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Baroness Faithfull: My Lords, is the Minister aware that the morale of those serving in the Prison Service is very low at the moment? Who is responsible for supporting, helping, and encouraging prison staff, in particular, prison governors?

Baroness Blatch: My Lords, my noble friend makes an important point. The present acting director-general, Richard Tilt, has said that concern and sensitivity must be shown for the staff and governors in these challenging times. He has also said that priorities during this period should be the maintenance of stability and the preservation of order in prisons, supporting the confidence of staff and avoiding non-essential

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expenditure, and that the aim should be to preserve balanced and constructive regimes for prisoners as the surest foundation for maintaining control.

Baroness Farrington of Ribbleton: My Lords, will the Minister explain how the Government arrive at the figure for what they describe as efficiency savings while being prepared to state publicly that they do not know what effect the cuts will have on the service? If the cuts were further to demoralise Prison Service staff, would the Government find additional money given that they have admitted they do not know what will be the result of their actions?

Baroness Blatch: My Lords, the sum is specific; it is 9.5 per cent. efficiency savings over the next three years. I have already said that in the meantime money is being put in for essential services. I have also said that it is for the governors to produce their own programmes of how they can find the efficiency savings. They present those programmes to their area managers who make a judgment about the impact on the operational service and the way in which that impacts on the Prison Service itself. Only after that will the programme be approved. Therefore, it is not possible to say now precisely what the effect will be except that we have said that the priority must be for front-line services and the stability and control of our prisons.

Lord McIntosh of Haringey: My Lords, I do not understand how the Minister can talk as though efficiency savings and cuts in prison staff are mutually exclusive. Surely she knows what the total budget of the Prison Service is and what the staff costs are. Therefore, she must know within the figure of 9.5 per cent.--otherwise it is a meaningless figure--the certain expected savings which are not staff savings. The only missing figure is the staff cost. If she cannot give the number of prison staff to be reduced, can she tell the House what saving in money as regards staff costs is expected as a result of the cuts?

Baroness Blatch: My Lords, perhaps I may give the noble Lord some examples of where we believe efficiency savings can be found. Better shift systems in some establishments will avoid the wasteful deployment of staff. Some prisons employ over-qualified staff on routine tasks. More use can be made of part-time and contract staff to reduce costs. There are often too many management layers in prisons. In fact, the Learmont Report drew specific attention to that. Flatter management structures would improve efficiency and reduce costs, and specific guidance on that has been issued to the Prison Service. There will be reductions at headquarters and in central services. The report recommended that there could be a reduction of some 500 staff at headquarters and from central services. Therefore, there is great scope for efficiencies which will not affect the operational efficiency of the service.

Lord Harris of Greenwich: My Lords, is the Minister aware that some of us are a little puzzled by her reference to the need for greater efficiency in the Prison Service? She and her colleagues have now been in office for 17 years. Was it not possible to get this

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matter right earlier? Is she aware that as a result of the cuts there are indications of a reduction in the number of probation officers working in prisons? Is she further aware that a consequence of that will be to deny inmates the specialist advice and guidance which they require in order to be reintegrated into society?

Baroness Blatch: My Lords, perhaps I may deal first with the noble Lord's second point. He is right in saying that there is anxiety about the number of probation officers working in the Prison Service. However that issue is resolved it is clear that the function should be carried out either by the Probation Service or the Prison Service. Together they cannot ignore that the function needs to continue. In some cases, prison officers can do the work just as well as probation officers but we are concerned about that and we are watching the position very carefully. We now have some private prisons and we are able to make real comparisons in terms of running costs and the operational efficiency of prisons. The figures are about to be updated but I can say that so far there is an efficiency saving of between 15 and 25 per cent.

Lord Finsberg: My Lords, does my noble friend agree that had she said that everything was all right she would have been accused of being complacent but that when she says that improvements can still be made she is saying the right thing?

Baroness Blatch: My Lords, I am grateful to my noble friend for that comment. Anyone who has run an organisation knows that management and organisational development is a dynamic. All people in management are constantly striving to achieve greater operational efficiency.

Lord Bruce of Donington: My Lords, will the Minister indicate whether the additional 9.5 per cent. in resources over the next three years is in cash terms at current prices or in real terms?

