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Willetts: Compassionate Conservatism and the War On Poverty

Speech to Centre for Social Justice at the Harrow Club, London

A speech to the Centre for Social Justice? On poverty and compassion?

These are still ideas which people do not easily associate with the Conservative Party. We have got into the mindset that these are Labour issues. When Nick Davies wrote Dark Heart, investigating some of the grimmest aspects of life in Britain today, the publisher put on the cover that "a copy should be sent to every Labour MP".

There are Conservatives who have been persuaded by Hayek, no less, that social justice is a "mirage". And they point out that compassion, like generosity, is a quality of individuals, not the state - you are supposed to be generous with your money, not other people's.

The appalling events of the past fortnight in the Indian Ocean show the obligations we all have to people in adversity. There has been an incredible outpouring of personal generosity, but we expect our Governments to act as well. That tragedy has reminded us that we are one world so how much more true it is that we are "One Nation". We are a national community, with obligations to our fellow citizens that we discharge through personal charity but also via the state. A country is not just a marketplace with a flag on top. Burke was right when he said that a country is "not a thing of mere physical locality".

Compassionate Conservatism

It is easy to have a neat dualism between head and heart, efficiency and compassion, or Conservative and Labour. That was how politics appeared in the 1980s: efficient but heartless versus useless but well-intentioned. It is not like that any more. The essential part of Blair's Third Way was to claim that Labour didn't just stand for fairness but also for economic efficiency. Similarly, it is essential for the renewal of Conservatism that we are not just the Party that celebrates enterprise and economic success but also understand that we have obligations to the most vulnerable members of society.

This is something which Iain Duncan-Smith recognises. It is what the Centre for Social Justice is all about. It is what compassionate Conservatism stands for. It is true to our Party's own traditions of One Nation Conservatism it is crucial to the intellectual and political renewal of Conservatism in the 21st century. That is why I am proud to be giving this speech today.

There have always been two strands of Conservatism. One is the celebration of personal freedom and the market economy. It is mobile, flexible and dynamic. It leads us to an understanding of the excitement and diversity of modern Britain especially of our great cities, above all London. London is probably the greatest city in the world at the moment not least because it is full of young people who flock here from across the globe, to study English, to work, and sometimes to settle.

We understand the importance of personal fulfilment, not least through the principles of classic liberalism of which our party is the true inheritor. We protect people's personal freedoms and private spaces. Perhaps this strand of our philosophy was best captured - in a slightly rueful way - by the poet Robert Frost who wrote "good fences make good neighbours".

But it was Quintin Hogg who observed that "economic liberalism is very nearly true." For a Conservative just to celebrate the freedom of the individual would be missing something equally important. There is not just "me"; there is also "we". There is always going to be a need for purposeful free market reforms, scraping off the barnacles that gradually encrust the ship of state. That's why tax reform and deregulation are important.

But if I were to identify the single biggest challenge facing our Party I would say it is to develop that other strand of conservatism - recognising our interconnectedness with other people. This is the language of the public good and of public service. It is what I called, ten years ago now, Civic Conservatism. It understands obligations to others, especially people less fortunate than ourselves. It recognises that government is not just some utilitarian management exercise but has to reflect and strengthen the best in our society.

This other strand of Conservatism can be traced back deep into our traditions. Adam Smith didn't just write about the Wealth of Nations; his Theory of Moral Sentiments came first. At the heart of it was the idea of "sympathy" for others. Gertrude Himmelfarb has recently brilliantly restored the idea of compassion to the centre of our idea of understanding of the Scottish enlightenment whilst at the same time rescuing it from its association with mere sentimentality.

Disraeli famously committed the Party to the elevation of the condition of people, and rescued us from years in the political wilderness as a result. Joseph and Neville Chamberlain brought a vigorous commitment to social reform to the Party in the inter-war years. More recently, Margaret Thatcher's address to the General Assembly of the Church of Scotland was an attempt to show that she understood that there was more to life than the individual and the market.

The traditional way for Conservatives to reconcile a belief in the free market with an appreciation of our obligations to others has been to say that if we run the economy well, we will have more money to spend on social services. But we appeared to be saying this through gritted teeth, like a divorced husband telling his ex wife how much alimony he was paying her. If you try to demonstrate your concern for the poor by talking about the beneficial effects of giving more freedom to the rich, you will never sound wholly convincing.

I believe there is a better and simpler way of reconciling these two strands in Conservatism. You can't have the sort of society which Conservatives have always believed in if whole sections of the population are left behind. If you want a market economy, everyone must have some money to bring to the market. If you want to give people the right to choose, you can't allow all but the cheapest items on the shelves to remain beyond their means.

