Social and Economic Policy

Madam Speaker

I have selected the amendment in the name of the Prime Minister.

Mr. Donald Dewar (Glasgow, Garscadden)

I beg to move,

That this House condemns Government policies that have widened social division, led to damaging inequality and brought insecurity to millions of people; believes that the abolition of the Department of Employment signals the complete lack of Government concern about unemployment, insecurity at work and skill shortages; and believes that the Government must take action which promotes employment opportunities, particularly for the long-term unemployed, increases the skills and adaptability of the workforce and protects the low paid through a national minimum wage. I have decided to be a determined optimist on this occasion, and am hoping that, over the next few hours, there will at least be a measure of agreement on the nature of our problems. I am a realist, and I recognise that, when we turn to solutions, it is likely that there will be disagreement and some debate; but on the nature and essence of the problems, I very much hope that we can at least recognise what is happening to our country.

Perhaps I should make a proposition to Conservative Members, which I do not think is too ambitious: low pay, social division and growing inequality are a scourge and an offence. Perhaps rather uncharacteristically, I could pray in aid the late Sir Winston Churchill. I offer a piece of Churchill memorabilia, and am happy to throw it into the debate free, gratis, for nothing, and with no claim on continuing loyalties.

Sir Winston Churchill, when President of the Board of Trade, on Second Reading of the Trade Boards Bill of 1909, said: It is a serious national evil that any class of His Majesty's subjects should receive less than a living wage in return for their utmost exertions. It was formerly supposed that the working of the laws of supply and demand would naturally regulate or eliminate that evil … But where you have what we call sweated trades, you have no organisation, no parity of bargaining, the good employer is undercut by the bad, and the bad employer by the worst; … where those conditions prevail, you have not a condition of progress but a condition of progressive degeneration … the degeneration will continue, and there is no reason why it should not continue in a sort of squalid welter for a period which compared with our brief lives is indefinite."—[Official Report, 28 April 1909; Vol. 4, c. 388.] Depressingly, that is, it seems to me, still relevant. Sir Winston talked about an indefinite degeneration. In many ways, in comparative terms, those are indeed the problems that we still face.

Mr. Andrew Robathan (Blaby)

I am delighted to hear the hon. Gentleman quoting Sir Winston Churchill, who is, of course, the hero of many Conservative Members. It is, however, some 86 years ago since those words were spoken—in the lifetime of our grandparents and our great-grandparents—and I think that some things have changed a little since then. Will the hon. Gentleman 627 enlighten the House and tell us, in real terms and in cash terms, what the average industrial wage was in 1909 in comparison with now?

Mr. Dewar

I can tell the hon. Gentleman that average wages are not what the debate is about. I accept entirely that average wages have risen, and no doubt the Minister will make that point very effectively and eloquently when he replies. I am drawing the attention of the House to the fact that 328,000 people in Britain earn less than £1 an hour. Some 1.143 million earn less £2.50 and, as the hon. Gentleman will recognise and will be concerned about, the vast majority of these are women. Women are particularly badly hit by low pay, with more than 670,000 of them falling below the £2.50 an hour limit.

In my view, those figures certainly justify the relevance of the Churchill quote, and I make no apologies for reminding the House that it was a problem seen by someone in 1909, whom the hon. Gentleman is right to say he admires greatly, someone who predicted that the problem would be continuous because of the imperfections of the market mechanism for a very long time. Sadly, he has proved to be right on that matter.

Dr. Robert Spink (Castle Point)

The hon. Gentleman is an assiduous Member and I know that he will want to set the scene properly and accurately. Will he therefore accept the fact that 75 per cent. of those who are classified as being on low pay live in a household where there are two or more wage earners? If he thinks that low pay is so bad and wants a minimum wage, will he tell the House where the Labour party would set that wage, because that is the only context against which this debate can have any credibility whatever?

Mr. Dewar

I am glad to say that my judgment of the success of the Labour party is not its credibility in the eyes of the hon. Member for Castle Point (Dr. Spink). I like to think that, on occasions, we impress him, but I am trying to reach an audience wider than one Back-Bench Conservative Member, who is no doubt well briefed for this debate. I congratulate him, however, on his assiduity. He should not despise the point that many people have to earn a second income to raise to a decent level—

Lady Olga Maitland (Sutton and Cheam)

He did not.

Mr. Dewar

The hon. Member for Castle Point seemed to belittle my point, and to suggest that there was no real worry about low pay for women if they lived in households in which other people had a job. Such households are often still poor, and both wage earners may struggle. I do not take the view that it is all right to have unsatisfactory and offensive levels of pay simply because a second income is involved, because that second income is often an essential platform on which to build an escape from poverty, and a lifeline to opportunity in our community.

Several hon. Members

rose—

Mr. Dewar

I must make progress, but I will give way to the hon. Member for Finchley (Mr. Booth).

Mr. Hartley Booth (Finchley)

The hon. Gentleman is generally fair to the House. Does he accept that a comparison with the first decade of this century is fallacious? Today, we have, alongside the £1 per hour wages to which the hon. Gentleman referred, a whole panoply of social security to back up each individual.

Mr. Dewar

I must confess that, if the hon. Gentleman is putting forward the general proposition that people who quote Sir Winston Churchill are saying nothing that is relevant, or has anything to do with modern politics, I look forward to hearing Conservative Members protesting against speeches on many occasions. When I came across the quotation, it seemed remarkably relevant to the problem we have. Of course the context has changed, and of course the figures have changed, but the essential social problem remains, and it is one to which we should turn our minds.

Mrs. Gwyneth Dunwoody (Crewe and Nantwich)

Is it not instructive that, in this orchestrated set of interruptions, it is clear that, for the Conservative party, the fact that women are underpaid and often forced to take low-paid and unskilled jobs is not a matter of worry, but a matter of congratulation? They bitterly resent the fact that women are forced into such a position.

Mr. Dewar

There is, indeed, a general tendency by Conservative Members to underestimate the contribution that women now make. They have a major input and are a major part—soon to be the largest part—in the work force. I do not make a general accusation, because that would be unfair, but I point out that there are still a few people around who see a woman's job as a nice little interest and a little bit of pin money. We should not take that view these days.

Lady Olga Maitland

We are talking about the important subject of women and part-time work. Does the hon. Gentleman agree that part-time work is a blessing for women, because, among other things, it fits in with their family commitments, and because it often becomes full-time work when they are ready to take it up?

Mr. Dewar

I am extremely anxious that women should have the opportunity of getting both part-time work and full-time work if that is what they want. I do not undervalue the importance of part-time work, which gives flexibility, as it melds with household duties and other interests. However, even though it may be a blessing, as the hon. Member for Sutton and Cheam (Lady Olga Maitland) put it, it should not be a charter to allow exploitation. That is unfortunate.

The hon. Lady has drawn herself to my attention. She is one of the Conservative Members who, on occasion, has an unrealistic view of these matters. She may remember a debate on 8 July 1994 in which she intervened to make a point about the number of people who were on benefit and who had televisions, freezers and so on in their homes. She then asked: Does he"— she was referring to me— agree that it is a problem not so much of people living on a set income, but of how they manage their budgets? A person in one flat may manage perfectly adequately while someone else may not. Surely we need to teach people the art of household management."—[Official Report, 8 July 1994; Vol. 246, c. 607.] There is a certain unreality about that view. [Interruption.] Conservative Members should not wave at me. The hon. Lady's view is totally unrealistic when it is compared with the experiences of my constituents and the constituents of many hon. Members who must cope with the problems we have been discussing.

Several hon. Members

rose—

Mr. Dewar

I can see that my optimism about getting some initial agreement about the nature of the problem has perished.

Dr. Spink

rose—

Mr. Dewar

I recognise that the hon. Member for Castle Point (Dr. Spink) is a sincere Conservative. I am told—although I have not checked it personally—that the Conservatives lost every seat they held on the district council in his constituency in the elections. Therefore, the hon. Gentleman should go away and think about his position and his party's policy before he comes eagerly back to the fray. I have let him in more than once, and I hope that he will be content with that.