Baroness Blatch: My Lords, I did not say that there was 9.5 per cent. extra; I said that the need was to find 9.5 per cent. efficiency savings over the next year. That is based on this year's costs, and the first year effect would be to increase efficiency and reduce the cost by 2.2 per cent. A view has been taken that that is achievable. We shall be watching the situation most carefully. As the noble Lord knows, budgets and operational efficiency are looked at and reviewed every year.

The Earl of Longford: My Lords, is the Minister aware that no one in the Prison Service will have any use at all for the kind of argument she has supplied today? Is she further aware that the policies of the Government are detested throughout the Prison Service and that therefore the figures she gives will be regarded with contempt?

Lord Molloy: My Lords, will discussions be continued with the prison staff associations, who are

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eager to talk to the Government in order to give of their knowledge, so that we can have a satisfied and efficient prison staff?

Baroness Blatch: My Lords, I am grateful to the noble Lord, Lord Molloy, for asking that question. Consultation is a very important part of the process. Governors will discuss their proposals with unions and staff and the acting director-general will be meeting with the national trade union. My right honourable friend the Home Secretary met the Prison Governors' Association on 8th February. Meetings have been held about the proposed voluntary redundancy programme with the Prison Governors' Association, the Prison Officers' Association, the prisons' trade union side and the Prison Service Joint Industrial Council.

Wealth Creation and Social Cohesion

3.6 p.m.

Lord Dahrendorf rose to call attention to the Report on Wealth Creation and Social Cohesion in a free society; and to move for Papers.

The noble Lord said: My Lords, perhaps on this Ash Wednesday I should stand before your Lordships as a penitent in sackcloth and ashes. Who knows? That may yet be my state after having heard those who have signed up to speak today. For the moment, my only embarrassment is that I have burdened your Lordships with the Report on Wealth Creation and Social Cohesion in a free society which, while easier to carry from the Printed Paper Office than some other reports that come before the House, is nevertheless a document of some length. I feel all the more humble and grateful that time has been found for this debate and I eagerly await all comments, friendly and critical, not least the maiden speech of the noble Lord, Lord Pilkington of Oxenford.

The commission which produced the report, and of which I had the pleasure to be chairman, was set up by the Liberal Democrat Leader, my right honourable friend Paddy Ashdown. It had eight members of varied backgrounds and persuasions but with a common concern to build on the strength of this country, thus to bring about constructive change. The report ranges widely yet its central point is simple. The wealth of the nation is more than conventional measures of economic growth tell us. The objectives of economic policy must take account of the longer term and the wider context, notably of social cohesion and political liberty.

Those are not optional extras, luxuries which one can conveniently forget when the going gets rough. They are essential ingredients of sustained and lasting prosperity. The conventional measures of growth, gross domestic and national product, have proved valuable and useful. Economists and statisticians have long been aware of their imperfections, but for decades GDP/GNP figures gave us a good indication not only of where our economy stands in relation to earlier states and to other countries, but also of how people feel about their economic circumstances.

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However, more recently, the two, measured growth and people's perceptions, have drifted apart. The first cause of such change was the discovery that GDP growth can have destructive side effects on the human habitat, the environment in which we live. That was dramatically, if somewhat misleadingly, highlighted in the early 1970s by the report of the Club of Rome on Limits to Growth. Twenty years later we make another discovery. GDP growth can be accompanied by the deterioration of our social habitat--the cities and towns in which we live; our involvement with the companies and organisations in which we work; and the whole fabric of social relations.

This is not just the vocabulary of the softhearted--although there is nothing wrong with that--let alone a romantic protest against the challenging world of international competitiveness. Our report describes this world without sentimental frills. Companies have to compete in markets which are no longer contained by cosy borders. Information technology and the near globalisation of financial transactions have seen to that.

The word "globalisation" is as yet an overstatement, but internationalisation there is. It is an overstatement also to say that all sectors of economic activity are equally affected by the process. Internationalisation can become a fad, an excuse for strictly unnecessary processes of alleged efficiency gains which in fact lead to deteriorating services. But when all is said and done, competitiveness in the harsh winds of world markets is the order of the day, and it is an opportunity as much as a threat. The fact that this country has been eager to grasp the opportunity has given it an advantage over many other old industrial nations.

