am sure he has read with great relish from cover to cover. The book's main thesis—as the hon. Gentleman will know—is that many of the problems we face today were not caused by the past 20 years, and that one needs to go back a century to trace the gradual and pernicious advance of collectivism into all the nooks and crannies of an individual's life, so that all the intermediary institutions which gave us the power and strength to make people richer, freer and more self-reliant have been displaced.

One element of that is the gradual advance of taxation and the scale of it. While I shall not dwell deeply on the book, which was published a matter of weeks ago, I shall quote from a bit of it. My fellow author Dominic Hobson and I wrote: In a modern economy without large concentrations of personal wealth which can be taxed for redistribution to the poor, the heavy burden of direct and progressive taxation is arguably far more unfair than any number of regressive indirect taxes. This was well-put by a young Labour MP in the House of Commons nearly fifty years ago. 'As we get … more and more to the stage where men will start life equal as far as possible and will rise by merit in the sphere in which they can offer the maximum contribution to the country's welfare, I do not think we ought necessarily to persist in a system of taxation which will tax higher remuneration at a higher rate. Indeed, in a fully developed Socialist economy, I would expect to see indirect taxation replacing direct taxation as the main source of revenue, because in a Socialist society, where men start equal and rise by merit, there is no point at all in giving them a substantial wage to reward the contribution they are making to the national economy, and then taking it away by taxation.'—[Official Report, 1 November 1946; Vol. 428, c. 1004.] His name was James Callaghan, and it was his privilege as Prime Minister to preside over the highest rates of income tax in the history of his country. When he joined the Inland Revenue as a Civil Service clerk in 1929, the poor did not pay income tax at all. Their main interest in the annual Budget, as Callaghan later recalled in his memoirs, was whether or not it increased the excise duties on beer, cigarettes and tea. It is a measure of what has happened since that they are now having to pay for those pleasures out of taxed income. We will spend £94 billion on social security in the next fiscal year, but that great roundabout of money—a money-go-round—does not appear to have worked, as we still have people in poverty. Yet there seems to be insufficient readiness on the part of Opposition Members to look to this enormous budget and to try to work out how it could best be directed. There is too much call for more of the same, when what we have got is not solving the problem.

Like the hon. Member for Garscadden, I want to solve the problem of poverty. But why is it that we will spend £94 billion and we will still have the problem? The first thing to say when looking at poverty is that some of the slogans have bedevilled and, I fear, trivialised the debate.

Opposition Members have pumped for all its worth the slogan "the rich are getting richer and the poor are getting poorer", but it is an illogical slogan. It is cleverly designed to imply that it is because the rich are getting richer that the poor are getting poorer. It is designed to say that Opposition Members have a claim on the money of the so-called rich in order to solve the problems of the so-called poor.

Indeed, so perverse has the morality which is attached to the slogan become that those who believe in socialism have raised to the status of a moral act the belief that it is somehow right, decent, proper and morally superior to expropriate other people's money for the alleviation of poverty, and that that is somehow better when it is done collectively than when individuals do it themselves. I find that profoundly perverse, and the nub of the debate is whether that slogan has any merit or value.

Mr. MacShane

Will the hon. Gentleman give way on that point?

Mr. Duncan

I am prepared to take the risk.

Mr. MacShane

When the hon. Gentleman worked in Singapore, between 10 per cent. and 18 per cent. of all his income went into the Singapore central provident fund, which was set up by the Singapore Government to raise money from all salary earners to provide for the general lifting up of the conditions of the people of Singapore. Does he welcome the fact that a far smaller proportion of his income is taken by the British Government in the area of providence and insurance?

Mr. Duncan

I am not sure that the hon. Gentleman's comparisons are right. Certainly, if we could get tax levels down to 10 or 15 per cent., it would be a miraculous step forward, but that will not happen here, and it is not quite what is happening in Singapore. There is a contrast between the countries in the balance between the priority given to investment and the priority given to consumption, in the way in which money is spent by the state.

There is very little social security in Singapore, but the warmer temperature and cheaper food mean that those necessities are easier for people on lower incomes to acquire. The proportion given directly to cash handouts in welfare in Singapore is small compared with the amount that goes into investment that is taken from the pool of what is raised in taxation. So the hon. Gentleman's comparison is defective.

My hon. Friend the Member for Surrey, East (Mr. Ainsworth) drew on an argument that is critical to the defective slogan that the rich are getting richer and the poor poorer. The statistical analysis from which the premise is drawn is deficient. The implication is that a fixed series of people are poor and are getting poorer as the rich get richer.

As my hon. Friend pointed out, the report of the Institute for Fiscal Studies makes it absolutely clear that although, in comparative terms—as a ratio of the poor to the rich—a category of the poor is getting poorer, it is not true to say that the same people are affected all the time. If one traced a sample, one would find that those people had been able to work themselves up the ladder, but by taking a sample that is different every time, the conclusion is drawn that the poor are getting poorer.

As the IFS says: All these statistics actually tell us is that the poor in 1991–92 were typically poorer than the poor in 1979. Not that people at the bottom in 1979 had got worse off. In point of fact, the slogan that the poor are getting poorer and the rich richer contains so much deception, deceit and inaccuracy that, if the Opposition want to be true to their consciences as they are for ever calling on us to be, it is time they revised the words they so often use.

The hon. Member for Garscadden chided and taunted me, saying that he believed it was my view that inequality does not matter. By and large, that is my view. The obsession with inequality has become a red herring, which diverts energy from a proper attack on poverty and low pay. If one irons out inequality and makes that one's target, one is merely homing in on those who are identified as being rich. In terms of solving the problems of the poor, the arithmetic would not add up. If it does not add up, there is no purpose in the objective beyond trying to make a philosophical point and employing it with envy and venom, which is sad to see and entirely counter-productive.

Lord Callaghan said in this House nearly 50 years ago that he would much rather see a proportionate tax or a tax on expenditure than a vicious progressive tax on income, and I agree. One of the first rules of economics is to understand the difference between stocks and flows. The socialist will look at the stock—the cake—and say, "It's unfair. I've got to divide it." But it is the old lesson of the golden goose. Economic prosperity comes from a continuum—a dynamic. If it is undermined by slicing it in half, for a one-off redistribution, the energy will be sapped, and the dynamic will be the lesser for it. The obsession with inequality is counter-productive and puts a brake on the wealth-creating energy, which, in the long run, is what one needs to solve the problems of poverty and low pay.

The hon. Member for Rotherham (Mr. MacShane) mentioned Singapore. This country has a balance of Government spending that is biased too much in favour of consumption and too little in favour of investment. Even the hon. Member for Brent, East (Mr. Livingstone), in an economic analysis document that I received in the post this morning, said that the problem with the British economy is that there is not enough investment. He is right. At the same time, however, he and many of his hon. Friends will be calling for immediate increases in the amount of money given to those they deem to be in need. One cannot have it both ways.

The other pernicious effect of the despotism of democracy, in which we all compete for votes by promising to spend other people's money, is that people's expectations have been raised to unrealistic heights. The sad and horrible truth about our democracy at the moment is that so many politicians' promises will never be met from the resources made available by people paying their taxes later.

It is time that we took stock of what can be afforded and shifted the balance between consumption and investment, to plan properly for the future and for the burden on those in work. As the hon. Member for Ellesmere Port and Neston said, the ratio between those in work and the elderly is going to change adversely, and we must provide for that now. If we promise that too much can be delivered straight away, we will never meet the expectations of those who are working their way through the system now.

Mrs. Gorman

Does not my hon. Friend agree that Hong Kong would be a better analogy to support his argument than Singapore? In the former, an open and free labour market and productivity, coupled with low taxes and amazingly high savings levels, has produced phenomenal growth—so much so that the majority of people there enjoy a higher standard of living than many people in Europe.

Mr. Duncan

I totally agree, and that is where I would like to see us heading. We have reached a point where we are minority shareholders in our own incomes. The best part of 50 per cent., or more, is taken by the state. Once one reaches that point, it is difficult to reverse the process. Doing so is the challenge that we, as politicians, face in the years ahead. If we can reverse the process, we will do more for the poor and the low-paid than anything a socialist Government could ever do by simply raising the taxes of those who are earning—a one-off, declining tax—supposedly to give to those in need, which will draw us all down.

I must dwell for a moment on the minimum wage, which is a great concept for a party in opposition, because it appears to promise those who feel deprived a better income, but it all depends on the level. My hon. Friend the Member for Surrey, East mentioned a shopkeeper. The hon. Member for Ellesmere Port and Neston would not say what the minimum wage would be for the shopkeeper in Surrey, East.

If the wage is below what is already being paid, it is a policy that is not worth the name, because it does not deliver any benefits. It is merely an undelivered promise that in no way raises a wage. If it is higher than what a shopkeeper is prepared to pay an assistant, it is bound to have a detrimental effect.

It is astonishing that that dichotomy has not been properly analysed, and that the Opposition will not commit themselves to a number. No number, no policy. It is meaningless. If it is below the equilibrium market price for labour, it is a complete irrelevance. If it is above, it is a tax on jobs, which will drive people out of work.

It is a lie to convey to the low-paid the impression that they would somehow be better off and that the policy would not cost anyone their job; it would. It is going to cost jobs. If it does not, it will make people work illegally.

Mr. Peter Ainsworth

My hon. Friend touches on the nub of the argument about the minimum wage. The policy is technically, but also philosophically, flawed, in that it involves the intrusion of politics into the arrangements that business people, whether large businesses or small shopkeepers, make with their staff.

Mr. Duncan

My hon. Friend is absolutely right. It is high time that those responsible for writing in the newspapers and broadcasting on television properly dissected the true effects of that cretinous policy with a forensic accuracy. It is cretinous because, if the wage is low, it is nothing, and if it is high, people will be out of work or driven to work illegally.

Yet the hon. Member for Ellesmere Port and Neston said that it would be a wonderful system, because, if we raise wages, people will pay national insurance contributions and will be off benefit. That is a cost to someone. It will be a cost to the employer or the employee, and it will drive people out of work.

The hon. Member for Garscadden said that people in his constituency say that they cannot buy things or do things. Too many people are in that predicament. The wish to solve it is an objective that is shared—I hope he will take this in good faith—by both sides of the House. But to say that greater intervention, a minimum wage, higher taxation and an anti-business culture, which we have seen in so many aspects of what the Opposition say, will make things better is patently absurd.

