HL Deb 16 February 1995 vol 561 cc791-4

3.19 p.m.

Lord Dahrendorf asked Her Majesty's Government:

How they propose to respond to the view arising from the Rowntree Foundation sponsored inquiry into income and wealth that growing inequality in Britain is a competitive handicap and a danger for the economy and for business.

Lord Inglewood

My Lords, government policies provide a firm basis for lasting economic recovery and are the best way to safeguard living standards of all groups, including the least well off. In addition, the Government are providing considerable help for the poor and vulnerable. Extra help, worth more than £1 billion a year in real terms, has been made available to low-income families since the social security reforms of 1988. The 1994 Budget included a package worth around £700 million aimed at getting unemployed people back to work.

Lord Dahrendorf

My Lords, I thank the Minister for that Answer, which clearly addresses itself to one core issue. Is it not, however, a clear finding of the Rowntree study, as well as other studies, that in the medium term the most important instrument for bringing people back to the labour market and away from benefits is education for, on the one hand, pre-school and primary school children and, on the other hand, 16 to 19 year-olds?

Lord Inglewood

My Lords, the noble Lord is correct that both the factors that he mentioned are important in bringing people into the labour market. But it is also important that we are clear that they are by no means the whole story. It is important that we have a labour market which can respond flexibly to the requirements of the world, not merely the single market but the wider world in the post-GATT era. We believe it is necessary to ensure that we have a structurally flexible labour market which will respond to the requirements of commerce and business, because it is commerce and business which provide jobs.

Lord Clark of Kempston

My Lords, does my noble friend agree that it is quite illogical to think that there is any connection between the competitive position of our economy and the so-called difference between the rich and the poor? Does he further agree that one thing that would certainly hit our competitive position in world markets is the adoption of the social chapter? Finally, does he not agree that, compared with the standard of living in 1979, the standard of living today has increased for everyone?

Lord Inglewood

My Lords, I can confirm that the standard of living under this Government is substantially greater than it was under their predecessor.

Lord Eatwell

For everyone, my Lords?

Lord Inglewood

My Lords, across the board. We believe that the best way to increase it is to have a flexible labour market. We further believe that the fossilisation and ossification that would result from the imposition of the policies contained in the social chapter would be detrimental to the interests of the British people as a whole.

Lord Jenkins of Putney

My Lords, is it not the case that it is the Government's policy that the poor should have great aspirations and that the trickle-down policy should have a long way to trickle? Should not the Government be congratulated on the remarkable degree to which they have carried out this policy?

Lord Inglewood

My Lords, we believe that the policies we have been pursuing are those which will act to the best benefit of society as a whole.

Lord Skelmersdale

My Lords, is it not a fact that the poverty line is a very arbitrary line? What matters is what a given amount of work in terms of minutes and hours will buy. The cost of a bottle of whisky has fallen substantially over the past 20 years in terms of minutes of work, and other products bought by people—for example, pints of beer—also fall into that category.

Lord Inglewood

My Lords, my noble friend is right that it is the value of what one earns that is crucial. But we must not forget in this debate that there is the problem which must be addressed of those who are at the least prosperous end of the income spectrum. That is why we have focused the efforts that we are making to help people on those whom we consider and identify as being most disadvantaged. That has been the thrust of cur policy and we believe it is an appropriate complement to a policy of encouraging incentives.

Baroness David

My Lords, reverting to the Minister's earlier answer to the noble Lord, Lord Dahrendorf, about nursery education and education for 16 to 19 year-olds, if education is so important to the Government, does the noble Lord not think it very odd that the pay review body's recommendation on teachers' pay has not been followed? A great many children who would have had nursery education in the coming year will not be able to have it as the funding has not been granted.

Lord Inglewood

My Lords, with regard to the detail of the teachers' pay round, that matter is still outstanding. But it is the case that family credit child care allowance will help around 150,000 low-income families to combine work with family responsibility. In addition, there is a £10 top-up for those on family credit working more than 30 hours, announced in the 1994 Budget, which will further help those who wish to combine full-time work with family responsibilities. We believe that this shows the Government's commitment in that direction.

Lord Barnett

My Lords, perhaps I may be allowed to congratulate the noble Lord on carrying out his duties as Deputy Chief Whip which, with all the other work that he does in your Lordships' House, certainly ensures that we get value for money from him, if not from any other Minister. Reverting to the noble Lord's answer to the noble Lord, Lord Clark, that there has been an increase in living standards overall in the past 16 years, can he tell us whether in any other developed country over the past 16 years there has not been such an increase?

Lord Inglewood

My Lords, I thank the noble Lord for his kind comments. We could probably agree that the definition of a civilised country is one where the standard of living has gone up.

Lord Rea

My Lords, with regard to the standard of living, does the noble Lord know of important work that has been done at the Trafford Institute of the University of Sussex which shows that there is a greater increase in expectation of life in those developed countries which have the most fair distribution of income as distinct from ours, which has an increasing divide between the extremes of income?

Lord Inglewood

My Lords, I am not aware of the study to which the noble Lord alludes, but I am interested to hear his comments about what it contains.

Lord Hooson

My Lords, does the noble Lord agree that the inequality regarding educational opportunity at the lower end of the spectrum is the key question disturbing people of all parties who have any concern about the future of this country? Is that not what the Rowntree Report is really concentrating on?

Lord Inglewood

My Lords, the Rowntree Report addresses a number of matters. As I said earlier, the matter of education and educational opportunities is exercising the country as a whole. It is because we on these Benches have been concerned about these matters that we have over the past 10 years introduced a number of changes in education which we believe will be to the advantage of the nation as a whole.

Lord Eatwell

My Lords, does the Minister recall that in his Mais Lecture on 4th May 1994 the Chancellor of the Exchequer said: The gap between the highest paid and the lowest paid will continue to widen"? He then said: This is inevitable and probably desirable". Does the Minister agree with the Chancellor of the Exchequer that inequality is set to increase; and how much more inequality does he think is desirable?

Lord Inglewood

My Lords, what is desirable is to improve the lot of all of our citizens, and in particular to improve the lot of those who are least well off. The policies which we on these Benches advocate are ones which will achieve that in the world rather than tinkering along the lines suggested by the noble Lord, Lord Eatwell, which will not create wealth. We cannot help those who are most disadvantaged in society if we destroy wealth. We must apply wealth.

Lord Eatwell

My Lords, am I to take it that the Minister's answer is that he disagrees with the Chancellor of the Exchequer?

Lord Inglewood

No, my Lords, not with the Chancellor of the Exchequer.

Lord Molloy

My Lords, in addition to the foundation mentioned by the noble Lord, Lord Dahrendorf, there are many foundations which examine all kinds of issues. Do the Government take notice of any of them? Should they not at least examine their recommendations, or do they regard their work as a waste of time?

Lord Inglewood

No, my Lords. The Government listen; and on the basis of what they have heard they form their policies.

Lord Richard

My Lords, we should not leave this Question without congratulating the Minister on something which he said. We are inventing a new category of people in our society. I think he called them "the least prosperous end of the income spectrum". Is it not a fact that in the old days they were called "the poor"?

Lord Inglewood

Yes, my Lords.