That is why I think that the most interesting and important chapter in modern Conservatism began three years ago when the Party began a programme specifically aimed at the renewal of its One Nation traditions. That was when Iain Duncan-Smith visited Easterhouse and declared "the renewal of society" was his central mission. It was when Oliver Letwin spoke of a 'neighbourly society' and looked beyond the causes of crime.

I gave a speech entitled 'The Reality of Poverty,' and as part of our One Nation hearings stayed on council estates, spent the night at a hostel for people recovering from drug abuse, and saw at first hand 24-hour London running through the night. And indeed, when Michael Howard became leader he said "the Conservative Party that aspires to lead a great nation cannot ignore the pockets of desperate poverty that disfigure modern Britain."

Three Principles for Tackling Poverty

There are many tests as to whether our compassionate Conservatism is serious or not and how it stands up as a credible challenge to Labour. But none is perhaps more significant and important than each Party's approach to tackling poverty and deprivation. A clear, authentic Conservative approach to poverty shows that our compassionate Conservatism is serious. And, most important, it would offer hope to millions of vulnerable people.

Our approach rests on three principles. First, we recognise the obvious point that one of the most important aspects of poverty is that people don't have enough money. We have to offer financial security. But money isn't the whole story. Values matter too.

As Irving Kristol puts it, "It's hard to rise above poverty if society keeps deriding the human qualities that allow you to escape from it." That is why, secondly, we need to strengthen society by reinforcing decent values. Thirdly, there is our progressive agenda for spreading ownership and choice more widely than ever before in our history.

Financial Security

Let me begin with financial security. We sometimes appeared to argue that the only thing that matters is absolute income. But it is no good telling someone today that they are better off than they would have been 50 years ago. Time travel is no answer to poverty today. Adam Smith put such arguments in their place when he observed in The Wealth of Nations:

"By necessaries I understand not only the commodities which are indispensably necessary for the support of life but whatever the custom of the country renders it indecent for creditable people, even of the lowest order to be without. A linen shirt, for example, is, strictly speaking, not a necessary of life. The Greeks and Romans lived, I suppose, very comfortably though they had no linen. But in present times, through the greater part of Europe, a creditable day-labourer would be ashamed to appear in public without a linen shirt, the want of which would be supposed to denote that disgraceful degree of poverty which, it is presumed, nobody can well fall into without extreme bad conduct. Custom, in the same manner, has rendered leather shoes a necessary of life in England. The poorest creditable person of either sex would be ashamed to appear in public without them".

If every other child in the school playground is talking about a programme they saw on TV last night and your family cannot afford a TV then you are poor. The fact that nobody had a TV a hundred years ago is irrelevant, it is where you are in today's society and whether you can participate in it that counts. The conventional way to measure this is to count the number of people with an income below 60% of median income.

It is not the only measure, it is not by any means a perfect measure, but it has been measured consistently now for 20 years and is a very useful benchmark. I can confirm today that a future Conservative Government will continue to produce data measuring poverty as 60% of median income and will accept that this is a powerful measure of our performance in tackling poverty. Putting such a measure centre stage will show the world we are serious about tackling poverty.

Of course Tony Blair and Gordon Brown have announced that their aim is to abolish child poverty. But they are already redefining the target by excluding housing costs, appear to help almost a million children out of poverty at the stroke of a statistician's pen. We should be targeting poverty not, as they are doing, targeting the target.

At a constituency surgery on a Friday in December Kelly, a lone parent, came to see me with her child. She had £5 to get through the weekend. All they were going to eat was bread and milk. And how had we got such dire need in Blair's Britain? She had been on Child Tax Credit, but there was a problem with renewing her claim for 2004-5 so the Revenue had stopped all payment in November. She was living on Income Support of £45 per week and £16 per week Child Benefit. After nearly a month like this we managed to get her Child Tax Credit reinstated in time for Christmas.

I don't believe either ministers or the media recognise how much distress is being caused by the shambles of Gordon Brown's Tax Credits. The system has been through so many changes that it can't take much more. But I can put forward today a practical proposal to tackle the immediate problem.

The most urgent problem bringing much financial distress to families today is the process whereby the Inland Revenue is reclaiming supposed over-payments of Child Tax Credits. Even the Inland Revenue, who have been scandalously reluctant to come clean about the scale of the problem, admit that 455,000 families were over paid in 2003/4 to the tune of £93 million just because of IT problems when the tax credits were introduced. They have agreed to write some of them off.