There is obviously not going to be agreement, but my view is that, if we follow present trends, there is a real danger that social cohesion will be challenged, undermined and put at risk by what I described—I stand by the description—as evils.'

There are always healthy arguments about salary. I remember with pleasure the Secretary of State's evidence to the Select Committee on Social Security on 25 January. The right hon. Gentleman was perhaps led astray by questioning, although he led himself astray to some extent, about our salaries—always a matter of prurient interest to the House. He said: When I was a backbencher I thought that, on the whole, MPs should probably be paid less to encourage them to have outside interests, which I believe enriches Parliament". I liked that, because I like plays on words, and we can agree that such a scheme would probably "enrich" Parliament in a very narrow sense. But I doubt whether it would enrich the life of Parliament.

I was entertained to see that the Secretary of State went on to say that Ministers should be paid more and back-bench Members less, and added: Now I am a Minister I hold both views even more strongly. There is a man of courage, although whether he is in touch not just with Lord Nolan but, more importantly, with the world outside, I would beg to doubt.

I was interested to see the evidence given to the Nolan committee by the right hon. Member for Norfolk, South (Mr. MacGregor) just after he had left ministerial office and picked up—no doubt to his and the company's benefit—a directorship. He said that to bar Ministers from directorships in companies with which they may have had some dealings during their ministerial office would expose them to the risk of comparative poverty on leaving their posts. I thought that I would just read that out, as a touching human gesture.

I would argue that there is every importance in recognising both where we are heading and the growing inequalities in society. I recognise that we are not here today to have a reprise of old arguments which we have made at the Dispatch Box on more than one occasion. I know, for example, that the Secretary of State has severe doubts about the findings of the Rowntree report, and went to great lengths to discredit its authors and rubbish its conclusions. As so much of the report's material was taken from research conducted by the Department, he was in effect mounting a root-and-branch attack upon the Department's statistics and methodology. That is something for him and the Department to sort out.

An enormous amount of evidence is massing—not just the Rowntree report—from many sources that we have growing inequality at the same time as we, like every western country, are seeing many people increase their prosperity as average earnings move up. We know that 14 630 million people now have incomes below half the average earnings, compared with 5 million in 1979. More than 10 million people are now dependent upon income support, which is probably an increase of a multiple of two or three since 1979. Since 1979, wages for the lowest paid have hardly changed in real terms, while they have increased greatly for those at the top end of the scale. This divergence and moving apart ought to worry all of us. One of my concerns—

Mr. Nigel Waterson (Eastbourne)

I am grateful to the hon. Gentleman, who has been liberal about giving way. Has he seen the report of the Institute for Fiscal Studies entitled "Why Peter Lilley was Right", which concluded that the poor have not been getting poorer?

Mr. Dewar

Yes, I was interested in that conclusion, and of course I have looked at the report. As the hon. Gentleman knows, the IFS has produced a number of reports—he has obviously read widely through them. He will remember that the one to which he refers studied outturn and expenditure patterns, rather than income patterns. As he will have noted carefully, it did not take into account income saved or invested, which gave a rather incomplete picture.

Building on the substantial evidence on my side of the argument in other IFS work, I remind the hon. Gentelman of the author's conclusion that the gap between the richest and the poorest in terms of both income and expenditure widened over the period. Even though that report, which the Minister optimistically said "blows a hole" in Labour's case, concluded that the figures were not as startling as those in the IFS report of between six and nine months earlier, it reinforced the same pattern and general picture.

If the hon. Member for Eastbourne (Mr. Waterson) is trying to say that there is not growing inequality in this country, he is on very weak ground indeed. I suspect that some of his braver colleagues would argue that it does not matter if the rich get richer and the gap grows greater.

Mr. Alan Duncan (Rutland and Melton)

indicated assent.

Mr. Dewar

The hon. Gentleman is always there on cue—a small, dynamic figure shouting his case in the second row from the back of the Back Benches, where he will probably remain for some considerable time.

Mr. Bernard Jenkin (Colchester, North)

Will the hon. Gentleman give way?

Mr. Dewar

I cannot resist it.

Mr. Jenkin

If the hon. Gentleman insists that poverty is increasing, is it not incumbent on him to tell the House which income group's spending has fallen since 1979?

Mr. Dewar

The hon. Gentleman should look at some of the Government's statistics. He will be familiar with those for households below average income, about which there is an interesting argument. The Government maintain that the statistics are unsound, because the bottom decile of households contains farmers, taxi drivers and accountants. All I can say is that I hope that their affairs will be investigated with the rigour that we are told is being properly applied to benefit fraud. If so, I think that there will be a considerable increase in prosecutions in the courts.

631 The answer to the hon. Gentleman's question is that a large number of households are in the bottom two deciles, even when we have made every conceivable allowance for the small and rather errant group who are stranded at the bottom of the pile.

The Minister suggested that there was great movement in and out. We are given that impression as many pensioners have moved out because of the maturing of occupational pension schemes—

Mr. Jenkin

Good.

Mr. Dewar

Yes—good, indeed. A large number of families—including a large number who live in my constituency and those of my hon. Friends—have become trapped there, however, and have lost hope, are dependent on benefit and are offered nothing by the fiscal and economic policies of this Government. The level of alienation that is beginning to emerge ought to be a worry to every one of us.

The trouble with the Secretary of State, or with many of his hon. Friends, is that they tend to adopt the Government's statistics as absolute truth when it suits their case, but, as soon as we get a series of Government statistics that do not, they are rubbished with great energy, and we are told that they are "unsound and misleading."

The shape of the statistics leaves us in no doubt that the general proposition is that gaps have widened, with social consequences which every one of us can see—whether in the health, education, or social mobility statistics—and which are opening up real dangers for our society.

I have spent most of my political life denying that there is an underclass. I do not believe that we have reached that situation, but I seriously worry that, if present trends go unchecked, I will find it harder and harder to make that case. Once I have reached the point where I can no longer do so, we will be facing very real penalties in the form of economic efficiency, lost talents and a threat to social stability.

Some old texts are still horribly relevant. Some texts may not be familiar to those on the Conservative Benches who recognise the words of Sir Winston Churchill. I cannot resist giving the House a short quotation from R. H. Tawney, who wrote in the 1930s about what he described as the "tadpole theory". He said: It is possible that intelligent tadpoles reconcile themselves to the inconveniences of their position, by reflecting that, though most of them will live and die as tadpoles and nothing more, the more fortunate of the species will one day shed their tails, distend their mouths and stomachs, hop nimbly on to dry land, and croak addresses to their former friends on the virtues by means of which tadpoles of character and capacity can rise to be frogs. The point that he was making was that it is dangerous if a society embraces the tadpole philosophy and we reach the position where the consolation that it offers to social evils consists in the statement that exceptional individuals can succeed in evading them.

We are very near the position where, if one is outstandingly able or unusually lucky, one can escape from the social evils that surround too many of our citizens. But if one is not exceptional in one of those two ways, one is lost, trapped, and in a real sense remaindered in society. That is the same argument as Sir Winston Churchill was making when he said that one would imagine that the market would put that right, and then went on to point out that the market does not put it right. 632 That is why leaving present trends to develop is such a damaging and wrong-headed thing for any Government to do.

Unlike many of his agitating Back Benchers, I give the Secretary of State credit for knowing that that is a real difficulty which we should fear. I read his Birmingham diocesan speech, which was much commented on, and his speech to the Northern Ireland Conservative Political Centre. The speeches to which I have referred are rightly concerned not just with social deprivation but with the low-wage pressure that bears down constantly on the unskilled and manual workers in our midst.

Let me give the right hon. Gentleman a quotation: The dispersion of earning power has had unattractive social consequences … It lies behind or is intertwined with many of our social problems. It may play a major part in the break-up of families, the growth of lone parenthood and a growing welfare dependency. It may even play a part in explaining delinquency and crime! I would not disagree with those sentiments, which have been expressed on many other occasions by Labour Members and some Conservative Members. So despite all that has happened in the past quarter of an hour, there is an element of agreement, at least between the Secretary of State and myself, about what we should be considering in order to solve the problem.