We have a lot of catching up to do. In the years since the war, we have spent too much before we had it and invested too little. If we do not reverse that balance, as we have started to do dramatically in the past 15 years, we shall be back to the bad old days, and socialism will drag us and the poor down even further.

8.20 pm
Mr. Denis MacShane (Rotherham)

It is a great pleasure to follow the hon. Member for Rutland and Melton (Mr. Duncan), who made a speech for the Opposition. He talked about all the terrible things that have happened for most of the past 50 years. I must ask which party has been in power in the past 50 years—or the past five, 10 or 15 years. His speech reflected the split in the Conservative party. We heard the first glimmering outlines of the new philosophy of what will be a split Tory party in opposition. I wish the hon. Gentleman well, as I admire his intellect. I do not have to agree with what he produces, writes or says, but I admire intellectual dexterity, and he has much of it.

We talked earlier of tadpoles. The hon. Member for Rutland and Melton talked of kissing Baroness Thatcher in the hope that she would turn into a frog—or perhaps it was the other way round. Clearly the hon. Gentleman is prepared to embrace the past, in the hope that it will define the Tory party's future. He is the author of a remarkable book, which I am sure has been read by all Conservative Members, called "Satan's Children". I recommend it to everybody.

Mr. Duncan

"Saturn's Children".

Mr. MacShane

Oh, "Saturn's Children". Forgive me. I knew that it was project Pluto or a message from planet Portillo, but getting the name exactly right escaped me. We look forward to reading it. As the author of many a remaindered book, I hope that the hon. Gentleman's publishers did not print too many copies.

The fundamental difference in this debate, which we saw in the sniggering from the Government Front Bench during the speech of my right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman), is that the Opposition attack poverty while the Government attack the poor. That is certainly the impression in the country.

Far cleverer than Karl Marx, the contemporary Conservative party has created not one but two reserve armies in the labour market. The first is the reserve army of the unemployed. We do not know how many people are unemployed, because the Department of Employment, that famous massage parlour for unemployment statistics, has been abolished. So the debate that used to entertain both sides of the House is over. We no longer know whether it is 2.5 million, 3 million or 4 million, because the Department of Employment and its vital statistical work in that area exist no more. However, we still have a massive reserve army of unemployment to drive down wages.

I admire the Conservative party, which has not ruled this country on and off for 300 years for no good reason. It has created a second reserve army: the poverty-in-work army. That consists of those in employment of a sort—part-time, low-paid or zero-hours-contract employment. Like Blücher arriving on the field at Waterloo, the Conservative party's armies of unemployment and poverty helped to render the lives of so many people insecure with low pay and unable to plan with any confidence in the future.

I simply ask hon. Members who will troop through the Lobby in an hour and a half's time to think of our children, nieces or nephews who have left university in the past couple of years. How many of them have a job or a job that matches the educational attainment into which they have put so much effort? We all know that the answer is: very few. We are talking about the future of our country, those who have invested in education and, like many hon. Members, gone to university and attained degrees. Yet they now find that their lives are ebbing along on minuscule wages and hand-to-mouth jobs, because we have so tilted our society's labour market away from work.

I pay tribute to the eloquence of my right hon. Friend the Member for Gorton, who showed a mastery of statistics that I cannot repeat. He offered us a long statistical narration that held the House. In my constituency of Rotherham, one in six men are out of work. They are men without destiny or hope, condemned not just to regular signing on but to the new water torture of the jobseeker's allowance and the salami tactics of taking away from them any hope of sustained help from their fellow citizens, via the state, to conduct their lives decently.

Unemployment is now a bit lower. What a funny turn of phrase to say that unemployment is lower. We define our society in the ebbs and flows of unemployment rather than permanent, enduring job creation. Unemployment is a little lower than a couple of years ago, thanks to a significant devaluation, which has provided the boomlet that the Prime Minister and his Cabinet make so much of in their speeches. But compared with 1990, there is now 20 per cent. more unemployment among male workers in Rotherham.

The hon. Member for Stratford-on-Avon (Mr. Howarth) talked about a society divided against itself, and a war of all against all. He is good at reeling off Hobbesian phrases. Let us compare the present with 1979, when life was, perhaps not a paradise, but far better for male workers in Rotherham than it is now. It was also better in 1970, 1960, 1951 and the first half of 1945—all years when this country was governed by a Conservative Government. I shall come back to that point later in my speech.

What is fascinating about the society in which we live is not the non-application of old or new Labour party or socialist ideas, but the betrayal of the idea that we live in one nation and even a betrayal of the Conservative philosophy which, until the past 15 years, accepted a sense of responsibility for social community.

Every week at my surgery, since I was elected a year ago, I have confronted someone whose life prospects would be helped—[Interruption.] My cough is caused by the filthy smog in which we have to live under the Tory Administration but that is another debate. At each of my surgeries—[Interruption.] I ask hon. Members either to stand up or shut up. If they are sitting down, they should let me get on with my speech.

Mr. Jacques Arnold

Would the hon. Gentleman tell us whether smog in London was better in the halcyon days of 1950, 1945 and before?

Mr. MacShane

As a small boy, I dimly recall struggling my way to school through dreadful foggy smogs. How grateful I was for the excellent Clean Air Act 1956. This is rather a big diversion, but how I wish that the Government could return to those values of seeking to lift up the general status, health and social standards of the entire nation.

To return to the debate—even if the House is relatively empty—I recall that a vigorous couple, the man aged about 30, recently came to my surgery with their two children. He had signed a contract for £8,500 a year to deliver computer parts for a company in Sheffield. He was getting up a 7 o'clock in the morning to deliver his orders, working right through the day to 6 or 6.30 pm, coming home and spending an hour or two planning his delivery route for the next day. His hourly rate of pay was under £3.50.

They were young, vigorous, confident people, and he and his wife had calculated that they and their two children would be better off on the various forms of benefit that are available. He asked whether he could move to an hourly rate, but there is no mechanism for that. I asked him whether he was a member of a union. He said that he was not, and that, if he joined a union, he would be dismissed. I asked what would happen if the other drivers joined him and put it to their employer that they should get a better hourly rate. His answer was that they would all be sacked on the spot.

I see that the Secretary of State for Education and Employment, who has taken employment back under her wing, is smiling, but that is the life story of millions of people—a life story of low pay, no help and more hope with social security.

I have a letter from a Mr. William Clarke in my constituency, who came to see me. I urged him to go to the jobcentre to find a job. He is 53, and a qualified heavy goods vehicle driver. There are plenty of heavy goods vehicles on our roads; there is plenty of trade—we are told that the economy is booming. But no one will give him a job. He went to the jobcentre, but he reports that all the HGV jobs are temporary with flexible full-time hours, temporary with full-time hours, or temporary but only in categories for which he is not qualified.

He went to be retrained and added extra qualifications to his HGV qualifications to get a job. What did he find? The job qualifications had suddenly changed. In much of our industry, employers are taking on workers only if they qualify for family benefit. Single young males who are relatively unskilled will not be given a job. Males who are not single, but are skilled and have a wife and children will get jobs. That may be good. I am all for encouraging employment for male family heads of household, but they are taken only because of the taxpayers' subsidy via the benefit system. That cannot be right.

The Rotherham picture fits into the national one. There are 1.5 million of our citizens, thousands in each of our constituencies, who earn less than £2.50 an hour—the price of a Pimm's on the Terrace. We have to pay £2.5 billion as a taxpayer subsidy to firms each year. I shall be interested to see whether the Secretary of State will deal in her winding-up speech with the idea of a national minimum wage and what that costs in Europe, a subject of which much was made earlier in the debate.

The unemployment statistics for Europe show that, in Austria, Denmark, France, Germany, the Netherlands, Italy, Spain and Sweden, just to cite EU members—I am quoting the latest issue of The Economist—the unemployment figures are falling as fast as, if not faster than, in the United Kingdom. Four times as many jobs are being created in Germany as in Britain, and that is with the social chapter and wage negotiation that amounts, in effect, to a national minimum wage.

Other speakers have referred to Asia—the hon. Member for Rutland and Melton certainly did. However, the base for the success of all the Asian economies is a much more compressed ratio of wages of employers and employees—8:1 in Japan compared to over 30:1 in Britain. There are no Richard Greenburys earning 100 times the starting wages of the equivalent of a Marks and Spencer shop assistant in Japan. In Hong Kong and Singapore, too, there is a much narrower differential in the ratio between the bosses and what the people who actually generate the wealth earn than in the United Kingdom.

That is also true of the rest of Europe. The ratio of earnings of the chief executive officers and chairman of the top firms in France, Germany and the Netherlands to those of their employees is much smaller than in Britain. The fundamental problem is that there has been a significant devaluation of employed work in Britain. We are moving to a rentier society, with rich incomes for those with funds invested and miserable giro payments that destroy morale for those who depend on state benefits.

In essence, the values of 1968—of anything goes, what I want I can have, what happens next door does not concern me—have been embodied in the contemporary Conservative Government. That is why Labour is appealing against greed at the top and against a society in which people's expectations are set by lottery winners, the values of Hugh Grant or the salary of Cedric Brown. Instead, we are trying to return to a society in which people's values are based on community and neighbourhood.

The argument of the Conservative party is, as I understand it, based on the Laffer curve nonsense about taxation. The rich do not work hard enough because they are not rich enough and, according to the Secretary of State for Social Security, the poor do not work hard enough because they are not poor enough. That is a fundamental divide.

Mr. Geoffrey Clifton-Brown (Cirencester and Tewkesbury)

The hon. Gentleman seems to have based his entire diatribe on the idea that the Government should spend more. Perhaps he would consider the example of the United States, where Government expenditure as a percentage of GDP is 35 per cent., yet their unemployment rate is only 5.4 per cent., down from 6.7 per cent. a year ago. If he thinks that an incoming Labour Government will somehow magically improve employment prospects in this country, how are we to compete with the United States?

Mr. MacShane

I shall pray in aid the Speaker of the House of Representatives, the honourable Newt Gingrich, who voted for an increase in the national minimum wage in 1990 and 1991. The Americans seek to put a floor under exploitation precisely so that the state does not have to subsidise low-pay employers, which is the philosophy of the British Government.

I would buy into some of the Conservatives' arguments if they applied the American experience, and if, for example, there were 52 regional Parliaments and control was decentralised from Whitehall. However, the fundamental difference is that in this country we have neither the American experience nor that of our more successful European or Asian competitors.

That was recognised more than 100 years ago by that well-known socialist Benjamin Disraeli, who proclaimed: the first consideration of a Minister should be the health of the people". He was not talking about health solely in terms of hospitals, but in the broad social sense.

