This weekend, final decisions will be made on the Comprehensive Spending Review. The Review, which will be announced next week, will be a defining document for this parliament. And a defining moment for the Coalition Government.
The decisions we take to tackle the UK’s deficit will be a test of the Government’s character. And they will shape this country’s future.
As we take those decisions, we will be guided a single, but crucial, belief: that while we must take swift and decisive action to get the nation’s books in order, we can do so in a way that is fair. We must do so in a way that promotes opportunity, social mobility and fairness, across our society.
Tackling the deficit means wiping the slate clean for the next generation. It means ensuring that our children do not pay the price for this generation’s mistakes. And their future must be at the heart of every decision we take along the way. At every turn, we must seek to build them a fairer, more liberal, Britain.
I wouldn’t have entered into this Coalition Government unless I believed we could do that.
So this morning I want to talk about how. I want to describe the kind of fairness this Coalition Government aspires to - future fairness, improving the life chances of our children. Then I want to set out our plans for what we call a ‘fairness premium’.
Before I do that, let me say something about the deficit itself.
Some people would like to pretend we can ignore it - deficit deniers who refuse to admit the astronomical waste that would involve.
The amount the country is losing in interest payments alone is a national scandal. We are going to spend £43bn on debt interest just this year. That’s £830m per week. Just under £119m a day.
For that money, we could build a new primary school every hour. We could buy a new Chinook helicopter every day. We could take 11 million people out of paying income tax. We could triple the number of doctors in our hospitals. We could spend twice as much on education every year.
There is nothing fair about throwing that kind of money away.
We must act now. And just as important as when to cut, and how quickly to cut, is how we cut. Our approach to deficit reduction has been based on five clear principles:
First, we have left no stone unturned in our search for savings. We’ve rooted out government waste wherever it can be found, taken tough decisions on freezing public sector pay and quangos, and we are looking hard at the proposals from Lord Hutton on public sector pensions.
Second, we are protecting the services that matter most for the integrity of society, and for the promotion of fairness. The NHS is protected from cuts. And as I will show today, we will be making bigger investments in creating a fairer future for our children.
Third, we are ensuring that the burden is shared. As you will see from the details of our plans next week, we have worked hard to ensure that every group in society makes its contribution to meeting the collective challenge we face. As a nation, we have to walk the hard road together.
Fourth, even as we cut, we are going to be investing in future prosperity. We are seeking to protect critical areas of infrastructure and capital investment; and knowledge creation has been given a high priority. The spending review will be a pro-growth document.
Last, but certainly not least, we will also be investing in future fairness: that is the main theme of my comments today.
Fairness = social mobility and life chances
Fairness is one of three guiding values of the Coalition Government, so it is vitally important to be clear what we mean.
The idea of fairness is hardwired into human beings. As any parent knows, “It’s not fair”, is one of the principal rhetorical weapons used by children from almost the moment they can speak. Psychology experiments show that all of us are finely tuned to fairness and unfairness in people’s behaviour towards us, or in social structures.
Fairness is intrinsically connected with equality. But the question is: equality of what? There are, for me, three main ways of thinking about fairness and equality.
First, fairness in terms of equal treatment. In law, everyone is entitled be treated in the same way. Similarly, in a democracy each vote should carry equal weight.
Second, fairness as meaning equal shares. In this version of fairness the income cake should be sliced as equally as possible.
Third, fairness can mean equal chances. This vision of fairness is based on people having an equal crack of the whip; that every child should have the chance to get ahead.
Of course, these three are not mutually exclusive - indeed they will often overlap with and reinforce each other. Nobody can sensibly argue that equality of chances can be magically separated from actual, everyday inequalities in resources.
But I want to argue today that we need to put a much greater emphasis on the third conception of fairness - on fairness in terms of social mobility and life chances.
Will Hutton, head of the Government’s Fair Pay Commission, argues in his latest book that fairness is about what he calls “due desert”. By this he means that people should be rewarded for their efforts to make the best of themselves, and that they should be shielded from the effects of what he calls “brute bad luck”.
He is right. It is simply not acceptable that the circumstances of a child’s birth can become a life sentence of disadvantage.
From welfare to life chances
Everyone must have access to opportunities. Anyone who is willing to work hard should be able to do well.
That is why we are taking steps to ensure that work pays and welfare promotes work and opportunity. As John Stuart Mill said: “Assistance should be a tonic, not a sedative”.
There will need to be cuts in the welfare budget. These are perhaps the most visible spending cuts since, by definition, they are about cash, rather than services.
But there is nothing intrinsically good or intrinsically fair about high expenditure on welfare. As the Commission on Social Justice reported in 1994: “A high social security budget is a sign of economic underperformance, not social justice”. That is true. And between 1997 and 2010, real terms spending on welfare rose by 49 per cent.
This Government’s starting point is that a welfare settlement based on the distribution of opportunities for tomorrow, not just the distribution of income today, will be a more sustainable one.
Britain - not fair today
So, to summarise what we mean by fairness, fairness demands:
- that children and young people have a good start in life
- that the state plays a significant role in leveling the playing field for the next generation; and
- that patterns of inequality in one generation should not be automatically replicated in the next.
Against this benchmark - fairness as life chances - Britain does not fare well, as the recent report from the Equality and Human Rights Commission demonstrated.