But the problem goes much wider. The Revenue have not been willing to provide any information about the scale of the problem but it could involve more than a hundred million pounds. There is often no way people can establish whether or not these over-payments are correct, nor whether the mistakes are the fault of the family or the Inland Revenue.

But there are hundreds of thousands of families who are now in great financial distress as the Revenue reduce or cut all payments of tax credits as they attempt to recoup a supposed overpayment. Imagine you were entitled to £100 a week Child Tax Credit. Last year the Revenue paid you £150 a week.

You questioned the amount but were assured it was correct. Suddenly the Revenue recognise they made a mistake. Their solution is to cut your income to £75 a week until they have balanced the account. That means the poor family in my example is, without warning, faced with a fall in their income of £75 a week, often through no fault of their own.

I can announce today that it is Conservative policy to offer an amnesty to families in respect of their Child Tax Credit in 2003/4 unless the overpayment was caused by fraud on the part of the claimant. That is what a Conservative Government will do. This will lift an enormous anxiety that is hanging over hundreds of thousands of families. It follows the recommendations of the Work and Pensions Select Committee that 'overpayments should not be recovered where to do so would cause hardship or damage work incentives.

The Tax Credit system just about collapsed under the strain of its introduction. The aim now should be to get accurate entitlements this next financial year rather than absorb all the Inland Revenue's energies in trying to correct payments made in the first two years, and in doing so they are causing distress to hundreds of thousands of families.

If any family believe they have been underpaid they should still have a right to approach the Revenue but the Revenue's attempts to reclaim supposed over-payments of Tax Credits in respect of last year should cease unless there is compelling evidence of fraud.

It is hard to climb out of the poverty trap if you are weighed down by debt. But that is the position in which many poor families find themselves. And, although ministers don't appear to understand this, it is one of the reasons why poor people are reluctant to open their proposed new basic bank accounts. They fear they will lose the ability to manage their own finances as debt collection agencies and others can get at their money.

Last month, thousands of poor parents will have borrowed money to purchase their children's Christmas presents. The interest charges mean they will end up paying more than their relatively affluent neighbours paid for the same goods - doubly so because the very fact of being poor affects the terms on which credit is available. The result is that people whose incomes are anyway low can see a large proportion of those incomes swallowed up by the costs of servicing their debts - increasing the risk that they will have to rely on credit to make essential purchases in the future.

We need to help people break this vicious circle. That is why Lord Griffiths is chairing a wide-ranging inquiry into the indebtedness of many British families: it will report in the next few months.

But helping people break free from debt should be just the start. The next step is to help them get into the savings habit so they can start to stand on their own two feet. Conservatives have always understood that the value of money in the bank is found not just in the purchasing power it provides but also in the sense of security it confers.

But Government efforts to support saving must go with the grain of how poorer people live their lives. When someone has been living hand-to-mouth, it's not realistic to ask them to tie their money up for several decades by saving in a pension. But the rewards for saving which the British policy framework provides focus on pensions.

I have proposed a new Lifetime Savings Account, with the money people save themselves attracting matching contributions from the Government and with the possibility of accessing the money you have saved. This is the sort of initiative which could help people with modest incomes get into the savings habit, it encourages saving that goes with the grain of people's lives.

Another major area of financial security concerns pensioners. When the Centre for Social Justice carried out a survey to find who were regarded as society's most vulnerable people, pensioners were at the top of the list.

I am proud that the Conservative commitment to relink the basic state pension to earnings - made over a year ago - has helped to fashion a new pensions consensus. Employers, financial institutions, unions and pensioner charities have all endorsed a policy that will help to restore the savings culture at the same time that it will help the many very poor pensioners who don't claim Gordon Brown's complicated means-tested benefits. Conservatives are committed to the restoration of the earnings link until the means-test is completely abolished.

Right Values

But it isn't just a matter of money. It is also a matter of supporting the good values by which most people live. As Michael Howard set out so powerfully on Tuesday, people who do the decent thing feel that what they do is not respected or valued. People who are trying to bring up children well on deprived estates are driven to distraction by gangs of youths that are out of control.

The police seem powerless to do anything about it. But if your nerve snaps and you threaten to fight back yourself the police will come down on you like a ton of bricks. Then the most disruptive kids have to be brought back into the classroom alongside your own child to deliver Ministers' targets for inclusion. If you are affluent enough to buy your way out you escape. But it is the people who can't afford private education we are really letting down.

Then we have to break through what is still one of the great taboos in understanding poverty and deprivation. Families matter. It is much harder bringing up a child on your own. Of course I understand all the reasons why relationships break up and that is why I stood before a Conservative Party Conference and announced that the Tory war on lone parents was over.

