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Full transcript of Secretary of State for Work and Pensions James Purnell's Progressive Manifesto lecture to the Fabian Society on Tuesday 6th May at Arundel House.
Creating an Open Society
It’s been a grim weekend. But it’s time to get up off the floor.
I woke up on Saturday morning to a flood of texts from non-political
friends. They all said the same two things: God this is depressing. And
please don’t let this happen.
That phrase – please don’t let this happen - should give us hope. Because
people haven’t given up on our ideas.
This is no 1995, the year that Labour got 47% in the polls, the moment the
1997 Election became inevitable.
It is not 1995, for two central reasons. First, the economic challenge is
different. In 1995, the government had punished the country economically.
It was a downturn made in Whitehall. 3 million people had been out of
work. Interest rates touched 15%. The government had done something
catastrophic to the British people.
Today, voters are spooked by the economy, uncertain how much to worry.
But they do not blame the government for creating this situation – they
realise it has global roots. What they do want to know is how we will
respond. This creates a political difficulty: the measures that are needed
economically are not always popular politically. Tough economic times
often require tough answers. And they are fertile soil for politicians with
easy answers: it’s the immigrants’ fault. Let’s put up trade barriers. Let’s cut
interest rates, whatever the cost.
Easy answers appeal in the short term. But they make the downturn worse
in the end.
So, our response to date has been about tough decisions: injecting billions to
preserve liquidity. Nationalising Northern Rock temporarily to maintain
stability. These measures were not immediate vote winners. But they are the
right decisions. We need to remain steadfast in taking those right decisions,
in the knowledge that we will be judged on their outcome.
But stability is not enough. We need answers to the other questions the
electorate asked last week. The first has been widely reported: what are you
going to do not so much about the credit crunch, but about the price shock?
That’s the question the pollsters would get. But talking to voters on the
doorstep allows you to have a conversation. And I’m sure there was
another: a nagging, less defined, but more fundamental question: what is our
country’s future? Is our economy as robust as we thought?
People give us the last ten years: they accept the economy has done well.
But they worry about what comes next. They can see that globalisation has
worked most of the time. It costs less to buy a new DVD player today than
a new DVD to play on it. Most people’s incomes have gone up. Britain has
been one of the winners of the opening of the world economy. But they
want to know whether it will last and how their families will do – they want
to know if passengers in Economy will benefit, not just those flying First
Class, or on their private Gulfstreams.
And that is the second and fundamental reason why this is no 1995.
Because Labour’s answer to the questions that voters asked is better than
the Tory answer. The Conservative answer is that the State should help you
less: that the State is part of the problem. Our answer is that the State
should help you better. Their answer is that people become powerful when
the State withdraws. Our answer is that people become powerful when the
State helps them to do so.
People are feeling anxious. Not just about bread prices and fuel increases.
They are anxious because they worry about how Britain will compete in the
21st century.
And we need to reassure and persuade them that countries with talent,
countries that innovate, countries that create, will prosper. It’s not just that
Britain is world class in the creative industries, in pharmaceuticals, in
advanced manufacturing, and in financial services.
It is that Britain is the kind of society that can prosper best from
globalisation. An open world calls for open societies. Open to the best
ideas, a creative hub. Open to the best people, a magnet for talent. Open to
new businesses, an entrepreneurial culture. But most of all open to anyone
to make the most of their potential. This time, for the first time in our
history, opportunity truly open to anyone, whatever their background,
whatever their parents’ income, wherever they were born. A truly open
society for a fast opening world.
How do we build such an Open Society? By investing in ideas, from science
to the arts. By winning the positive argument for migration. By widening
access to university. By ensuring our schools stretch everyone, whatever
their talent.
Over the last few years, Britain has become more open to talent and to
ideas. But we are not there yet. There is much to debate over the next few
weeks, as we think about how to respond to last week’s Elections, and I
want to return to these themes above.
But an Open Society has a foundation stone. It has an original idea without
which the rest is just verbiage. That idea is a fair chance. An Open Society
means that some people will do better than others, indeed that those who
put in more effort deserve to do better, that making the most of your talent
should be rewarded.
Our basic moral intuitions accept that idea of reward. But they only accept
it if we all have a fair chance.
And that means tackling inequality.
Today, we are publishing research which confirms that children of poor
families are more likely to go without regular exercise, have interrupted
educations, and live in poor housing. Their lives damaged almost from their
outset by poor health, low achievement and low expectations.
I start from the cast-iron belief that all individuals have an equal right to a
flourishing life.
It is the priority we accord to this goal that defines us on the political left
rather than the political right. The thing that people forget about New
Labour is that it was Labour as well as New.
The founding argument for New Labour was that, finally, there would be a
marriage between social justice and economic prosperity. That poverty was
never a price worth paying.
Nobody in my party has embodied this for longer, or with greater success,
than the Prime Minister. His political career has been defined by consistent
argument and action on debilitating poverty. To be a guiding force in a
country which has 600,000 fewer poor children than it had a decade ago, is
an achievement which would cause a Labour politician of any vintage to
swell with pride.
