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Economic Inequality

Volume 748: debated on Wednesday 23 October 2013


Asked by

To ask Her Majesty’s Government what proposals they have to reduce the level of economic inequality.

My Lords, income inequality in the UK is now at its lowest level since 1986. The Government are committed to ensuring that all families benefit from the return of growth to the economy and maintain that the best route out of poverty and the best way of reducing inequality is for households to move into work.

My Lords, last week we had the report of the Social Mobility and Child Poverty Commission, State of the Nation 2013, under the leadership of Mr Alan Milburn and the noble Baroness, Lady Shephard. It concludes that:

“Britain remains a deeply divided country. Disadvantage still strongly shapes life chances. A balanced economic recovery, between different parts of Britain, is not currently within reach”.

Do the Government agree with the broad conclusions of the report that, if we want more social mobility, that has to go hand in hand with a more equal society?

My Lords, the Government agree with the broad conclusions of the report. As the noble Lord says, there are major problems of deep-seated, regional inequalities and imbalances. However, the Government are committed to tackling these, which explains why we have committed more than £2.6 billion to the regional growth fund, why we are committed to High Speed 2 and why apprenticeships, which now stand at 850,000 in the last academic year—some 370,000 more than in the last year of the Labour Government—are taking place largely outside London and the south-east.

My Lords, the Minister replied about income inequality. Is not the main thrust of the question about inequality of wealth? That has not really been tackled by any Chancellor since David Lloyd George. Should we not deal, particularly, with the question of inheritance and the way in which taxes on inheritance are systematically emasculated or evaded by rich capitalists?

My Lords, there has been a very long-term increase in inequalities in wealth. This is largely based on inequality in housing, which is where the vast bulk of personal wealth belongs. In terms of getting a more balanced economy, whatever we do about wealth and inheritance, which has proved very difficult—and proved very difficult for Lloyd George—the key is to get more people into better paid jobs.

My Lords, does the Minister agree that generally the more equal the society, the better the outcomes in a whole range of economic and social indicators, from health and education through to teenage pregnancy and so on? With that in mind, and the fact that real wages have declined by £1,500 since the general election, what practical steps are the Government taking—for example, by increasing the national minimum wage as a matter of urgency?

My Lords, as the commission found, there is a growing problem of in-work poverty. That is why my colleague, Vince Cable, asked the Low Pay Commission last month to look at the possibility of raising the minimum wage without damaging overall levels of employment.

My Lords, do the Government agree that the recent hike in energy prices is going to increase inequality in our society, and, if so, what do they propose to do about it?

My Lords, the key is to have a sustainable and secure energy policy for the medium to long term. That is why the Government are investing so much in the energy sector and why the news about the agreement to build a new-generation nuclear power station was important. In the short term, all consumers should see whether they can save money—because many can—by switching their source of energy supply.

My Lords, bearing in mind the way in which wealthy pensioners, such as many in this House, are protected against the austerity cuts that other welfare recipients face, will the Government consider how to enable us to begin to bear our share of the burden, whether by taxing or means-testing the winter fuel allowance or otherwise?

My Lords, one of the commission’s recommendations was that intergenerational equity could be improved if pensioners paid a higher share. That has not been the view that the Government have taken. Particularly given the very high levels of pensioner poverty, against which many noble Lords have campaigned over many years, we have taken the view that the real value of pensions should be protected during this period of fiscal consolidation. However, we accept that there may be more to be done. Indeed, for people who receive payments such as the winter fuel allowance, there are now a number of voluntary schemes under which they can make that payment available via charities so that it can be used for people on low incomes.

My Lords, why did the Minister not respond to his Liberal Democrat colleague who asked the initial Question with total honesty by saying that he is a junior member of the junior party in a coalition, of which the majority party has in its DNA the promotion and preservation of inequality?

My Lords, the biggest task in reducing inequality, as the commission points out, is to get more people into work, and this Government are doing that. For example, the number of NEETs has fallen consecutively over many quarters, the number of people in work increased by 155,000 in the last quarter and the proportion of the population in work is at a record level. We on this side of the House will take no lessons from him about getting people into work and earning good money.

My Lords, will the Minister undertake to work with his colleagues to ensure that, when we are given figures for employment, they include a breakdown which tells the public how many people are earning a living wage, how many are in part-time work and how many are on zero-hours contracts? HS2 will not help my friends and colleagues from Wales. The Government keep trumpeting that the issue is getting people into employment, but tell that to people for whom getting into employment is getting into poverty.

My Lords, of the three categories of figures that the noble Baroness referred to, those for part-time work are already available. For zero-hours, however, I think that the figures have been made available, have been challenged and are being looked at. If we want a rebalancing towards the regions, we are not going to achieve that overnight. We need long-term transformational projects, of which High Speed 2 is one. It is vitally important for the long-term well-being of the regions.