In his excellent book entitled "The Great Democracies", Winston Churchill described what the Conservative party did in the 1870s: A Trade Union Act gave the unions almost complete freedom of action, an Artisan's Dwelling Act was the first measure to tackle the housing problem, a Sale of Food and Drugs Act and a Public Health Act at last established sanitary law on a sound footing. Disraeli succeeded in persuading much of the Conservative party not only that the real needs of the electorate included healthier conditions of life, better homes, and freedom to organise in the world of industry, but also that the Conservative Party was perfectly well fitted to provide them. How far the Conservative party has travelled since then. Its meanness and indifference and its sniggering about poverty that we have heard from Conservatives today proves how unfit, how divided and how irrelevant contemporary Conservatism is, whether of the Vulcan or the "dithering", "don't know" and "undecided" factions.

If we want to build one nation again, we shall need a change of Government. Only a Labour Government can deliver to the citizens of Britain the one nation they need and merit, and in which they should live.

8.41 pm
Mr. Jacques Arnold (Gravesham)

I am most grateful to the Opposition for choosing a debate on social and economic policy. My only regret is that their motion does not live up to the occasion.

Labour's motion condemns what it calls "damaging inequality", but it does not deal with the fact that the policies that Labour has traditionally espoused would bring about a damaging equality. What concerns me is that Labour's policies would create a damaging equality between the working men and women of Britain and the workshy. We have heard nothing about the measures that Labour would introduce to encourage working people. Labour policy invariably deals with how one can increase the income of the workshy, which results in employment traps which in turn are a major problem for the social and economic fabric of this country.

The motion then condemns so-called "insecurity". It should certainly be tackled, but it stems largely from the rapidly changing world economic situation. We have always said that no one owes us a living, but the tiger economies and Latin America are coming up rapidly and beginning to compete with us. It is indeed the case that no one owes us a living, but how would Labour policies deal with the serious insecurity facing us? We have seen the steps taken by the Government, but the Labour party offers in exchange only the minimum wage and the social chapter. Many of my colleagues have dealt with those two particular Labour policies. There is no doubt that if they were carried out as Labour proposes, insecurity in this country would increase considerably.

The Labour motion goes on to say that the Government must take action which promotes employment opportunities, particularly for the long-term unemployed, increases the skills and adaptability of the workforce". It is clear that Labour did not listen to the opening speech of my right hon. Friend the Secretary of State for Social Security, who catalogued the steps taken by the Government. Indeed, those steps are outlined in considerable detail in the admirable Government amendment.

I shall now concentrate my remarks on the current trends in social and economic policy and their impact on the family. I wonder how many people have faced up to the facts. Today, one in five families with dependent children is headed by a lone parent compared with only one in 12 in 1971. How many people are aware that the proportion of families headed by single mothers who have never been married has grown from 1 per cent. to 7 per cent. in the same period? Today, nearly one in three births occur outside marriage compared with one in 16 only 30 years ago. Marriage rates have reached their lowest point since records began more than 150 years ago. There has been a sixfold increase in the annual divorce rate since 1961. If current trends continue, four out of 10 new marriages will end in divorce.

Two out of three mothers with dependent children have jobs or are actively seeking work compared with fewer than half only 20 years ago. Economic activity among mothers of children under five has increased from just over a quarter to almost half. Those facts have been exacerbated by a mixture of changing employment patterns and the impact of the tax and benefits structure.

I would contend that the social and economic policy followed for many years has resulted in the undermining of the breadwinner. The strength of the role of the father-provider of the family has been severely eroded. In the past 30 years, this country has lost 3 million relatively well-paid full-time jobs for semi-skilled and unskilled male factory workers, and modern technology has also limited the low-skill male jobs in transport, warehousing, retailing and offices.

As a result, the unemployment rate for young low-skilled males is high, despite the development of new schemes and training by the Government. That has led in turn to those very young men not providing what is known as a "marriage prospect" to eligible young women and a low rate of creation of stable marriages in which to bring up children. Their loss of self-esteem derived from full wage packets also leads to delinquency and crime.

Conversely, modern technology has created millions of new jobs requiring greater skills, and they are more suited to the aptitudes and preferences of women. Jobs are also more flexible and not necessarily full time. That has created a swing in the balance of employment, encouraging female employment to such an extent that nearly half the work force is female. Indeed, more than 50 per cent. is expected to be female in the year 2000, and many women are maintaining their jobs through parenthood.

The net result has been the undermining of the father as breadwinner, and it militates towards single-parent families, illegitimate births and divorce, all of which have an impact on the children of the nation. The trend for mothers of young children to work is growing. It is interesting to note that the proportion of working married women with children under five has risen from 27 per cent. in 1977 to 47 per cent. four years ago, according to the latest census. That has not happened through choice.

The social attitudes survey shows that 76 per cent. of mothers thought that they should stay at home full time with their children. The figure rose to 80 per cent. in lower-income groups. [Interruption.] The hon. Member for Peckham (Ms Harman) is shouting from a sedentary position, but the fact is that, unlike her, most women would prefer to stay at home and look after their children.

Ms Harman

How long are women to spend at home looking after their children? Are they supposed to stay at home until the children are 30, or perhaps 40? It is no good making a blanket statement to the effect that women must get out of the labour market for ever once they have children. Clearly, they must leave it temporarily, but how long does the hon. Gentleman have in mind?

Mr. Arnold

How long is precisely as long as those children need their mother properly to develop them. My worry is that the fact that if mothers do not stay at home, especially if they wish to, it damages the development of their children. As I said, the social attitudes survey shows that 76 per cent. of those mothers believe that they should stay at home, and the statistics increase to 80 per cent. in lower-income groups. The mothers know the impact on their children in terms of socialisation, nurturing and support.

The House should ask itself, why have those mothers done so? The answer is that real and perceived financial need have driven them to do so. Prices, especially housing costs, have increased to absorb two salaries; as the job market has changed, wages have adjusted to equality through lower unisex rates; and taxation policy has progressively removed the previous bias that favoured the family.

In recent years, taxation policy has changed savagely, withdrawing favoured status from married couples and causing a heavy impact on the family. That has come about in response to calls for fiscal simplicity and sexual equality. In recent years, we have split the taxation of the family. When a mother gives up paid work to care for her children, she forfeits not only her income, but her tax allowance, which is worth at least £880 to the family and is not transferable to the husband.

There has been a further impact on the married couple's allowance—which has been frozen, and therefore eroded in value, for the past four years—through the downbanding from standard rate to the 20 per cent. band last year and to the notional 15 per cent. band this year.

The benefit to families has been reduced from £430 a year ago to £258 this year—a loss to every family of £172. Further, if the married couple's allowance had kept up with inflation and had continued to be applied at the standard rate, it would be worth £200 more this year.

Mr. MacShane

I am genuinely interested in the line that the hon. Gentleman has pursued. Does he agree that, if we want to consolidate family life and, especially, give young children a good start, it would be helpful if we could enact parental leave provisions that would allow both parents to spend time with them, particularly with young babies, in the first six months, 12 months, 18 months or two years?

Mr. Arnold

Proposals such as that would be just as damaging as the minimum wage in wrecking the chances of families with young children of getting jobs. We should be bolstering the father in being the breadwinner, and structuring the tax system so that mothers can stay at home, as so many of them wish.

It is interesting to note that, for the average family with the mother caring full time for the children, the impact of the loss of her income and tax allowance benefit combined with the devaluing of the married couple's allowance and mortgage interest relief for families is a severe squeeze on family net income.

Tax and national insurance contributions for single persons on average income have declined from 31.5 per cent. in the last year of the Labour Government to 28.6 per cent. today, despite the increase in taxation in recent years. They have declined less for a married person, from 27.8 per cent. to 26.8 per cent., but the significant statistic is that the burden of taxation on married couples with two children under 11, assuming a non-earning wife and taking into account child benefit, has increased from 20.9 per cent. to 21.9 per cent.

A Conservative Government must pay attention to that. Our taxation policies have had an adverse impact on families, whereas the impact on single persons and married couples without families has improved. It is time that the Government took that very much on board.

The Treasury has benefited considerably from recent measures such as the reduction in the married couple's allowance. The married couple's allowance, as we recall, was introduced in 1991 with independent taxation, and it now applies to 10.5 million families. The Chancellor, by reducing that tax allowance from the 25 per cent. band to the 15 per cent. band this year, has made some considerable savings, and salt has been rubbed into the wounds of families by the impact of the so-called allowance restriction on personal tax coding, which draws attention to and emphasises the 15 per cent. band.

I wonder how many people realise that the gain for the Treasury and consequent loss for families has already increased to £2,090 million simply as a result of the downbanding, and that the impact since 1991–92 of not increasing the married couple's allowance for inflation has been a benefit for the Treasury at the expense of families, of a further £3 billion. The impact on families of the downbanding of mortgage interest relief at source has been that the Treasury has gained more than £1 billion at the expense of the family.

I hope, therefore, that, in preparing his Budget this autumn, the Chancellor of the Exchequer will produce a Budget for the family. I believe that he should restore the married couple's allowance to the standard rate band, which would cost the Treasury £2.4 billion. There should be no similar restoration of the additional person's allowance for single parents of children other than for those who are widowed, as that would be a disincentive for illegitimacy and for divorce.

A capacity should be introduced for non-working mothers with dependent children to transfer their basic allowance to their working husband. If that were to be done, there would be a major impact, worth £861 to the family, at a cost to the Treasury of £2.8 billion.

I believe that, in considering social and economic policies, we should consider the impact on the family. If the Government face up to those matters in the Budget in the autumn, not only will there be a significant effect on the employment market through releasing jobs currently carried out by mothers and making them available to less skilled males, which will have an economic benefit as a spin-off, but we shall reverse the tide that has worked against the family, to the detriment of the development and growth of our young people.

8.57 pm
Mr. Ken Purchase (Wolverhampton, North-East)

Few of my constituents would recognise themselves in the picture that the hon. Member for Gravesham (Mr. Arnold) painted. In contrast to the smaller micro-economic analyses that have just been made, let me mention one or two global statistics.

Unemployment costs the nation between £20 billion and £30 billion per annum. The former Department of Employment's own figures clearly show the average cost of an unemployed person in terms of benefits and revenue and spending power forgone. That is the nature of what we face today.

