Government Policies: Social Effects

HL Deb 30 April 1986 vol 474 cc260-7

3.6 p.m.

Lord Wells-Pestell rose to call attention to the social effects of government policies; and to move for Papers.

The noble Lord said: My Lords, having looked at the list of speakers I could perhaps be forgiven for thinking that there are areas in your Lordships' House which have no interest in what we are about to discuss this afternoon. There is not a single Member from the Cross-Benches participating and there is only one Member participating from the Alliance, but I am glad to say that we probably have the greatest authority in your Lordships' House on insurance matters and supplementary benefit in the noble Lord, Lord Banks, and I am delighted that he is taking part. Of the four Members who will be speaking on behalf of the Government, we at least have two Ministers, so perhaps we ought to be grateful for that.

The purpose of this debate is to draw attention to the kind of life which a large number of people are experiencing at present, due, we believe on this side, in large measure to the present Government's policies. There is no doubt in the minds of my friends and myself that those policies have caused a great deal of misery and a widening gap between the rich and the poor. Whether this debate will serve any useful purpose remains to be seen, for we on this side of the House have always felt that there is a wide divide between the philosophy of the Conservative Party and that of the Labour Party. That makes our task all the more difficult, for there must be a number of areas and situations which are familiar to us but which are almost unknown to a large number of noble Lords opposite. I did not say every noble Lord opposite, but a large number. Even if they know about them, they certainly will not have personal knowledge or experience of them.

We on this side of the House feel that it is the quality of human life and values which matter in the long run. One—and in my view the most important—function of government is to provide adequately and effectively for the underprivileged, to ensure that those in need are provided with the means to lead a worthwhile life, free of the anxiety of making ends meet. To put it another way, they should have a secure roof over their heads and sufficicent money coming in each week to pay their way and meet the family's needs. It is a perpetual struggle for a very large number of people.

In this Government's first Budget in June 1979, of the £3,500 million handed out in tax cuts, about 40 per cent. went to 5.5 per cent. of the taxpayers, and no one could agree—not in their right minds—that they really needed any of that money at all. Much the same happened this year, and the rich again came out of it very well. The gap between the rich and the poor was widened even more.

There are far too many people in our society who are not only finding it difficult to make ends meet but who do not succeed in ever overcoming their struggle. Beveridge's aim and principle was that the state should do more than just relieve poverty; it should provide the means to live without the anxiety of making ends meet. This principle, if not lost sight of by this Government. I honestly believe has been undermined by them.

I am not unmindful of the problem facing us, and I appreciate the cost of meeting the numerous benefits. Government expenditure on social security benefits in 1984 to 1985—obviously the last figures available—was £36,882 million. It is a lot of money. It is difficult to get a detailed and accurate breakdown of the figures available, but there are some 30 main social security benefits, including retirement pensions for nearly 10 million persons. In addition, there is supplementary benefit, where it is considered necessary, for the elderly, the sick and disabled, the unemployed, widows and one-parent families; that accounts for another 5 million people. That is not the total number of people who are in receipt of benefits; they were the only ones I was able to identify. Statistics are difficult to separate or get together, but these clearly show that there are millions of people entirely dependent upon the state for their existence. In a television broadcast on behalf of the Child Poverty Action Group on Sunday 20th April the Bishop of Stepney referred to the people's daily struggles to survive. He spoke about children who were inadequately clothed and noted that there were more than twice the number of people in his area on the breadline this year compared with last year. This was a statement made only last Sunday week.

The Government have surely been well aware of the situation of the poor as compared with the better off section of society; yet social security benefits have been cut since 1979, as a result of policy changes, the staggering amount being £11,100 million. In addition, the Government have taxed the unemployed by a total of £3,000 million since that tax was introduced in 1982. It means that the very poorest—pensioners, unemployed families with children, single parents, and the sick and disabled—have lost about £14,100 million since 1979.

Unfortunately pensioners fare the worst. Since 1979 the retirement pensioner has not been fairly treated; and in the recent spell of bad weather the amount of pension was not enough to ensure that there were no cases of pensioners dying. The Government have shown a great lack of concern, for it is certain that if pensioners had had more money, many hundreds of them would not have died during the cold spell.

The tax cuts for those earning over £30,000 a year totalled £4,400 million; an average saving of £2,380 per annum. In other words, the tax cuts recently given to those earning over £30,000 a year were worth about £200 a month. For those earning over £50,000 a year the cut was £12,780, which was over £1,000 a month. We all know that the Government's reply will be, "We could not afford higher benefits". It is always their reply in matters of this kind.

The City of London has done itself extremely well in recent years, though its conduct, I think most of us will agree, leaves much to be desired. Today it is a place where young men in their late 20s can earn £30,000 to £40,000 a year.

Noble Lords

More than that.

Lord Wells-Pestell

One firm—a leading stockbroker—last year doubled its wages bill, paying an average of £47,619 per person. I should like to quote a comment in one of the newspapers, which said: At the lower end of the employees' scale 73 people were paid between £35,000 and £120,000 a year". I understand that the chairman of Jaguar was given a 100 per cent. rise in 1985 from £86,000 a year to £173,000 a year, an increase of £1,673 a week. A press report refers to; the latest in a line of privatised company executives to benefit from huge pay rises as soon as they transfer to the private sector Frankly, I do not think that the man or woman has yet been born who is worth £186,000 a year either to the community or to any firm employing them. When one considers that there is so much poverty and misery in the country wage rates of that scale and increases of that scale really are quite immoral.

In view of the Government's meanness towards those in real need I should like to ask what has happened to the £53 billion revenues from North Sea oil since 1978, the £7,620 million which so far the Government have received from privatisation, the £3,892 million and the £1,206 million from levies on gas and electricity, and the saving of £4,900 million on rate capping.

It would be interesting to know where that money went. A caring government, aware of the misery and poverty of such a high percentage of people, would have arranged for a part of this vast amount to have been set aside to increase state benefits to a more reasonable level than they are at present.

I understand that the big four banks have between them made a profit—I admit before taxation—of about £2,800 million. But more than half of that amount will remain after taxation, and so they will come out of it very well. Is it beyond the wit of the Government to think up some way of taking a bit of what is left, as they have done from gas and electricity? In view of the conditions in which so many of our fellow beings are living some provision should have been made from this newly-found wealth so as to relieve the misery that exists at present. At least we ought to be doing something along that line.

We have a vast army of lone parents. I wonder how many noble Lords in this House realise that there are about one million lone parents. Their children are permanently clothed in other children's cast-offs. These children are never likely to have the experience during childhood of wearing anything new. Can your Lordships imagine the effect that this has on those children and the contribution it makes to anti-social behaviour? I am astounded that so many people (I am inclined to think that there are some such people in your Lordships' House) who have lived so long, seen so much and heard so much understand so little of the conditions that some people are forced to live under. There is a responsibility on each of us to see that better provision is made in the future for the poor. There ought not to be so much poverty and misery in our society. It is not surprising that anti-social behaviour and crime are on the increase. Most of us know that violence is the language of the deprived.

On Wednesday, 9th April it was announced in the press: A suite with a view of the City and the Thames for £350 a night with breakfast is the main feature of Britain's most luxurious private hospital", which opened in London a few days ago; £350 a night with breakfast! It is immoral. There is no justification for that whatsoever. I admit that it was provided from profits from the Kuwait oil boom. The hospital can provide everything from heart surgery down to mundane tonsillectomy. It is all right if one can afford it. It is stated that Guy's, St. Thomas's, King's College Hospital, Moorfields and Bans are referring parents. That is an example of what can be done if only one can afford it. There is no waiting for weeks, no waiting for months, no being in acute agony and pain. A patient can go in immediately if he can afford that kind of treatment.

But the significant point is that all five hospitals I have mentioned which are sending patients to that hospital are themselves already facing cuts. At Guy's 200 hospital beds have been closed since 1984. St. Thomas's will be closing to all except emergency cases in August and will be carrying out 400 fewer heart operations. King's College has had to close 14 specialist liver transplant and dialysis units and cut back its cancer treatment service. It is also proposing to close 29 surgical beds. What a delight it must be to be rich and what a curse it must be to be poor and have to depend on the National Health Service. Yet on more than one occasion the Prime Minister has stated that the National Health Service is safe with the Conservative Government. Safe for whom?

In Oxford where I live we are witnessing the closure of hospitals and of beds, curtailment of treatment and reduced services, not because they are not needed, but because the money is not there. The authorities have been told that they must make cuts.

Every week I torture myself by reading in local papers that in areas such as Harrow, Stanmore, Finchley, Barnet and other parts of north London houses are selling at between £125,000 and £500,000 each. This is disgraceful. They are not just put up for sale; they are sold. House prices are now tremendous, and yet the money is there. It is not just one or two houses; there are many, advertised not only in one paper but in several.

In last Sunday's Observer Mr. Michael Heseltine presented his plan for a better society. The keynote of this plan was that we must not become a society of two nations. That is precisely what we are, as millions of our citizens are painfully aware. The responsibility of a caring government is adequately to provide for their citizens who are old, infirm and in need of life's essentials and to see that those who are on the bread line, or just below it, are provided with enough food so that they can live a reasonable existence. My Lords, I beg to move for Papers.

3.25 p.m.

Lord Young of Graffham

My Lords, I am grateful to the noble Lord, Lord Wells-Pestell, for introducing the subject of this debate. Before I say anything further I must apologise to all your Lordships for my inability to remain until the end of the debate. Unfortunately I have a long-standing engagement, but I assure all in your Lordships' House that I shall read with care all the contributions to the debate.

I am very glad that we are having this debate though rarely have I ever heard the politics of envy expounded in such a way. Rarely have I heard such a lack of understanding of the word "morality" and of the way in which the economy works or a clearer exposition of the reasons why this country fell so far. I hope today that our debate will contribute towards our understanding in both a philosophical and a practical way, because in a philosophical vein I believe that it is vital for all in your Lordships' House to understand just how Government policies have an effect, and how they had an effect in the past, on the social fabric of our nation. On a practical plane I hope that all in your Lordships' House, if not the people outside, will recognise the solid achievements of this Government.

I must start by confessing to a sense of uncertainty in approaching the question of the social effects of government policy. I had thought that the age of social engineering was dying in the 1960s and was buried in the 1970s. Of course we can measure the social changes that affect our people in many ways. Government policies have direct effects on people's well-being in such areas as health, education and law and order. But the direct links between social change and Government policies are often hard to identify and I believe dangerous to try to create through deliberate government policy.

Indeed, here lies the essential difference in the policies which different governments have adopted. Socialists believe in putting decision making in the hands of the state. They actually believe that they can legislate and make people good. When they fail they console themselves that if they are not yet good, then against all the evidence they are at least better. They say that the state knows what the individual needs and can best provide it. George Orwell has shown us where this could lead. Eastern Europe provides an object lesson to us in the practical results of the state taking care of the people's social life and welfare.

Our belief is diametrically opposite. Our belief is in personal freedom and personal responsibility, for the two are inseparable. Look at industrial relations. We have restored the trade unions to their rightful owners, their members. They tell the unions what to do. In home ownership, the great strides have been paralleled by a greater control for tenants in their housing estates. In companies, the drive for privatisation has given managers a chance to manage and at the same time the employees have become the real owners of the company.

Some would say that what is important is not these broader philosophical questions but what has actually happened to people's real incomes and how well off they are. We heard much from the noble Lord opposite about what has happened in tax over the last few years. A single person on average earnings has enjoyed a significant increase in real take-home pay under this Government. I will remind your Lordships again and again that the only money that people spend is their take-home pay. The amount of tax they pay is an irrelevance. What really matters to everybody is the size of their pay cheque at the end of the week or at the end of the month.

Under this Government we have seen an increase of over 18 per cent. in real terms between 1978–79 and 1986–87. Let us look at the period the noble Lord was extolling between 1973–74 and 1978–79 when for a single person on average earnings the real take-home pay fell by 2.9 per cent.

If your Lordships object that that is just for a single person, then let us look at families between 1978–79 and 1986–87. A family with two children had an increase in real take-home pay—the money they were able to spend themselves—of 17 per cent. Between 1973–74 and 1978–79 that family would, I must confess, have enjoyed an increase. But, my Lords, it would have been an increase of half a per cent.

Lord Barnett

My Lords, I am sorry to interrupt the noble Lord's catalogue of statistics. Among them, would he care to add what has happened to the average taxpayer during the period since 1979—namely, whether they have or have not had their tax and national insurance increased or decreased?

Lord Young of Graffham

My Lords, a great gap divides us and I have an enormous task to bring home the economic realities of life. It does not matter two hoots what happens to the level of tax and what happens to the level of national insurance. What does matter is what people spend at the end of the day and how much money they take home. Until we get that understanding of their economics, then I think that I had better pass swiftly on to education because this is a profitless area with noble Lords opposite. All that I can say is that I will gladly swap the tax bill of the noble Lord opposite for his net take-home pay because I think he will find that his net take-home pay and that of any noble Lord is always larger than their tax bill.

In looking at education, it lays the groundwork for a citizen's life. After all, it is education that inculcates society's values as it prepares young people for the future. We are sometimes accused, amid all the sterile accusations about spending cuts, of neglecting education. That is simple nonsense. The key fact is that more money is being spent per pupil in real terms than ever before. Real spending per pupil in primary schools was 17 per cent. higher in 1983–84 than in 1978–79. Pupil-teacher ratios have fallen year by year.

What I want to be careful about is the simple connection that somehow spending more money equals a better output. We all know that higher spending is not the real key to better education. There was a report only last week on ILEA which showed spending above the national average having below average results. A year or two back, there was a famous report on Haringey—the second highest per capita spend in the land and education was, alas! one of the lowest. The key that unlocks and frees the minds of our children is the quality of the education that they receive. It requires a real effort to improve the quality of education to a standard and to get the best possible return for the enormous resources which we invest in education. That is our aim and objective, and one of the ways in which we hope to achieve it is to put more responsibility and more choice in the hands of parents.

Parents are those with the first interest in seeing that their children have the best education. Many teachers and many people seem to feel that the dispute between education authorities and teachers over pay indicates the Government's lack of commitment to education. That could not be further from the case. Our concern is to raise standards of teaching. We have looked to better selection of student teachers and more and better in-service training for existing teachers, but we believe above all else that appraisal of the performance of all teachers will identify the help that the less effective ones need and provide the rewards for the most effective teachers.

Of course we have looked at the closer links between education and the world of work. The Technical and Vocational Education Initiative will, I believe, bring into the school system a better appreciation of the opportunities that await our young in the outside world. I hope very much that the new General Certificate of Secondary Education will put a greater emphasis on understanding and a greater emphasis on practical skills. The review of vocational qualifications which has just been made has revealed the need for a clearer structure of qualifications which will enable young people to develop their own pattern of work-related education and to change direction of skill more easily. That is true freedom.

Then we heard reference a few moments ago to health. Health, like education is something on which any Government could and would like to spend ever-increasing amounts; but, as in education, the amount that we can spend is limited by our national wealth. Your Lordships may think that in saying that I am leading up to an explanation of these cuts about which I keep on hearing. What is the actual record? I hate giving statistics but, if noble Lords opposite would drop the word "cuts", I will not give statistics. The simple explanation is that spending in real terms has increased by 24 per cent. since 1979. In the health service today we have 10,000 more doctors and dentists and 63,000 more nurses and midwives. We have more buildings. We have had 58 hospital schemes, each worth over £2 million, started and completed since 1979 and over 150 more hospital schemes worth over a billion pounds being planned, designed or built. I do not see very much in those figures about cuts. When we look at the actual facts, more people are being treated and the average number of patients per family doctor has fallen. Health care has improved under this Government but I have no doubt at all that noble Lords opposite will talk again and again about the existence of cuts.

On the matter of law and order, one of the most basic needs of our society is the safety and security of our people. We have responded to the problems of law and order by increasing police strength by almost 13,000, by putting bobbies where they belong, back on the beat, where they can be fully effective. We provided the pay, the equipment, the technology and the moral support to the police in their difficult and dangerous task. That we shall continue to do.

All these areas—health, education and law and order—are vital parts of the services which government provide for their citizens. There are those who have often confused our concern to limit spending, our concern to increase efficiency, with cuts in people's welfare. That is wrong and irresponsible.

Wrong because the facts on such vital services are against them. Irresponsible because we know that the demands for public services are limitless. They are not constrained by the price mechanism which forces those making demands to balance those demands against costs. Encouraging people to think that the well of public money is bottomless only encourages the spend, spend, spend attitude which has brought us steadily higher taxation and lower incentives and, even worse, it encourages people to believe that they can do nothing for themselves.

If noble Lords opposite continue to tell people that they can do nothing for themselves, that they cannot be trusted to look after themselves, that "Big Brother knows best", well, after a while, they may even start to believe it. The real contrast between our policies and those which some other people propose is simply the power of the state. Our concern is to encourage personal responsibility and to roll back the frontiers of the state. Our country was seduced by the welfarism of the 1960s into believing that the state should take care of everything. The beliefs of Beveridge were left far behind in the scramble to provide services.

If we look at what has happened over the last few years and at the way public spending has risen steadily—from 35 per cent. of GDP in the early 1960s to 45 per cent. in the mid-1970s—we find five major changes. People took home less of the money their employers paid them, and employers paid more and more in additional costs to hire labour. The tax structure was so distorted that we subsidised everybody to enable them to buy machinery to take away jobs from people. The worst effect is that we attempted to redistribute wealth through the tax system. We set tax rates at 83 per cent. and at an unbelieveable 98 per cent. Indeed, in one year I remember it was 103 per cent. After 35 years of tax rates at that level, lo and behold, we had not redistributed wealth but, as sure as anything, we had eliminated wealth creation, and we wondered why we got poorer and poorer and poorer!

The achievement of this Government is that we have restored wealth creation and respect for it. What we have achieved and what we shall continue to achieve is a better standard of living for all our citizens. What we must not lose is the quality of life of which our fathers were justifiably proud. What we must give our children is the best possible start in the next century; a chance to grow up and live in a society in which freedom and individuality are cherished, in which wealth creation is respected and in which the less fortunate of our people are safeguarded. Those are the desirable and inevitable social consequences of this Government's policies.