Category: Financial Inequality

National Minimum Wage (Offshore Employment) (Amendment) Order 2020

My Lords, I congratulate the Minister on introducing this order, which was long overdue. The National Minimum Wage Act 1998 created a minimum wage across the United Kingdom for workers. The aim of the Act was to guarantee a decent minimum standard of pay for workers and to promote fair competition between businesses. However, the Act excluded from its provisions various workers in offshore employment. Some of those workers were brought into the scope of the Act by The National Minimum Wage (Offshore Employment) Order 1999. However, certain exemptions applied. It did not cover employment on a ship in the course of navigation or workers on shipping vessels or dredgers. It is therefore important that these loopholes be examined.

I commend the Government on setting up a working party to look at the issues and to commence consultations. The working party was made up of maritime unions, the UK Chamber of Shipping, and the shipping companies. Following the consultations, it is now proposed that the wide-exception 1999 order be amended and that the 1998 Act will apply to employment in connection with a ship in course of any kind of navigation, or for workers on fishing vessels or dredgers. However, a narrow exception will apply to workers

“employed for the purposes of activities on a ship exercising the right of innocent passage or the right of transit passage.”

Can the Minister say why that exception applies?

It is appreciated that the provisions of the National Minimum Wage Act will apply to seafarers working in UK territorial waters or in connection with certain activities in the UK sector of the continental shelf. Can the Minister say whether there is any intention to extend the scope of applying the 1998 Act?

We were, and we are still, a great maritime nation. However, it is important that we do not have cheap labour in our shipping industry, and that these workers enjoy the same rights as employees working on land. We need to close as many gaps as possible to ensure that workers in our shipping industry are paid adequately in accordance with the spirit of the 1998 Act. We also ought to make sure that UK workers are not replaced ?by cheap workers from abroad in our shipping industry. In the past, UK workers made up less than 20% of the industry, which was not acceptable. I therefore support the order.

 

Link to full debate on Hansard. 

Covid-19: Recovery Strategies

My Lords, the conditions created by the pandemic and the lockdown will probably result in this year representing the largest annual reduction in carbon emissions. The crisis and this result should, with the right approach, enable us to achieve reductions in our emissions to zero by 2050, stimulate the economy and create jobs. The crisis should be a springboard to achieving these objectives. It is anticipated that our GDP will fall by 12.8% and unemployment will be at about 7.3% by the end of 2020. My concern is that there will, in addition, be regional inequalities, which our Prime Minister is keen to level up. Therefore, it is important for us to take appropriate and immediate medium-term measures. During the pandemic, there was a need to spend, spend, spend. Now that we are coming out of the crisis, our motto must be to think green, to achieve growth and to create jobs. I commend the Prime Minister for his commitment to spending £2 billion investing in greener transport, including providing walking and cycling facilities.

We must all ensure that all the BAME communities are fairly treated in all aspects of the country, including the business sector, as part of our future strategy. This is a wake-up call for us to do so. What is the Government’s reaction to the two letters sent to the Prime Minister by 200 business leaders and the Committee on Climate Change, and how are the proposals being considered?

Link to full debate on Hansard. 

Families: Economic Inequality

My Lords, this is a most timely debate and one that will find a resonance across most parts of our country. I congratulate the most reverend Primate the Archbishop of Canterbury on raising the matter and on the typically skilful and reflective way in which he introduced the subject.It matters not what period of history we choose to examine, nor even whether we restrict our vision to the human species: the family plays a fundamental role in the life of all social beings. Nature defines that we are much stronger when we are attached and included in strengthened social ties and institutions; we are stronger both individually and collectively. That is why we should value families extremely highly across all sections of our communities.

Economic inequality is a cause of great soreness and distress in society. A study produced by the Centre for Social Justice last year identified poverty as being driven in part by financial exclusion and debt. We have witnessed a substantial increase in the level of debt across our population. In 1997, the average financial liability, excluding mortgages, was £2,690. In 2006, that figure stood at £5,940. We all recognise that debt tends to affect those with the least the hardest. Those who are among the relatively worse off in our society are the most vulnerable to fluctuations in interest rates.