However, while some of our major European partners now struggle with the exigencies of competitiveness, we--in some ways like the United States of America--are faced with a new set of social issues. Three sets of them stand out. First, your Lordships have on several occasions rightly expressed satisfaction with the continuing decline in the unemployment figures. However, the figures are still high and they are oddly resistant to growth. Increases in productivity often mean that fewer people produce more. Thus we are suffering from what has been called "jobless growth". But the problem runs deeper. Many of those made redundant actually find new jobs, but these are often--as in the United States--lower paid, less secure and generally less attractive than the ones that were lost. Along with jobless growth we have imported the working poor. Perhaps these are but symptoms of a profound transformation of the world of work. Over time there may be ways for individuals, employers and social institutions to adjust to the new condition. Initially, however, such change is disturbing and disruptive. People do not know how to cope. They fear that things will get worse because they find that all aspects of their lives are affected by a sense of insecurity. Of course it is hitherto protected middle class people who are hit hardest. Can anyone be surprised that the feel good factor remains elusive?

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Secondly, companies are more than profit machines. As employers, as purchasers and suppliers, and as centres of community life, they are the nub of a network of stakeholders. Shareholders can dispose of their assets; stakeholders are at risk of being disposed of themselves. Are we right to concentrate on shareholders to the exclusion of all others?

    "In a society which seems to want instant gratification, may it not be time to restrain the virtually unfettered freedom of capital to dispose--if the price is right--of this country's asset base?"--[Official Report, 22/1/92; col. 888.]
These are not my words but those of one among us who knows the subject intimately, and who to my delight will take part in this debate today.

The noble Lord, Lord Laing of Dunphail, said that in a debate which called attention to the importance of,

    "an equitable balance in industry between the interests of capital and all other stakeholders".--[Official Report, 22/1/92; col. 885.]
He initiated that debate in this House on 22nd January 1992. At the time many of your Lordships showed much interest in the subject. Even the Government Minister who responded to the debate--the noble Lord, Lord Reay--confirmed,

    "that other stakeholders, apart from the shareholders--customers, employees, creditors, suppliers and the general public--have legitimate and important interests".--[Official Report, 22/1/92; col. 922.]
He added--as does the report which we are discussing today--that these interests are not fine weather luxuries. He said, at the same column of Hansard,

    "Any well run company now knows that it has to recognise those wider obligations as a condition of its success".
That is the point. Sacrificing stakeholder relationships on the altar of shareholder interest has a cost to the public and to social cohesion which before long rebounds on companies and on the economy generally.

The third set of issues has to do with the great new risk to civil societies; the exclusion of important categories from the labour market, and from social and political life more generally. Long-term unemployment is but one form of exclusion. When priests of the Northumbrian industrial mission invited me to the North East, one took me to a number of homes--if that is the word--in the poorest part of Gateshead. I talked to one mother of three about the nearby Metro shopping centre, to which eager consumers are drawn from faraway places. She told me, "They have hired security guards there to keep us out". By "us" she meant the excluded. Of course that is not why security guards are hired but it is what the excluded feel.

The noble Lord, Lord Borrie, who will speak later in this debate, has chaired a commission which has produced an important report on social justice. I find it easy to agree with many of its findings. There is, however, an important nuance. The word "justice" suggests redistribution. On the other hand the report on wealth creation and social cohesion accepts a wide range of inequality as long as every citizen is on board, as it were. What matters is not equality but inclusion. The excluded--the underclass, many of the young, certain single mothers, and some members of ethnic minorities--present us with a threatening problem. Their predicament is morally unacceptable. It also

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demonstrates that we are not living up to the professed values of a civilised society. Can we be surprised if more and more people do not take these values seriously and violate them at will?

The excluded will not march on your Lordships' House or even the other place; they will not form the core of a new social and political movement; but they are a daily indictment of a society in which the majority tries, and probably tries in vain, to pull up the drawbridge around its castle to keep the minority out.

So what are we to do? I cannot put it better than one of your Lordships did a few days ago:

    "I do mind about this country ... I mind about it doing well and about its prosperity and cohesion. We need to try and work out this odd paradox of changing enough to compete and prosper and deliver quality of life, while at the same time allowing people to know where they belong and who they are".
Thus, the Lord Privy Seal and Leader of the House, Viscount Cranborne, in that splendid publication The House Magazine of 19th February.

