Living Standards

Baroness Lister of Burtersett Excerpts

Monday 5th September 2011 Lords Chamber

[Lord Rooker]

To ask Her Majesty's Government what is their response to the Resolution Foundation's Commission on Living Standards' report Missing Out, published on 27 July 2011.

[Baroness Lister of Burtersett]

My Lords, in the absence of my noble friend Lord Rooker, and at his request, I beg leave to ask the Question standing in his name on the Order Paper.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, the Resolution Foundation report finds that the share of national income going to the bottom half of workers in the form of wages has shrunk over the past 30 years. While this has been a long-term trend in most advanced economies, the Government are committed to the UK having a better educated and more flexible workforce within a more balanced economy and to ensuring fairness, with all individuals rewarded for entering and progressing in work.

[Baroness Lister of Burtersett]

My Lords, I thank the Minister for that Answer and for drawing attention to that key finding. However, the other key finding of the report is that the main reason for the falling proportion of national income going to those on low and middling wages is rising wage inequality, particularly at the top. Will the Minister please advise your Lordships' House what the Government plan to do to reduce wage inequality both before and after tax, particularly at the top end of the wage distribution?

[Lord Sassoon]

My Lords, I declare an interest as a former member of the advisory board of the Resolution Foundation, whose work I very much admire. The report talks about wages before the effects of tax and benefits. Indeed, the noble Baroness is right that about two-thirds of the effect which it identifies results from growing wage inequality. However, it is interesting that the report’s tables point out that, at one extreme, the wage inequality results in those within financial services on the 90th percentile of earnings earning 6.2 times the amount earned by somebody on the 10th percentile, whereas in manufacturing the differential is only 3.3 times and has hardly changed over the past decade. Therefore, we need to see a much better balanced economy; balanced growth is what we want to see. In the previous decade, manufacturing’s contribution to the economy halved and that of financial services increased very significantly. The starting point has to be a more balanced growth in the economy.