May I give another quotation, because I like having friends on my side? Lord Lawson of Blaby, who was speaking to the Social Market Foundation in London on Monday 20 June, delivering, according to the headline, a verdict on Government economic policy"— a cheery event, I should have thought—said: a small reduction in real earnings, although unattractive to those involved, is in itself a price well worth paying to bring down unemployment. That is a controversial view, but that was also his view as Chancellor. He went on: What I did not consider, however, ten years ago, was the possibility that this process might involve levels of pay for the least skilled that a fundamentally wealthy society would rightly consider too low to be acceptable. That is one of the problems. Right-wing economists as well as right-wing politicians are now worried about the continuing pressure that is driving down wage scales for those people, and greatly exacerbating the problems to which I have referred. It is against that background that I want briefly to discuss this issue.

Dr. Spink

The hon. Gentleman implied earlier that I despise the low-paid. I hope that he will be characteristic and withdraw that implication, because he clearly does not think that that is so, and it is not. Which does the hon. Gentleman believe is best: low pay or no job?

Mr. Dewar

I was unfair to tadpoles and to the hon. Gentleman, because they are not like for like, and therefore the comparison should not be made. The choice he offers me would be an interesting subject for discussion if it were a choice.

If the hon. Gentleman could establish that there is an inescapable choice between having some level of minimum wage but no jobs and having lots and lots of jobs but no minimum wage, I would be in a difficult situation. However, as he well knows, he cannot establish that that is the choice. He should not try to simplify the argument to help himself and then present it as a truth to the rest of the House.

Mr. Gerald Kaufman (Manchester, Gorton)

If the hon. Gentleman were right, would it not be an appalling commentary on 16 years of Conservative government and alleged economic success that there was a choice between low pay and no job?

Mr. Dewar

My right hon. Friend is absolutely right. It is one of the mysteries of British politics how Conservative Ministers, who have been in power for many years, can suddenly discover problems and announce that they are tackling them with great energy, even though those problems have been happily running along unchecked for the past 15 years. We had a small example of that this morning from the Secretary of State. That is not the subject of this debate, but we shall no doubt return to it on another occasion.

My simple message is that there is exploitation, which is an unpleasant phenomenon. I took the bother of checking on some jobcentre advertisements in my constituency. I know that Labour politicians are wont to do that, but it is a matter of illustrating a simple truth. I saw advertisments for a catering assistant at £1.23 an hour; for a hairdresser at £78 for a 43-hour week; and for counter or shop assistants at between £2.00 and £2.50 an hour. On a simple moral level, there seems to be strong cause for concern.

The Secretary of State will say—and I agree with him—that work must be worth more than benefit. Low wages strike at that principle. At the extremes of the figures that I have announced, low wages can be a disincentive for those who should be searching for work.

Mr. Duncan

Will the hon. Gentleman give way?

Mr. Dewar

No, I must push on, but I welcome the Under-Secretary of State for Social Security, the hon. Member for Hertfordshire, North (Mr. Heald), to his new job. I had thought that he was a Whip, but he is a lordly creature compared with a Whip. I congratulate him on his promotion.

There are a number of arguments about the minimum wage with which I shall deal. It is alleged that only a small percentage of households would benefit from it. There is some truth in that. Unfortunately, 40 per cent. of households have no earner. However, of households with earners who would benefit—the only ones that are relevant to the minimum wage argument—a substantial percentage would do so.

If we consider the bottom three income deciles of earning households, we find that, in every case, whatever calculation is made and whichever survey we take, over 50 per cent. would benefit from the introduction of a minimum wage set at a variety of different levels. Perhaps the most obvious evidence of that is from the British household panel survey, with which some hon. Members will be familiar.

The key argument that is put up is that the minimum wage will cost jobs. I say this gently to hon. Members, but there is no clear and convincing evidence of that. If an unreasonable minimum wage is set—and one can make that judgment only in the circumstances of the time at which it will be set—it will no doubt cost jobs. That is like saying that, if the Government make a mistake with taxation or national insurance contribution policy, or any other major economic decision, the results could be disastrous. It does not mean that the policy is wrong and should not be followed. There is no evidence that a sensible and flexibly applied minimum wage will cost jobs.

Lady Olga Maitland

I urge the hon. Gentleman to clarify the minimum wage. What does what he calls a not unreasonable level mean? If it is too high, it will undoubtedly mean that employers will not be able to employ other people; if it is too low, he will be perpetrating a great con on the world outside by suggesting that he is trying to do something for the low-waged when he is not.

Mr. Dewar

I agree with the hon. Lady 100 per cent. If we set the rate too low or too high, it is likely to be ineffective, or it may have some unfortunate by-products. That is no doubt true of the Chancellor's tax policy. The hon. Lady may have a personal opinion about what the Chancellor should do in November 1996, but I imagine that, if she asked him such a question, he would tell her not to be silly, and not to bother him with futile questions. What I infer from her question—this is something I welcome—is that, if we cast the rate at the right level, it will do the job effectively.

Conservative Members should consider the international experience and the international comparisons. As many hon. Members will know, there is at the moment an argument in America, led by the research of David Card and Alan Krugger of Princeton university, which suggests that there are in fact positive labour and employment consequences from the introduction of a minimum wage.

The researchers compared states where the level of the minimum wage varies. There is, of course, a move by the American Government as a result to put up the minimum wage from $4.25 an hour to $5.15. It all depends on getting it through a Republican House where the Government are not in control, but that is the judgment of the Clinton Administration, and it is largely supported by American evidence and research.

Several hon. Members

rose—

Mr. Dewar

I shall give way to one or two hon. Gentlemen, but, as someone said, rather daringly, I was over-liberal in letting people intervene. I must live down that reputation for a few minutes.

Mr. Denis MacShane (Rotherham)

Will my hon. Friend give way to me?

Mr. Dewar

No, I have to be entirely consistent in these matters.

I mentioned the American experience, but what about the British experience? The Government undertook a careful inquiry into the Agricultural Wages Board, and a reprieve from death row was issued. Indeed, I believe that the Secretary of State for Education and Employment was involved in that, although it may have been just before her time. In any event, she will know all about it. The conclusion was that there were no adverse labour market consequences, and that the Agricultural Wages Board should survive. I think that it should, and for strong reasons.

I referred to the position of women in society. Probably three quarters of those affected by a minimum wage would be women. The following fact might attract some people to the notion of a minimum wage. For the purpose of modelling alone, let us assume a minimum wage of, say, around £3 or £3.50. I have not done the modelling, so I take the figures used by those who have. In fact, 635 I am using the figures of the IFS, in case some people think that they are those of some kind of kept research team of mine. I wish that I had such a beast.

The IFS discovered that a minimum wage of around £3.50 would mean that a large number of women would be brought into the national insurance contribution net, much to the benefit of the Chancellor. It would also have the effect of bringing them into benefit and pension contributions and into a level of social security that is not available to them at the moment. In the present complex and unstable situation in which many of our citizens have to live because of changing social habits and values, that is an important point to bear in mind. It is a substantial spin-off.

The Secretary of State's eyes light up with sincerity when he talks about Britain's job creation prospects—the Mais lecture was full of them about 18 months ago. However, our job creation levels are disappointing when set against those of the United States. It is very unfair to pick out one factor and assume that it is in some way responsible for that, but let us put it this way: it is not a damning indictment of a minimum wage that the better record has been achieved in the United States, a country which has had a minimum wage for a long time. If we look at the European scene, it is very much a case of everyone being out of step except our Peter. I suggest that he should think again.

The Secretary of State for Social Security (Mr. Peter Lilley)

Will the hon. Gentleman tell us why unemployment, measured according to a common definition, is greater in France and Spain than it is in the United Kingdom?

Mr. Dewar

No doubt that would require complex analysis—[Interruption.]—but I can say to the Minister that in many countries, of which America is one, a national minimum wage has been combined with a very successful economic record.