I add one point of critical importance which your Lordships may well wish to debate more extensively on another occasion. Like Lord Beveridge in his Full Employment Report of 1944, we have included the phrase "in a free society". That was not merely a conventional add-on. What the noble Viscount the Leader of the House called an odd paradox is even more complicated today. There are those who praise countries which have achieved competitiveness and social cohesion at a cost to political freedom. That is the "Asia that can say no", to cite one of its eminent representatives--say no, that is, to the West. If I may for once quote the commission report:

    "We do not share this belief, indeed, we feel that it must be fought ... We are convinced that wealth can be created in a [democratic] context, and that the cohesion of a civil and civilised society supports the constitution of liberty".

How then do we square this circle? There is no need to despair. Indeed, the necessary new directions are quite evident. It is the first steps which are difficult. Encouraging sustained long-term investment is one of the vexing problems of the British economy. It is all very well to be the enterprise centre of Europe, but worrying to think that that is in part the result of the availability and acceptability of high profits on the back of low wages and social costs and could collapse as quickly as it emerged.

Contrary to the views of some members of my commission, I do not believe that there is one single cause or a simple solution to short-termism. The pressure of pension funds and similar institutions on distributing yields to shareholders is probably the most important factor. At the same time, funds which are available for investment are obviously needed. Above all, attitudes will have to change, and few things are more difficult.

I have already spoken of stakeholders in relation to companies. The use of the wider term "stakeholder society" seemed to us important in relation to social exclusion. Every citizen belongs and must be seen to belong. Horrible as it is to admit the fact, it is not easy to see how all those who have fallen through the net already can be brought back in the near future.

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However, we must cut the supply lines to future exclusion. That means a new approach to education and employment which takes account of the changing world of work. Individual learning accounts are one way forward, and I am grateful to my noble friend Lord Rochester for having supported the idea in the employment debate in this House on 7th February.

Then there is the need for a new approach to the welfare state. Entitlements must be safeguarded by a new balance of employer, employee and taxpayer contributions, and they must be transportable, namely, attached to individuals rather than jobs. We agonized over the question of compulsory contributions, especially in the light of my earlier comments on a free society. In the end we came down in favour of a degree of compulsion. It is good to know that in another place these ideas are now taken further.

A socially cohesive country needs certain constitutional arrangements, in the widest sense. I believe that much of economic and social regeneration is local in character. Strengthening and recreating local power are of critical importance. Perhaps directly elected mayors would be useful precisely because they would detract from the power of central office holders and even of Members of Parliament. Beyond local power there is the crucial function of that space in our society for which it is so hard to find an attractive name, the "third" or "voluntary sector", which is the lifeblood of civil society.

Above all, there is one pervasive theme in all the solutions on offer. We have to change our economic culture. One aspect of that change is the language of economic debate. It is just not good enough to identify the wealth of the country with a few narrow economic indicators. Adam Smith knew that when he described the "progressive state" as:

    "a cheerful and hearty state to all the different orders of society",
although we seem to have forgotten it. A wealth audit as recommended by the Commission on Wealth Creation and Social Cohesion which adds environmental and social data to traditional national accounts would be a step forward. It is, of course, only a part of a wider task.

The question is, can we be prosperous and civil too? The answer must surely be yes. It is my sincere hope that today's debate will make a contribution to that objective. I beg to move for Papers.

3.27 p.m.

Lord Laing of Dunphail: My Lords, I congratulate my noble friend Lord Dahrendorf, whom I greatly respect, on his excellent introduction and thank him for giving us an opportunity to debate this very important subject.

The title of the debate poses at least two important questions. How much wealth is required to sustain the reasonable expectations of people in a free society? And how is it possible to achieve a proper balance between the creation of wealth and the quality of life necessary to facilitate social cohesion? Almost every day it is brought home to us that we are not creating enough wealth to meet the expectations of our society. Why? Because of

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our chronic addiction to short-termism. It is widely recognised that we underinvest, carry out too little training and spend too little on research and development, all of which are vital to future prosperity and future jobs.

With our history as a great trading nation, why have we become so shortsighted? No doubt there are many reasons but, setting aside inflation, I see two as being most important. First, as the noble Lord, Lord Dahrendorf said, too much money is paid out in dividends to institutional shareholders--absentee landlords--who give too little weight to the importance of research and development and training--the longer term. Secondly, there is the failure of management to explain to the workforce how much wealth has been created and how it has been distributed. In my view it is management's role not only to manage but to lead and to educate. More attention to both of those areas would lead to more wealth being created and thus to greater social cohesion.