It is all very well Conservative Members saying that unemployment has been falling for X months. Bearing in mind the way in which unemployment is measured, they cannot be accused of telling us anything that is not true, but, as other hon. Members have said, there have been so many changes in the way in which the employment statistics are collected in recent years that no proper comparison can now be made between when the Conservatives took office and the present day.

My hon. and learned Friend the Member for Leicester, West (Mr. Janner) said that the true comparison was between roughly 1,050,000 people in 1979 at the end of the Labour Government and 2.5 million now. We can accept with glad hearts and great pleasure the fact that some of our constituents have found work in recent months, but whatever Conservative Members tell us about unemployment falling, it does not alter the fact that the record of the Conservative Government on employment is abominable in every sense of the word.

As a result of the growth in unemployment, the social security system is less and less able to cope with the demands placed on it. Although the cost of social security in real terms has doubled, benefits paid are now worth less to the individual than in 1979. So we have had a doubling of the cost yet less support for people who are unemployed or otherwise unable to get into the labour market.

Other recent statistics show that one third of males aged 16 to 65, and therefore potentially economically active, are not in employment for one reason or another. It is no wonder that the social security budget is creaking at the seams. It is no use Conservative Members telling us that they intend to clamp down on scrounging. Opposition Members support that: we do not believe that people should be able to obtain by fraud, cheating or other methods benefits or anything else to which they are not properly and fully entitled.

Let me summarise a kind of framework. I talk of wealth, I talk of work and I talk of welfare—three Ws. Each one is a necessary step to the other, for without work—I mean real work that adds value—there can be no worth. Unless wealth is created, at a personal level or collectively, there can be no welfare. So we all know where we are starting from. We can now see in perspective what it means to have 2.5 million-plus people unemployed in this country. It means that the wealth-creating forces are diminished and that the wealth that would be created cannot be distributed in any way, never mind be kept in the wealth creator's pocket. It is lost and we cannot regain it. Conservative Members and, indeed, Opposition Members are concerned that money has been lost through strikes, illnesses and accidents at work, but now we have a deep self-inflicted wound.

For people who are in work, the quality of work has changed beyond recognition. At one end of the spectrum, it is certainly true that there has been massive enrichment of the few, but for the masses the quality of work has diminished. No longer can people with skills which they learnt perhaps in difficult circumstances necessarily transfer those skills to another job. The very technology that engineers, scientists and technicians have created has been used to dispossess those who have the skills of their rightful inheritance. It is paradoxical, but none the less that is the way in which technology has moved in the past 15 or 20 years.

The trade union rights that underpinned people's safety at work have been washed away over the years by legislation. Let me tell Conservative Members, and the world if it wants to listen, that where the economic system is dominated by the simple economics of supply and demand, when the demand for labour increases none of the changes that the Government have made will make a scrap of difference. The employees, the workers, the labour force will reclaim that which they think is theirs. The Government will have made no difference to the way in which the structural part of labour relations is played out in Britain. All that the Government will have done is to apply the cruel market forces of supply and demand, which simply mean that today employers can hold down wages simply by using the single economic tool of unemployment by frightening people that they might be out of work tomorrow. Tomorrow, when those people have jobs, the Government can be sure that their position will start to be redressed. The Government may understand it, but they will live to regret it if they do not.

Much remains to be done to restore a proper balance between unions and their members and employers and their organisations. Only when the scales are balanced and fairness prevails may we expect real progress.

Ministers claim that the number of employed people is rising, and to some extent that is borne out by the facts; but many of those jobs are part time and poorly paid. As for the minimum wage—

Mr. Peter L. Pike (Burnley)

My hon. Friend is about to refer to the minimum wage. Does not low pay equal poor health, poor housing, poor social conditions and poor educational opportunities?

Mr. Purchase

My hon. Friend makes an excellent point, with which I shall deal in a moment.

The Conservative party has no right to press Labour to say what the minimum wage should or will be, when it will not say what its minimum wage is. When we ask, "What is the least for which anyone should work?", you have not a word to say. Is it 50p an hour? Is it £1 an hour?

Mr. Deputy Speaker (Sir Geoffrey Lofthouse)

Order. The hon. Gentleman must stop blaming the Chair.

Mr. Purchase

I seem not to learn these simple lessons, Mr. Deputy Speaker. I apologise profusely—but, as you know, I am somewhat excitable about matters such as this.

It is incumbent on Conservative Members to tell us the amount for which they believe that people should work. If that amount is nothing, they should say so; if it is 50p an hour, they should tell us that it is 50p an hour. I suspect, however, that they know nothing of these matters, and that they therefore will not rise to the bait.

Wealth should be a function of work, adding real value to the goods and services that are provided. In that context, Britain once had a strong economy: we made things, exported things, ensured that the quality of the goods was first class and traded with the world. We held our own. It was not until the Conservatives implemented their policies of the late 1950s that we saw balance of payments problems that the country had not hitherto experienced in peacetime; even then, the Conservatives had begun to forget that, as an island economy—notwithstanding our wider role in Europe and, indeed, the world—we must import certain goods, apply our skills, initiative, innovation and invention and then export those goods at a price greater than that which we originally paid.

That put our balance of payments into perspective, and we got it right: we were paying our way. In 1964, however, a Labour Government inherited a balance of payments deficit of some £400 million. That does not sound a lot, but I think that it would amount to a considerable sum in modern-day money—an amount approximating to the balance of payments problems that we experienced throughout the late 1980s, which were resolved only through the sale of the family silver.

Making money has now become the way in which so-called wealth is created; but it is not real wealth. It is imaginary wealth, because it has no strength or material value. What do I mean by that? Let me give my answer in three ways. At a local level, while small firms struggle to win orders and to fulfil them on the basis of delivery dates, quality and price, thieves and burglars are ripping off the rest of society. In every street in every town, many people are involved in petty thieving of one sort of another, taking away the value that is created by people who go to work. Nationally, white-collar crime is rising inexorably. Scams are reported day and night in our local and national newspapers. At board room level, directors over-reward themselves in an immoral way. People are sitting on each other's remuneration committees, determining who will get what. [Interruption.]

Mr. Purchase

I beg your pardon?

Mr. Pike

People are ripping off pension funds.

Mr. Purchase

Indeed—speak a little louder.

We now know that many pension fund managers are paid on a results basis and are turning over shares, adding to our short-term financial problems just to line their own pockets. Pensioners are often the losers in such matters. Massive pension fund scams have taken place—not least the Maxwell disgrace, with all that that has meant—as a result of which people have tried to make changes, but without much success.

Currency speculators do not care what their activities will do to a nation state. It is simply a matter of pressing buttons—again using the technology created by scientists, engineers and technicians in this country and elsewhere. Their tools are being used against them. Speculators are turning their countries inside out at the press of a button. It is paradoxical. At the same time, they speculate internationally in shares, without a care for whether the company that they speculating for or against will go down the tube, and whether men and women will become unemployed. That is a "make money" society; it is not the "earn" society that Labour Members want to create. It is not about the spivs in the City of London.

On high and low pay, if what Conservative Members were saying about minimum and low pay were true, it is certain that Calcutta and the sweat shops would be a paradise, and that the City of London would be a desert, but we know that the opposite is true because these people speculate and exploit everywhere they go. Respect no longer exists for working men and women who create real wealth in this country. Some people think that large-scale international spivvery should be rewarded. That is not right.

Under the Tory Government, for the first time this century, we have seen the steady—at times almost imperceptible—reversal of the way in which income is distributed in favour of people who have the least. For the first time in a century, that worthy civilised trend has been reversed under this Government.

What does it mean? With so many people out of work, with the social security system under so much pressure, the ideals of Beveridge—for the welfare state to act as a safety net, but always recognising that we would have a society that depended on full employment, however that was defined—are creaking under the strain. The rich are getting very rich and the poor are getting very poor—such is the society that has been created in Britain today.

The value of benefits has diminished but their total cost has doubled since 1979. What has been the result of the benefits culture? In many cases, people, especially the young, have lost any understanding of the connections between work, wealth and welfare. They believe that, broadly speaking, wealth and welfare drop on the mat in the form of a giro cheque. You have robbed them of their dignity, of their right to work—

Mr. Andrew Mackinlay (Thurrock)

The Tories have.

Mr. Purchase

The Conservatives have robbed them. I am sorry, Mr. Deputy Speaker. I know that you are too kind a man to do that.

The Conservatives have robbed those people of their dignity and of their understanding of the connections, which are so important for a civilised life in which we can both give and take when that is necessary. Young people have borne, and will continue to bear, the brunt of the Government's policies. Inequality is growing every day and it is reaching obscene levels. An elderly woman with disabilities came to my surgery on Saturday. She wants and needs to move from her present council flat to a ground-floor flat. The council are willing to relocate her, but it cannot afford to pay the costs of her furniture removal. She went to social security as she is on income support and was advised that she would have to apply for a loan in order to pay her removal costs.

That woman worked for most of her life and her husband paid into pension schemes all his working life. Now, at 70, she is reduced to having to apply for a loan to move house on account of her disabilities. Is that the society that the Conservatives laud in their amendment? They should disown it without further delay because that inequality is unacceptable in a civilised world.

From time to time I like to compare levels of inequality in this country. One could compare the woman to whom I referred with the Queen, the richest woman in the world, who is so rich that she does not know how much money she has.

In the world created by the Conservatives drug dealers earn more money than centre-lathe operators, theft is more valued than earning a living and gambling has been elevated to a grand scale by the national lottery. People now think that their only hope of escape is a win on the lottery—whether it is £1,000 or the figure offered last weekend. Gambling has been institutionalised and the state has become a bookmaker.

My town has an awful reputation for prostitution. Wolverhampton apparently has more prostitutes per capita than any other town in England. Young girls as young as 11 are known to ply their trade in my town. The House condemns sex tourism, but we have it on our doorstep courtesy of a Conservative Government. I could describe the Government—if it is not unparliamentary, Mr. Deputy Speaker—as a state pimp because of the policies that they have introduced and the way in which they have allowed society to rot from the roots up. I do not believe that that is too strong a description of the Conservative Government.

9.17 pm
Mrs. Teresa Gorman (Billericay)

I have been allocated the princely total of three minutes in which to devastate the House with the erudition of my remarks.

I entirely support the remarks of my right hon. Friend the Secretary of State, who opened the debate. I believe that he is determined to use taxpayers' money to provide incentives to get people into work rather than use it to pay people for not working. I commend him for that approach.