It is interesting to note the first thing that Mr. Alain Juppe did when he became Prime Minister of France. His "dry" credentials are impeccable. He comes from a very much right-of-centre Government, from the presidency of Jacques Chirac. He is extremely worried about unemployment in France, and made that the main campaigning platform of his presidency. He hopes to improve the position, and one of the first things he did was to increase the minimum wage.

There was no suggestion of Mr. Juppé going around saying, "The British Government have got it right. My good right-wing colleagues across the channel in Downing street and in Richmond house are absolutely right. We must get rid of the wicked minimum wage, which is obviously responsible for our economic problems." No; the right-wing analysis—I emphasise, the right-wing analysis—in France is that the minimum wage should be increased. The Minister might want to consider that.

There is another important reason to introduce a minimum wage, and that is that there is in the Government's policies a strong emphasis on in-work subsidies. People who work will receive help. Almost 600,000 of those people are in receipt of family credit. As the House knows—conveniently, the figures were given in a reply to my hon. Friend the Member for Birkenhead (Mr. Field) on 12 June at column 420— in 1988–89, family credit cost £394 million. In 1994–95, it will be very nearly £1.5 billion.

636 Apparently, that is one occasion when that type of escalation is not unwelcome in the Government, because they have announced their new earnings top-up measure, which will cost £75 million over three years. If that is a success—I assume that the Government believe or hope that it will be a success—I am told, in a reply on 20 July 1994 at column 255, that extending it to all childless couples will cost another £65 million and bring in 70,000 people, and that extending it to single people, who are also being piloted, as I understand it, will bring in another 1.5 million people and cost £1.5 billion in additional cash.

Therefore, we are quite big now—even in the Conservative party—on in-wage benefits. I do not criticise that; it is not a matter for discussion in the debate, anyway. However, there is a clear common-sense argument that, in those circumstances, we should put a floor under wages to ensure that the long-suffering taxpayer does not pick up the bill as the bad employer repeatedly cuts wages and forces them down. There is a significant danger of that.

That is one of the powerful arguments recognised, interestingly enough, by the Financial Times, which is generally hostile, which has said that, if we are going to go down that road, obviously we shall have to reconsider the minimum wage. The argument was also recognised by The Independent in its leader on 31 August 1994, headed: Fear not the minimum wage", in which it says: Neither party should be frightened off by the Government's simplistic economic arguments. Combined with a tax and social security system that better promotes work incentives for people on low earnings, a flexible framework of minimum-wage legislation would help to make companies take a more appropriate share in maintaining the low paid, rather than thrusting the burden on an over-stretched state benefits system. That is a powerful argument, which the House should consider.

Many other things must be done. I believe that everyone in the House recognises that we should not regard the welfare state as an argument about a payment of last resort, grudgingly granted by a reluctant system. We all pay lip-service, to varying degrees, to incentives and training opportunities that try to inject hope and movement into the benefit system.

Of course, as the Minister will say, there are signs of activity and signs of conscience on the Government's part. I submit that they are half-hearted, and bear the stamp of political calculation based on that principle of essential minimum. For example, the back-to-work bonus is jam tomorrow, or perhaps jam never, for those who are not fortunate enough to find full-time employment. The national insurance contribution holiday is worth only about £6 a week, and I suspect that it will have little impact.

Perhaps the attitude of the Government can be summed up by the rather casual abolition of the Department of Employment, without any real discussion or debate. I rather suspect that it was a popular and populist move because it evicted the right hon. Member for Enfield, Southgate (Mr. Portillo) from an economic portfolio. It leaves him sidelined and living in the giant shadow of the Secretary of State for Foreign and Commonwealth Affairs, the right hon. and learned Member for Edinburgh, Pentlands (Mr. Rifkind). I suspect that that will at least be popular with the Chancellor of the Exchequer, who will feel a little safer as a result.

637 What it will do for the sales of videos at the Conservative party conference next year, I do not know. was interested to note that the right hon. Member for Southgate outsold everyone else by 2:1. I am glad to notice that, gallantly if still a long way back, the right hon. Member for St. Albans (Mr. Lilley) came in second place. That probably does not tell us anything about the excellence of the videos, but it tells us a great deal about the Conservative party conference.

Mr. Gyles Brandreth (City of Chester)

Normally when I rise to speak, the hon. Gentleman likens me to some character from Dickens. Last time, it was Uriah Heep. I am Micawber-like today, waiting for something to turn up in terms of policy.

We have had from the hon. Gentleman 45 minutes of entertaining badinage, which was very stylistic but had no content. He mentioned one of his constituents going to the jobcentre and seeing a low-paid job. What would he say to that same constituent if he came to the hon. Gentleman's surgery and said, "You advocate a minimum wage. In today's society, this is what I am being offered. In your society, what would the minimum wage be?" The hon. Gentleman must answer his constituent.

Mr. Dewar

I am glad that I have been entertaining. The hon. Gentleman is in entertainment himself, so his accolade is one that I value. I would explain to my constituent the need for a national minimum wage and how it would operate. I would ask him to endorse the principle. If he came from my constituency, I expect that he would do so enthusiastically. I would then, as I intend to do now briefly to the House, suggest that there were a number of things that we should do and should not do.

Let us start with just one thing that we should not do. We should not follow the Government's example of continuing to cut the training budget. In England next year, the budget will fall by 8 per cent. in cash terms and 11 per cent. in real terms. I would tell my constituent that, if he wished to judge the sincerity of the Government's talk about unemployment and equipping people to compete in the employment market, he should look at what they are doing to the training budget.

I would then recommend to my constituent the package of measures that the Labour party suggested at the time of the last Budget. We would have taken those measures, but the Government did not take them. Our package followed the Government in suggesting a national insurance contribution holiday for employers who took off the unemployment register people who had been on it for more than one year. When I first saw the proposal for a tax allowance of £75 a week, it looked, to say the least, ambitious, but it would be a real incentive to take into employment people who had been on the unemployment register for more than two years.

When the policy was costed, it was found that, after some initial costs, the tax allowance would be self-financing in the second year.

Mr. Lilley

indicated dissent.

Mr. Dewar

The Secretary of State shakes his head, but that is what reputable economic forecasters and modellers have suggested. When the Secretary of State introduces anything, he produces figures which he expects 638 us all to accept to show that the policy is self-financing. For example, we were told that the disregard for child care costs against family credit would cost £240 million, but that £220 million of that would be recouped, and the scheme would be almost self-financing.

The secret of such measures—I am arguing that case—is that, if we can move people into work, they pay national insurance contributions, and perhaps pay tax. They are certainly not paid benefit. The Government can afford to be generous and not be half-hearted. They could try to make an impact on the unemployment problem.

I would explain such measures to my constituent. I would also point to quality child care for three and four-year-olds whose parents wished to take up that option. I would point to the disregard for working parents, which the Labour party has outlined, and the measures that we have proposed to produce some movement in the construction industry, create employment and at the same time tackle social problems.

My only problem might be that, if my constituent had a short-term attention span and wanted to get away to other things, he might find the meeting rather long. However, I think that he would be favourably impressed. He certainly would not be impressed by what has happened in this country in the past 10 years or so.

Let me conclude by saying that social problems have to be tackled. They cry out to be tackled, and we ignore them at our cost.

I am often accused of peddling the politics of envy, but I am not interested in the politics of envy—although I will give the Secretary of State an opening by saying that some of what has happened in the privatised utilities is blatantly offensive, raising ethical and moral problems that are perhaps even more pressing than any economic issue to which they attach.

In many instances, the Government's actions have handed people, on a plate, an opportunity for personal enrichment beyond what most would consider to be the bounds of reason. Few of those people could even be said to be at the cutting edge of entrepreneurial risk, and to have justified their gains on grounds of hazard. I would find it difficult to put such an argument in relation to the hierarchy of National Grid, to take just one example.

That is part of a wider picture. Perusal of the Financial Times shows how commonplace it is for people to take—in the form of share options, pension contributions and substantial salaries—sums that will inevitably provoke anger and bitterness among those who, for reasons that I understand, are being asked to show restraint and to accept pay limits that are very modest even in relation to the likely rate of inflation over the next year or two.