I turn now to leadership, and I quote Field Marshal Viscount Slim of Burma:

    "Leadership is of the spirit, compounded of personality and vision: its practice is an art. Management is of the mind, more a matter of accurate calculation, of statistics, of methods, of timetables and routine: its practice is a science. Managers are necessary: leaders are essential".
Leadership is just as important in peacetime as in wartime, but is not perceived as being so.

I had the privilege of being chairman and chief executive of United Biscuits for nearly 30 years. When I retired it was the second largest biscuit company in the world with a turnover of nearly £3 billion and employing over 30,000 people in the United Kingdom. I mention that only because, in the interests of internal cohesion, I spoke to approximately 20,000 of our employees every year on all shifts, in groups of 300 or fewer, explaining company policy, threats to job security, what the added value was and how it was divided. I believed that that would lead to trust and internal cohesion and therefore could make a contribution to external cohesion.

Your Lordships may be interested in the split of the added value or the wealth that we created. Over a very long period of time when our return on investment was about 21 per cent., 70 per cent. of the added value went to our employees. Only 1 per cent. of that went to those earning over £20,000. Twenty per cent. was reinvested back in the company; 5 per cent. went to dividends; and 5 per cent. to tax. I used the visual aid of a jug of orange juice to represent the added value and four glasses for its division. The picture was very clear. I pointed out that with the 70, 20, 5, 5 split the only glass available for extra money for pay if it had not been generated was the glass representing investment. It is taking money for pay from that source which has proved so damaging to British industry.

I offered a contract to our workforce. If they agreed that the first charge on our added value would be 20 per cent. allocated to reinvestment in the company

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and to work such investment efficiently and flexibly, then the company would guarantee 70 per cent. of the added value to employees and job security until retirement after 10 years' service. This contract would be reviewed every five years or more frequently if there were some very compelling reason to do so. Such policies require constant reconsideration to ensure that they maintain a contemporary ring. The contract offered by my company was turned down for a number of reasons. However, I can assure your Lordships that it led to a greater degree of trust and cohesion within the company. If anyone is interested in the personnel policies of United Biscuits they are outlined in a book entitled A Clear and Simple Vision, copies of which I have placed in the Library.

It seems to me that if all company chairmen and chief executives seek the goal of internal cohesion as being something they can control, this will inevitably spread cohesion to the wider community. Without internal understanding and corporate cohesion we will not attain the goal of national social cohesion.

In the sessions with the workforce I also explained our ethics policy on which management had responsibility for briefing staff. Among other things the policy stated that we would pay our bills on due date. Not to do so is a form of stealing. I asked our auditors to let me know if they came across any deviation. If clearly stated and adhered to, such an ethics policy helps employees to be proud of their company. Having pride in one's work and in one's company is essential for internal cohesion.

I made clear to our workforce and to the City that the company was run for the benefit of all the stakeholders which included the shareholders. The shareholders come last in this sense. If a company is fully backed by its workforce, reinvests at the necessary level to keep it internationally competitive, trains well, leads well and educates well, the shareholders will gain a better return than if the dividend is paid at the expense of those things necessary to maintain a vibrant company in the long term.

If all this sounds like paternalism, then I believe in paternalism. Laing's law is that everyone longs to be loved. We have swept away paternalism, putting nothing of value in its place except a myopic emphasis on the bottom line at the expense of nearly everything else except top managers' pay. That cannot win hearts and minds.

If what I have said sounds too simplistic, we should remember the story of Naomen who went to Elijah to be cured of leprosy and was told to go and dip seven times in the Jordan. Naomen went away angry because he had expected to be asked to do something difficult. Short termism is a form of leprosy because in the end it is fatal while there are simple things we could do to banish it, as I indicated.

I referred to stakeholders. Stakeholders obviously include the community. Mark Weinberg and I were responsible for setting up the Per Cent Club whereby 300 companies gave a half per cent. or more of their UK pre-tax profits to the community in one form or another. My company gave 1 per cent., or approximately

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£1 million per year. We seconded 15 managers for three years or longer to various communities which proved a very worthwhile period of training for them and was certainly welcomed by the communities. This meant that our management became involved in helping communities to help themselves. Communities do not want money alone. They welcome leadership from people intimately connected with their area.