I am worried, however, when I see the scale and the range of incentives. Every incentive, such as the jobseeker's allowance, back-to-work bonus and all sorts of other benefits to top up earnings, comes out of the taxpayers' pockets and taxpayers on low wages will be less motivated to work to build up their family fortunes. Therefore, I suggest that perhaps it would be better to examine family incomes as a whole and not rise to the Labour party's bait.

Labour Members keep grinding on about the necessity of introducing minimum wage laws. I do not wish to rehearse the sensible arguments advanced by Conservative Members about why minimum wage laws are a bad idea. It has been mentioned several times that President Clinton is in favour of minimum wage laws. I am not surprised about that because President Clinton is a socialist by our standards. Of course President Clinton commends the concept, but in the United States of America—which has had minimum wage laws for many years—unemployment among unskilled and minority groups in particular has persistently increased relative to employment. Minimum wage laws have removed from employers the cost of their discrimination. If an employer must pay a certain wage regardless, he will tend—for whatever prejudiced reason he may have—to choose the most attractive candidate. Minimum wages always discriminate against the people that Opposition Members wish to help.

I invite my right hon. Friend the Secretary of State for Social Security to explore other areas of job creation, particularly those associated with home and family work. Recently, the French have created many new jobs for young and unskilled people in homes whose family members go out to work. In France, if one needs someone to help with domestic duties—such as looking after an elderly relative or small children—one can offset the cost against the family's gross income.

Wages within the family should also be considered. There should be less pressure for every job to achieve a minimum wage starting point. In many households, one wage supplements another. If a woman is prepared to take a part-time job at a relatively low wage—perhaps because it is unskilled—to supplement her family income, that is as valid a reason for working as that of the family's top wage earner. Considering family income as a whole will bring some sanity to our attitudes to wages.

9.21 pm
Ms Harriet Harman (Peckham)

This debate has shown that despite all the drama surrounding the Tory leadership election, nothing has changed. The stark divide between this side of the House and the Government remains. The Tories have brought unemployment, division and insecurity—and they have produced no policies today that will change that. Labour believes that the task of government is to modernise our economy and to build our community. Britain needs new policies for economic success and social renewal.

We need nothing less than a skills revolution, to put our businesses and economy at the front line of economic competitiveness, and to help people to get work and get on in their jobs. However, when the Secretary of State for Education and Employment was Secretary of State for Employment, she cut training. We need an attack on the national scandal of poverty pay. While privatised utility bosses award themselves huge pay increases, millions of men and women at work struggle in the twilight world of low pay. When the right hon. Lady was Secretary of State for Employment, she abolished the low pay protection of wages councils. Again today, the Tories have rejected a national minimum wage.

We need a comprehensive strategy to tackle unemployment, take people off benefit and put them to work—in particular, to end the menace of people being trapped on the dole for years. Again in today's debate, the Tories boasted that unemployment is a problem solved, and they plan instead to cut benefits to the unemployed.

We need to make people at work feel more secure. House prices fall because no one can plan ahead. High street shops struggle because people do not want to spend. The Tories tell us that a fearful and insecure work force is a good thing. People throughout the country know what is needed—but we have Tory failure and no change in policies that have failed.

The Prime Minister has been re-elected leader of his party—just, and Cabinet posts have changed hands. What has changed in the real world in Britain today? What has changed for the unemployed? Nothing. Still the Government deny that unemployment is a problem; still they refuse to take action to take people off the dole and put them into work; still they cut the benefit bill, not by putting people into work but by cutting the amount of benefit that people have to live on. There are cuts in unemployment benefit—from 12 months to six months; and cuts in help with mortgage payments for the unemployed. But the problem of unemployment remains—as my hon. Friend the Member for Wolverhampton, North-East (Mr. Purchase) put it, people of working age are not at work.

What has changed for the young black unemployed man in London? Still, 60 per cent. of young black men under the age of 24 are without a job. What has changed for the people of Manchester? My right hon. Friend the Member for Manchester, Gorton (Mr. Kaufman) told us movingly about the problems of unemployment that remain in his constituency. The Government would simply sweep them aside and pretend that they do not exist.

Unemployment is scarring our communities. As my hon. Friend the Member for Rotherham (Mr. MacShane) said, one in six men in Rotherham is out of work. Unemployment is scarring communities in every region of Scotland and Wales—and still the Conservative Government reject commonsense proposals for immediate action to put people back to work. I refer to the release of council house receipts to enable councils to start building again, an environmental task force to provide work and improve environmental standards, and a tax relief of £75 as an incentive to employers to take on people who have been unemployed for more than two years. The Government reject all these proposals, claiming that unemployment is not a problem.

Unemployment is a problem, however, not just for the unemployed but for those in work, because it is one of the major reasons why people in work feel insecure. What has changed for them? Nothing. Will people feel more secure in their jobs when they read in the newspapers that "Tarzan's in charge"? I do not think so. Will house prices rise now that the Department of Employment has been abolished? I do not think so. There is an epidemic of insecurity at work which has swept from the private sector through to the public sector, from manual workers through to management. There are too many people who fear that each pay packet may be their last.

People have no long-term confidence in their employment. But to buy a house or even a car they have to make a long-term commitment: 25 years for a mortgage, five years for a loan on a new car or three for a loan on a second-hand car. Yet today one fifth of employees are out of their jobs within a year. More and more jobs are on temporary contracts. Negative equity traps people in their homes and makes them nervous about spending. They are afraid to move or to take risks—afraid to plan for the future. No wonder house prices have fallen in real terms by 30 per cent. in the past six years. Just because the Prime Minister is temporarily more secure in his job does not mean that other people are more secure in theirs out in the real world.

People know that the only way they will feel secure is if the economy is growing strongly—not boom and bust. They know that they need a fair framework of rights at work, including the right to join a union. And they need the right education and skills.

The new First Secretary of State and Deputy Prime Minister and the Secretary of State for Education and Employment have been touring television and radio studios saying that the abolition of the Department of Employment shows that training and skills are now to be the Government's top priority. I challenge the right hon. Lady: is she making training a priority, or will she simply implement the training cuts that are set to run for the next three years? Already cuts in training are under way for this year, next year, and the year after. The training budget is to be cut by 12 per cent. in real terms over the next three years. Will she stop those cuts or will she implement them? Training for Work, the main adult training programme for the unemployed, is to be cut this year, next year and the year after. Will the right hon. Lady stop that or implement it?

We have no doubt that the cuts will be implemented. When the right hon. Lady was Secretary of State for Employment she chopped back the Department's training budget by £100 million over three years. The promises that the right hon. Lady will make tonight are already broken. The people know that the Tories are the Government of broken promises. They are the Government that we cannot trust. They promise to make training a priority but they cut it back to the bone.

When the right hon. Lady was Secretary of State for Employment she did nothing to provide training to those in work who need it most, the low paid with no skills. Let there be no mistake about it, this is a public policy issue. Today's worker without skills is tomorrow's long-term unemployed. The Tories reject our proposals that would ensure that all employers would invest in the training and development of their employees.

What has changed with low pay? The answer is that it has become worse. People know that our society is riven with unfairness, division and inequality. There is excessively high pay at the top and excessively low pay at the bottom. It makes for a divided society and an inefficient economy.

Mr. Pike

Is it not a fact that the low paid who are on family credit can be hit to the extent that for every pound that they receive at a certain stage they may benefit by only 3p? Is it not time that the Government did something to help those people?

Ms Harman

That is right. Those who are trapped in low pay and depend on benefits find that they are no better off if they earn more because of the pound-for-pound withdrawal of benefit. The low paid who are trapped in poverty and dependency cannot escape. That is why we must have a national minimum wage. The gap between top executives and their employees is twice as wide in the United Kingdom as it is in Japan. Cedric Brown has become famous for his huge pay increase while millions of our fellow citizens work all hours yet still struggle to make ends meet.

These are the figures. Over 1 million—

Mr. Duncan

Will the hon. Lady give way?

Ms Harman

I shall give way to the hon. Gentleman if he will say whether he is prepared to justify 300,000 people earning less than £1.50 an hour. Does he think that that is acceptable? Will he justify pay of £1.50 an hour?

Mr. Duncan

I do not like the fact that many people are earning only that amount, but to tax the rich and introduce a minimum wage would not solve the problem. The hon. Lady was in her place when I talked about a minimum wage. Does she accept that if a minimum wage were set at below the level that an employer was prepared to pay it would be an irrelevance? Does she agree also that if it were set above that level it would undoubtedly have a detrimental effect on employment? Will she answer those questions and tell us at what level in today's circumstances she and her party would set a minimum wage?

Ms Harman

The hon. Gentleman says that he does not like people earning less than £1.50 or £2.50 an hour. The Government, however, have resolutely set their face against doing anything to increase such rates of pay. Far from that, they have removed protection that would have prevented people earning lower and lower rates of pay. I shall come to the hon. Gentleman's argument about the level of a minimum wage later.

Who on the Government Benches will justify pay of £1.50 an hour? Is it the Tory economic miracle after 17 years to threaten people with pay of £1.50 an hour or no job? We are not faced with an accident.

Mr. Jacques Arnold

Answer the question.

Ms Harman

I shall respond to it later.

It is not that the Government do not know what to do about low pay. It is not merely that the Government do not care about low pay. Low pay is not the consequence of Government incompetence or even Government neglect. It is a central part of their strategy of low pay, deregulation, insecurity, competition by means of even lower pay, cutting costs and a fearful work force. Under the Government low pay is not only a national scandal but an instrument of Government economic policy.

The Government are not trying to prevent low pay. They are in favour of it. The Secretary of State for Education and Employment, when she was Employment Secretary, abolished the wages council. She stripped away low-pay protection from 2.5 million workers. The Government are now asking the unemployed, before they can get their benefit, before they can get the jobseeker's allowance: What is the lowest wage you are willing to work for? They are using the unemployed to drive down wages still further.

But the British people reject the cruelty and the unfairness of low pay and they reject the Tory strategy of competing on low pay. Our determination to act on low pay is founded on our belief that the Government have a responsibility to reduce divisions, and that economic success for this country can be achieved only by being a high-skill, high-tech, high-investment economy.

We believe that low pay is a problem for the low-paid. It is also a problem for the taxpayer and for our society as a whole. It is a problem for the low-paid who struggle to make ends meet, who are trapped in benefit dependency and who work longer and longer hours. Low pay is a problem, too, for the public purse, because when employers do not pay proper wages, the taxpayer has to pick up the bill for housing benefit, council tax benefit, income support and family credit. In the past four years, the cost of those benefits for people in work has doubled and it now stands at £2.4 billion—£100 a year for every taxpayer to subsidise low pay. Are the Government going to justify that? Top-up benefits should be precisely that, not a subsidy for employers. That point was made forcibly by the hon. Member for Stratford-on-Avon (Mr. Howarth).