Let me give a passing example. The fact that Lord Young of Graffham, that splendid child of Thatcherism, takes the amount that he takes from Cable and Wireless while at the same time complaining about the greed of teachers has an important effect on national morale and the social cohesion that I mentioned earlier.

If we want people to pull together, we must pay attention to the symbols of our time that have been allowed to rise unchecked. If we are to deal with alienation, that will constitute a good investment in economic efficiency. We must tackle the loss of talent, the negative costs of bitterness, and the increasing instability to which the Secretary of State himself referred in the speech from which I quoted earlier.

639 The other day I read a book bearing the HMSO imprint but produced by the Scottish Consumer Council. It is called "Poor and Paying for it", and it examines the increasing inequality of opportunity, and other problems, of the low-paid in Scotland. It quotes a young mother from Wester Hailes, who said—with a simplicity that struck me as unanswerable— If you've no money you cannae buy things and do things. Many of my constituents—not just those on benefit, but those on low wages; some of the most serious poverty is experienced by large families on poverty pay—are faced with that deadening truth, that you cannae buy things and do things. I believe that we shall all pay a price if we do not soon have a Government who are prepared to recognise the damage that is being done, and to do something about it.

The Secretary of State for Social Security (Mr. Peter Lilley)

I beg to move, to leave out from "House" to the end of the Question and to add instead thereof: welcomes the increase of 38 per cent. in average incomes and the rise in spending of all income groups since 1979; welcomes the fact that the United Kingdom has fewer people claiming unemployment benefits and more jobs than any other major European country; welcomes the creation of a new Department for Education and Employment to improve further Britain's skill base and competitive position; applauds the £700 million package of measures to improve incentives to work for those on benefits and increase the rewards of work for lower-paid families; welcomes further initiatives, such as the Jobseeker's Allowance, the Back to Work Bonus, and the pilot of an Earnings Top-up for childless people on low earnings; believes that supplementing low pay to help people into work is preferable to destroying jobs through a statutory national minimum wage and the social chapter; and recognises that improving opportunity and the reward for effort is less socially divisive than encouraging dependency and the politics of envy.". I am genuinely grateful to the Opposition for calling the debate, which gives us an opportunity to expose the multiple fallacies that they have been peddling about inequality, employment and the minimum wage.

The hon. Member for Glasgow, Garscadden (Mr. Dewar) asked us to try to agree on the nature of the problem. He immediately went on to quote Winston Churchill, and to suggest that we faced a problem similar to that faced by Churchill in 1911. To be fair to the hon. Gentleman, he became a bit more up to date when he referred to my Ulster lecture on the dispersal of earning power.

I hope that the hon. Gentleman agrees that the low earning power of the least skilled is a problem throughout the western world. That problem is a consequence of the displacement by modern technology of many jobs that depended on brawn rather than brain, and of the fact that trade has brought into the international marketplace a great number of very low-paid but able workers to compete with ours. It is nonsense to suggest, however, that the cause of the dispersal of earning power has something to do with an increased meanness among employers—or, indeed, that those who are paid reasonably have the good fortune to be employed by generous employers, while the low-paid have the misfortune to be employed by mean employers. The fact is that, in a competitive market, employers are compelled to pay an amount that roughly reflects the value that people can contribute to the process of producing goods and services and they cannot pay more than that value or they go bankrupt. A national minimum wage simply 640 means that anyone whose earning power is limited by an inability to contribute as much as the minimum wage will not have a job.

The basic problem, which I hope hon. Members on both sides of the House will agree exists, could be tackled only by improving people's earning power through better education, training and skills, which are often acquired at work—so we should not drive them out of work through a national minimum wage or the social chapter—through in-work benefits to help supplement their earnings, and through deregulation that will reduce the other costs that reduce employers' ability to earn.

That should be our starting point, but it obviously is not because the Opposition come up with policies that are incompatible with that analysis. With your permission, Mr. Deputy Speaker, I shall take the issues in the order in which they appear in the Opposition motion. They begin by referring to "widened social division" and "damaging inequality". Since even before the Rowntree report appeared, the Opposition have been using figures relating to the incomes of the bottom 10th of households to suggest that low income is a static condition from which people cannot escape, and that the poor are getting poorer. Unfortunately for the Opposition, the recent Institute for Fiscal Studies report does blow a hole in that thesis. That report showed that low income is not a static condition from which people never escape. On the contrary, up to half of those who were in the bottom 10th of incomes in 1991 had risen out of that band a year later. Overall, the incomes of those in the bottom 10th had risen by a quarter over that year.

Moreover, as measured by their expenditure, the standard of living of households in the bottom 10th of incomes, far from falling since 1979, has risen by 30 per cent. in real terms. That evidence is supplemented by that from the new earnings survey, which gives figures for the movement out of the bottom 10th of earnings over a longer period. They show an even more dramatic picture. One in 10 of those in the bottom 10th of earnings five years ago have succeeded in reaching the top 10th of earnings today. In short, far from the poor getting poorer, many of them have been getting richer and most of them have been getting less well-off.

Mr. Kaufman

Yes, that is true.

Mr. Lilley

Most of them have been getting less poorly off.

The Opposition, however, are not solely or even primarily concerned about the bottom 10 per cent. They are far more concerned to stir up resentment against the good fortune of the top 10 per cent. It is against them that the politics of envy have been deployed. It is true that the top 10 per cent. have seen a more rapid increase in their incomes than the national average—I willingly concede that—but who are these bloated plutocrats whose well-being has allegedly been obtained at the expense of the least well-off? Let us get one thing clear: they are not all Cedric Browns. The hon. Member for Peckham (Ms Harman) might try and suggest that they are, and the handful of highly publicised cases of privatised industry directors may be distasteful, but the total impact on the top 10th is negligible because more than 5 million people are in the top 10th of households.

The Rowntree report produced what it called a "UK Income Parade". It drew out 50 households from the survey that it was using for its research. They represented 641 different income distribution points from bottom to top. It said that, if people's heights had reflected their income, we would see a parade of dwarfs and a few giants". It is worth seeing who the giants are, according to the Rowntree report. At the threshold of the top 10th of incomes we find a household comprising a single man who lives in a council house and who has a take-home pay of £311 per week. In the view of the Opposition, he is getting on towards being stinking rich. In the middle range of the top 10th of incomes we find a 57-year-old freelance journalist earning £30,300 per year gross, whose wife works part time as a manager of a day centre on a weekly wage of £115. Alas, like all the cases in the report, he is anonymous. It would be poetic justice if he wrote articles for The Guardian denouncing the widening social divide and damaging inequality without realising that he had been selected by the Rowntree report to typify the stinking rich. The biggest giant in the parade is a 60-year-old man earning £47,300 gross, whose 58-year-old wife is on invalidity benefit.

It is not possible to tell from the Rowntree report what the wage earners in other representative households in the top 10th do. However, judging from their salaries, they could include a police officer married to a senior nurse, a head teacher of a large comprehensive married to a primary school teacher, or a Member of Parliament married to his secretary. Labour believes that they are the sort of people whose salaries are too high and whose taxes are too low. According to Labour, they are the cause of damaging inequality and social division. When Labour Members talk about soaking the rich, they should make it clear that they mean taxing the middle classes. It is not just the Cedric Browns who are in the firing line: journalists, policemen, teachers and nurses will be the real victims of Labour's politics of envy.

Labour Members are divided in their views about redistribution. The hon. Member for Birkenhead (Mr. Field)—who, alas, is not present in the Chamber—recently wrote: There is no general ground swell amongst middle-class groups for redistribution of wealth to the poor … Politicians who maintain otherwise are a public menace distracting from the real task. Six days earlier, the hon. Member for Garscadden had written in The House Magazine: An element of redistribution is a vital investment in social stability which matters for us all". I shall leave it to the two hon. Gentlemen to fight among themselves about what the Opposition policy should be and who is or is not a public menace—but if the cap fits, wear it.

Mr. Dewar

Dear me—a phrase maker. The right hon. Gentleman is constructing an imaginary Labour economic policy. No doubt he derives some satisfaction from that and it furthers his cause, because he can then knock it down. However, I do not know of anyone who has said that we shall "soak the rich", and certainly not the sort of people to whom he referred.