Everything that I have said, I believe, would help to create more wealth and lead to a greater sense of belonging and from there to social cohesion. I believe we might all do well to remember the story of Naomen.

3.37 p.m.

Lord Borrie: My Lords, last year there emerged two publications under the name of the noble Lord, Lord Dahrendorf. One is the Report on Wealth Creation and Social Cohesion in a Free Society which we are discussing today. Given the amount of time we have, it is just as well that we are not discussing his other major work, The History of the London School of Economics. But there is a link. The link, I believe, is the late Lord Beveridge. The noble Lord described the late Lord Beveridge in his history as the greatest director that the LSE had. Lord Beveridge was, of course, also a great proponent of social cohesion, social solidarity and social welfare. In the days of the Second World War a special edition of the great report on social welfare which was published in 1942 was sent out to armed forces throughout the world. That report caught the imagination of the people, whether serving in the forces or otherwise, because it promoted social solidarity and gave people the feeling that solidarity--which had enabled them to fight and in due course win the battle against Hitler--could also be engaged in to achieve a fairer and more just society after the war ended. The post-war Attlee Government did indeed carry out the Beveridge belief that this was a time for revolutions and not just for patching, and social cohesion and welfare were established. Until quite recently, we have come to take them for granted.

But what do we see today? I do not think that we see very much social cohesion when one-third of our children are in poverty; one in five young men of working age and men in their forties and fifties of working age are not working; when one in seven of 21 year-olds are barely literate; and 1 million of our pensioners are having to seek income support. Of course, there is another unknown figure; namely, the number of those pensioners who are too proud to stand the stigma of applying for income support.

The Dahrendorf Commission, the Commission on Social Justice, which I chaired and to which the noble Lord has kindly referred, and another report which has not so far been mentioned--the Rowntree Report on Income and Wealth--all documented in the course of last year the widening gap between the rich and the poor. Each of those reports makes the very vital connection for the debate today between social injustice for a significant minority and economic disadvantage for all of us and for the country as a whole.

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Your Lordships may recall that one of the members of the Rowntree inquiry was Mr. Howard Davies who was then director general of the CBI and is now deputy governor of the Bank of England. On the very day that the Rowntree Report was published, under his own personal byline he published an article in which he wrote that when growing numbers of people become detached from the economy--excluded, to use the noble Lord's word--that represents a significant waste of resources and increases other social costs in the health service and the criminal justice system as well as the social security budget.

The Beveridge plan of 50 years ago never intended that welfare should be a way of life. Today there is a great need to get people off welfare into paid work wherever possible. Hence the need--and it is impossible in the time available to elaborate any of these points--to ease the transition between benefits and paid work, to raise earnings disregards, to improve childcare provision and to promote active labour market policies, including the training that is so obviously necessary.

The creation of a two-nation Britain, a divided Britain, and the absence of social cohesion today can most obviously be seen in the areas of heavily concentrated long-term unemployment in so many of our major cities. They are simultaneously areas of low educational achievement, housing squalor, youth unemployment and limited choice of shopping and financial services. In the words of Professor Donnison of Glasgow University, they are "landscapes of despair" where, as some people say, even the rottweilers have to walk out in pairs.

Here the need is to address the problem of unemployment within a larger programme of community regeneration. We need to mend the social fabric that has so obviously been torn apart. As the noble Lord himself recognised in his speech today, it is not just a matter of economic proposals, important though they are. It is not just a matter of the issues to which the noble Lord, Lord Laing, has referred, important as they are. I refer to, and quote, the words of Dr. Tony Gibson who has worked in one of those areas of multiple deprivation; namely, Meadowell in Newcastle-upon-Tyne. He said that,

    "economic and social decline can be reversed but only by using the untapped and potential skills of local residents".
It does not just come about because of more general economic regeneration in the country as a whole. Restoring social cohesion needs both changes in national policies and a bottom-up approach to a new partnership whereby central and local government share power with people living in the areas and through a number of tangible, albeit small, projects that have an immediate effect on people's quality of life.

I am most grateful to the noble Lord, Lord Dahrendorf, for initiating a debate on a report which has done so much to focus thought on the essential values of social cohesion.

3.45 p.m.

The Lord Bishop of Chester: My Lords, I am grateful to the noble Lord, Lord Dahrendorf, for his

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speech today and for his report. Had I been in a place of less decorum, I would have liked to stand on my seat to cheer the speech of the noble Lord, Lord Laing, because it was sheer practicality in the marketplace of Christian principles; and I rejoice in that.