We believe that low pay is a problem that demands Government action, and we will take action.

The Tories will not take on the arguments—

Mr. Duncan


Ms Harman

The Tories will not take head on the arguments about the minimum wage, so they say that if we have a minimum wage people would be concerned about losing their jobs. It is true that people are concerned about losing their jobs.

Mr. Duncan

What rate?

Ms Harman

I will get to that point in my speech, if the hon. Gentleman will give me a break.

It is true that people are concerned about losing their job—15 years of Tory rule have certainly made sure of that—but a minimum wage, where it is sensibly introduced, does not cost jobs and we shall introduce it sensibly. [Interruption.] Around the world there are many different examples of different methods of minimum wage fixing, but they all have—[Interruption.] Conservative Members are not listening. They have asked all afternoon what our approach is to the minimum wage. I am about to tell them if they will just keep quiet. [Interruption.]

All around the world, many different methods are used by different countries to fix a minimum wage [Interruption.]

Madam Speaker

Order. I will have no more barracking from sedentary positions. The hon. Member for Rutland and Melton (Mr. Duncan) has asked his question. He might now listen. [Interruption.] Order.

Ms Harman

All around the world, there are difficult examples of how different countries, with Governments of the left and of the right, fix a minimum wage, and they all have one thing in common: they involve both sides of industry—employers and unions [Interruption.]

Madam Speaker

Order. [HON. MEMBERS: "Name him."] I am tempted to name him. I have warned the hon. Gentleman. Another murmur from the hon. Gentleman and he will be named.

Ms Harman

Thank you, Madam Speaker.

Those countries all have one thing in common: they involve both sides of industry—employers and unions—in coming together to agree the level for the minimum wage, and that is the approach that we shall take in Government. I have consulted many employers in manufacturing and services about the methods for implementing low-pay protection. We shall carry on doing just that in Government. We will establish a low-pay commission to recommend the level of the minimum wage, just as the wages councils did.

Employers and unions in consultation—that is what business is asking us to do to fix the minimum wage. We will not listen to the Tories; we will listen to employers and unions. There will be consultation involving both sides of industry, which is what they do in other countries. That is what happened in this country with the wages councils, that is what Winston Churchill did and that is what we will do in government.

The Conservative concerns about job losses are crocodile tears; they are bogus. When we introduced the Equal Pay Act 1970, women's pay was increased by law, and employers and Conservatives said that it would cost women's jobs and drive them back to the home. It did not happen. When the Secretary of State abolished the wages councils, she said that ending low pay protection would involve an increase in jobs. It did not happen. Pay went down and jobs in the wages councils sectors were lost. Now we have the worst of all words: low pay and no new jobs.

There is no evidence from this country or from anywhere in the world that low pay protection, when sensibly introduced, costs jobs. In all other developed countries, a floor under wages is a matter of consensus between parties on the right and parties on the left. Everywhere else, it is normal and is regarded as a necessary minimum standard. The Government have failed to recognise the important role for Government in a changing labour market. They do not understand that Government should make people feel partners in change, not victims of it. They do not understand that the role of the Government is to help people combine work and family responsibilities. They do not understand that it is the role of Government to ensure that there is a skilled and confident work force.

The Tory policies have failed and the British people know it; that is why they do not trust the Tories. The Deputy Prime Minister is going round the television studios talking about a new start. If he went round the country and talked to people, he would realise that the British people do not trust this Government. The only new start they want is a new Government for this country.

9.41 pm
The Secretary of State for Education and Employment (Mrs. Gillian Shephard)

The debate has been long. It must have been a disappointing one for the Opposition because it is, after all, their Supply day. For there to have been only two or three Labour Back Benchers in the Chamber for long stretches is obviously a scandal and a disgrace. It is better to pass a veil altogether over the attendance of the Liberal Democrats, who were not in their place for many hours.

The debate was opened in an elegant, even donnish, way by the hon. Member for Glasgow, Garscadden (Mr. Dewar). However, no amount of elegance or donnish charm could disguise the fact that he was circling round the vacuum that is Labour policy. He said nothing whatsoever.

I should not fail to mention the quite extraordinary contribution by the hon. and learned Member for Leicester, West (Mr. Janner). Not only did he treat the House to a dazzling display of "Where's the ball?", but he signally failed to convince the House of his altruistic concern about the merger of the Department for Education and the Department of Employment. I remind him that "vanish" is an intransitive verb. We should, perhaps, forgive the hon. and learned Gentleman. It is not only his birthday tomorrow, but it was his 40th wedding anniversary last week, as he announced to an astonished House last Thursday. In my later remarks, I shall aim to dispel his wilder fantasies and anxieties.

My hon. Friends the Members for Romford (Sir M. Neubert), for Stratford-on-Avon (Mr. Howarth), for Surrey, East (Mr. Ainsworth), for Rutland and Melton (Mr. Duncan), for Gravesham (Mr. Arnold) and for Billericay (Mrs. Gorman) made extremely valuable contributions to the debate, reminding the House not only of the need to be realistic about the problems that we face, but of the welcome fact that unemployment has fallen for 21 consecutive months and that we have a higher proportion of people of working age in work than the European average. They reminded us that a minimum wage would destroy enterprise and would cost jobs. Since the Labour party is unable to define the level of a minimum wage, what they say on the matter is so much hot air. My hon. Friends also reminded us of the opportunities and—very importantly—the current context.

Mr. Duncan

Did my right hon. Friend hear what I heard and what I believe the Official Report will confirm? Did not the hon. Member for Peckham (Ms Harman) promise—I think that is the right word—to give us the level at which she would set a minimum wage? Did she not break that promise within five minutes by refusing to do so? Will my right hon. Friend now invite the hon. Lady to give that number, without which the Opposition's policy is worth nothing?

Mrs. Shephard

Whether or not the hon. Lady made such a promise, she certainly did not give a number. Without a number, all talk of a minimum wage is so much hot air. It is clearly the intention of the Labour party to introduce a minimum wage, but as it knows that such a minimum wage would destroy enterprise and cut jobs, it does not dare to set a figure.

We heard much in the debate about poverty and job security. That is as it should be. Those are important issues and it is right that they should be debated. We heard a good deal less from Opposition Members about the context and about the nature of the world as it is now. We have a global economy that is fast moving and competitive, and we heard little from the Opposition about how the country is to thrive and prosper in those circumstances.

Predictably, we heard nothing whatsoever from Opposition Members about how jobs and security can be created. All we had from Opposition Members was a refusal to look at the world as it now is and a deep reluctance to face the reality of change or to master that change. As we approach a new century and a new millennium, we must look forward and prepare positively for the challenges that those will bring. There is no place for those who look only backwards, or for people whose hearts are in the Ministry of Labour that was founded in the 1890s and not in the Department for Education and Employment that has been founded in the 1990s.

The world is changing fast, and change engenders uncertainty and concern. That is not unique to this country. Right across the developed world, people feel insecure about jobs and threatened by new technology and by the opening up of markets, as tariff barriers disappear. I understand those fears, but technology change is here and will not go away, and nor will changing patterns of world trade. When GATT was formed, tariffs averaged 40 per cent. They are now down to 3 per cent. Britain is a part of the world marketplace and there are formidable competitors in that marketplace.

Mr. MacShane

May I invite the Secretary of State to throw away the script from which she is carefully reading and tell us what she thinks without the aid of a scripted speech?

Mrs. Shephard

Dear me—what an insightful contribution from the hon. Gentleman. I wish that the hon. Gentleman could have seen the faces of his colleagues as he ground on and on earlier in a speech full of carefully composed quotations. The hon. Gentleman might like to listen carefully as I proceed.

What is new and will increasingly face us in the next century is competition from low-wage economies whose peoples are as well-educated and as highly motivated as our own. Those economies are developing rapidly in south-east Asia, south America, eastern Europe and Africa. That is a challenge that young people who are now in our schools and universities will face when they leave formal education and start to earn a living. It is our challenge too, because it is our task to equip our young people when they leave formal education not just with the knowledge and skills that they need to survive, but with the attitude of mind to grasp the opportunities that they will be offered to enable them to thrive and prosper.

There is one way and one way only to guarantee job security and the benefits, whether material or otherwise, that come with it. That is to create enterprises in Britain which can take on the best competition in the world and beat it. To achieve that, people who work in those firms must have the skills and knowledge to do so. In tomorrow's world, with which we are concerned, industrial and commercial success will be based on knowledge, design and innovation.

We are steadily shaking off the legacy of the 1970s. We now have one of the best industrial relations records in the world. Productivity growth is as good, or better, than anywhere in Europe and inflation is once again under control and down to levels last seen more than 30 years ago.

Of course I accept that insecurity over jobs is a real factor. That is why the Department provides more than 1.5 million employment and training opportunities to help unemployed people get the new jobs that they want. The Employment Service plays a vital role, working with training and enterprise councils, to provide jobs and training. More than 200,000 new vacancies are being notified to job centres every month and unemployed people are getting those jobs. Britain now has fewer people claiming unemployment benefit than any other major country in Europe. More of our adult population have jobs than in any other major European country.

We have also made progress in education. The knowledge and skills of those joining the work force for the first time are improving. Less than a quarter of our young people got five good GCSEs 15 years ago, now it is over 40 per cent. The number of young people gaining two GCE A-levels has doubled to 28 per cent. since 1979. Britain now graduates more of its young people than just about any country in Europe. That is a record of achievement and of consistent improvement, and a solid base on which to build Britain's skills. There remains a lot to do, but the framework is in place and the improvements are there and are measurable.

Much has been said tonight about division and I accept that there has been a divide in this country—a divide between the academic and the vocational. It is a false divide. That is why the new Department for Education and Employment has been so widely welcomed—

Mr. Kevin Barron (Rother Valley)

By whom?