In my speech, I was very careful to say that the abuses and offences that have emerged—and to which the Prime Minister has admitted—in the private utilities and certain other sectors of the economy pose an ethical and a moral problem rather than an economic problem as such. We 642 believe that it is very bad for the morale of this country to allow that practice to go on unchecked. We also believe that the emphasis should be on opportunity and giving people a chance—which the market does not at present afford—to better themselves and to improve their quality of life.

Mr. Lilley

I believe that I am correct in saying that the hon. Gentleman referred to the Rowntree report and the figures it cites—he certainly did so in a previous debate—which he appeared to endorse. They are based on an analysis that the top 10th of income earners are getting more and the bottom 10th are getting less. The hon. Gentleman referred today to the widening division, but if he is simply talking about the division between half a dozen privatised industry directors and the 5 million people at the bottom of the income scale, he is clearly misleading people, to say the least.

Mr. David Nicholson (Taunton)

The hon. Member for Glasgow, Garscadden (Mr. Dewar) referred to people being able to better themselves and improve their quality of life, and in his speech he talked about frogs and tadpoles—I have been meditating on that fable ever since. Does my right hon. Friend agree that, thanks to the Government's efforts, in the past 10 to 15 years many people have been able to better themselves through participation in higher and further education?

Mr. Lilley

My hon. Friend is absolutely right. At the time when he and I entered Parliament, we set the target of increasing the number of people in higher and further education from one eighth to one third by the end of the century. We have already achieved that proportion of school leavers entering further and higher education.

The next issue raised in Labour's motion is the merger of the Department of Employment with the Department for Education, which the motion alleges signals the complete lack of Government concern about unemployment". That is the precise opposite of the truth. I shall leave my right hon. Friend the Secretary of State for Education and Employment to rebut that allegation in detail. Suffice it to say that the best key to a good job is the skills and educational attainment to contribute to the production of goods and services. Employment training and education are therefore intimately linked. It is right that Whitehall's structure reflects that, and it is absurd that the Opposition should want to dismantle it.

Mr. Dewar

I quoted figures, which I understand are accurate, about the reduction of the training budget this year as against next year. I believe that that will continue a trend that has existed for some time. How does the Secretary of State explain that reduction, in terms of the commitment that he is parading?

Mr. Lilley

We believe in increasing the total quantum of training and the total quality of training and education in the economy. The vast bulk of it applies in work. The key for many people is getting jobs in which they can build skills and expertise. We are more keen on that than on simply setting up ever more schemes, as the Opposition would like us to do.

The third issue raised by the motion is action which promotes employment opportunities", which is precisely the action that the Government have been taking, with growing success. It is also just what Opposition policies would undermine.

643 Our success is best measured by comparing our performance with our partners in the European Union, who already implement the policies that Labour advocates. Unemployment in the United Kingdom is below the EU average and falling faster than elsewhere. Britain has a higher percentage of people of working age in work than any other major country in the European Union. Moreover, the number of people in work rose by more than 1.5 million in the UK between 1979 and 1990—the last two peaks in the Organisation for Economic Co-operation and Development cycle—while it fell in the rest of the European Community.

Opposition claims that falling unemployment in Britain is not leading to more people in work are not true. Over the past 12 months, the number of people in work has risen by nearly 300,000. Claims that those extra jobs are all part-time, female, low-grade jobs are equally false. Only 5 per cent. of those extra jobs have been taken by women working part time. Two thirds of all the jobs created over the past year have been full-time jobs, and 70 per cent. have been taken up by men. The most rapid expansion has been in professional and managerial jobs.

Our success in generating more employment opportunities is based on a threefold strategy—first, improving education and training by ensuring that the right subjects are taught through the national curriculum, which Labour opposed; raising standards through testing, which Labour opposed; through parental choice, which Labour opposed; and through publishing school performance, which Labour opposed.

The second leg of our strategy is to improve competitiveness by avoiding the burdens of the social chapter, reducing payroll taxes where possible and deregulating enterprise. Labour would destroy competitiveness by opting into the social chapter. The third element of our strategy is to increase work incentives through in-work benefits.

Family credit already helps to make work worth while for 600,000 parents. Last week, I published the Green Paper on our plans to test a new earnings top-up benefit for people without dependent children who have limited earning power. There is a case for making work more attractive for such people—to encourage people to get on to the employment ladder, since most skills and experience are acquired in work.

If that pilot study is successful, it should benefit the least well-off. It should also benefit the taxpayer, because it costs more to keep people out of work than to top up earnings in work. The figures that the hon. Member for Garscadden quoted were from some while back and related to the possible extension of family credit to all people without families. On the basis that we are proposing, the cost—even assuming no offsetting reduction in unemployment—will be one third that which the hon. Gentleman claimed.

Mr. Dewar

I am sorry to interrupt the right hon. Gentleman again, but this is an important point. I accept his correction in respect of the cost. Our case is that there ought to be a floor under wages, to stop employers setting lower and lower wages for people entering the employment market, leaving a greater and greater strain to be taken by the taxpayer. Does not the right hon. Gentleman acknowledge that danger? Will checks and balances be built into the system, to prevent such a thing 644 happening? It would help the right hon. Gentleman's case—I put it no higher than that—if he could satisfy the House that there is no such danger.

Mr. Lilley

We are undertaking a pilot study, which is a major departure from social security policy and a sensible one, to ascertain whether such a benefit would assist not only the people who receive it but the whole economy. The test will be whether it helps people back to work, improves their take-home pay in work and encourages job creation. If the answer to those questions is no, with wage reductions offsetting the benefits to employees and no growth in jobs, we shall examine those factors. If the hon. Member for Garscadden is not 100 per cent. sure—and I submit that no one could be 100 per cent. sure—of his case for a national minimum wage, why does not Labour propose testing it on a pilot basis?

Ms Harriet Harman (Peckham)

The case for minimum wages was proven by the wages councils.

Mr. Lilley

The hon. Lady can try to make that case later and see whether the House finds it credible.

Ms Harman

The Secretary of State asked whether there could be a pilot scheme for a floor under wages by law. We had such a scheme from 1909, under the wages councils, until the Government abolished them. We do not need a pilot scheme, because we know that a floor under wages is necessary.

Mr. Lilley

Given that since our reforms, including those affecting wages councils, the UK has been more successful in increasing the number of jobs than most other countries, the suggestion is that the test has gone not in the hon. Lady's favour but in ours, and it should strengthen the economy as more people will be working and fewer kept idle.

Our approach is the opposite to that of the Opposition, who have consistently criticised in-work benefits. A national minimum wage would cut off the bottom rungs of the employment ladder and reduce opportunities for people to get into work and to increase their earning power through the expertise and skills that they may then acquire.

The final element of the Opposition motion is the claim that a national minimum wage would protect low-paid people. Any hope that a national minimum wage would help the lowest-income households is fallacious. Only 3 per cent. of families in the bottom 10th by income contain a full-time worker on low pay. The bulk of low-income households are on benefit, self-employed, retired or have large families. By contrast, many of those earning low pay are providing a second income in households with quite high total incomes. As a result, the Institute for Fiscal Studies calculates that, even before allowing for job losses, a national minimum wage would actually help the best-off 30 per cent. of households more than the least well-off 30 per cent. I cannot really believe that that is Labour's objective, although I may be mistaken.

There are three questions on the national minimum wage that the Opposition must answer if they are to be honest with the electorate. First, at what level would they pitch it? We have been given no answer today. Secondly, to what extent would the Opposition expect or allow differentials to be restored for wages above that level? Thirdly, how many jobs do the Opposition believe would 645 be destroyed as a result of their policy? What distinguishes new Labour from old Labour is its refusal to answer or even to deal with such questions.

This is not a new issue. Barbara Castle, as Secretary of State for Employment, set up an inquiry into a national minimum wage. Her conclusion was unequivocal: The introduction of a national minimum will add to labour costs. This could in turn increase the level of unemployment … The alternatives would either be a substantial increase in costs or, more likely, some reduction in employment both for men and still more seriously for women, with the worst impact falling on the least prosperous areas". So the Government of that day ruled it out.