I follow the line which the noble Lord, Lord Borrie, has taken. First, I need to say that the Church does believe in wealth creation. Very often there are suggestions that it does not. Perhaps I may quote from a speech made by the Archbishop of Canterbury to the Manchester Business School a year or so ago in which he said:

    "Wealth creation is part of God's plan, inherent in the nature of his creation and as such a high calling".
He went on to say that,

    "if the wealth is not created it cannot be spent on overcoming the appalling problems of world poverty and environmental degradation".
Yet we would wish to say, as has already been said today, that there is an enormous moral responsibility, not least, as this report shows, in the social impact on people.

Rabid individualism and greed in wealth creation destroy the social balance of society. But responsible wealth creation has to be concerned, as we would all agree, with the whole of society. Again the Archbishop of Canterbury said:

    "We are all responsible for assessing continually from a moral viewpoint the overall results of seeking to create wealth within the current framework of laws and incentives".
Therefore, we welcome warmly the proposals in the report of the noble Lord, Lord Dahrendorf, that call, first, for a,

    "new language of public debate about economic policy ... which adds wider notions of wealth and of social well-being to traditional measures of growth".

Christians have a particular concern to stress the values of community and social cohesion. We believe that no one should be excluded from the communities to which they rightly belong, whether they are relatively small local communities or the community of the state. Made in the image of God, all people must be of equal worth before God. We stand firmly by that. We may not treat some as of more value than others. The evidence of social exclusion offered in the report of the commission led by the noble Lord, Lord Dahrendorf, and elsewhere must be cause for serious concern.

For many, insecurity of employment and income can be a very isolating, alienating experience. The report indicates that very clearly when it states that,

    "the decline of full-time 'tenured' work, the emphasis on flexibility and competition, and the emergence of an excluded 'class' is creating an insecure and fractured society with fewer and fewer shared values and common interests. Social cohesion is under stress".

I see that first-hand in my very large diocese which stretches across the north of England from Birkenhead through one-third of Merseyside across to Stalybridge in the Pennines. I find that there are enormous differences. There are areas where there is very low unemployment. Indeed, one prosperous town has only 5 per cent.

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unemployment, while in other areas there is well over 50 per cent. unemployment. We are involved in those different areas.

A little while ago I was instituting a new incumbent and it was in one of the depressed areas of Merseyside in my diocese in the Wirral. In my sermon I addressed the congregation and said: "One of your great concerns must be to reach out to the unemployed in this area". After the service was over I was surrounded by a large section of the congregation. They said: "We are the unemployed. There are only three people who worship in this church who are employed and one of them is the vicar". Seeing that on the ground in the eyes of people, I find it a worrying situation.

I was visiting another incumbent in the same area, Merseyside, who handles a large, soulless estate. He is a godly man, one of the finest priests I have in my diocese, of utter integrity and excellent in biblical exposition. He took my breath away when he said: "In this parish, as I visit and meet people and share with them, I see those who are putting in false returns for benefits. If I were in their position, I would do the same". That raises large questions. It takes one's breath away because there was a man empathising at the ground level where he lives with people in that situation.

It is the importance of community and social cohesion and concern about the divisive effects of unemployment that, noble Lords will be pleased to know, have led the Churches to set up their own inquiry into unemployment and the future of work under the auspices of the Council of Churches for Britain and Ireland and the leadership of the Bishop of Liverpool. In that way, the Churches will contribute further to the consideration of issues before us today. The working party will examine the topics of low pay, social security benefits, unpaid work, the community and the notion of the work ethic. The inquiry hopes to report late in 1997. We believe that the Churches' close contact with all sections of society--the Church is everywhere--gives them both a perspective and a duty to examine such large questions and to engage with the effects of social change and the moral issues arising from them.

In bringing attention to the subtle relationship between wealth creation and social cohesion, the noble Lord's report also brings attention to the need for men and women to be creative and productive in order for them to feel included and willing to participate fully in the life of society. Indeed, the very marks of humanity that we share in the image of God include creativity and the ability to stand outside ourselves to make moral and responsible decisions. As human beings in community, we must nurture interdependence and a sense of mutual obligation. In that way, we will also be nurturing the values of the Kingdom of God. I welcome the report.