Mrs. Shephard

I will tell the hon. Gentleman. The Association of Metropolitan Authorities, for example, strongly welcomed and supported the merger, which has been its policy for many years. It has been welcomed by the Secondary Heads Association, which said, We welcome the merger and have argued for it in the past. There is a need for coherent linking of provision for post-16s. The Professional Association of Teachers said: This is very good news. PAT has been suggesting it for some time. Education and training need to be considered as a whole. The National Union of Teachers welcomed it, saying: Bringing education and training together should serve to promote vocational education and the development of lifelong learning. The National Commission on Education welcomed it, as did the Institute of Directors, which said that it is a sensible rationalisation, drawing together policies for education and training. The Confederation of British Industry has welcomed it. Howard Davies said: The CBI welcomes the changes announced today by the Government. We have long argued that responsibilities for these two vital areas should be brought closer together. The proposed structure will help to provide a clearer focus and more coherent policy formation. It welcomes it because it can see the opportunities that it will bring. It sees that in our schools—[Interruption.]

Madam Speaker

Order. While one can have no objection to hon. Members having conversations, they must be quiet. It is very noisy indeed on both sides of the House and I ask for a little less noise.

Mrs. Shephard

Those bodies can see that there will be positive benefits and new opportunities in our schools. Schools need industry and employers increasingly play an important role, giving teaching materials, supporting events and providing motivation on careers, particularly to young people who may need just that motivation and who find school days irksome. Employers can see that, as young people from the age of 14 onwards start to make those choices, helped by the invigorated careers service, they will be better informed if careers advisers, teachers and employers work more closely together. They can see that more and more young people are staying on at school after 16. Over 90 per cent. now stay on compared with less than one in three in 1979. They know that young people face a bewildering range of options—academic or vocational—which we can tackle with no turf wars through the new Department. They can see that we can better co-ordinate key policies to drive up skill levels and promote business success.

We can encourage closer links between education and the business world. We can promote greater coherence between academic and vocational qualifications. We can encourage even closer relationships between further education and TECs.

Mr. Mackinlay

What young people want to hear from the right hon. Lady tonight is how they can get jobs that are appropriate to their skills and aptitudes when they leave college or university. Does she not acknowledge that thousands of young people leaving college and university face skivvy jobs or jobs that are totally inappropriate to the expensive training and education that the state has provided, which will provide them with no job satisfaction? What will she do to provide real jobs for skilled people who have a great deal to contribute?

Mrs. Shephard

As this is an Opposition Supply day, I had hoped for a few ideas from the Opposition, but they have not been forthcoming. The hon. Member for Thurrock (Mr. Mackinlay) obviously has not noticed that unemployment has been falling for the past 21 months and that graduate unemployment has also been falling. I remind him of that and point out that it means a number of things. It means that the Government's labour market reforms are working; that the best help for unemployed and employed people is the sound and stable economic policies that we are pursuing; and that the Employment Service has done a magnificent job in placing unemployed people back into work. All those facts should be obvious to the hon. Gentleman, as should the nonsense of his party's policy of a minimum wage, which would destroy enterprise and jobs.

I was describing the benefits that will flow from the merger of the Department for Education and the Department of Employment. It is only the Labour party, linked as always with its old friends in the TUC, that cannot see those benefits. It is locked in the past and condemned by its knee-jerk reaction to oppose any change. Only Labour Members fail to see that this country's future lies with a skilled and well-educated work force.

The hon. Member for Peckham may be in touch with the TUC but she is out of touch with opinion in industry and the teaching profession.

Ms Harman

Will the right hon. Lady give way?

Mrs. Shephard

No, I have only two minutes left.

Who will speak for the Labour party on those matters in future? We wait to see. On tonight's showing, it is unlikely to be the hon. Member for Peckham, who arrived with her indignation prepared in advance. Unfortunately, she arrived without the answers. Yet again, she has proved herself incapable of answering the simplest of questions about Labour's intentions. She cannot answer the basic question: what would be the level of a minimum wage? May I give the hon. Lady a friendly warning? She may be wise to avoid making a commitment on that matter because if the experiences of her unfortunate colleague, the hon. Member for Sheffield, Brightside (Mr. Blunkett), are anything to go by, it normally suffices for an Opposition spokesman to make a policy statement for it to be countermanded by Labour high command, sometimes within months, sometimes within weeks, and once within two hours. How sad it is that the House has been subjected to the sort of imprecision and vacillation to which, alas, I became all too accustomed in respect of education. The interests of children in schools, students in our colleges and universities—

Mr. Gordon McMaster (Paisley, South)

rose in his place and claimed to move, That the Question be now put.

Question, That the Question be now put, put and agreed to.

Question put accordingly, That the original words stand part of the Question:—

The House divided: Ayes 230, Noes 299.