Banks and financial institutions have aggravated the problem by making borrowings on loans, mortgages and credit cards far too easy. People have been encouraged to borrow more than they can afford. The present financial crisis should be a lesson for those institutions: they must learn to lend money in more responsible ways from now on. We need better co-ordination of government policy, especially in addressing regulation of bad businesses. The Bank of England and the FSA need to be more vigilant in taking the most suitable action where there is an indication of moral hazard. That is necessary to protect prospective borrowers and their families.

Total household financial liabilities have increased every year since 1997, from about £586 billion to £1,370 billion in 2006. Expressed as a proportion of households’ gross disposable income, that has increased from 105 per cent in 1997 to 164 per cent in 2006. At the end of January this year, total debt in this country stood at £1,412 billion. That figure is alarming. Levels of personal debt in this country are estimated to increase by approximately £1 million every five minutes. A recent report found that children of families that have broken down suffer from mental problems and depression. One factor in family breakdown is financial difficulty.

We have seen a tremendous increase in the number of home repossessions in recent years. In 2004, 8,200 properties were taken into possession. In 2007, some 27,100 properties were repossessed, according to the Council of Mortgage Lenders. These figures make a mockery of the Government’s claims to have helped more people on to the property ladder. The effect of repossession on a family can be catastrophic. When the volume is this high, the effect on wider communities is also quite frightening. The situation will get worse with the credit crunch, which is affecting the country as well as having an adverse effect globally. I hope that the Minister can give the House answers to these problems today. What assessment have the Government made of the likely implications for individuals and families of banks’ greater caution in lending money to one another as a consequence of a credit crunch that we have all witnessed?

This country’s inflation, too, is causing great damage to families. Although the Prime Minister claims that inflation is running at about 2.5 per cent, it is now recognised that the cost of living is increasing at a far greater rate. A recent study found that the price of butter has increased by 37 per cent, bread by 28 per cent, flour by 22 per cent, a pint of milk by 17 per cent, cheese by 17 per cent, potatoes by 11 per cent, gas and fuel by 10 per cent, and petrol by 8 per cent. The most recent Budget has been estimated to cost the average family around £110 a year more, and we have seen council tax double since 1997.

There have been further increases in the price of food, according to figures quoted in the Times on 23 April. We also know that over the past few weeks the price of a barrel of oil has increased to about $115. The problems of scarcity and the high price of food not only affects people in the United Kingdom but is a global problem that requires appropriate action, not only by national governments but by all countries in the world. The engagement of international institutions is required to help to avoid a major catastrophe. Given the rising cost of living and families finding it harder to make ends meet, it is a shame that the Chancellor of the Exchequer has seen it necessary to aggravate the problem by raising taxes in the Budget. Tax rises appear to have been focused on those least able to afford the increases.

In the limited time available to me, I do not want to get caught up in debating the pros and cons of the 10p tax rate, but increasing taxes, particularly those that hit the most vulnerable the hardest, during a time of impending economic hardship is bad news, socially as well as economically. In view of the pressure applied by parliamentarians, the Government appear to have made concessions to low-paid workers without children and pensioners under the age of 65. The details of these concessions are rather vague at present; it is not clear whether they will entirely redress the problems that affect everyone who will suffer as a result of the abolition of the 10p rate of tax. It appears that we will have to wait until the Pre-Budget Report in the autumn to find out the details of these plans.

Tackling financial exclusion and economic inequality is a social responsibility. There is a role for others beyond the Government to address these problems. There is a role for civil society, charities, religious bodies, financial institutions and businesses to take joint responsibility and to work together to find and implement solutions. We need to look at the recently published Thoresen review of generic advice and the possibility of implementing its recommendations. Furthermore, people need to be guided on financial matters and we could begin perhaps by giving appropriate guidance in secondary schools. I want to take this opportunity to pay tribute to the work of citizens advice bureaux for their hard work in providing advice to those in difficulties.

Finally, I shall make a few observations about childcare. The first steps in a child’s development are crucial. All parents will recognise the importance of getting the correct balance. I congratulate the think tank Policy Exchange on its report on this issue earlier this week. Research consistently shows that parents prefer informal childcare during the earlier stages of development, which is best for children and, thereby, for the communities concerned. The report proposes the provision of funding to support families rather than institutions, as is favoured under the current system. The report offers a serious contribution to this most important debate on how best we can support the needs of our communities, strengthen our families and address the inequalities that we all dislike. We should give consideration to the recommendations in the report.