3.52 p.m.

Lord Pilkington of Oxenford: My Lords, I feel honoured that I can make my maiden speech on the occasion of this imaginative and stimulating report. As we have all seen from reading it, it is a panoramic report which looks at a wide range of national life and suggests large solutions. I hope that noble Lords will excuse me

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if, in the spirit of Ash Wednesday which has been mentioned, I look at present realities rather than future dreams, at little acorns rather than the large oaks described in the report.

I am worried as to whether the present structures of education can support the imaginative vision that the noble Lord, Lord Dahrendorf, has put before us. That is the idea of individual learning accounts; an idea where every citizen has an educational bank account and cashes it in throughout his life, undergoing various training courses, adapting to a rapidly changing world. Such a vision demands that those courses are there, that there are institutions to support them and qualifications that are highly valued in the community at large. I wish to stress that the great weakness of our education system lies in its vocational provision. Unless that is improved, then the individual learning account holders will have nowhere to cash their vouchers.

Why is that so? I could suggest a multitude of reasons for our failure in vocational education. They go back a hundred years or more, but I shall only mention two. First, for too long we placed too high a value on apprenticeships. When many other countries in Europe had abandoned traditional apprenticeships, this country regarded them as the best way of training a workforce. One of the most horrific chapters in English educational history is seen in the minutes of the board of education of the first three decades of this century when vocational courses were deliberately downgraded in the interests of apprenticeships.

The second and possibly more important reason for the failure is that education in this country has become an ideological battlefield. Ideological battlefields are not good scenes to achieve progress in education. In the last century, French education was almost destroyed by the bitter battles between Church and state. We are doing the same in our own time.

We should be humble enough to look at the vocational provision of our continental neighbours. Though we may criticise Europe in many ways, I say dogmatically that in that area they have got it right. As many noble Lords know, the system there is simple. There is a two-route system post-16 years old. The age group choose whether to go to specific vocational colleges, part-time or full-time, or to gymnasium or lycee. On the vocational side, there are highly valued qualifications at the end: the professional baccalaureate in France and similar qualifications in Germany and the Netherlands. Have you ever seen a plumber in England put his qualification on the side of his van? Go to Copenhagen and you will see that that happens.

More important, there is parity of esteem and not jealousy between the gymnasium and the lycee and vocational colleges. I beg us to take a look at the system if we are to solve the problems which the noble Lord outlined in his report. I point out, first, that the continental system is valued equally by the Left and Right of the political spectrum. I say again that unless we can get a consensus over educational matters in this country we will be the poor man of Europe as regards education.

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Secondly, the system ensures that more of the age group post-16 are in full-time training. Thirdly, the system would meet many of the worries of the noble Lord, Lord Dahrendorf, regarding the underclass because we would offer institutions that could meet their needs. I say this as the one element of controversy in my maiden speech, and many noble Lords may disagree: I have grave doubts whether one institution can train people ranging from brain surgeons to plumbers. They are both equally valued but need different styles of training. I also doubt whether one examination can be satisfactory for brain surgeons and plumbers at the age of 18. That is not the case anywhere in Europe.

I admire much of the vision of the report, but I urge that we should be pragmatic. We should try to reduce the political controversy in education and produce a structure that will support all the people of our country.

3.58 p.m.

Lord Beaumont of Whitley: My Lords, on behalf of the whole of your Lordships' House, it is my great privilege and pleasure to be the first to congratulate the noble Lord, Lord Pilkington of Oxenford, on his informative and helpful maiden speech.

I am a very suitable person to offer congratulations since I was the first of the so-called inferior clergy to be made a Life Peer. In fact, I may have been the first of the inferior clergy to be made a Peer. The Clerks can possibly go back further than that, but certainly one would have to go back a very long way. Indeed, when it was suggested that I should be made a Life Peer, considerable doubt was expressed, since the inferior clergy could not become Members of the House of Commons, as to whether they could become Members of the House of Lords. Jeremy Thorpe very cogently pointed out that, since the Government had got into the habit of making Life Peers of retired archbishops, the whole idea that clergy can be Life Peers in the House of Lords was then accepted. So I pioneered the way for the noble Lord, Lord Pilkington, and I am delighted to be able to welcome him, particularly after that extremely helpful speech on the subject of education in this particular context. We look forward very much to hearing him on this and other subjects in the years to come.

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