The last Labour Government likewise rejected the idea. The former Chancellor, Lord Healey, is on record as warning his party in his best silly-billy manner: Don't kid yourselves—the minimum wage is something on which the unions will build differentials. Then, in the 1980s, the hon. Member for Birkenhead—

Mr. MacShane

Is that now the difference between old Tories and new Labour? We pray in aid Sir Winston Churchill; they pray in aid Barbara Castle.

Mr. Lilley

I suppose it is. The interesting thing is that new Labour seems to have disowned every previous Labour Government—and quite a few current Labour spokesmen.

In the 1980s, the hon. Member for Birkenhead, Chairman of the Select Committee on Social Security, published an excellent book called "The Minimum Wage—Its Potential and Dangers". In it he wrote: The employment consequences of implementing a National Minimum Wage are serious, but if the trade union movement decided on a policy of re-establishing differentials, the effects would be little short of disastrous. More recently, in his characteristically robust way, the right hon. Member for Kingston upon Hull, East (Mr. Prescott) has said of a minimum wage: I knew the consequences … were that there'd be a shakeout—any silly fool knew that. In short, not just this Government but all previous Labour Governments—and, until now, the Opposition—have always accepted that a national minimum wage would destroy jobs. But just recently the Opposition have done a volte face. On the basis of a survey involving telephoning 400 fast-food outlets in New Jersey, they now claim that a minimum wage can increase jobs. That really does sound like a drowning man clutching at a straw. The OECD has examined all the evidence from the United States, and it is clear that the weight of the evidence from there and elsewhere suggests that minimum wages destroy jobs.

The hon. Member for Garscadden said that the American experience of the past few years, despite the existence of a minimum wage, was successful in creating jobs and proved that a minimum wage was no obstacle to that; but of course over that period the real value of the minimum wage has fallen by a third. So its impact in terms of job destruction has been declining. Small wonder, then, that America has been doing increasingly well.

Mr. Dewar

I really think that the right hon. Gentleman is overstating his case in a way that does him no good. Despite what he has said, there are many countries—we have discussed one or two of them: America, France, and 646 there are many others—with minimum wages and with no intention of retreating from them. And some countries in eastern Europe—not necessarily a good parallel, I admit—are thinking of moving to a minimum wage system, on the basis of evidence from western Europe and north America.

I agree that there is a conflict of evidence, but there is a large body of evidence to the effect that there are no adverse labour market or employment consequences. Indeed, in a parliamentary reply on 4 November 1992, the Department of Employment was good enough to list a large number of those countries.

Mr. Lilley

When I asked the hon. Gentleman why France and Spain, which differ from us in having a minimum wage and the social chapter, suffer from higher unemployment, he was unable to give me a single reason—he said that the question would need complex analysis. But it is a prime question that any advocate of a minimum wage ought to have asked himself, and answered, before choosing to inflict it on his own country.

The hon. Member for Garscadden claims that there is no suggestion in France that the minimum wage is a problem. That is to ignore the fact that the previous Prime Minister, a member of the same party, proposed a reduction of the minimum wage for young people and withdrew that proposal only in the run-up to the election because it was proving politically unpopular. He withdrew it in the face of political agitation—

Mr. Dewar

rose—

Mr. Lilley

The hon. Gentleman has already intervened three or four times. If he failed to make his points in his own speech, that speaks for itself.

The Labour party now bases its case on studies that tacitly assume that in some areas some firms are effectively the only employers of unskilled labour and can therefore depress wages below the market clearing level. A minimum wage can be harmless only in those limited circumstances, and to the extent that it is geared to offsetting such power. Labour's research certainly cannot be used to justify a statutory national minimum wage.

A more logical approach, for anyone who believes Labour's research, would be to encourage more competition from more new businesses and to bid up wages to the market clearing level in the areas where they are artificially depressed. But Labour does not even seem to recognise the implications of the research on which it leans so heavily.

One thing is clear: the level at which the minimum wage is set would be crucial. Once it is known, academics can work out the implications. More importantly, employers and employees can work out whether they would move from low pay to no pay. That is presumably why the shadow Employment Secretary has decided to refuse to tell us what the level would be. We are told that it will not be set until after the next election.

That rather cynical ploy has backfired, however. The hon. Member for Nottingham, South (Mr. Simpson), secretary of the Campaign Group, said: it would be to our advantage to be a party that says what it means and means what it says, and that means something specific about the starting level of the minimum wage. The ploy has also caused alarm among the brothers—and other relatives—in the trade union movement. They fear another retreat, so they want a firm commitment to a 647 specific minimum wage. Indeed, Mr. Jack Dromey, a recent contender for the leadership of the Transport and General Workers Union, has urged the unions to campaign to persuade Labour to adopt a minimum wage figure of between £4 and £5 an hour before the election. No one is better placed to persuade Labour than Mr. Dromey. He is, after all, the husband of Labour's shadow Employment Secretary. Perhaps I should call him Mr. Harman in politically correct circles. One can imagine the pillow talk in the Harman household. After a hard day's campaigning in the Labour movement, he returns to the household and says to his spouse, "Couldn't we be united for £4 or £5 an hour?", at which Mrs. Dromey turns away with a sigh: "These numbers give me a headache—you'll have to wait until after the election."

The fact is that the Labour party is refusing to answer the questions that any honest party should answer if it is to come clean with the electorate—

Ms Harman

The right hon. Gentleman is giving me a headache now.

Mr. Lilley

That is not so much of a problem in my case. I fear that none of the blandishments from people in the Labour party, least of all from Mr. Harman, will work. The Opposition are in retreat, on this issue as on so many others, at least until the next election. They have retreated on nationalisation, and changed clause IV. They have retreated on tax, and abandoned John Smith's plans. They have retreated on nuclear weapons and on trade union reform, and they are retreating here because we are winning the arguments.

It is a tactical retreat, however. The right hon. Member for Sedgefield (Mr. Blair) has adopted the tactics of the man who walked backwards into a cinema in the hope that the attendant in the box office would think that he was leaving. But I believe that the electorate will see what the Opposition are up to and will realise that this is only a temporary retreat.

The Labour party offers new rhetoric for old policies. Scratch the soundbites and we find the politics of envy posing as egalitarianism, a job-destroying minimum wage masquerading as help for the low-paid, and a policy that will deepen dependency pretending to be an offer of help to those coming off the dole. By contrast, we offer a hand up as well as a handout, opportunity instead of envy and the chance for people to gain their first experience of the workplace. The debate offers a welcome chance for the electorate to compare the cynical politics of the Opposition with the practical policies that we, the Government, spell out day after day.

Mr. Gerald Kaufman (Manchester, Gorton)

In his closing words, the Secretary of State spoke about the electorate's views on the debate. If my constituents had been able to listen to the right hon. Gentleman's speech—it contained the cheapness that we expect of the person who made a xenophobic speech at a recent Conservative party conference, and did not fall below his usual level but kept up to that which we expect—they would have been left bewildered and dismayed but with the knowledge that the Secretary of State is the man who is responsible for their having to survive day after day in grinding and hopeless poverty.

648 I represent tens of thousands of people who live in great poverty. I represent many thousands who are unemployed. That the Secretary of State should make a debating speech based on stale statistics when my constituents are looking to Parliament for some hope and some salvation tells us why the Government are running out of time and why they will be rejected by the electorate as soon as it has an opportunity to do so.

My constituents live in terrible poverty. Of the 634 constituencies in Great Britain, Gorton is No. 35 when it comes to unemployment. Male unemployment is 21.8 per cent., which is more than double the national average. Overall unemployment is 15.5 per cent., which is almost double the national average. In Gorton, 38 per cent. of the unemployed have been unemployed for more than a year and 35 per cent. of the unemployed are under 25 years of age. Youth unemployment in parts of my constituency reaches 47 per cent. The Government respond to that situation with the cheap and facile remarks that were made by the Secretary of State.

