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Income Inequality

Volume 788: debated on Wednesday 31 January 2018


Asked by

To ask Her Majesty’s Government whether they have a policy goal to reduce income inequality; and if so, what is their strategy for achieving that goal.

My Lords, income inequality is lower than it was in 2010. The best way to reduce inequality is by getting people into work, and since 2010 we have seen 3 million more people find work as a result. The national living wage has helped to reduce the proportion of full-time jobs that are low paid to the lowest level in at least 20 years. In the long term, this is the best way to improve living standards and reduce inequality, as well as to boost our productivity as a nation.

My Lords, if the Minister had used the measure of income inequality recommended by the ONS rather than the ONS’s own less accurate measure, he would not have been able to paint nearly such a rosy picture, especially if housing costs were taken into account. As it is, inequality is starting to rise again and is predicted to increase massively by 2020 as a result of government policy. Could the Minister explain how a policy of freezing benefits for the worst-off in work, as well as out of work, to their disadvantage, while cutting taxes to the advantage of the better-off, will help to reduce inequality?

My Lords, to improve the living standards of squeezed households in the short term, the Government will boost incomes for the low-paid, increasing the national living wage and the personal allowance. To help to reduce the cost of living, we are freezing fuel duty and childcare and tackling housing costs. The core of the problem lies in our low productivity as a country, and we have to try to tackle this problem in both ways.

I welcome the noble Lord to his new role. Given that food-bank use is set to hit a record high this year, and that a quarter of parents with children under 18 see someone in their household skip a meal, does the Minister agree that we need a national measure of household food insecurity to address the hunger crisis? Will the Government this week support the Food Insecurity Bill, which is due to have its Second Reading this Friday in another place?

I welcome the development of food banks; I believe that they have provided a very useful service to the community. They are widely supported on all sides of the House, I would have thought. I do not know what our attitude will be to the legislation that has been suggested but, none the less, the truth of the matter is that good eating is often in the control of the people who buy the food; too many people eat convenience food. Indeed, there was an article only the other day about the number of people who have obesity problems because they are not eating the right sort of food.

My Lords, there are 6 million adults in the lowest socioeconomic groups without access to the internet or the skills to use it. Yet we know that, on average, the lowest-income households can save over £170 a year by being connected. I am so happy to hear the Minister mention jobs because we also know that 90% of new jobs are now advertised only online. What specific actions are the Government taking to help the most vulnerable communities get access to the internet?

Perhaps it would help the noble Baroness to know that we had record tech investment in the UK last year.

My Lords, on another aspect of income inequality, can my noble friend confirm that, in an effort to reduce that inequality, he will have discussions with the BBC?

It is as a result of our publishing the salaries of above £150,000 in the public domain that this whole business has come out. The Government deserve some credit for having done that.

My Lords, does the noble Lord agree with Wilkinson and Pickett in The Spirit Level that equal societies, in terms of income, are much happier societies and that income inequality leads people not to be happy? Does he further agree that being in work does not mean that you have income equality? We have a lot of hard-pressed families on poverty wages, hence the food banks. What are the Government going to do to create this income equality, where we can all become happier people?

I am a bit of an old-fashioned person. I believe that the path to happiness is being able to create some security for yourself and your family, having a job and being in work. We have record employment in this country at the moment.

My Lords, the Minister invites us to look into his crystal ball, but we can look at the book. How does he explain the fact that, over the last 10 years, wages have not risen for the average worker—something which has not happened since Napoleonic times? How does he explain that the Social Mobility Commission, with the valuable work that it was doing, has resigned en bloc because of government failure to implement its proposals? The Minister has a case to respond to.

My Lords, we are advertising for replacements for the Social Mobility Commission, but I come back to what I said earlier: wages for the lowest-paid have risen by 7% in real terms since 2015. That is the way to deal with poverty and, indeed, with social mobility.

My Lords, is the Minister aware that we, along with Lithuania, are the most unequal country in Europe? Is he also aware that, as a result, only Serbia, Romania and Hungary have a higher proportion of children in raw poverty than this country? Both of these are driven by the Government’s reluctance to tackle inequality.

No, that is not the case. I am afraid I must argue with the figures the noble Baroness has presented to the House. This country is the fifth-worst.