By the time they hang up their coats for their first day at school, bright children from poor backgrounds have fallen behind children from affluent homes. Children from poor homes hear 616 words spoken an hour, on average, compared to 2,153 words an hour in richer homes. By the age of three, that amounts to a cumulative gap of 30 million words.
Parents have a huge role to play here - providing love, discipline and education. But the government has a vital contribution too, in offering additional help for those children who, because of the circumstances of their birth, risk falling behind in these critical foundation years.
By the time that young people are taking their crucial GCSE and A level exams, the gap has widened further. The odds of a pupil on Free School Meals achieving 5 good GCSEs, including English and maths, are less than one third of those of a pupil who is not on Free School Meals.
University education simply highlights the gap. Four out of ten young people born to rich parents in 1970 went to university, compared to just seven per cent of those from the poorest fifth of households. The more elite the university, the lower the chance of poor kids getting in.
With each stride, the children born into disadvantage fall further behind in the race.
Why social mobility is our main goal
That is why social mobility is the central social policy objective for the Coalition Government. I’ve spoken at length before about social mobility, so I won’t say too much more about it today. But I do want to reinforce the significance of the government’s commitment.
David Halpern, who has worked in Number 10 for many years as a policy expert in this area, has written: “One can begin to see why politicians are initially so drawn to the idea of increasing social mobility and then quietly move on. It’s very tough, and it takes a very long time.” He’s right on both counts. So let me be clear – we know how tough it is, but we are determined, we know it takes a long time, and we will stay the course.
A fairness premium
And we know that actions speak louder than words. We know that promoting social mobility costs money.
That is why, while next week’s CSR will cut spending, it will increase our investment in fairness, and in particular improving children’s life chances. It will be an investment package for future fairness.
I can announce today that in the Spending Review we will provide extra funds - a total of over £7 billion over the spending review period - for a “fairness premium”, stretching from the age of two to the age of twenty: from a child’s first shoes to a young adult’s first suit. This is more than £7 billion spent on giving the poorest children a better start in life.
It is hard to think of how money could be better spent. Not only because we are helping those children who have least control over their own fortunes. But because the benefits will be felt across our society as a whole.
Imagine a classroom where no child is left behind. Better discipline. Better results. The whole class moving forward together.
Imagine catching those children who are going off the rails when they are still young. Fewer troubled teenagers. Less crime. Less public money spent on damaged adults.
You cannot overestimate the transformational potential of this kind of investment. Focus on these children, and families across the country reap the rewards.
This Fairness Premium will come in three parts:
First, all disadvantaged two year-olds will have an entitlement to 15 hours a week of pre-school education, in addition to the 15 hours already available to them at three and four years of age. By offering more help at an earlier age to the most disadvantaged children, we will directly tackle the gaps in attainment that open up in the critical early years of life. This additional early years investment will amount to £300 million a year by 2014-15.
Second, a Pupil Premium to help poorer pupils wherever they live in the country. Schools will receive additional funds to offer targeted help to every pupil eligible for free school meals and reduce educational inequalities. By the end of the Spending Review period, this pupil premium will grow to an additional £2.5 billion of investment each year.
Third, we must make sure that bright but poor children grow up believing that a university education is not out of reach. So we are looking now at what can be done to remove the obstacles to aspiration that hold back bright boys and girls from deprived backgrounds. Alongside reforms to Higher Education, we are proposing to provide a form of “student premium” for the least advantaged students, representing a commitment of at least £150 million a year by the end of the spending review period. Our goal is clear: to tear down the barriers that prevent poorer young adults from entering university. We will be consulting with universities and students on the most effective way of achieving that goal.
So: a fairness premium from the age of two to twenty, with additional resources to help the most disadvantaged. Needless to say, in the context of a very demanding spending review, these are sizeable commitments. By definition, our decision as a government to put extra resources into the Fairness Premium has meant even tougher choices elsewhere.
It might have been easier, at least in the short term, to soften the blow elsewhere and abandon our hopes of a major investment in fairness and mobility. But that would have been to allow the deficit to define our social purpose – and that could not be allowed to happen. We have said that we will not balance the books on the backs of the poor, and as you will see, we meant it. But nor will we balance the books by scaling back our moral obligations to do more to help the next generation to determine their own lives, rather than have their lives determined for them by the circumstance of their birth.
The spending review is a difficult process. As a Government, and as individual ministers, we need to be able to look ourselves in the mirror and know we did the right thing, even when -especially when - it is a hard thing.
The right thing to do is improve the life chances of the poorest by investing in a Fairness Premium even as we cut spending in other areas. The right thing to do is to invest in the future, even if it makes it harder today. We are all of us in Government having to swallow hard in order to make the spending review work. We’re all having to accept difficult cuts in many areas of public spending that we would very much rather avoid. We’re all having to negotiate and compromise. We’re all having to change our positions on some issues when the arguments demand it.
But all of us in this government, including the Prime Minister and myself, are not willing to compromise on a better future for the poorest children. There’s been lots of talk of “red lines” in the CSR process. It should be obvious from what I’ve said today that the reddest line of all is the one around their future.
It will be a hard road, but I think we all know that if we are to restore our economy to health, the hard road is the one that must be taken. That is how, together, we build not only a more prosperous nation - but a fairer nation, too.