If these proposals do not prove to be affordable, we still have to devise a system that moves away from the “state knows best” principle which drives government policy at the moment. Parents can be trusted to know their families and to do what is best for them, and we would all be much stronger if that were allowed to happen. I hope that the Minister will have something positive to offer in answering this debate.

Financial Inequality

My Lords, the issue of financial inequality is an important challenge confronting the country today and I pay tribute to the noble and right reverend Lord, Lord Harries of Pentregarth, for securing today’s debate. Indeed, given the dangers that confront our economy, the focus should be shifted strongly towards those who are the most vulnerable.One of the biggest concerns in this area should be debt, about which I shall talk initially. The problem of debt divides people into those who have and those who have not. It is another dimension in our discussion today. In response to a recent Parliamentary Question in another place, total personal debt was estimated at £1.4 trillion in January 2008. Further, it was revealed that the average personal debt had increased from £16,000 in 2002 to £23,000 in 2006. That is a large increase and for many it is a serious issue. Total household financial liabilities have increased every year since 1997, rising from approximately £586 billion in 1997 to £1,370 billion in 2006. When one allows for loans secured on dwellings as a percentage of households’ gross disposable income, the figure has increased from 28 per cent in 1997 to 39 per cent in 2006.

Citizens Advice has seen increasing numbers of mortgage and secured loan arrears problems in the past two years. Home owners in arrears receive little help from benefits, insurance or their lenders. Poor lending and arrears collection practices have made problems much worse for many borrowers. In the past year, Citizens Advice reports having to deal with 57,000 problems of mortgage and secured loan arrears—an 11 per cent increase on the previous year.

Safety nets are failing. The take-up of mortgage payment protection insurance has declined and the Government’s own income support for mortgage interest payments scheme is failing to keep people out of serious arrears problems because of the limited help that the scheme provides. Sustainable home ownership is a challenge for many low-income households. Better co-ordination of government policy and proactive regulation of bad businesses are needed to prevent these borrowers from being set up to fail.

Earlier this month, the final report of the Thoresen Review of Generic Financial Advice was published. It sets out a blueprint for a national money guidance service to help people to make better decisions about money issues. The conclusions include the provision of money guidance focused on giving people information on budgeting, saving and borrowing protection, retirement planning, tax and welfare benefits, and jargon busting. The report recommends a United Kingdom-wide approach to money guidance to be delivered using a multichannel approach—telephone, face-to-face and web-based provision. Those improvements would be paid for by splitting the costs equally between the Government and the financial services industry. I am sure that noble Lords would be most grateful if the Minister would provide some indication of the Government’s response to these proposals.

I believe that we need to do more to tackle the problems of financial difficulties and debt issues. There is a role for the Government, civil society, financial institutions and businesses to take responsibility jointly and to work together to find and implement the solutions. I would like the Financial Services Authority to exercise greater scrutiny and control over financial institutions where moral hazard or signs of bad practices are indicated. Financial institutions should follow responsible lending practices.

The Government should take steps to improve the financial education that is delivered in our secondary schools. There should be a clampdown on store cards. Perhaps we should consider a seven-day cooling-off period, so that if a customer signs up for a store card or other revolving credit facilities at the point of sale, this credit cannot be used for seven days. Equally, much clearer information for credit card users should be provided. For example, credit card adverts, application forms and statements should include illustrative scenarios that explain exactly how much credit will cost if only minimum repayments are made every month.

Finally, I should like to add that one of the key causes of financial inequality is that many people are trapped into poverty by the very welfare system that was designed to help them. There is reliance on a welfare culture. It is imperative that we support initiatives and polices that give encouragement and incentives to people to look for work or to go on training schemes. There should be a focused welfare-to-work programme. In addition to earning a wage, people will get satisfaction and self-esteem from working. Unemployment and poverty are contributory factors in the breakdown of families. My party is taking this matter seriously and we have set out our proposals on it. In view of the constraint of time, I am not able to discuss these fully.