Division No. 200] [10.00 pm
Abbott, Ms Diane Dewar, Donald
Adams, Mrs Irene Dixon, Don
Ainsworth, Robert (Cov'try NE) Dobson, Frank
Allen, Graham Donohoe, Brian H
Alton, David Dowd, Jim
Anderson, Donald (Swansea E) Dunwoody, Mrs Gwyneth
Armstrong, Hilary Eagle, Ms Angela
Ashdown, Rt Hon Paddy Eastham, Ken
Ashton, Joe Etherington, Bill
Austin-Walker, John Evans, John (St Helens N)
Banks, Tony (Newham NW) Ewing, Mrs Margaret
Barnes, Harry Fatchett, Derek
Barron, Kevin Faulds, Andrew
Bayley, Hugh Fisher, Mark
Beith, Rt Hon A J Flynn, Paul
Benn, Rt Hon Tony Foster, Rt Hon Derek
Bennett, Andrew F Fraser, John
Benton, Joe Fyfe, Maria
Bermingham, Gerald Galloway, George
Berry, Roger Gapes, Mike
Betts, Clive Garrett, John
Blunkett, David George, Bruce
Boateng, Paul Gerrard, Neil
Bray, Dr Jeremy Gilbert, Rt Hon Dr John
Brown, Gordon (Dunfermline E) Godman, Dr Norman A
Bruce, Malcolm (Gordon) Godsiff, Roger
Byers, Stephen Golding, Mrs Llin
Caborn, Richard Gordon, Mildred
Callaghan, Jim Graham, Thomas
Campbell, Mrs Anne (C'bridge) Grant, Bernie (Tottenham)
Campbell, Menzies (Fife NE) Griffiths, Nigel (Edinburgh S)
Campbell, Ronnie (Blyth V) Grocott, Bruce
Campbell-Savours, D N Hall, Mike
Cann, Jamie Hanson, David
Chidgey, David Harman, Ms Harriet
Chisholm, Malcolm Harvey, Nick
Church, Judith Hattersley, Rt Hon Roy
Clapham, Michael Henderson, Doug
Clark, Dr David (South Shields) Heppell, John
Clarke, Eric (Midlothian) Hill, Keith (Streatham)
Clarke, Tom (Monklands W) Hinchliffe, David
Clelland, David Hodge, Margaret
Clwyd, Mrs Ann Hoey, Kate
Cohen, Harry Hogg, Norman (Cumbernauld)
Connarty, Michael Home Robertson, John
Cook, Frank (Stockton N) Hood, Jimmy
Corbett, Robin Hoon, Geoffrey
Corbyn, Jeremy Howells, Dr. Kim (Pontypridd)
Corston, Jean Hoyle, Doug
Cousins, Jim Hughes, Robert (Aberdeen N)
Cox, Tom Hughes, Roy (Newport E)
Cunliffe, Lawrence Hughes, Simon (Southwark)
Cunningham, Jim (Covy SE) Hutton, John
Dalyell, Tam Illsley, Eric
Darling, Alistair Ingram, Adam
Davidson, Ian Jackson, Glenda (H'stead)
Davies, Bryan (Oldham C'tral) Jackson, Helen (Shef'ld, H)
Davies, Rt Hon Denzil (Llanelli) Jamieson, David
Davis, Terry (B'ham, H'dge H'l) Janner, Greville
Jones, Barry (Alyn and D'side) Parry, Robert
Jones, Jon Owen (Cardiff C) Pearson, Ian
Jones, Lynne (B'ham S O) Pendry, Tom
Jones, Martyn (Clwyd, SW) Pike, Peter L
Kaufman, Rt Hon Gerald Powell, Ray (Ogmore)
Keen, Alan Prentice, Bridget (Lew'm E)
Kennedy, Charles (Ross, C&S) Prentice, Gordon (Pendle)
Kennedy, Jane (L'pool Br'dg'n) Purchase, Ken
Khabra, Piara S Quin, Ms Joyce
Kilfoyle, Peter Radice, Giles
Kirkwood, Archy Randall, Stuart
Lestor, Joan (Eccles) Raynsford, Nick
Lewis, Terry Reid, Dr John
Liddell, Mrs Helen Rendel, David
Litherland, Robert Robinson, Geoffrey (Co'try NW)
Livingstone, Ken Rogers, Allan
Lloyd, Tony (Stretford) Rooker, Jeff
Lynne, Ms Liz Rooney, Terry
McAllion, John Ross, Ernie (Dundee W)
McAvoy, Thomas Rowlands, Ted
Macdonald, Calum Sheerman, Barry
McFall, John Shore, Rt Hon Peter
McKelvey, William Simpson, Alan
Mackinlay, Andrew Skinner, Dennis
McLeish, Henry Smith, Andrew (Oxford E)
McMaster, Gordon Smith, Chris (Isl'ton S & F'sbury)
MacShane, Denis Smith, Llew (Blaenau Gwent)
McWilliam, John Snape, Peter
Madden, Max Soley, Clive
Maddock, Diana Spearing, Nigel
Mahon, Alice Spellar, John
Marek, Dr John Squire, Rachel (Dunfermline W)
Marshall, David (Shettleston) Steel, Rt Hon Sir David
Marshall, Jim (Leicester, S) Steinberg, Gerry
Martin, Michael J (Springburn) Stevenson, George
Martlew, Eric Sutcliffe, Gerry
Maxton, John Taylor, Mrs Ann (Dewsbury)
Meacher, Michael Thompson, Jack (Wansbeck)
Meale, Alan Timms, Stephen
Michael, Alun Touhig, Don
Michie, Bill (Sheffield Heeley) Turner, Dennis
Michie, Mrs Ray (Argyll & Bute) Vaz, Keith
Milburn, Alan Walker, Rt Hon Sir Harold
Miller, Andrew Wallace, James
Mitchell, Austin (Gt Grimsby) Walley, Joan
Morris, Rt Hon Alfred (Wy'nshawe) Wardell, Gareth (Gower)
Morris, Estelle (B'ham Yardley) Wareing, Robert N
Morris, Rt Hon John (Aberavon) Wicks, Malcolm
Mowlam, Marjorie Williams, Rt Hon Alan (Sw'n W)
Mudie, George Williams, Alan W (Carmarthen)
Mullin, Chris Wilson, Brian
Murphy, Paul Winnick, David
Oakes, Rt Hon Gordon Worthington, Tony
O'Brien, William (Normanton) Wray, Jimmy
O'Hara, Edward
Olner, Bill Tellers for the Ayes:
O'Neill, Martin Mrs. Barbara Roche and Mr. John Cummings.
Orme, Rt Hon Stanley
Ainsworth, Peter (East Surrey) Batiste, Spencer
Alexander, Richard Bellingham, Henry
Alison, Rt Hon Michael (Selby) Bendall, Vivian
Amess, David Beresford, Sir Paul
Arbuthnot, James Biffen, Rt Hon John
Arnold, Jacques (Gravesham) Bonsor, Sir Nicholas
Arnold, Sir Thomas (Hazel Grv) Booth, Hartley
Ashby, David Boswell, Tim
Atkins, Rt Hon Robert Bottomley, Peter (Eltham)
Atkinson, David (Bour'mouth E) Bottomley, Rt Hon Virginia
Atkinson, Peter (Hexham) Bowden, Sir Andrew
Baker, Rt Hon Kenneth (Mole V) Bowis, John
Baker, Nicholas (North Dorset) Boyson, Rt Hon Sir Rhodes
Baldry, Tony Brandreth, Gyles
Banks, Matthew (Southport) Brazier, Julian
Bates, Michael Bright, Sir Graham
Brooke, Rt Hon Peter Greenway, Harry (Ealing N)
Brown, M (Brigg & Cl'thorpes) Greenway, John (Ryedale)
Browning, Mrs Angela Griffiths, Peter (Portsmouth, N)
Bruce, Ian (Dorset) Gummer, Rt Hon John Selwyn
Budgen, Nicholas Hague, William
Burns, Simon Hamilton, Rt Hon Sir Archibald
Burt, Alistair Hamilton, Neil (Tatton)
Butler, Peter Hampson, Dr Keith
Butterfill, John Hanley, Rt Hon Jeremy
Carlisle, John (Luton North) Hannam, Sir John
Carlisle, Sir Kenneth (Lincoln) Hargreaves, Andrew
Carrington, Matthew Harris, David
Carttiss, Michael Haselhurst, Sir Alan
Cash, William Hawkins, Nick
Channon, Rt Hon Paul Hawksley, Warren
Chapman, Sydney Hayes, Jerry
Clappison, James Heald, Oliver
Clark, Dr Michael (Rochford) Heath, Rt Hon Sir Edward
Clarke, Rt Hon Kenneth (Ru'clif) Heathcoat-Amory, David
Clifton-Brown, Geoffrey Hendry, Charles
Congdon, David Heseltine, Rt Hon Michael
Conway, Derek Hicks, Robert
Coombs, Anthony (Wyre For'st) Hill, James (Southampton Test)
Coombs, Simon (Swindon) Hogg, Rt Hon Douglas (G'tham)
Cope, Rt Hon Sir John Horam, John
Cormack, Sir Patrick Hordern, Rt Hon Sir Peter
Couchman, James Howard, Rt Hon Michael
Cran, James Howarth, Alan (Strat'rd-on-A)
Currie, Mrs Edwina (S D'by'ire) Howell, Rt Hon David (G'dford)
Curry, David (Skipton & Ripon) Howell, Sir Ralph (N Norfolk)
Davies, Quentin (Stamford) Hughes, Robert G (Harrow W)
Day, Stephen Hunt, Rt Hon David (Wirral W)
Deva, Nirj Joseph Hunt, Sir John (Ravensbourne)
Devlin, Tim Hunter, Andrew
Dicks, Terry Hurd, Rt Hon Douglas
Dorrell, Rt Hon Stephen Jack, Michael
Douglas-Hamilton, Lord James Jackson, Robert (Wantage)
Dover, Den Jenkin, Bernard
Duncan, Alan Jessel, Toby
Duncan-Smith, Iain Johnson Smith, Sir Geoffrey
Dunn, Bob Jones, Gwilym (Cardiff N)
Durant, Sir Anthony Jones, Robert B (W Hertfdshr)
Dykes, Hugh Jopling, Rt Hon Michael
Eggar, Rt Hon Tim Key, Robert
Elletson, Harold King, Rt Hon Tom
Emery, Rt Hon Sir Peter Knapman, Roger
Evans, David (Welwyn Hatfield) Knight, Mrs Angela (Erewash)
Evans, Jonathan (Brecon) Knight, Greg (Derby N)
Evans, Nigel (Ribble Valley) Knight, Dame Jill (Bir'm E'st'n)
Evans, Roger (Monmouth) Knox, Sir David
Evennett, David Kynoch, George (Kincardine)
Faber, David Lait, Mrs Jacqui
Fabricant, Michael Lamont, Rt Hon Norman
Fenner, Dame Peggy Lang, Rt Hon Ian
Field, Barry (Isle of Wight) Lawrence, Sir Ivan
Fishburn, Dudley Legg, Barry
Forman, Nigel Leigh, Edward
Forsyth, Rt Hon Michael (Stirling) Lemox-Boyd, Sir Mark
Forth, Eric Lester, Jim (Broxtowe)
Fowler, Rt Hon Sir Norman Lidington, David
Fox, Dr Liam (Woodspring) Lightbown, David
Fox, Sir Marcus (Shipley) Lilley, Rt Hon Peter
Freeman, Rt Hon Roger Lloyd, Rt Hon Sir Peter (Fareham)
French, Douglas Lord, Michael
Fry, Sir Peter Luff, Peter
Gale, Roger Lyell, Rt Hon Sir Nicholas
Gallie, Phil MacGregor, Rt Hon John
Gardiner, Sir George MacKay, Andrew
Garnier, Edward Maclean, Rt Hon David
Gill, Christopher McLoughlin, Patrick
Gillan, Cheryl McNair-Wilson, Sir Patrick
Goodlad, Rt Hon Alastair Madel, Sir David
Goodson-Wickes, Dr Charles Maitland, Lady Olga
Gorman, Mrs Teresa Malone, Gerald
Gorst, Sir John Mans, Keith
Grant, Sir A (SW Cambs) Marland, Paul
Marlow, Tony Robinson, Mark (Somerton)
Marshall, John (Hendon S) Roe, Mrs Marion (Broxbourne)
Marshall, Sir Michael (Arundel) Rowe, Andrew (Mid Kent)
Martin, David (Portsmouth S) Rurnbold, Rt Hon Dame Angela
Mawhinney, Rt Hon Dr Brian Sackville, Tom
Mellor, Rt Hon David Scott, Rt Hon Sir Nicholas
Merchant Piers Shaw, David (Dover)
Mills, Iain Shaw, Sir Giles (Pudsey)
Mitchell, Andrew (Gedling) Shephard, Rt Hon Gillian
Mitchell, Sir David (NW Hants) Shepherd, Colin (Hereford)
Monro, Sir Hector Shepherd, Richard (Aldridge)
Montgomery, Sir Fergus Shersby, Sir Michael
Needham, Rt Hon Richard Sims, Roger
Nelson, Anthony Smith, Tim (Beaconsfield)
Neubert, Sir Michael Soames, Nicholas
Newton, Rt Hon Tony Speed, Sir Keith
Nicholls, Patrick Spencer, Sir Derek
Nicholson, David (Taunton) Spicer, Sir James (W Dorset)
Nicholson, Emma (Devon West) Spicer, Michael (S Worcs)
Norris, Steve Spink, Dr Robert
Onslow, Rt Hon Sir Cranley Spring, Richard
Oppenheim, Phillip Sproat, Iain
Ottaway, Richard Squire, Robin (Homchurch)
Page, Richard Stanley, Rt Hon Sir John
Paice, James Steen, Anthony
Patnick, Sir Irvine Stephen, Michael
Patten, Rt Hon John Stem, Michael
Pattie, Rt Hon Sir Geoffrey Stewart, Allan
Peacock, Mrs Elizabeth Streeter, Gary
Pickles, Eric Sumberg, David
Porter, Barry (Wirral S) Sweeney, Walter
Porter, David (Waveney) Sykes, John
Portillo, Rt Hon Michael Tapsell, Sir Peter
Powell, William (Corby) Taylor, Ian (Esher)
Rathbone, Tim Taylor, John M (Solihull)
Redwood, Rt Hon John Taylor, Sir Teddy (Southend, E)
Renton, Rt Hon Tim Temple-Morris, Peter
Richards, Rod Thomason, Roy
Riddick, Graham Thompson, Sir Donald (C'er V)
Rifkind, Rt Hon Malcolm Thompson, Patrick (Norwich N)
Robathan, Andrew Thornton, Sir Malcolm
Roberts, Rt Hon Sir Wyn Thurnham, Peter
Robertson, Raymond (Ab'd'n S) Townend, John (Bridlington)
Townsend, Cyril D (Bexl'yh'th) Wells, Bowen
Tracey, Richard Whitney, Ray
Tredinnick, David Whittingdale, John
Trend, Michael Widdecombe, Ann
Trotter, Neville Wiggin, Sir Jerry
Twinn, Dr Ian Wilkinson, John
Vauqhan Sir Gerard Willetts, David
Wilshire, David
Viggers, Peter Winterton, Mrs Ann (Congleton)
Waldegrave, Rt Hon William Winterton, Nicholas (Macclesfield)
Walden, George Wolfson, Mark
Walker, Bill (N Tayside) Yeo, Tim
Waller, Gary Young, Rt Hon Sir George
Ward, John
Wardle, Charles (Bexhill) Tellers for the Noes:
Waterson, Nigel Mr. Timothy Wood and Mr. Timothy Kirkhope.
Watts, John

Question accordingly negatived.

Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 30 (Questions on amendments) and agreed to.

MADAM SPEAKER forthwith declared the main Question, as amended, to be agreed to.

Resolved, That this House welcomes the increase of 38 per cent. in average incomes and the rise in spending of all income groups since 1979; welcomes the fact that the United Kingdom has fewer people claiming unemployment benefits and more jobs than any other major European country; welcomes the creation of a new Department for Education and Employment to improve further Britain's skill base and competitive position; applauds the £700 million package of measures to improve incentives to work for those on benefits and increase the rewards of work for lower-paid families; welcomes further initiatives, such as the Jobseeker's Allowance, the Back to Work Bonus, and the pilot of an Earnings Top-up for childless people on low earnings; believes that supplementing low pay to help people into work is preferable to destroying jobs through a statutory national minimum wage and the social chapter; and recognises that improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy.