§ 2.56 p.m.
§ Lord Carter rose to call attention to the gap between rich and poor in society and to the case for a social security system that meets the problems arising therefrom; and to move for Papers.
The noble Lord said: My Lords, the Motion before the House is:
To call attention to the gap between rich and poor in society and to the case for a social security system that meets the problems arising therefrom".
§ The first question is: how wide is the gap between the rich and the poor? Is it widening and, if so, is that relevant? Or is it perhaps the price that we have to pay for economic success, however that may be defined at present?
The problem is to define what we mean by poverty. Clearly poverty must be a relative concept measured by reference to the living standards of a particular society at a particular time. It was defined very well in the Supplementary Benefits Annual Report of 1978. The definition reads:
Poverty, in urban, industrial countries like Britain, is a standard of living so low that it excludes and isolates people from the rest of the community. To keep out of poverty, they must have an income which enables them to participate in the life of the community".
§ To measure poverty is as hard as defining it. However, the task of measuring has not been made easier by successive changes to the relevant statistics in recent years, all of which have somehow ended up by apparently reducing the numbers in poverty. I wish that the same enthusiasm had been applied to reducing poverty as has been given to redefining it. One estimate says that over 15 million men, women and children are living on or near the poverty line. The income divide between the top 20 per cent. of men in work and the bottom 20 per cent. is now greater than it was 100 years ago. The relative pay of the lowest paid is now the lowest on record.
§ At the same time as the number of relatively poor has increased, the wealth of a substantial proportion of the population has certainly increased. That is a trend we certainly welcome. Tax cuts and benefits changes together since 1979 have been worth about £40 per family per week to the top 10 per cent. of earners. The bottom 50 per cent. of families have lost nearly £8.50 per week. The total burden of tax and national insurance has not decreased. In fact it has increased from 34 per cent. of GDP in 1978–79 to 37 per cent. in 1989–90.
The total burden of tax and national insurance has increased but the weight has been shifted on to the shoulders of those who are least able to bear it. I shall give just one example out of many, although one of the dangers in a debate on social security is that it will become a battle of statistics. The top 1 per cent. of taxpayers gained £22,680 per head in one year from the tax changes in 1988–89. Their
gain in taxation alone was greater than the total income of 95 per cent. of the population. Perhaps I may use a memorable phrase of Mr. Frank Field. He said that over the past 10 years we have witnessed,
the most significant redistribution of income to the rich since the dissolution of the monasteries".
§ Alongside that massive redistribution, and indeed a part of it, has been the creation of a new underclass: the long-term unemployed, lone parents, pensioners who have nothing but their state pension, and the young homeless. The underclass itself is subsumed into a larger group. There are 9 million people on income support. That represents 17 per cent. of the population and is a 50 per cent. increase since 1979. There are also the 7 million people reliant on means-tested benefits. I have referred to the redistribution in direct taxation for the top earners. I am sure that the Minister has been briefed to point out that reducing the top rates of tax produces more revenue. I see that the Minister nods. It is quite true that the share of tax revenues contributed by the top 1 per cent. has increased by 7 per cent. since 1979. That is hardly surprising as their share of income has increased by 43 per cent. in the same period.
§ Alongside this redistribution of the burden of direct taxation there has been an equally massive but not so obvious change in the social security system. There has been a change from collective responsibility for social provision which can be traced from before the time of Beveridge up to 1979, to a policy where there has been a real reduction in the relative amount spent on collective public provision. That has been accompanied by the erosion of rights to benefit and the expulsion from social insurance rights of quite large numbers of people. In passing I should say that I have always been puzzled by the fact that those who preach loudest about the virtues of collective security in the matter of defence do not adopt the same argument for social policy.
§ Social security is a vital part of our total social policy. Some three-quarters of all households will derive some of their income from benefits at some time in their lives. From the end of the war and the time of Beveridge until 1979 there was broad consensus about social security. There was the move from flat rate to earnings related benefits and contributions and the idea of family endowment through child benefit. There was the introduction of non-contributory and non-means-tested allowances for disability. There was the earnings related state pension scheme, SERPS, and the statutory uprating of benefits linked to increases in earnings. Those and other changes which were agreed by all parties in principle were designed to prevent poverty as well as to relieve it. However, the change in policy since 1979 has been dramatic. There has been a massive switch to means-tested or, as they are termed, targeted benefits. There have been reductions in the real value of benefits and the erosion of the rights to benefit. Some benefits have been made the responsibility of employers and there has been a reduced entitlement to earnings related pensions and the restructuring of income related benefits.
§ There has also been the introduction of the Social Fund, which is discretionary and cash limited, to 1550 replace benefits which were claimed as of right. Grants of £41 million have replaced benefits of £400 million. There has been the abolition of earnings related supplements to certain benefits and now there is the poll tax. The switch to means-tested or to targeted benefits brings more and more people into the poverty trap where their effective marginal rate of loss of benefit can be as high as 60 to 70 per cent., or in some cases higher, compared with a top rate of tax of 40 per cent.
The Government have always been concerned to ensure that those who receive their income through social security benefit should not receive more than those who are in work. Sir Geoffrey Howe stated in his second Budget in March 1980 that,
One of the biggest problems is the lack of balance between social security benefits and incomes in work … Indeed there are people whose incomes out of work exceed what they could reasonably expect to get when in work".
A similar quotation on the same subject states that,
the first and most essential of all conditions is that the situation of the individual relieved shall not be made really or apparently so eligible as the situation of the independent labourer of the lowest class".
§ The second quotation came from the report of the Royal Commission on Poor Law in 1834.
§ We know how all this has come about and I have just explained the changes, but we need to know why it has come about. What is the rationale for this change of policy from collective provision to rugged individualism? The noble Lord, Lord Joseph, will be speaking later in the debate. We know that he was one of the architects of the new thinking in the 1970s. I wish to put a simple question to him which I hope he will be good enough to deal with when he comes to speak. If he and others had known in 1979 what the effects of the changes in policy would be—that is, the increase in poverty, the increase in homelessness, the reduction in the real value of benefits, the widening gap between the rich and the poor and the creation of an underclass—would they still have gone ahead with the changes? In other words has it all been worth while?
§ The rhetoric of the new thinking of that time was very attractive. It urged a policy of setting people free, rolling back the barriers of the state, leaving people to spend their own money as they wished or, as the Prime Minister put it in 1984, a change from a "give it to me" to a "do-it-yourself" society. However, I wonder sometimes whether the new thinkers of that time succumbed to the occupational hazard of all politicians and became bewitched by the resonance of their own rhetoric.
§ I am sure that the Minister has also been briefed to point out how much more the Government are now spending on social security compared with what was spent in 1979. There has been an increase of 39 per cent. However, half of that is due to the increased number of claimants comprising pensioners, the disabled and single parents. A quarter of that increase is due to increased unemployment and only a quarter to an increase in benefits. The value of the 11 major state benefits was 26 per cent. of average male earnings in 1979 but only 19 per cent. in 1989. That is a reduction in the real value of the benefits.
§ We have heard a great deal about the dependency culture and the welfare net. There are those whose 1551 children's private education has been paid for by grandparents through tax covenants, whose tax bill has been reduced by the full exploitation of mortgage interest relief, self-employed retirement annuities, personal pension plans, personal equity plans, business expansion schemes and the judicious use of offshore funds, and whose elderly parents now have their private health care subsidised through tax relief. Those are all perfectly legitimate ways of reducing the tax bill, but I wish that those who have benefited in that way would be a little more careful in the use of phrases such as the dependency culture and the welfare net.
§ I cannot hope to deal with all areas of social security and I know that other speakers in the debate will wish to do so. However, I wish to spend a few moments discussing disability benefits. The Government, to their credit, set up the OPCS surveys of disability. We were told that the long awaited comprehensive review of disability benefits would have to await the publication of the OPCS surveys. We were then told that the review would not be an independent review but an internal review inside the Department of Social Security. We now have the White Paper entitled The Way Ahead. That is a deeply disappointing response by the Government. All the disability organisations without exception are deeply disappointed with it. There was no consultation with them at all during the preparation of the White Paper. Consultation took place on the OPCS surveys but there was none on the preparation of the White Paper. We welcome the increases in disability allowances which resulted from the White Paper, but which affect only 800,000 people out of the 6.2 million disabled. However, there is nothing for the 70 per cent. of disabled people over 60.
§ There is one particular aspect of the White Paper which concerns the future of the Independent Living Fund on which I should like to question the Minister. When this fund was set up the Government said that the problem involved only a few hundred very severely disabled people. They gave the fund an annual budget of £5 million. At that time we warned the Government that they had the figures wrong and they were not providing enough money. The fund is now helping 4,500 people and has an annual budget of £24 million. The White Paper referred to the fund's responsibility being transferred to local authorities. That is deeply worrying as local authorities have neither the skills nor the resources to deal with this problem. We certainly do not wish to have the funding for the very severely disabled pitched into the argument that now exists with the poll tax as regards funding from central and local government. I hope that when the Minister replies he will tell us what are the Government's plans for the Independent Living Fund.
§ I have defined the widening gap between the rich and the poor and described the changes in the social security system which we have experienced in the past 10 years and their effect. Your Lordships are entitled to ask what should be done. First, we must change the Government. Noble Lords opposite will not be surprised to know that we have that firmly in mind. The next Labour Government will reform 1552 the tax system and the social security system. We shall introduce a national minimum wage. That is the key to lifting the lowest paid out of income support. The top 10 per cent. of earners have seen an increase in real earnings of 48 per cent. in the past 10 years. However, the bottom 10 per cent. have seen an increase of only 3 per cent. The taxation system will be made fairer, with a lower bottom rate of less than 20 per cent. and a top rate of 50 per cent.
§ National insurance contributions now raise more than 73 per cent. of the amount that is raised in income tax. National insurance will be replaced by a new social insurance scheme, with a less regressive contributory system which will also be levied on unearned income. We shall increase child benefit and remove the tax on workplace nurseries. We shall limit the total value of tax breaks enjoyed by individual higher-rate taxpayers. We shall restore the principle of collective provision for social security and reduce the reliance on means-tested benefits.
§ We shall restore entitlement to earnings related pensions and the earnings related supplements to unemployment benefit. Retirement pensions will be increased and we shall restore the links between pensions and increases in earnings. A new scheme for personal pensions will offer pensions which will be based on each individual's best 20 years' earnings. There will be a new bonus on the basic pension for all pensioners over 75.
§ We shall introduce a new range of disability benefits providing help with the extra cost of disability and a guaranteed income for those who cannot work because of disability. We shall replace the invalid care allowance with a carer's benefit which will be paid at the full basic pension rate.
§ We shall reform income support substantially to remove its worst and most regressive effects, particularly to help those receiving transitional relief under the 1988 Act—lone parents, youngsters aged 16 and 17 and the disabled. All payments from the Social Fund will be converted into grants and we shall widen access to the severe disability premium.
§ I have deliberately listed just some of the reforms of the taxation and social security systems to which the next Labour Government are committed. They will not all happen at once and they will not all happen in one Parliament, but they will happen. I am not sure why that is found to be amusing. It is a clear statement of policy, but those reforms will not all happen at once—we are a realistic party. We are accused of having no alternative, but an immense amount of work has gone into our determination to reform the system root and branch. I have listed just a few of the measures that we intend to introduce.
§ We are determined to restore to our system of taxation and social security the principles of social justice linked to collective provision for those needs which cannot be efficiently and more fairly met by the market. To use an old-fashioned phrase, I should describe that as ethical socialism. Others would say that it is the politics of common decency. It is the policy which we shall introduce to restore the equity and social justice which have been lost in the past 10 years. I beg to move for Papers.1553
§ 3.12 p.m.
My Lords, it is tantalising to have only eight minutes in which to reply to that packed speech. I should like to quarrel with very nearly all its components. To answer the noble Lord's main question, yes as someone who takes responsibility to some extent for the strategy which the incoming Conservative Government of 1979 adopted, I should have gone ahead with that strategy. I do not regret it. Of course I accept that individual components of that policy need constant refinement in order to get them right. However, in general, as I shall seek to explain in the limited time available to me, I do not regret the general drift of the Government's intentions and efforts.
I have to be quick. I shall deal first with the gini co-efficient, the measurement of difference. There is no gini co-efficient that I can find which measures international comparisons. At home it is perhaps true, although the figures do not yet give the answer, that lowering the top rate of tax may have widened differences. However, the tax revenue from the top brackets of earners has increased, not fallen. Secondly, the number of jobs has increased. Thirdly, entrepreneurship is growing, though not fast enough.
If noble Lords will in due course look at Table 5.19 of this year's Social Trends, they will find that since 1971 the marketable wealth of the most wealthy 1 per cent., the most wealthy 5 per cent., 10 per cent., 25 per cent., and 50 per cent. has fallen through 1981 and 1986 to 1987. The noble Lord is wrong on that score.
It has constantly to be said that the party opposite underestimates the importance of wealth creation. Wealth creation depends upon giving incentives to people to take risks. Noble Lords opposite constantly emphasise the rate of bankruptcy. Bankruptcy is merely one measure of the risk that entrepreneurs take. We have too few entrepreneurs, although many more than we used to have. Upon the entrepreneurs depend the jobs, the prosperity, the resources for public services on which all our policies—on both sides of the House—depend.
I believe that any government coming into office in 1979 would have had to meet huge burdens on social security in the 1980s. There was a rising number of pensioners, including a rising number of the very elderly. There was a rising number of unemployed; and let the party opposite not think that they would have escaped the rising number of unemployed which was necessary if we were to recover any profitable international competitiveness, because, in their own five years in government, unemployment rose from half a million to 1 million. There was a rising number of lone parents and a weakening of family ties and responsibility. On both sides of the House, and I believe in the Churches, we deplore the weaker family ties. I have to accept, and hope that noble Lords will accept, that there has been a failure of schools and training to prepare many of our population for life and work. The welfare spend would have had to increase hugely, whichever government was in power, in the last 10 years.'
1554 Meanwhile, to help meet that increased spending, productivity, which has to pay for everything, has risen sharply in the past 10 years. However, it has not risen nearly enough and not nearly to the level of competitor countries. Savings have risen among individuals, although not as much as we need. Occupational pensions have risen, and owner occupation has risen.
Any government would have had to face great challenges in order to pay for the extra social security that those trends—which would have occurred whatever the government—imposed upon the government of the time. Yet the resources have not grown quickly enough. We had a choice.
I believe that the poverty lobby and to some extent the noble Lord who has just spoken discredit what could be a good case if only they did not overstate it so wildly. The claim that a third of our population has poverty or near poverty standards of living is just not credible. It is not believed. That is why attention is distracted from the real pockets of poverty, or at least serious pressures on resources, that undoubtedly exist.
In social security, whichever government is in power, there has to be a mix of universal and means-tested benefits, plus the encouragement of personal savings, family help, owner-occupation and charity. They all have to co-exist. No one imagines that collective help is not needed. What is needed is a mix of those different resources.
Is it wise to rely excessively on universal benefits as the noble Lord seems to suggest might be the policy of the party opposite? I accept at once that many elderly people are still very hard pressed. However, occupational pensions have been rising, owner-occupation has been rising, and the savings of a large number of the elderly are significant. To rely too much on universal benefits to avoid any being hard-pressed would involve a huge contribution increase, a huge contribution cost on the workers and an even bigger wedge than now between gross and net earnings. To provide universal benefits for those who do not need them because of their own thrift or because of occupational pensions would cause the resentment of neighbours who have been thrifty, the discouragement of savings and a disincentive to workers.
We are all aware, particularly this week, of the crisis in Swedish affairs. We are certainly not Sweden. We do not, alas, have a record of prosperity akin to Sweden's, but I recommend the party opposite to read carefully a lecture entitled The Limits of the Welfare State given by Professor Assar Lindbeck on 12th October 1988 at Birkbeck College. It is worth reading. Professor Lindbeck refers to the soaring marginal tax rates in Sweden—70 per cent. for the average Swede—permanent damage to the economy and permanent distortion of incentives. He says:Dentists drill wells on their summer estates rather than drilling the teeth of patients".He adds:Professionals and craftsmen barter services rather than exchange them for money".1555 He refers to the nationalisation of the functions of the family and to the encouragement of dishonesty. Those would be some of the results of going too far in trying to develop the welfare state on universal lines.
On the other hand, I see that means-testing—targeting, as the Government call it—also has disadvantages. It causes poverty traps, the "why work?" syndrome and disincentives and it requires a huge administrative effort. However, getting the right mix between universal and means-tested benefits, the trickle-down effect from more entrepreneurs and the rising productivity that we need under any government to be internationally competitive are all necessary.
In a more nearly perfect world, all would be good managers of their own resources, but we know that they are not. Among ourselves, we are not. Those on social security are not. All would have good relations with family and neighbours in a more nearly perfect world. All social security offices would be decent and provide privacy. All social security staff would be ultra-sensitive as well as firm. In a more nearly perfect world all claimants would be reasonable, but it is not a perfect world and we can only hope to provide our component of those factors. We acknowledge that we are far from that position now.
As for Labour's criticisms, I suggest that there is some self-deception and humbug. I am not surprised that, in explaining the policies of the Opposition, the noble Lord followed the precepts of his leader and was being "vague". In the short time available to me, I must say that the end of his speech merely gave headlines and objective without explaining some of the problems. For instance, pensions may have risen when Labour was in office from 1974 to 1979 but, because of inflation, the real buying power of pensioners rose only 3 per cent. over five years. Since 1979 the real buying power of pensioners as a group has risen 31 per cent., though many elderly people are still hard pressed.
Finally, I recommend those who study such problems to read three recent books: Losing Ground by Charles Murray; Family and Nation by Daniel Moynihan; and perhaps above all Workers and Pensioners, edited by Paul Johnson. I wish that I had had more time to reply to a packed speech.
§ 3.24 p.m.
§ Baroness Fisher of Rednal
My Lords, I hope that all noble Lords will have 50 per cent. extra time as has been given to the noble Lord, Lord Joseph. I do not intend to dwell on the incomes of particular groups of people because, although income is the main factor in determining vulnerability to poverty, it is not the only one. Poverty is the combination of low income, poor and often damp housing, fuel poverty, poor education and employment opportunities and bad health. They all contribute to what is generally called poverty and, in many cases, it becomes multiple deprivation. Among those groups of people are those whom we call the vulnerable groups. They are more often than not the elderly, the unemployed, the low-paid, the single-parent families and the disabled.
1556 We now see in this country, as a result of recent structural changes in the economy, that there is a dual labour market comprising, on the one hand, a labour market of secure, well-paid, highly-skilled jobs offering good conditions and good employment and, on the other hand, a secondary labour market offering low-paid, temporary, part-time, low-skilled employment. As a result of the growth of dual labour, poverty creeps in with regard to low-paid employment. We see the Government having to subsidise low wages through income support instead of the employer paying what one could call a decent wage. As a result of the abolition of the wages councils by the Government, there is now no protection for low-paid workers. Noble Lords will see that industries included in the recent growth in low-paid work are hotels, catering, retail and clothing. That low-paid employment will continue to grow and will obviously cause poverty. Where do we see low pay? We see it primarily among women, black people, people with disabilities and young workers.
We also see not only cuts affecting individuals through social security payments, but also cuts to public services which have a direct bearing on poverty. I hope that when the Minister replies he will not disagree that government cuts to local authorities have increased poverty in these localities. We have seen a cut in housing. I shall dwell this afternoon not upon homelessness and the money wasted on bed and breakfast accommodation, but upon the creation of poverty because local authorities have not been given the money to build houses to provide people with decent housing conditions. A form of poverty and deprivation develops if one does not have a decent home.
On the education side, there is a lack of provision for those pupils in many of our schools who do not attain high academic qualifications. We cannot all be blessed with the same intelligence and intellect. The needs of the other groups of pupils are therefore sadly neglected. We must ensure that we offer the non-academic pupils a greater emphasis on vocational education. We see truancy on the street and on the television screen. We see the police going round supermarkets picking up boys and girls who are not at school. They are bored with school because they are classified as the non-academic pupils. We deprive those students of a reasonable education and force them into poverty as they grow older.
We could also do a great deal to alleviate poverty in the education field if local authorities were enabled to extend provision in nursery schools and pre-school education. I am thinking primarily not about opportunities for women at work, but about the family itself so that it can organise itself when it is in dire need and poverty. The nursery schools offer to those families some support and often very good advice.
This morning I heard on the radio that by selling what are called cherished number plates the sum of nearly £2.5 million has been raised. A sum of £2.5 million has been obtained for about half a dozen cherished number plates. In this Chamber this afternoon we are discussing poverty.
1557 I hope that the noble Lord will be able to bend the ear of the Treasury to ensure that the £2.5 million raised yesterday as well as the £3.5 million raised six weeks ago from selling number plates will go to help those in greater need and who need greater help. I am sure that this debate will reveal that there is a real need for an anti-poverty strategy. Local authorities and charities see many of these problems in the localities but they are not in a position to take full responsibility for that burden. They both take as much action as they can to alleviate the problems.
However, most important is that there must be a much more positive strategy from the Government. I feel sure that this debate will outline that need in much greater detail.
§ 3.31 p.m.
§ The Lord Bishop of Gloucester
My Lords, although this debate almost inevitably must break open upon party lines, its almost transparently Biblical theme of the poor must commend some kind of response from these Benches. I believe that an expectation has grown up in recent years that the voice from the Churches must be confrontational, prophetic and denunciatory. Few of us would deny that that voice has its place. Prophetic protest against injustice or oppression is too deeply entrenched in the Judaic-Christian tradition to be outlawed. It is accredited both in the Old Testament prophets and in the words of Christ himself.
If the Churches have any commonly accepted function within the community it must include speaking for the voiceless and seeking to protect and champion the oppressed. However, I am only too aware of how easy it is for well provided clerics to raise voices in that mode. I do not believe that it is the only voice that is relevant to the matter before us. Alongside what I might call the voice from without is surely the voice and word from within—what perhaps many of us in our personal lives would identify simply as the voice of conscience. It has a corporate as well as an individual aspect and the Churches need to be its mouthpiece.
Indeed, perhaps Churches which are as much enmeshed in the history and life of society as are the mainline British Churches might hope to be as effective or even more effective, speaking perhaps more quietly as the conscience of the community than speaking necessarily always as prophets. Churches speaking in that mode may gain integrity by the fact that they share the dilemmas and problems which they address. I believe that it is important to acknowledge that Churches are property owners. They have employees and for the most part identify in their membership, uncomfortably so, more with the haves than with the have-nots of our society. If the Churches sometimes appear to be unhealthily preoccupied with questions about wealth in society, it is not because necessarily they survey those questions from the distant mountain top; it is because they also live day by day uncomfortably close to them.
I believe that we are closer to poverty than many. If begging and homelessness are on the increase and if more and more families are seriously troubled because their frail and elderly relatives are unable 1558 to make ends meet, the vicarage doorbell will ring more often. There is certainly evidence coming from the parishes and the dioceses to give cause for worry on all those counts.
It would be impertinent of me to offer an opinion on whether in absolute terms the less well off in our society are poorer now than they were, say, 10 years ago. The economists and social scientists must try to decide on that. However, it seems indisputable that the poor are becoming relatively poorer. I offer just one statistic which has come from the recent report from the advisory group on urban priority areas of the most reverend Primate the Archbishop of Canterbury. Over the past 10 years the gross earnings of the lowest paid workers have risen in real terms by 6 per cent. The earnings of the highest paid have risen by 36 per cent.
If there is cause for concern here, I hope that it is not in the interest of a crude egalitarianism. Indeed, our underlying response should be gladness that people are generally better off as well as that unemployment has decreased. Of course we should give credit and praise to the wealth creators and the government policies which have encouraged that advance in wealth. Incidentally, I believe that it is a caricature to suggest that Christian concern is only with the distribution and not the creation of wealth. How can that be when we believe in God as creator and when Christianity affirms, as no other religion does, the value of this world, its goods and its prosperity? But surely the point is that any such general growth in national prosperity should strengthen rather than weaken our capacity as a society to deal compassionately and effectively with those who are progressively being left further behind in the race. By that I mean those who apply unsuccessfully to the Social Fund for grants or loans; the homeless young; one-parent families; and the growing number of frail, elderly people with insufficient means for their needs.
Why cannot we offer a proper answer to their needs as we grow in prosperity as a community? The issue which faces us is whether the trickle-down theory of wealth spreading through society and the reliance on private charitable giving can be trusted to deal mainly with the increasing relative poverty of some of our people, or whether the necessary compassionate action to help them must also be firmly and prominently part of public social policy in government. Many of us must believe that both will be needed for the foreseeable future.
In the end does not much of this discussion turn on how we define wealth? We pray daily in this House for the public wealth and we draw upon the primary meaning of the word which has to do with being well, wellbeing and primarily corporate wellbeing—the commonwealth. Wealth is not just money although money is part of it. Wealth, says the dictionary, is the happiness and the prosperity of the people. Wealth creation is the increase of true wellbeing in the community—fulfilment, health and a good environment. A strong and healthy manufacturing base is part of it but it is not the whole. If we double the output of pornography, how have we increased the nation's wealth?
1559 Therefore our gratitude to those who have initiated this debate will surely be the greater if it helps us all to sustain a rather larger and more spiritual understanding of what the wealth of our nation truly means as distinct from a narrow and materialistic concept.
§ 3.40 p.m.
§ The Earl of Longford
My Lords, the right reverend Prelate has tried hard to be neutral in political terms. However, he left most of us in no doubt that he favoured the Motion. He said without equivocation—and I take this as my own text, and it has been taken by those able speakers, my noble friends Lord Carter and Lady Fisher—that the poor are getting poorer. We start from that premise.
Of course we were glad to hear from the philospher of Thatcherism. I regard the noble Lord, Lord Joseph, as one of the most sensitive men and I hope that he will be sensitive to the objections that will be raised today to his point of view which is rather an eccentric one, if I may say so. Speaking as an eccentric myself, I regard him as well qualified to speak in that capacity.
I moved a Motion calling for a greater measure of equality nine years ago. No one can deny that that Motion has been the opposite of successful because in the past nine years, as the right reverend Prelate has pointed out, inequality has become a good deal worse. I am in danger of repeating what has been said so ably, but, mercifully, I shall exclude all figures. These have already been laid before the House by the noble Lord, Lord Carter.
In preparing for this debate some of us have studied the work of Frank Field, MP, who, I venture to say, has done more with regard to poverty and helping the poor than any individual whom I can think of. Those who have not read his recent book, Losing out, might well read it now. It was referred to by the noble Lord, Lord Carter. I do not think anyone can deny certain propositions laid down by Mr. Frank Field in that book. For example, he says that between 1949 and 1979 there was a steady move towards greater income equality. That happened in the 30 years before the present rulers came to power. Since then there has been a move the other way. I do not think that anyone can deny that. I presume that it must be regarded as deliberate. I do not think that it is accidental. I do not believe that the noble Lord, Lord Joseph, would say that it is regrettable; he would probably feel that it is essential. There is no doubt that it happened.
There is no doubt that for 34 years, or whatever the period was, after the war the Conservative Party was in power half the time. Therefore this steady move towards greater equality was promoted for half the period by the leading Conservatives of the time. I shall not list them all because so many are sitting opposite. I mention such great figures, no longer with us, as the Earl of Stockton, as he became, and Lord Butler. They promoted this greater move towards equality. Then along came the philospher of Thatcherism, the noble Lord, Lord Joseph, who devised a totally different approach. We have experienced that for good or ill for the past 10 years with Mrs. Thatcher at the helm.
My Lords, does the noble Earl recognise that at the end of those 30 years we were the poor man of North-West Europe?
§ The Earl of Longford
My Lords, I do not recognise that. When one considers life in this country, to speak of extreme poverty is an exaggeration. If one talks about work among the poor one could not say that they were stricken. The poor are the poor now. But no one will pretend that suddenly some tremendous change has overtaken the poor in the past 10 years except that their position in relation to the rich has become very much worse. That is generally accepted.
The position has been brought about in three ways by Thatcherite rulers inspired intellectually by the noble Lord, Lord Joseph—from the highest principles, of course. The first has been to allow the free market a good run. I do not know whether anyone reads the Sunday Times. I read it faithfully. A week or so ago we were told on the front page that a representative section of the business leaders of the country were giving themselves a 28 per cent. increase in reward at a time when the Government were calling for restraint and workers were receiving 8.7 per cent. In other words, the business leaders under the free market were giving themselves three times as much as the workers. I suppose that that is applauded by the noble Lord, Lord Joseph. That is in accord with Thatcherism at its most elevated. I have heard no expression of regret about it.
Secondly, there have been the Budgets. I do not think that anyone now will disown Mr. Lawson's Budgets. I suppose that there is a slight tendency in circles opposite to regard him as a scapegoat and to take the attitude that if anything has gone wrong—we are paying fabulous interest rates and so on—it can be put down to Mr. Lawson. That would be rather churlish. By and large we have to regard the Lawson Budgets as Thatcherite. They have redistributed to their best ability the wealth of the country between the rich and the poor to a considerable extent.
Thirdly, there have been the many social security and related measures, regaled by my noble friend Lady Ewart-Biggs when she opened a debate on citizens advice bureaux in this House recently. My noble friend described various measures which have had an effect. Presumably everyone agrees that they have had some effect. I am afraid that we have to agree that the effect has been very bad.
Those who have been in the House some years and who have heard me often know that I have been involved in a centre called the New Horizon Youth Centre for homeless young people which I founded about 20 years ago. I am still a patron. It now looks after many young people. If one goes to that centre today and asks young people, "What do you do with your life", they say, "We are beggars." That is something new. Begging has become normal as a direct result of government policy.
There is much more to say but my time is up. The more that is claimed by the noble Lords opposite about the success of this Government, the more disgraceful it is that the poor should be treated in this way.
§ 3.48 p.m.
§ Baroness Faithfull
My Lords, I wish to speak on four topics. I have spoken on them in your Lordships' House before. I hope to do so again, but I speak on the principle, "Try, try and try again, even if you do not succeed to start with".
Is the Minister able to say anything about the child benefit? The question has been asked before; we shall probably ask it again. The Equal Opportunities Commission has circulated its pre-Budget policies for the next year. It says:Child benefit, payable to all mothers in recognition of the costs of caring for children, has been frozen by Government for three consecutive years … almost 100 per cent. of mothers claim it because it attracts no poverty stigma … A decision to increase Child Benefit in the Budget would be the single most effective fiscal contribution possible to support family life".I appreciate and understand the comments of my noble friend Lord Joseph that universal benefits are not always possible to afford even if one wanted them. When the noble Baroness puts forward a wonderful programme of measures for the Labour Party—if it is in power as the next Government—will she tell us how it will pay for them? That is vitally important because if the rate of inflation rises not everyone will benefit. I realise that child benefit is a universal benefit, and I applaud it, but if we cannot afford to pay it I am sure we can work out an arrangement whereby it goes only to the people who most need it.
My second point relates to the tax on child care. It is Her Majesty's Government's policy to persuade women to go out to work. Therefore, I speak feelingly on the care of children. Unless children are well cared for, to persuade women to go out to work will not be cost-effective. If the children suffer, it will be expensive later on in their lives. Removing tax on workplace nurseries and employer child-care payments could allow up to half a million mothers to return to work and many more to continue working after their babies are born. Many employers who are planning to introduce child care initiatives in order to recruit and retain staff are concerned that treating child care as a taxable perk undermines their efforts.
I put forward this view because if women are working there must be good child care facilities. My personal view is that I would prefer all women to stay at home and look after their children until the age of three, but that is not always possible under our present system.
My next point relates to the decision on the Social Fund taken by the Law Lords in this House. What is to be the future for that fund? Other speakers in this debate have also raised this point. To give a family a room, a flat or a house but nothing to put in it is again not cost-effective, not kind and not the best way to rehabilitate families.
My final point is perhaps a point on which I shall spend most of my time in this debate. I refer to the young, as have other noble Lords. All the voluntary organisations in the field of child care—the National Children's Bureau, Dr. Barnado's, the Children's Society, the National Children's Home and the NSPCC, which is holding its annual general meeting today—are deeply concerned about income levels 1562 for young people of 16 or 17 years of age. I applaud the policy of Her Majesty's Government in persuading 16 and 17 year-olds to remain at home if they can do so and if they can find a job in their own area where they can remain under the auspices of their own families, friends and the community. However, having said that, there are a few youngsters—regrettably, a growing number—who have been in care, who have no home background or home on which to depend, nowhere to go at Christmas, and so on. I contend that it is those youngsters who are sleeping in the doorways of our cities. I understand from Scotland Yard that it is the homeless youngsters who are victims of the drug trade, either as runners or takers of drugs. I implore the Government to think yet again in regard to the 16 and 17 year-olds, if not for compassionate reasons, for the reason that it would be cost-effective on a long-term basis to look after such youngsters. An examination of the histories of people in prison will show that many of them are these youngsters, and that is expensive for the country.
I have with me figures showing what the 16 and 17 year-olds are living on but I shall not give them now in view of the shortage of time. However, people ask how any scheme to help them would be administered. I believe that it would be perfectly possible to handle this through the social security system and the social services. People ask why these 16 and 17 year-olds leave home. I spoke to three girls last week whose mothers' boyfriends had been interfering with them. They had every right to leave home and it was right that they did so. However, it is equally right that we as a community should care for those youngsters.
I know that on 13th March 1989 the Minister, Mr. Nicholas Scott, made some concessions for these youngsters but it is apparent from any examination of their incomes that they cannot live on what they receive. I ask my noble friend the Minister to look again at this matter in view of what it means to our society and, perhaps more important, what it means to those youngsters.
§ 3.55 p.m.
§ Lord Dean of Beswick
My Lords, the House will understand if I restrict myself to the people covered by the word "poor" in the Motion on the Order Paper. I refer explicitly in my few minutes to perhaps the poorest sector in the community—those people without even a roof over their heads. Much has been said in this House over the past few years on this subject and I know that all quarters of the House have generally pressed the Government to do something about this as a matter of urgency.
There is a forceful argument that strikes me for taking action. In the past we have periodically—week after week, month after month, during Question Time and in debates—referred to the highlighting of the deteriorating situation which was brought to national notice first by the Duke of Edinburgh's Commission, then by the Audit Commission Report and then by the Archbishop of Canterbury's Faith in the City. Now, only yesterday, we have an independent report from the Joseph Rowntree Memorial Trust produced by Professor 1563 John Greve. He reached the same conclusions—that the homeless situation in this country can only be dealt with by a massive building programme of houses for rent in the public sector.
I was saddened when I heard the Minister, in answer to recent Questions from myself and others in this House, say that that is no longer the role of local authorities; that they will not be building many more council houses and that the Government will not let them because that is the role of the housing associations. I have some figures showing that in 1975 the housing associations built 14,000 houses. In 1979—the last year of premiership of my colleague and noble friend Lord Callaghan—the housing associations built 16,000 houses. Since then, under the existing Government, every year the figures have plummeted downwards. The boast that the Minister keeps making—and the new Minister, Mr. Michael Spicer, made on the radio yesterday; I heard him—is of a tremendous increase in financing for the housing association movement in order to assist in solving the problem of homelessness. In fact, it will only bring them back to the figure achieved in 1979. That is supposed to be progress.
The facts are of course that even with the increases now coming through from the Government towards housing in the rented sector they will still only reach in real terms one-third of the total made available by the last Labour Government just before they lost power. There is no other agency in the country to do this. It is not the job of private builders to provide low-cost housing for people who cannot afford a home. It can only be done in the public sector.
Quite unexpectedly I heard the Minister being interviewed on the "Today" programme yesterday morning. He was giving all the answers which I have heard given by various noble Lords opposite in your Lordships' House when asked what was the cause of homelessness and what were the answers to the problem. What shocked and saddened me was the monumental indifference or lack of knowledge of the subject shown by the Minister in his answers. His failure to grasp what was happening in this country was towering.
He said that one of the main causes—and this has been referred to today by the right reverend Prelate—of homelessness in this country was the desire of young people to opt for independence earlier in their adult life. He said that it is not a phenomenon exclusive to this country but that it is happening all over Europe: young people want to leave the family home at an earlier age. When he gave that answer he reminded me of Canute sitting there hoping that things would happen. He said that those young people should go back home to mum and dad, get a job and not come to London and the other big cities. If anybody could switch us back to that kind of system, it would be ideal. I have two daughters of my own; one is married and one is not. They did not want to stay at home with mum and dad. They were lucky and were able to fend for themselves. However, many children are the victims of circumstances and let us make no mistake that many are not from good homes but are from bad homes where they have been poorly housed in areas of serious deprivation.
1564 Let us see what Professor Greve discovered. The findings of his report include that homelessness has doubled since the present Prime Minister came to power and the figures are still rising. One thousand families asked local councils for help with homelessness-related problems every working day. Homelessness is growing fast among young people, particularly those aged between 16 and 18 who are no longer entitled to any social security benefits. That is not the fault of anybody other than the people who are managing the affairs of the country—it cannot be. They are responsible for that situation which I believe was deliberately created. One million households, 3 million people, have been registered as homeless over the past decade and homelessness is now affecting a wider spectrum of people.
I am sorry to burden your Lordships' House, but let us look at the findings of another recent report. A new report reveals that 16 per cent. of people who rent their homes are in arrears with their payments and 5 per cent. of households face difficulties with payment. A survey on credit in Britain carried out by the Policy Studies Institute indicated an astronomical rise in debt on a general basis.
Once again I appeal to the Government. All I can say is that if the Minister's answers to the problems of homelessness in this country are those which he gave yesterday, he has no grasp of the magnitude of the problem. I urge the Government to make available money to local authorities to start building programmes once again so that we can eat into those appalling figures and once again make sure, with pride, that people are provided with reasonable homes at lower rents.
§ 4.4 p.m.
§ Lord Allen of Abbeydale
My Lords, I propose to devote my few minutes to two specific issues. The first relates to the way in which the poll tax in certain respects interlocks with the social security system. Those who are poor and also disabled or very old and living on income support will be eligible to claim an 80 per cent. rebate. Although they will have to pay the remaining 20 per cent., the personal allowance under income support has been increased to take some account of that liability. However, that increase relates to the national average and in the current year has been fixed at £67.60 per year. For some reason, the increase is slightly less than that for married couples and those under 25, although they do not have to pay any less tax.
That means that someone on income support living in Wandsworth—where the 20 per cent. will be under £30—will be handed a nice bit of extra spending money. How that squares with the Government's doctrine of everyone contributing to local government expenditure, I find slightly obscure. However, if the individual is living in an area where the poll tax is well above average, there will be a shortfall.
For example, a couple with two mentally handicapped children over the age of 18 living at home who do not qualify for complete exemption could be very hard hit indeed. An extra £100 or £200 may not seem all that much these days but if 1565 you are living on the edge of poverty and have no capital resources, that can be a most formidable sum. The prospect of mounting debts and enforcement procedures among the very poor and disabled is singularly unattractive.
Nor, to my mind, does that fit in with the policy of community care. There could well be a reluctance to give a home to a relative if that carries with it a financial penalty which can be avoided if the individual is instead in residential care. I believe that the Govenment may well live to regret the fact that they secured the rejection of the amendment passed in this House to deal with problems of that kind.
There is one other rather different problem. I know of a couple not on income support with a handicapped son. They made structural alterations to their house to make it possible for him to continue to live at home and were granted rate relief. Their rates came down to £140. Their poll tax, even with transitional relief let alone what is to come, comes out at more than double that. That is not an isolated example and it illustrates the problem which seems not to be catered for by the social security system in arrangements which substitute a personal tax for a property tax.
My other point relates to mobility allowance. I know that the noble Lord who is to reply to the debate will not be surprised that I am raising it today. I was pleased that the Government performed one of their more graceful U-turns and extended the allowance to those who are both deaf and blind, something which they refused to do when we discussed an amendment to last year's Social Security Bill. However, that amendment, which was passed here on Report and then rejected in another place, also attempted to secure eligibility as regards the allowance for an individual suffering from severe mental handicap such that he is unable to walk without physical control by another person. What we had in mind was an individual who is, literally, capable of walking but no one can tell where he will walk unless physically controlled. He may go sideways, backwards or straight under a bus or he may lie down screaming in the highway and be quite impossible to manage on public transport.
MENCAP calculated very carefully that the total number in this group might be about 4,400, but on Report the Government said that the figure was 100,000. In another place they went one better and said that the figure was 125,000. We were puzzled, since the OPCS survey did not identify the group covered by the amendment. We were left to conclude that the Government had cobbled together a whole variety of people—the mentally ill, sufferers from Parkinson's Disease and others—and not just the mentally handicapped, which was the sole category to which the amendment related, and have also applied a less stringent test to supervision.
In reply to a Question on 12th October last (at col. 565 of Hansard) the noble Lord, Lord Henley, produced yet another figure; this time it was 140,000. He said on that occasion that the figure probably represented the total of severely mentally handicapped people in this country. Indeed, it might.
1566 He conceded that not all those people would be claimants, but he would not accept the figure of 4,400. In subsequent correspondence, as he will recall, he plumped for a figure of 50,000. He was good enough to say that that figure should be regarded as an order of magnitude rather than as a precise estimate.
MENCAP thinks that it is blindingly obvious that the total involved must be far below the Government's latest figure of 50,000. That figure represents no fewer than one in three of the total of severely mentally handicapped people in this country. It is ludicrous to suggest that anything like that proportion could possibly be thought to qualify under the conditions that we suggested. MENCAP still believes that the numbers involved must be well below 10,000. Some of those people may qualify for the £10 a week mobility component of the new disability allowance promised for 1992. However, I should not like the Government to think that that allowance of 10 is an adequate substitute for the full mobility allowance which these few thousand people need and deserve just as much as do the half million present recipients of the allowance but from which they are excluded because their condition has no known physical cause.
I must leave the matter there. It seems to me that here are two instances where some of the poorest and most unfortunate members of the community have reason for thinking that the social security system, whatever its merits, falls some way short of perfection.
§ 4.12 p.m.
§ Lord Cocks of Hartcliffe
My Lords, others more experienced and expert than myself have dealt and will deal with detailed matters of social security benefits and kindred issues. I should like to speak for a few minutes about the gap between the rich and the poor because we often take for granted manifestations of the class differences in this country which are apparent to visitors.
The east end of our major cities is where the traditional working-class homes were built. That was no coincidence. The prevailing winds from the Atlantic, the West and South-West blew the pollution towards the east side of the cities and that was where the working-classes had to live, while the more salubrious western areas were the higher class residential parts.
Our whole approach to this subject is bedevilled by departmentalised thinking, which in turn stems from the whole nature of our education system. There is far too great an emphasis on higher education. I should very much like to support what my noble friend Lady Fisher said in this regard. If we debate higher education or the matter is touched on in your Lordships' House, the Benches are absolutely packed and every nuance of the matter is explored.
We recently had an example of that with the passage of the legislation on the Government's student loans proposals. We had a great deal of special pleading. As an example of what I am trying to convey to your Lordships I should like to give one 1567 example of some of the lobbying to which we were subjected. I am sure that, like myself, other noble Lords received a communication from the British Dental Association asking for support for an amendment which stated:Students on courses of more than three years duration shall have their loans cancelled for any years subsequent to the initial three years of their course".The letter went on in explanation,The Association is anxious that the Bill should not discriminate against dental students who undergo a rigorous course of five years duration together with a long academic year of forty-five weeks. Long hours and long terms provide little opportunity for dental students to supplement their grants with part-time work".It really needs a latter-day Charles Dickens to do full justice to that situation, which is supposed to wring our hearts. What is the reality? The British Dental Association figures tell us that the cost to the public for each dental student per clinical year is £23,000 to £24,000. What are the rewards for surviving that appalling assault course? The figures given by the General Dental Practitioners' Association show that the net income for dentists in 1989 was £24,920 per year. The review body for doctors' and dentists' remuneration in its 20th recommended report, Cmnd. 937, said that the target net income for dentists should be £29,740. We need to put such figures into perspective; otherwise we simply go into little pockets of special pleading for various groups and do not see society as a whole.
During the debates on the student legislation I wondered whether we were getting matters entirely out of proportion. I asked the noble Baroness, Lady Blatch, about comparable figures for student support in other countries. I shall not weary your Lordships with the answer, which runs to an entire side of foolscap, but the upshot was that the comparable figure for full-time and part-time students in England and Wales at 1984 prices amounted to £770 per year. For the same year the figure in the United States was £270; in Japan it was £30; in West Germany, £70; in France, £180; and in Italy, £40. We never seem to get down to the basis of how we are running this country in comparison to other countries. We struggle along with a lot of stereotypes and shibboleths. Occasionally we should take time to try to puncture some of these.
My noble friend Lord Dean returned to the theme of homlessness, which he pursues with great assiduity. I also have my theme; that we are actually paying students more public money to study away from home when it is not necessary and are exacerbating the homelessness problem. We ought to remember that only 7 per cent. of working-class children reach university, yet a very large proportion of the taxes paid in this country which go to supporting the privileged in higher education are paid by working-class people.
Hospital provision is another example. In my city of Bristol the first proposal for a hospital on its south side was in 1935. Nothing came of that because there was a monstrous redevelopment in the centre of Bristol, on a grossly unsuitable site solely because of 1568 pressure from the university, which wanted its own precinct, and the consultants, who wanted to be near their posh consulting rooms in Clifton. The general population who made up the patients received no consideration at all.
I believe that there is also trouble brewing for the Government over the proposed closure of Westminster Hospital, where an ill-thought-out scheme is likely to come unstuck. Although the stereotype of Westminster is one thing, there are actually thousands of working-class people who live in the area who should have more consideration.
We should remember that higher education is a privilege. Those of us who benefited from it and are in positions where decisions are made should stand back from time to time, look at society's inequalities objectively and realise that many of them have been created over the years by the products of higher education. Educated people know how to lobby and how to exert pressure to achieve their aims, which are gifts usually denied to the people who are suffering far more from the system than anybody else.
§ 4.20 p.m.
§ Lord Lucas of Chilworth
My Lords, if the noble Lord, Lord Cocks, will allow me to say so, I found his speech particularly invigorating in that he drew for the first time from that side of the House meaningful comparisons. He finished by suggesting a manner in which we might make matters a little better. He said that perhaps we should stand back and look a little objectively at some of these problems. In my view that is the major fault, if there is one, with the funds which the Administration which I support on this side of the House make available.
The Government are spending about £1 billion a week on social security and next year they will spend something like £10 billion on a whole range of benefits for the family. Yet for all that we find, as the right reverend Prelate the Bishop of Manchester said in last week's debate on the citizens advice bureaux that those at the bottom of the scale go down even further. However, he admitted:It has been especially important to have an organisation such as the CABs in our country in recent years because of the growth in the numbers of the relatively poorest in our society. Poverty was once much more widespread in Britain than it is today".He went on to say:The fact that the poorest are a minority in society means that the pressures on them are that much greater". [Official Report, 7/3/90, cols. 1186 and 1187.]And there was nobody who dissented from that. Nor I think is there anybody this afternoon who would dissent.
But the noble Lord, Lord Carter, in his opening speech which my noble friend Lord Joseph described as a packed speech, put forward a whole range of statistics and numbers which were quite meaningless. Again the noble Lord, Lord Allen of Abbeydale—and I am sorry that he is not in his place—brought forward another range of figures, but nobody can agree about all these things. I expected the noble Lord, Lord Carter, to suggest to those of us on this side of the House exactly what his party 1569 would do to narrow the gap, but, sadly, he did not do so. Surely that is something that we might have heard.
I want to touch on the Social Fund about which my noble friend Lady Faithfull spoke in respect of the Law Lords' decision. It seems to me, although an enormous amount of money has been put into the Social Fund, that because it is a discretionary system there are inequalities, and I find it difficult to reconcile in my mind £75 million worth of grants to the end of October 1989 and some £200 million awarded in loans.
Again, going back to our debate last week, it seems to me rather counter-productive to load upon those who are in the disadvantaged band of our society further loans to help them out of their difficulties. I really think that my noble friend the Minister should have another look at the disposition of the moneys that are made available. I think that that was implicit in what the noble Lord, Lord Cocks of Hartcliffe, had to say in taking another objective look.
In defining the poor the noble Lord, Lord Carter, said that poverty is represented by an income so low that recipients cannot engage in the life of the community. The noble Baroness, Lady Fisher, said that poverty is low income, poor health and poor housing opportunities, unemployment and so on. The right reverend Prelate suggested a rather different definition. There cannot be one single definition.
But what we should remember—and I learned this from my association with the citizens advice bureaux—is that, however little money there is available, it is those with the least who are the least able to manage their financial matters. When you get on the wrong side and into debt, all the other problems such as homelessness, of which the noble Lord, Lord Dean of Beswick, reminded us, compound the great difficulties and push those disadvantaged people even further down in the system.
I believe it is right and proper that the department of my noble friend the Minister should pay greater attention to education and publicity in that area, as well as in the area of benefits and entitlements. Is it not surprising that so many entitlements are not taken up? For example, the family credit advertising campaign has already increased the total case load from 280,000 to 320,000. It was not the need that drove people to ask; it was the fact that under the system it is an entitlement that has been brought to their attention and they have taken advantage of it. I believe that there are a number of other entitlements, quite unbeknown to potential recipients, which should equally be made known to them.
In a free market society, in which I believe, there will always be a differential, whether it is between the disadvantaged and those not disadvantaged or whether between the so-called rich and poor. But without the kind of free market economy that this country has enjoyed in the past 10 years, the general wealth of the nation, the general upsurge in the economy, could not have been achieved; and those advantages have been passed on—though not necessarily in proportions acceptable to all noble Lords—right across the entire range of our society.
§ 4.28 p.m.
§ Lord Stallard
My Lords, I should like to start by thanking my noble friend Lord Carter for initiating this debate, and at the same time I should like to sympathise with the noble Lord, Lord Joseph, in his frustration at not having enough time to develop the points that we should all like to develop in a debate such as this.
That the gap between the rich and the poor has increased during the period of office of the present Administration is an unfortunate fact of life; and the noble Lord, Lord Joseph, defended that fact of life. Ever since the 1980 Social Security Act, their first Act—I was a Member of the Committee which considered the Bill in the other place—there has been a series of cost-cutting exercises to reduce public expenditure, mainly at the expense of social security budgets. Even though the most recent uprating of benefits orders for the 1990–91 period contained one of two helpful provisions, they were designed to effect overall saving of some £320 million. That has been the pattern right from the beginning of this Administration's social security legislation.
I want to use my few minutes to talk about the problems of the elderly among whom are some of our poorest people—pockets of poverty, the noble Lord, Lord Joseph, I think, called them. I should like to ask the noble Lord who will reply to the debates whether he has had a chance to read the current issue of Pensioners' Voice, the official non-party publication of the National Federation of Retired Pensioners. Under the banner headline, "We stand aghast", the paper prints a reply from the Parliamentary Under-Secretary of State for Social Security on behalf of the Prime Minister, to whom the national federation had written and sent a petition of 110,466 signatures calling for the restoration of the link between pensions and average earnings.
I have not time to enlarge on the Government's record on petitions. But it is not very good if we remember the 5 million signatures on the ambulancemen's petition. I shall not read the whole of the reply but the first paragraph, following the customary apologies for delay in replying says that,we do not see uprating pensions in line with earnings as the key factor in improving pensioners' incomes. It is not simply the level of basic pension, but pensioners' total incomes which is the true measure of their well-being".That indicates government thinking. I do not accept it. But that is what they think on the issue of pensions. I wish I had time to quote the rest of the reply to a very good case put up by the pensioners. However, it is indisputable that the breaking of the link has had a devastating effect on pensioners' incomes. The level of the basic pension would now be significantly higher had that link been maintained. The single pension would be £11 per week more than it is now, and the pension for a couple would be somewhere in the region of £17.55 more. The 7.6 per cent. increase in the state pension announced by the Secretary of State for Social Security on 25th October, based on last September's cost-of-living increase, does not compensate for the high monthly prices of between 7.3 per cent. and 8.3 per cent. experienced from April 1989, when the 1571 pension rose by just 5.9 per cent. Yes, the basic pension, so far as I am concerned, is a major element in the income of pensioners seeking to maintain some independence and some dignity.
It is also a fact that 60 per cent. of older people derive at least three-quarters of their income from the state pension and are therefore extremely vulnerable to these constant changes in social security benefits. Changes in housing benefit and heating allowances, in supplementary benefits and in other respects have all pushed pensioners further down the list so far as incomes are concerned. I do not have time in this debate to develop the whole social security scene, much as I should like to, and so I will bide my time until another occasion.
However, I should like to follow on from what the noble Lord, Lord Allen of Abbeydale, said. I should like to mention the latest and most savage attack on the incomes of thousands of pensioners: the community charge. In the debate about the gap between rich and poor, this must be a prime example. Even some rich people have expressed embarrassment at their latest windfall and are making their views known in public. Age Concern has received over 50,000 requests for copies of its fact sheet on the community charge. Voluntary organisations and pensioners' groups all over the country are inundated with queries from pensioners who are worried sick about the charge, coming as it does, on top of extra charges for gas, electricity, water, telephones, television licences, rents and heating and increased standing charges, promised by this Administration. Even those pensioners living alone, who were previously paying high rates, know that all these increases will more than wipe out any gain they may have been led to believe would result from the community charge. They are also worried, and they are the gainers.
The community charge benefit system is still so complex and confused that even the staff of local authorities do not understand it. They are supposed to be implementing it, but they do not understand it. I have spent hours studying it and I think I now have a basic understanding. For example, the Government have maintained that the charge will be related to a person's ability to pay through the community charge benefit system. Yet although the charge, so it is said, is intended to promote individual accountability and each person will receive an individual demand, for a couple the rebate depends on the savings and incomes of both partners, irrespective of the couple's personal financial arrangements, and any rebate is shared between the two of them: this, in the year of the introduction of independent taxation, is almost beyond belief.
The limit of £8,000 of joint savings means that a couple, most of whom have scrimped and saved to put away a few pounds to ensure a little decent security in retirement and a decent burial when the time comes, are now being severely punished for their thrift by this Government. This is not a problem which will affect the rich. So the gap gets wider with every new government initiative. How can that be defended? We are told that compensation is being made in the income support rates for the 20 1572 per cent. poll tax that claimants will have to pay. This compensation was added into the income support rates for 1989–90 on a one-off basis, and the £1.15 per week compensation per adult will be significantly less than the amount which many claimants living in areas with above-average areas of poll tax will have to pay.
Likewise, the transitional relief proposals are intended to provide relief for those whose community charge bills are more than £3 per week over the 1989–90 rates bills, but only so long as the local authority remains within the spending limit of the Government. As many local authorities of all political persuasions have announced community charges in excess of the Government's figures, pensioners will still face increased charges in excess of the £3 relief it is alleged they will get, if perchance they find out about it and happen to claim it. It could be as much as an extra £5 they will lose on top of that.
I have not sufficient time to examine the issue in greater depth; I should have loved another half-hour to go into the alternative social security system. We know that it must be expressly sensitive to individual needs and that it must be comprehensible to the general public as well as being capable of removing the tax benefit poverty trap. The present system does none of those things. The system mentioned briefly by my noble friend Lord Carter in his opening speech will. We are pledged to it; that is what we will bring in.
§ 4.36 p.m.
Baroness Ryder of Warsaw
My Lords, in our society, as a consequence of its very nature, sadly there will always be a gap between rich and poor. What is needed, as much as anything else and more now than ever, is the element of caring: that people should care about the welfare of each other and that governments should care equally for every level of society, and especially for the poorest level of all.
With this in mind, I should like to bring to your Lordships' attention three matters which need our urgent consideration. First, as regards the poll tax or community charge, it is now very obvious that the abolition of domestic rates and the substitution of poll tax means that the well-to-do will benefit greatly while the poorer members of society will have to pay more. True, those receiving supplementary benefit and those on a very low income will benefit, but, in setting a figure for these rebates, do the Government really understand how much it costs to run a home today? Many people cannot even fill out the forms, let alone understand what the tax is about.
I understand that to qualify for any rebate a married couple are allowed £8,000 capital between them. I also understand that two unmarried people living together are allowed to have £8,000 each. This is not only unfair but an encouragement to an increase in immorality, with all its consequences. Could the possibility of a negative income tax be explored as a means of levelling up the income of the poorest members of society to an acceptable level?
Secondly, in regard to education, the gap between rich and poor in our education system is becoming 1573 wide and wider. In the private schools, small classes with fulfilled and enthusiastic teachers, and often superb facilities, combine to give the children of those who can afford to pay the best possible start in life. In the state schools, large classes, truant children, unhappy and pressurised teachers, inadequate supplies of books and poor equipment mean that increasingly the children whose parents cannot afford to pay have to start life at a crippling disadvantage. Education is the most precious gift we can give our children. In the state schools the gift is fast becoming a liability.
Furthermore, the proposed student loans system will be a heavy burden on those students whose parents cannot afford to pay for their education altogether. Would not the abolition of the loan system and the social fund and a return to a system of non-repayable grants for those who prove to be in need be the answer?
Thirdly, I turn to public and private medicine, nursing homes and residential care for the sick and handicapped. My greatest concern of all is for the sick and handicapped. Let us face the fact that there is a great difference between public and private medicine. No longer can those in the public sector expect to receive the treatment they need regardless of cost. The new provision causes serious concern that a sick person who is not in the private sector will get not what he wants but what his local health authority or medical practice can afford.
There are many people in our society today suffering from long-term diseases and disabilities who simply cannot cope in their own homes. They need dedicated 24-hour care from qualified nurses, and in an atmosphere that should be as homely and non-institutional as possible. If such people have sufficient money and can afford to pay the full cost of their care, there is a wide choice. However, if they have no money and can rely only on the DSS grant of £235, rising only to £245 in April 1990, then the choice is very limited indeed.
In very many of the Sue Ryder homes the cost per patient is over £500 per week, which has to be raised year in, year out by supporters who are becoming more and more disillusioned and bewildered by the Government's attitude. Speaking for the foundation which bears my name, we are inundated day and night by a host of demented people of all ages who are literally desperate for help. I shall gladly take any noble Lord to see the dreadful conditions in which they exist.
I should like noble Lords to imagine the dilemma and distress caused unnecessarily to thousands and thousands of silent sufferers. We may not think that they are vote catchers but, believe you me, the supporters who have to raise the money are. We should be ashamed that in this very materialistic society we have these shocking and deplorable gaps. Is no one in the Government going to show understanding and imagination and offer real help and not just make purring noises, referring to us as the private sector and often with remarks such as "good luck to you"? This gap is not only totally wrong but shocking.
§ 4.42 p.m.
§ Baroness Seear
My Lords, I agree with the attack made by the noble Lord, Lord Carter, on the degree and depth of poverty experienced by certain sections of the population in this country today. Before he nods his head in too much approval of what I have just said, however, I do not accept either his analysis or his prescription. Before the Labour Party makes so much of what has happened to the change in income tax level, it should remember that the level was changed from the quite absurd—and the party admits by its present schemes that is was quite absurd—top level of tax of 83 per cent. for income and 98 per cent. for investment income.
Nobody who knew his way to a good accountant ever paid that tax but that is the unreality of the situation which Labour left behind. The level of tax was calling aloud for a very substantial change. But that does not justify a great deal of what is going on at the present time. I do not agree with the noble Lord when he advocates a minimum wage. My party has long believed in a minimum income supported by a modest but real and secure citizen's income or basic income, not at subsistence level—because that cannot be afforded—but at a level that would be certain as a fallback so that everybody would feel secure.
I know very few economists of any repute who support a minimum wage. I remind the Labour Party that it was the undue increase in the minimum wage in France which had a great deal to do with President Mitterand having to go into reverse with many of his socialist policies. However, I agree that we are ashamed at the level of poverty that is seen in our cities day in and night in particular.
I believe that there are many noble Lords on the Government Benches who think the same and I am certain that the noble Lord, Lord Joseph, is among them. The Government will say, "We should like to do more but it will cost too much". I do not wish to encroach on the discussions which will follow after next Tuesday, but I say, as a throwaway remark, that there are certain measures which the Government can take which would release resources in order to alleviate some of the worst and most blatant examples of poverty which exist at the present time.
For example, the Government could get rid of MIRAS for higher income tax payers. It is absurd that the wealthy should be allowed to receive 40 per cent. MIRAS because they are paying tax at that rate. That is an absurd allocation of resources. Similarly, the Government could change the strange principle whereby the national insurance contributions paid by employees stop increasing at a level of about £17,000. There is no reason at all why the contribution should not be raised at least up to the level at which the higher rate of income tax is paid.
I shall be puritanical for a moment and it does no one any harm to be so from time to time. I recommend that this year the Chancellor should not be afraid of increasing taxation on tobacco and drink. In both cases there is a strong health argument for increasing the taxes, both of which have been under-increased for a very considerable length of 1575 time. Those are three measures which the Government could undertake. I anticipate their reply: they will say, "We should like to do all these things, but we cannot find the money".
There are a great number of other provisions which many of us would like to see put into effect. As other speakers have done this evening, I wish to concentrate on two particular groups where poverty is most acute. I refer to the pensioner who does not have any substantial additional income apart from the basic pension. I am the first to agree—and I am sure that there are many in your Lordships' House who also agree—that if he or she has a sizeable occupational pension or some other form of income in addition to the basic pension, then such a person may be quite comfortably off as a pensioner. These people have got rid of the mortgage and got rid of the children and they may well have more spending power than ever before.
However, the vast majority of pensioners are not in that position. The time may come when they will be, but that is not the situation at present. The pensioner who is dependent on the basic pension is extremely poor at the present time and at an age when it is very difficult to do anything about the situation for himself.
I concentrate on that group. There are a number of measures that could be taken. We should restore the link between the basic pension and earnings rather than with the RPI. The wealth of the country has increased—I pay tribute to the Government for some of the things they have done in this respect—but that is all the more reason why pensioners should have the opportunity of sharing in the increase in national wealth. To limit the increase in pensions to the RPI rather than to earnings is a situation that we should not tolerate.
The Government should consider not taxing the basic pension. It should be removed from tax altogether. If you like, that is an instalment on the idea of a basic income, though I have not time to elaborate on that point. There would be one very advantageous effect. Not only are people on the basic pension extremely hard up, but there is also a very great deal of hardship felt by those who are just a little above that level of income. In one way or another they have accumulated some additional resources—enough to push them into paying tax. That is absurd. If the Government were to remove tax on the basic pension then such people would be in a very much better position. The additional income which they have accumulated with so much difficulty would be theirs because they would not then reach the minimum level at which tax is levied.
I wish to make one further point. I think I heard the noble Lord, Lord Lucas of Chilworth, speak about debt, although I did not hear any other noble Lord refer to it. Debt is both a consequence and a cause of poverty. It is time we tried to do something far more constructive about it. The Government should give much more positive encouragement to saving. I hope that the Chancellor of the Exchequer has been thinking about this.
My party has proposed a registered savings account into which people could take out of their 1576 income up to a certain level a given amount of money on which they would not pay tax until they took it out of the account. This would encourage people. At the moment, saving is channelled by our tax system into either property or pensions. It would be far better if there were a level playing field, to use an overworked phrase, in regard to savings so that all kinds of savings had the same encouragement. A registered savings account into which people could put their money would enable them to have a nest egg, would encourage people not to spend, which is highly desirable at present from a macro-economic point of view, and would also encourage them not to get into debt. I should like to put forward many other proposals but, sadly, my eight minutes are up.
§ 4.51 p.m.
§ Baroness Turner of Camden
My Lords, I am grateful to my noble friend Lord Carter for introducing the debate this afternoon on this important topic. Most noble Lords who have spoken have agreed that during the past 10 years we have seen a widening gulf between those who are doing well out of the market-led philosophy of the 1980s and those who are doing less well, and in many instances very badly.
According to the Low Pay Unit, about 6 million workers in full-time employment—about 37 per cent. of the total full-time workforce—now earn less than the EC threshold figure as defined by the Council of Europe, which is 68 per cent. of average full-time earnings. Low pay subsidises the United Kingdom economy to the tune of £15 billion a year, which would be the cost of bringing the low paid in the United Kingdom up to the EC threshold. In fact the figures concerning the low paid could well be worse than I have indicated. The official statistics are based on questionnaires returned by employers to the Department of the Environment. It is fairly obvious, since this is a voluntary exercise, that the employers who co-operate are among those paying the best rates. If that is so, the figures could well be worse than the ones I have mentioned.
Moreover, the so-called reform of social security which we have seen in recent years could well have contributed to the worsening position of the low paid. The rules in relation to entitlement to unemployment benefit have repeatedly been tightened so that the unemployed are now not able to pick and choose but must take whatever is available, however low paid and however exploitative. In fact, much of the Government's social policy has been directed towards the coercion of the unemployed into low waged work in the labour market.
The Government inherited a comprehensive system of social insurance based on the contributory principle. No one claims that it was perfect. On this side of the House we agreed that it was in need of revision. But since 1979 we have seen successive social security Bills—almost one a year—and the aim has always apparently been the same. It has been to make it more difficult to claim and to remove benefits hitherto payable as of right and replace them with means-tested benefits. The Government refer to this as targeting. When it comes to the low paid, the Government have developed a series of 1577 incentives which have resulted in large public subsidies to employers who do not pay a living wage. Family credit is this kind of system. It is a means-tested benefit.
Recently, the Department of Employment has acknowledged the wage substitution effect when suggesting that family credit will take up any fall in wages that results from the disappearance of wages councils. These councils, some of which still remain, although with eroded powers and a feeling of being under threat, provide the nearest we have in the United Kingdom to a provision for a minimum wage. In almost all other countries in the European Community there is some form of minimum wage legislation. In this respect I disagree with the noble Baroness, Lady Seear. I trust that the time is not too distant before we have similar provisions in the United Kingdom.
Those who oppose the minimum wage on grounds of cost should consider the size of public subsidy paid to low-paying employers via the social security system. On the other hand, tightening up on conditions for unemployment pay has led to indirect support for employers who do not pay reasonable wages, because people have been forced into low paid employment. I have no doubt that this was the Government's intention all along.
Of course it will be claimed that unemployment has been reduced and that many new jobs have been created. Everyone welcomes that. But what is not often said is that a number of the new jobs are part time. I am not against part-time employment. It has to be said that, owing to the lack of support facilities—crèches, nursery schools and so on—many women prefer part-time employment. There is a lot to be said for more flexible working patterns. If, however, hours are shortened to reduce wages below minimum earnings levels, the gain to employers in saved national insurance contributions is of the order of £213 a year per employee. Given that the number of jobs of this type has increased by 1 million during the 1980s, the total subsidy to employers would be in excess of £200 million per year.
That has to be seen as part of the incentive to employers by government to maintain wages at a lower level even though it would no doubt be stated that there were some benefits for the low-paid employee as well. However, the effect for many married women is that they cease to be covered by the national insurance system if their wages do not reach the minimum level at which contributions begin. And if they work for fewer than 16 hours a week they have no employment protection either.
In making these remarks it should not be thought that I am opposed to social security support for families with children. Of course I am not. I am simply pointing out that there is a wage subsidy effect and that this is ignored by those who oppose minimum wage legislation.
As for support for the family, it remains the view on these Benches that the Government should have honoured their election pledges about maintaining 1578 child benefit. I do not believe that they have done so. The noble Baroness, Lady Faithfull, has already dealt with the issue of child benefit. She pointed out that there is a high take-up of the benefit because it is perceived as a right, as something to which everyone is entitled. Any genuine family policy must include its restoration. Freezing child benefit will save the Government £250 million in net terms in 1990–91. I understand that only 28 per cent. of this saving, £70 million, will be ploughed back into family credit for low income families with children.
When we come to the position of the elderly, the outlook seems bleak. It is true that there has been an increase in the number of people retiring on occupational pensions derived from their employment. That development is very much to be welcomed. Nevertheless, as has already been stated in the debate, the majority of elderly people, still look to the state pension as their main income. I understand that the figure is of the order of 60 per cent. Until 1980, pensions were uprated in line with the increase in the RPI or the wages index, whichever was the greater. I join noble Lords who have pleaded for a return to a linking with the wages index. Older people should benefit from increasing prosperity. After all, during their working lives they have played their part in creating it.
There is much concern about the financing of homes for the elderly. The Independent Hospitals Association has stated that adequate care for poorer elderly people is at risk because income support levels are not sufficient to meet residential and nursing home fees. There is a danger of a two-tier system of residential care developing, with a lower level available for those dependent on income support. I welcome the decision taken by a vote in another place last night. I hope very much that the Government will take that on board and amend their policies accordingly.
During the debate several of my noble friends have drawn attention to the problems of the young, the homeless and the underprivileged generally. I believe that the decade has seen a widening of the gulf between rich and poor. I do not want to go over the ground again but the existence of homelessness is an extreme example of the kind of conditions that have arisen since 1979. Before then, it was unusual to see young and elderly people sleeping out; however, it has now become commonplace, not only in London, but also in other cities.
Time does not permit me to enlarge upon the kind of social policies which we on this side of the House would like to see implemented to deal with all these problems. But, in introducing the debate, my noble friend Lord Carter outlined at length what our alternative policies would be, contrary to what the noble Lord, Lord Lucas, said. In those circumstances, all I can say is that we have reached a situation where, in advance of achieving a change of government, we must look at some of the problems which have been mentioned today from all sides of the House with a view to providing at least some amelioration of the conditions which are now apparent to us all.
§ 5 p.m.
§ The Parliamentary Under-Secretary of State, Department of Social Security (Lord Henley)
My Lords, this has been an interesting and enlightening debate and I am sure that all noble Lords will join me in thanking the noble Lord, Lord Carter, for giving the house an opportunity to discuss the subject. In his speech he fantasised somewhat about the policies that his party would pursue should it ever be returned to office. I think I should say that that is a very unlikely eventuality. It is all too easy to make promises when in opposition and it is all too easy to gloss over the cost of that profligacy. The difference is that, unlike the noble Lord's party, we have a record of action and achievement. It is a record, as I intend to point out in the few short minutes that I have, of creating wealth and spreading it more widely than ever before.
The Motion before your Lordships calls attention,to the gap between rich and poor in society and to the case for a social security system which meets the problems arising therefrom".But I believe it is essential to understand the context in which we are debating this issue today. If by that the noble Lord feels that it is for the social security system to be essentially redistributive, I cannot go along with him. If he means by that that it is for the better off through taxation and the social security system to help those less well off and in need, then that I would concur and say that that is exactly what we are trying to do and what we very largely succeed in doing.
It would be quite wrong to ignore, when we come to debate these issues, that not only do we live in a society which is richer than ever before; we also live in one where wealth is spread more widely. Moreover, all sections of society are benefiting from the increased prosperity of the nation as a whole. As a society we are twice as rich as we were in 1971. Even in the 10 years since 1979 our wealth has increased one-and-a-half times. Today, thanks to the policies we have pursued over the past 10 years, which received some praise from the noble Baroness, Lady Seear, real personal disposable incomes stand at an all-time high. Thanks to our policies of tax reform, we have created a climate in which businesses can thrive and in which individual initiative and risk-taking are rewarded. The consequence has been a transformation in our fortunes, an almost unprecedented expansion in our economy, a steady increase in employment opportunities and real improvements in living standards for all groups of the population.
These figures have been quoted before in your Lordship's House but they bear repeating. Real take-home pay for a married man with two children on male average earnings has risen by nearly one-third under this Government. Over the past year alone the real take-home pay of a married man on average male earnings, including the effect of the £3 a week reduction in national insurance contributions introduced last October, has risen by over £20 a week. In the numerous families where both partners are working, the overall increase will have been even greater.
1580 The growth in prosperity to which I and other noble Lords have referred has been reflected in the spread of personal ownership and major changes in the lifestyles of people in all groups. One has only to look at the increased availability and ownership in consumer durables to see this. It is perfectly valid to have regard to trends in ownership of all kinds of goods throughout the range of incomes—indeed, this is a factor which cannot be ignored when considering living standards. It is not merely that colour televisions, central heating, telephones and washing machines now form part of the ordinary experience of millions of citizens in this country; the fact that such items are owned to an increased extent among all groups and not just by the so-called "rich" is itself a fair indicator of the widespread wealth to which I referred. These are not just long-term trends. The recently published Family Expenditure Survey for 1989 contained some interesting analyses, showing, for example, that amoung households headed by a retired person mainly dependent on state benefits there were dramatic increases between 1979 and 1988 in ownership of central heating, telephones and washing machines.
Over the past 10 years there has been a steady decline in the number of pensioners on low incomes. Indeed, if we look at the proportion of pensioners in the bottom fifth of the national income distribution we find that it has declined from 38 per cent. in 1979 to 24 per cent. in 1987. As a group pensioners have done well under this Government. Their average total net incomes over the period between 1979 and 1987 grew by 31.3 per cent. in real terms, which amounts to over 3.5 per cent. a year on average compared with 0.6 per cent. a year between 1974 and 1979.
Pensioners' average income from savings increased by 130 per cent. in real terms between 1979 and 1987, an increase of more than 10 per cent. a year compared with a decrease of 3.4 per cent. a year between 1974 and 1979. Pensioners' incomes increased in real terms twice as fast as those for the population as a whole between 1979 and 1987. Moreover, 52 per cent. of all pensioners and 73 per cent. of recently retired pensioners now have an occupational pension and approximately half of all pensioners own their own homes. I want to place these figures on the record because I believe it is important for the House to be aware of the very real improvements that have been made in recent years for a group which is commonly believed to have fared less well than is borne out by the facts.
Perhaps at this stage I should mention the point made by the noble Lords, Lord Stallard and Lord Carter, and the noble Baronesses, Lady Turner and Lady Seear, on the link with earnings. We believe that the link between the basic pension and earnings is not the key factor in improving pensioners' incomes. As I said, more important to pensioners is the value of their total income from all sources. Between 1974 and 1979 when pensions were increased in line with the higher of movements in prices or earnings, pensioners' average total net incomes increased by only 3 per cent. During our first eight years in office the real terms increase, as I have already said, has been 31 per cent.
1581 I am only too well aware that a myth is sometimes put around that the undoubted improvements in economic prosperity and personal incomes have only benefited those at the top of the income distribution. Indeed, we have heard it said during this debate that, although the better off may have become wealthier, the poor have become poorer. I do not deny for one moment that those at the higher end of the income distribution have done well. That was the proper and inevitable result of our measures to end some of the outrageous rates of tax referred to by the noble Baroness, Lady Seear, which simply drove some of our most talented and creative people from the country.
Our programme of tax reform has sought to create a climate in which businesses can thrive and individual initiative, risk-taking and hard work are encouraged and rewarded. I believe that it was right to take steps to leave people with more of their own money so that they could choose for themselves what to do with it. All the evidence points to the fact that people not only at the higher end but also those further down have responded to these improvements in incentives by seizing the new opportunities available to them, improving their own living standards and those of their families. It is for this reason that the Government make no apology for the fact that the rich have got richer. But in any society in which you do not have a complete equality there will always be differences in purchasing power. What is quite untrue—indeed, it is a dangerously misleading myth—is to suggest that as a consequence of the greater prosperity of this country the poor have got poorer. The reality is quite the reverse.
I do not deny for one moment that some people have fared less well in recent years than others. We recognise that some people, for reasons of disability or other factors quite beyond their control, have to live on limited incomes and depend on what the state provides. It is precisely for this reason that the Government have sought to protect the position of those most in need. Retirement pensioners, the sick and disabled, families with children, all have had their position safeguarded and protected. Indeed, in many cases we have been able to go further and achieve real improvements in the position of those dependent on benefits. It is precisely because we recognise the importance of providing for people in need that we have devoted an unprecedented level of resources to social security.
I believe that it was the noble Lord, Lord Stallard, as well as other noble Lords, who implied that we had cut resources devoted to social security. In the coming financial year we are planning to spend a record £55 billion on social security. That is an enormous amount by any standards and represents an increase of one-third in real terms since we came to office. It amounts to over £20 per week for every man, woman and child in the country.
We have increased spending on the elderly by some 24 per cent. in real terms and on the long-term sick and disabled by some 90 per cent. in real terms since we came to office. The reforms which we introduced in April 1988 were designed to achieve precisely the objective that underlies the Motion before your Lordships' House today in the name of 1582 the noble Lord, Lord Carter—namely, to create a properly co-ordinated framework of benefits which is flexible enough to enable resources to be targeted more effectively on those who need them most.
Through the new system of income support, with its structure of personal allowances and premiums, we have been able to direct specific help to groups such as pensioners, families with children, lone parents and disabled people. Spending on family credit in 1988–89 at around £400 million was more than double the amount spent on its predecessor, family income supplement. Family credit now provides a significant tax-free cash income payable to over 300,000 low income working families with children. The average weekly payment is now around £27 and in nearly every case it is paid to the mother.
Going back to pensioners, we are aware of the problem of those with no occupational pensions to whom the noble Baroness, Lady Seear, referred. That is why last October we used the new structure of income-related benefits to provide extra help for those less well off elderly and disabled pensioners. As a result of those changes, which cost some £200 million in a full year, some 2.6 million gained by up to £3.50 a week. The new structure has also enabled us to direct more help to low income families with children. The extra money being provided from this coming April for this group will bring the total amount of extra help provided to approximately 1.5 million families getting income-related benefits to over £350 million a year in real terms since April 1988.
In the short time that I have available I should like to answer various specific points raised by noble Lords. Obviously I cannot guarantee to answer every point that was put to me this afternoon as time is limited. However, I shall do my best. The noble Lord, Lord Carter, asked about the future of the Independent Living Fund. I appreciate the fact that he gave me advance notice of the question. As was made clear in the White Paper The Way Ahead that the noble Lord referred to, the wider arrangements for care in the community to take effect in 1991 envisage care packages devised by local authorities on an individual basis. We would therefore expect that people seeking help after that date should generally be able to look to local authorities. We shall be consulting local authorities on these proposed arrangements and in particular on the timetable for any transfer of existing cases and associated resources. The Government are consulting the fund's trustees, the Disablement Income Group and the Disablement Income Group, Scotland on the experience gained from running the fund and are examining whether there may be a very small group of people for whom supplementary arrangements may be necessary.
The noble Lord, Lord Carter, also mentioned the OPCS review of disability. Again the measures which my right honourable friend announced in The Way Ahead published on 10th January will introduce major improvements in the balance and structure of social security help for disabled people. They will provide an extra £300 million in 1993–94 on top of the £8.3 billion we are already spending on the long-term sick and disabled. These measures will 1583 help some 850,000 disabled people and carers. This is a generous response to the findings. I find it hard to see how that response can be classified as disappointing. As each of the reports of the OPCS disability survey findings were published, comments were invited and many disabled people and their organisations made comments. The proposals in The Way Ahead, which, as I said, was published on 10th January, took account not only of the survey findings but also of the comments we received. We have not only invited comments on the proposals but have sent a copy of them to a wide range of disability organisations inviting their comments. We shall, as we always do, take account of their comments in working out detailed arrangements for these proposals.
The noble Baroness, Lady Faithful], touched on child benefits, as did various other noble Lords. The Government's decision not to uprate child benefit this year has already been discussed. I do not propose to repeat in detail the arguments which I put forward when we discussed those regulations—that an increase in child benefit at a net cost of some £250 million would have given relatively small amounts to large numbers of families who cannot be said to need it. It is difficult to see how such a move could have been justified in the terms of the Motion before your Lordships today, which seeks to draw attention to the fact that it is the less well-off rather than the rich who need the help which the state can provide. More to the point, it would have done nothing at all to help the 3 million children (almost a quarter of all children) in families receiving income support and family credit because these benefits are adjusted to take account of changes in child benefit. As I reminded your Lordships earlier, the average weekly payment of family credit is around £27. It is difficult to see how a universal child benefit could ever provide this level of help for low income families and still remain affordable.
The noble Baroness, Lady Turner of Camden, implied that we were in breach of our manifesto commitment. Let me say that the future level of child benefit will continue to be determined at the annual review of benefit rates and its level will be decided in the light of circumstances at the time. That is in accordance with the existing law and it fully honours our manifesto pledge that child benefit will continue to be paid as now and directly to the mother. That is what we shall continue to do.
We are often accused—the suggestion has again been made during the course of this debate—of putting too much emphasis on the success of the economy. This success was emphasised by my noble friend Lord Joseph and I wish he could have spoken to us for longer than the time that, sadly, he was limited to. The strength of the economy was also stressed, as I was pleased to note, by the right reverend Prelate the Bishop of Gloucester. However, I submit to your Lordships that the emphasis we have placed on generating wealth has clearly paid off, not only in terms of restoring a sound economic framework but also in terms of protecting and improving the living standards even of those who are less well off.
1584 This policy has paid off because it has encouraged people to help themselves where they can, rewarding industry, initiative and hard work. But at the same time we have done what any caring society must do. We have protected those who cannot provide for themselves, giving help without sapping the will to stand up by one's own efforts. We have sought to put an end to the attitude which says "You won't do any better whatever you do".
The conclusion that I draw is that the most important contribution that the state can make in promoting welfare is not to be found in ambitious projects of social engineering. It is to be found in an economic framework in which people can generate wealth and resources which enable not only their own families to prosper but also enable those who are less well off to share in this prosperity. I hope that your Lordships' House will endorse that conclusion tonight.
§ 5.20 p.m.
§ Lord Carter
My Lords, I am very grateful to all those who have spoken in the debate. The debate has been in the best traditions of your Lordships' House. It has dealt with a central problem of social policy; sincerely held differences of view have been expressed cogently; and there has been constructive criticism.
As there are a few moments left before we reach the end of the allotted time, I should like to take up a few points. I emphasise to the Minister and noble Lords on the other side of the House that when we spoke of poverty we were speaking of relative poverty rather than actual poverty. What is crucial is how the poor feel in relation to the rest of society.
The Minister referred, correctly, to substantial increases in expenditure on social security. However, he omitted to say that the vast proportion of that increase is due to an increase in the number of claimants and the number of unemployed; the real value of benefits has declined in many cases.
The noble Lord, Lord Joseph, said that he could not believe many of the figures that I quoted. I suggest that he discusses his problem with the Government's own statistical service because I was very careful to quote entirely from official statistics. Those statistics show that it is not true that wealth has been more fairly shared in the past 10 years.
I have to take issue with the noble Lord, Lord Lucas of Chilworth, and with the Minister. The noble Lord, Lord Lucas, said that I had not said what we would do on this side of the House. The Minister said that I was fantasising. Those remarks baffle me. I listed some 20 or more specific changes of policy that will be introduced by the next Labour Government. I did not mention all of the proposed changes, but they are all contained in our policy document.
§ Lord Henley
My Lords, I only used the word "fantasy" because I thought it was so unlikely that the noble Lord and his friends would ever have the chance to put those policies into operation.
§ Lord Carter
My Lords, we shall have to wait and see. The policies are clearly stated in the Labour Party policy and review document which is available to all.
I repeat my thanks to all those who have spoken and beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.