In our frenetic and cynical age, when it is routine to say that politicians care
only about survival, it is worth pointing out someone with a defining
message based on belief rather than political calculation.
Because this issue embodies something beyond brand management, beyond
electoral arithmetic, beyond salesmanship. There aren’t many votes in child
poverty. But that doesn’t matter one bit. The child poverty target is a
question of belief. Of justice. Of what is right.
When Tony Blair and Gordon Brown committed us to the goal of
eradicating child poverty they spoke for everyone in this party. They also hit
its nerve centre. The child poverty target links Old and New Labour. The
outrage we feel at the waste of lives lived in poverty is what links the Labour
party of 2008 with the Labour party of 1908.
The difference today is that we are no longer the only ones talking about
poverty. The Tories now say they recognise relative poverty. We should
celebrate that – we have won the intellectual argument. The Tories know
that they have to say they agree that poverty is defined relative to the rest of
society, or be out of step with the mood of the times.
But willing the end is only the first test. The second, and harder, test is
willing the means. Willing the means, so that when there is a choice about
where to spend money, child poverty is at the front of the queue.
And the Tories have to date failed that test. Last week David Cameron
published a document titled ‘making British poverty history.’ The title would
suggest that the Tories share out target. But in the 17 pages of the document
the best they can manage is to say that the Conservatives "have set ourselves
an aspiration to meet the child poverty targets... "
But having an aspiration without a policy is empty. It’s a bit like someone
having had an aspiration to paint the living room this Bank Holiday
weekend. They would really have liked it if the room had been painted by
today. But they spent the weekend watching the TV and the paintbrushes
stayed in their cans.
The Tory tactic is clear. Hope that we also fail the test. Hope that we don’t
meet the 2010 target, and that people decide that there is little difference
between an aspiration without a policy, on the one hand, and a target that is
difficult to meet, on the other.
Well, there is a difference. The difference is in the hundreds of thousands
of children whose lives have been and will be transformed. Yes, it’s a brave
target. Indeed, the Guardian once speculated that some thought this “the
most impossible, and stupidly defined, target ever constructed in Whitehall”.
But I’d rather have a target that is tough to meet and lifts more children out
of poverty than an aspiration which can never be measured and therefore
requires no action.
The target is tough, because it is like running up a down escalator. The
incomes of poor families need to increase faster than those of the median
family if relative poverty is not to grow.
And when governments stop running, poverty increases. Between 1979 and
1997 inequality in the UK rose faster and further than in any other country.
Over a period of 20 years, the proportion of children in relative poverty
more than doubled. By 1997, one in four children in Britain was poor.
If we hadn’t started running in 1997, that gap would have grown. Even if
the Tories had started walking up the escalator in 1997, and uprated all their
policies in line with inflation, child poverty would have grown. In fact, it
would have risen by a further 1.7 million.
It would have risen because the nature of economic change was making the
problem worse. The salaries of the skilled were, and are, rising faster than
the wages of the unskilled. As we closed the economic gap with other
countries so we opened up the economic gap within.
So it’s not just that the target, when it was set, was a long way distant. It was
receding all the while.
No government with an eye on the main chance would ever have set such a
target. This was not a target set with next day’s headlines in mind, it was set
with the next generation in mind.
But it has spurred us on. We could fill 20,000 classrooms with the children
who are now above the poverty line.
Measures announced in the last two years will lift around 500,000 children
out of poverty. Households with children in the poorest fifth of the
population are on average, £4,500 a year better off, as a result of measures
introduced since 1997.
It’s a good record, one that stands comparison with any government. But
it’s not yet good enough yet and the target is there to remind us of that.
We need to redouble our efforts. We need to do more through the tax and
benefit system. We need to do more to tackle the poverty penalty. And we
need to give people the chance to get on.
First, on tax credits, we should not fall for the argument that they don’t
matter. The Tories are trying to say that because tax credits are not the
whole solution, they are not part of the solution. David Cameron said three
years ago that “unravelling Labour's tax credit system will be a complex and
long-term task”, although he told GMTV last week that “We didn’t, we
never, we didn’t oppose tax credits”.
His social exclusion Minister, in a flourish of double speak, says tax credits
disguise poverty, rather than curing it. I don’t know about you, but I think
giving people more money is a hell of a way to disguise poverty.
In fact, when you read their policy document, a picture starts to emerge. It
talks about measuring poverty at 40% of median income rather than at the
internationally recognised measure of 60%. So, that’s it. The Tories don’t
want to eradicate poverty. They want to redefine it.
All of a sudden 2.5 million children are no longer poor, as if by magic. The
circumstances of not one single child will be improved. It’s just an attempt
to let a potential Tory government off the hook by making the task look
easier.