People are desperate for a job; when they get a one, they have to live as the victims of their employers. I wrote to a Secretary of State for Employment about one of my constituents who is a security guard. He works 64 hours one week and 72 the next. He is paid no overtime and is not permitted to join a trade union to get the protection that it could offer. His employer reduced his hourly pay from £3.02 to £2.35. I wrote to the then Secretary of State for Employment and asked what recourse my constituent had in that appalling predicament. He was working all the hours God sent, yet saw his pay reduced.

The then Secretary of State wrote to tell me that the man could resign his job. That would have been extremely useful, bearing in mind that he lives in a constituency in which about a quarter of the males are unemployed. He would not have had much hope of other employment. Furthermore, if he had taken that course, he would not have been eligible for the benefit that comes when a job is lost involuntarily. That was the studied advice of the Government to one of my constituents who was being exploited by his employer, as so many of my constituents are.

Many of my constituents live in poverty that it is fair and accurate to describe as abject. A third of the population of Manchester has to have recourse to income support; my constituency is poorer than the Manchester average. In Manchester, 43.7 per cent. of households rely on housing benefit, which is one of the indices of poverty. On that index, Manchester is the poorest city in the country. My constituents are poorer than the people of Manchester as a whole. The proportion of them who live on housing benefit is even higher than the 43.7 per cent. in Manchester.

In Manchester, 24.8 per cent. of children have to have free school meals. As I have said, my constituents are poorer as a whole. Thirty per cent. of households in Manchester have lone parents with children. Indeed, 29 per cent. of the children in the city live in that circumstance. How are those women—overwhelming they are women—to survive? How are they to get jobs in an area of extremely high unemployment? How are they to bring up their children in a way that will keep them off drugs, off the streets and out of crime? How are they to achieve all that when they are living in a literally hopeless situation?

I read in the newspapers this morning that the Secretary of State is to conduct a drive against bogus applications for social security benefits. My constituents are as firmly 649 against bogus applications for social security benefits as anyone else. It would be a good idea if the Secretary of State also conducted a drive to ensure that honest people who are truly eligible for benefits knew how to get them and were assisted to get them.

Some of my elderly constituents are being deprived of benefits. Although we try to tell them that benefits are available, the Government do not make a determined effort to let them know what they can get. A couple in the Fallowfield area of my constituency—they are both aged 85—do not receive income support. The wife receives the higher rate of attendance allowance. Their joint pensions amount to £119.06. It was found that, because they were not aware of the benefits for which they could apply, they were worse off by £51.65 a week. It would be a good idea for the Secretary of State to do something positive and determined to ensure that such people receive the benefits to which they are entitled. In all conscience, the benefits are not very large, even when they are increased.

An 87-year-old woman in the Gorton area of my constituency has never claimed income support because she has "been frightened to". I quote her words. What sort of Government are we living under when an 87-year-old woman is frightened to apply for a benefit for which she qualifies? She has been living on £59.49 a week. It transpired that, if she had been properly advised by the Benefits Agency, she could have been receiving another £75.76 a week.

A couple in Levenshulme in my constituency have been living on £118 a week. When investigations took place, it was found that that couple could get their benefits increased by £57.60 a week.

Why do not the Government go out of their way to try to assist people in that position? Why do not they try to introduce a culture of benefit in which a woman in her 80s is not afraid to apply for the benefit to which she is entitled?

I understand that the Secretary of State is—I agree with him on this—opposed to the introduction of an identity card, but in Cabinet he is arguing for the introduction of an identity card for people on benefit. I beg him not to proceed. If he does, he will codify for ever the fact that we have two nations—those who are on benefit, and those who are not. We would have inferiors and superiors, based not on merit or virtue but circumstances and misfortune. It would be a very black day if we were to separate our constituents, whatever our party, into two groups.

Because of the poverty in my constituency and because of unemployment—and not because of a dependency culture but because of a need for benefit, which does not prevent people from living in poverty—we have health problems of which those who live in and who represent the more affluent parts of the country are simply unaware.

Mr. Barry Porter (Wirral, South)

I agree with the right hon. Gentleman that it would be entirely appropriate for people to be given as much information as possible so that they can claim the appropriate benefit, but would not the suggested card go a long way towards meeting that desire? If people have the card, it would be up to the appropriate authority to ensure that people received the benefits to which they were entitled. I thought that that was the argument.

Mr. Kaufman

Let us take the 87-year-old woman who was frightened to apply. I do not know what good a card would do for her, or is the hon. Gentleman saying that everyone on a retirement pension should have a smart card? If everybody on a retirement pension was, therefore, regarded as an inferior member of the community, millions of pensioners would rise up in anger against the suggestion.

I shall, for a moment, consider health in the city of Manchester. As everybody knows, poor health often derives from poverty. The poverty and ill-health indices of the wards in our city correlate. In our city, the incidence of an array of illnesses and diseases is far higher than it is in the country as a whole. If England and Wales is an index of 100, the incidence of ischaemic heart disease in Manchester is 161 for males and 173 for females. For lung cancer, it is 214 for males and 204 for females. For cerebrovascular disease, it is 186 for males and 144 for females.

The mortality ratios in the city for all causes, remembering that the national average is 100, is 163 for men and 148 for women. If babies and infants in Manchester had the same experience as the average for England and Wales, the total number of still births and deaths in the first year of life would be 75 instead of 104—nearly 30 more. If one takes the weight of children at birth, which is a strong index of poverty, one finds that 6.7 per cent. of children born in England and Wales weigh less than 2,500 g. In the city of Manchester, the figure is 9 per cent. In the Gorton, South ward in my constituency, it is 9.8 per cent. In the Levenshulme ward it is 10.71 per cent. In the Rusholme ward it is 10.29 per cent.

Those are all indices of poverty. They are indices of women who are fighting to get a decent diet, fighting to survive, and giving birth to babies who are smaller than the average and thus subject to a greater risk of ill health—if they survive at all.

Poverty has an effect on childhood mortality rates in the city of Manchester. The rate of perinatal mortality in England and Wales is 7.5 per cent. In Manchester, it is 9.9 per cent. The rate of still births in England and Wales is 4.2 per cent. In Manchester, it is 6.4 per cent. The rate of infant mortality in England and Wales is 6.5 per cent. In Manchester, it is 8.4 per cent. It is important that I repeat that, by and large, the figures for my constituency are worse than those for the city that I represent.

Mr. Alan Howarth (Stratford-on-Avon)

I am grateful to the right hon. Gentleman, who speaks feelingly on behalf of his constituents, for giving way. Is he aware that international research material, assembled and reported on by Richard Wilkinson of Sussex university, demonstrates that societies in which there are greater inequalities of income experience worse indices of ill health and early mortality than societies in which the income differentials are less wide, and that the kind of poverty that he is describing is detrimental to the interests and, indeed, the health of us all?

Mr. Kaufman

I am deeply concerned, as anybody who represents and lives among the people about whom I am talking must be, as there is not just the problem, the sadness, the desolation of individual poverty and suffering, but the loss to the country because of what is happening.

651 I shall give an example of what my constituents have to put up with, to demonstrate to the House that what happens in Gorton and elsewhere in Manchester is not an accident but a consequence. It is a consequence of the unemployment, of the low income. It is a consequence of inadequate medical provision. We have in my constituency the Gorton medical centre. It operates from something that scouts would be ashamed to use as a hut. It has been condemned as unfit by the Health and Safety Executive. The doctors in the medical centre have put forward a plan for its rehabilitation, which would cost £150,000. So far, that money has not been made available. I have had discussions and correspondence with the right hon. Member for Surrey, South-West (Mrs. Bottomley), who has just ceased to be Secretary of State for Health, and nothing whatever has been done to put it right.

There are 9,000 people on the patient lists of the Gorton medical centre. I have visited it on a number of occasions. The waiting room is so small that there is not room for everybody to sit or even to get in. Pensioners, pregnant women and women with babies have to stand, or even to stand outside in the street. We need £150,000 and the money is not coming, yet in March the High Court found that the very family he