Inequalities — House of Lords, 2019-06-13
Topic: Social Welfare
Simone Finn (Conservative, Centre-right): My Lords, I congratulate the noble Lord, Lord Dubs, on securing this hugely important debate and for his commitment and hard work over very many years, especially on behalf of refugees. I also congratulate the noble Lord, Lord Ravensdale, on his excellent and insightful maiden speech This is an enormously broad debate and we have only a few minutes, so I will limit my remarks to the review that Sir Angus Deaton is undertaking for the IFS. This helpful and serious review will enable us to examine exactly where we face challenges of inequality and what might be done to ensure that everyone has the same opportunity. Inequality, perhaps even more than poverty, is a very politically charged topic. The idea of people being left behind—whether that is the poorest being left behind by the wealthy, the older generation left behind by the younger, women left behind men or people left behind due to a lack of education—is, understandably and rightly, of huge concern to us as a nation. The idea that inequality may be increasing, and that people may be slipping further and further behind, has rightly been the subject of debate in this place and further afield However, there are some facts within the Angus Deaton review that it is helpful to highlight in this debate. First, inequality as measured by the Gini coefficient has remained broadly unchanged since the early 1990s. Despite the conversations happening around inequality, in reality the Gini coefficient, which is most usually used to measure inequality, has remained broadly unchanged since the early 1990s. If we look at a 90:10 ratio, measuring the people at the top of the income field next to those at the bottom, inequality has actually fallen from the early 1990s. Household incomes are more evenly distributed across society than they were in the 1990s. Far from the story of dramatic increases, inequality has actually stayed flat Secondly, according to the IFS, overall income inequality has remained stable, as incomes have been topped up by the Government. If we hone in on just incomes, the story is interesting. It is true that there has been a rise in incomes in the top households, with the average high-earning household earning around 40% more than it did in the 1990s, compared to stagnation in the lowest-earning households and smaller uplifts in the middle. The salaries of FTSE 100 CEOs are now a staggering 145 times the salary of an average worker, compared with 47 times higher in 1998. However, due to government policy, for example by expanding tax credits in the 1990s, overall income inequality has remained stable, as incomes have been topped up by the Government. After taxes and benefits, household incomes across the distribution have kept pace, and the poverty rate has remained stable since the late 1990s. However, we all know that money earned from work comes with dignity and security, and that people care about where that money comes from. This is why providing a true living wage to ensure that work really provides for families is key It is worth shining a light on other areas where inequality is playing a role in people’s lives. One such example is where those on lower incomes experience higher levels of family breakdown. Some 16% of children in the UK are born into households with no father; we know that this has significant impacts on poverty, with single families experiencing a much higher rate of poverty than two-parent households, and on the stability of children’s lives, which can trap people in a cycle of generational poverty. Policies which support families and ensure that this support is at the heart of government thinking will potentially make a huge difference to how the next generation grows up. The Deaton review will provide a fascinating insight into the nature of inequality in today’s society. In terms of income inequality and the structure of society, the picture has remained very flat. However, it is vital to understand and unpack fully the social issues related to inequality and the lived experience of poverty and inequality. Only by doing so properly can we ensure policy interventions are able to target most effectively the places where they can make a real difference.