I’m sure they are doing this because if they win they don’t want to be
lumbered with spending pledges on child poverty that they don’t really
believe in. Indeed, it’s instructive that their only policy on tax credits is not
funded. They say they want to increase the amount that couples get from
the Working Tax Credit. They say this would cost £3 billion. But they
don’t have £3 billion to spend. They say it will be paid for by welfare
reform – but are publicly committed to getting no more people off
Incapacity Benefit than we are. And they can’t avoid giving the impression
that their welfare policy is driven by desperation to make their spending
plans add up, not by moral outrage at the lives wasted by being trapped on
benefits.
So, both their goal and their policies are just aspirations. It would be nice to
reduce child poverty. It would be nice to put more money into the Working
Tax Credit. But nice isn’t good enough. Until they pass the test of
hardening their commitment and costing their policy, they cannot claim to
be committed to ending child poverty. Lip service is not the same as
commitment.
But of course tax and benefits are not enough. They are necessary but not
sufficient. This is not a new argument – indeed, it was this government that
created the social exclusion unit precisely to embody the truth that poverty
is not just about income. It’s also about the costs of being poor and about
the chance to earn more and do more.
So, we need to reduce the poverty penalty. As Save the Children showed
recently, it costs you more to be poor. And part of our response to the local
elections has to be helping those on lower incomes with the cost of living.
To make sure that every extra pound goes further.
There are many causes of the poverty penalty. But I want to start with the
cost of credit. Last year, there were 160,000 people relying on loan sharks.
I would like nothing more than to put the loan shark out of business. They
walk the streets of estates in my constituency, often with the latest toy in
hand, to dangle in front of children to get their parents to take out a loan.
But without dangling the interest rates which can be literally extortionate.
One lone shark prosecuted last year was found to be charging rates of
between 1500 and 117,000 APR.
We already do a lot to help. The social fund will this year provide half a
billion of interest free finance to people on benefits when they are in need.
But the budgeting loans are not currently available to those who have
moved into work, and we do not have sufficient resources to offer them to
everyone they could help.
I have, therefore, commissioned KPMG to undertake a feasibility study to
assess the options available for reform. They will report by July. This can
be the start of transforming our approach so that we extend affordable
lending to everyone.
I want to explore how private and third sector partners can work together
with the Government in the delivery of a reformed scheme. I want to see
how the money that we have invested in the programme can be made to go
further, to offer low cost loans to those who work as well as those who
don’t.
Because the centrepiece of our policy on child poverty must continue to be
work. And getting a job in itself is not enough. Once people are in work,
they need to stay there. And they need to progress. That is the third area we
need to focus on, making work stick as well as making work pay.
Today we publish the evaluation of the second year of the Employment,
Retention and Advancement pilot. The programme provides assistance to
people in work as well as financial incentives to stay in work and get
promoted.
The findings are good. Lone Parents on the programme are earning 24%
more than those who are not on the scheme. And they show lone parents in
ERA are more likely to work full-time, combine education or training with
employment, and to take steps to advance in work.
We will fully evaluate the pilot, but the evidence to date is encouraging. And
I can announce that we are rolling out three key elements of the programme
to all lone parents.
First, the in work credit. We’ve piloted it. It works. Now all lone parents
around the country can get it. £40 extra a week for the first year, £60 if
they live in London.
Second, advice to stay in work, not just to get in to work. During the critical
first 6 months of their employment, a Jobcentre Plus personal adviser will
be on hand.
Many of these parents have been away from the workplace for some time,
and will often lack confidence in their new jobs. Their advisers will be
available to ease the transition into work, help deal with problems and
encourage people towards roles with better security, pay and conditions.
At the fledgling stages of a move back to work, any unforeseen mishap or
change in circumstances could be enough to undermine the whole
enterprise.
And so the third element of the programme is the in-work discretionary
fund. When a crisis develops in the first 6 months of the job, this fund can
provide for a payment of up to £300 in order to avert what could otherwise
derail a career before it has even started.
Be it to cover a childcare emergency, the cost of travel, or the rent until a
salary is paid, this money can provide much needed stability at a time when
all else is in flux. It can provide solid ground underfoot as people take their
first steps into the labour market.
We know that ending child poverty will not be easy, and nor will it be
achieved just by investing more in the tax and benefit system. Over the next
few months, we need to show that there is energy and momentum behind
the task. I’ve set out some of our ideas today. But that is just the start. As
announced in the budget, the Government will soon come forward with the
details of £125 million of pilots to develop new solutions to tackling the
roots of poverty. This must be the biggest anti-poverty experiment ever
conducted.
That is not the mark of a tired government. It is the mark of a government
that has a real energy, because it is confident that its answers are the right
ones to the questions the public are asking.
That ideological confidence is the way out of this week’s political setback.
The Tories are paying lip service to our policies because they know their old
answers are out of tune. But our challenge is to show that their policies
would not achieve the goals they now say they share.
My argument today is that the goal is simple. To create an Open Society, the
kind of society that is best placed to take the opportunities of globalisation.
An Open Society, most of all, for everyone in Britain – giving them the
chance to climb as far as their ambition takes them. But with that ladder
rooted on the solid ground of a fair chance for all. That is why child
poverty matters, and that is how we can make the best case for it.
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