But Britain's high rates of family breakdown are one of the key reasons for our high rates of child poverty. If you are bringing up a child on your own you, the child is twice as likely to be in poverty as children being raised by a couple. You can't tackle poverty without strengthening families.

Family breakdown is not inevitable. Of course sometimes things are so bad that people just have to escape a bad marriage or a failed relationship. But one of our problems in Britain appears to be that when relationships get into difficulties they are more likely to break up than in some other countries. Evidence is beginning to come in about what can be done to help assist people hold their relationships together.

There is a lot of practical wisdom, perhaps in the past it used to be passed on from parents and grandparents and the local community. There is obviously the valuable work of One-to-One, formerly Relate. But I am also very encouraged by Community Family Trusts which offer some help to people when they first get married about how they can keep their relationship going through the bad times rather than breaking up.

Nowadays we endlessly hear from the Government and the pundits about the importance of good parenting. There is an embarrassed silence about what is perhaps the most important relationship of all for the child, between that child's two parents. I hope it will be possible for a future Conservative Government to offer more support for Community Family Trusts.

One of the criticisms I hear of compassionate Conservatism is that governments can't be compassionate. Governments can be efficient but compassion is a moral quality displayed by individuals. We expect governments and bureaucrats to be rule-bound, standard and uniform. But compassion is a quality of individuals.

This is where the voluntary sector comes in. It is often the best way of helping people with complicated personal problems. No state system is going to be capable of helping them with the personal commitment and emotional involvement of the committed poverty fighters who work in the voluntary sector. The voluntary sector can help people and touch people in ways which no public agency can.

Often they are most effective because they have a distinctive ethos. I don't expect the public sector to share that ethos but we have reached the stage where the public sector actively tries to destroy charities that are not pale imitations of public bureaucracies.

Let me give you two examples of the plight of successful voluntary sector projects helping some of our most deprived and vulnerable people. Between them these examples show how, despite all the Blairite rhetoric of social capital and supporting the voluntary sector, they are destroying the very distinctiveness of the voluntary sector.

Betel is a voluntary faith-based drug rehabilitation project that works with some of Britain's most disadvantaged people. I visited a hostel of theirs in Bromsgrove and saw at first hand how they could turn round the lives of vulnerable people. Emmaus communities around Britain offer homeless men and women a home, work and the chance to rebuild their self-respect in a supportive community environment.

Wanting to break the dependency culture that permeates the lives of their clients, neither of these projects want their clients to claim the Income Support to which they would be entitled. Instead they have developed work programmes that engender self-respect, skill training and stability in the recovering addicts.

But these progressive, work-based ways of 'supporting people' are not recognised by the Government. Although their aim is to provide better help for people - at a lower cost to the taxpayer - the state ends up denying them the one benefit they do need - housing benefit. The authorities are suspicious - they can't understand why Income Support is not being claimed as well.

Both Betel and a number of Emmaus communities are under threat as a result. Innovative projects lose their funding but the real losers are the taxpayer and vulnerable people.

It is not as though we in Britain are particularly successful at caring for our most disadvantaged or that we have a particularly good track record for caring for those who suffer from addictions. To fail to support charities who are breaking new ground is a disaster.

If there is one thing above all that charities complain about it is the bidding culture which is now growing out of control. We will offer sustained reliable core funding for projects that work.

I know it is an incredibly boring political slogan but it gets to the heart of the problems they now face as they deal with Government. No longer will charities have to dress successful projects up as new ones in order to bid for money after every two or three years, endlessly filling in forms rather than helping the people they want to help.

Some of our most imaginative policy proposals are contained in last year's report - Sixty Million Citizens. Matched funding and community-managed endowments ensure that taxpayers' money goes to address the real concerns of real communities - not the fashionable priorities of politicians.

An 'Unfair Competition Test' would be introduced to prevent fledgling voluntary sector projects from being muscled off the stage by the government starting its own rival project. Bureaucracy Busters would be appointed to help start-up charities to navigate the corridors of town halls and Whitehall. I bet the Tabernacle School I visited this morning wish they had the services of a Bureaucracy Buster in their fight to get new premises. Jacqui Lait MP, Shadow Minister for Civil Society, is currently finalising how the Green Paper's ideas will be included in our manifesto.

Our Progressive agenda for spreading ownership and choice

My third theme is the Conservatives' progressive agenda for spreading ownership and choice. Labour is today the defender of the status quo. Tony Blair would like you to believe otherwise but for all the appearance of activity there is no forward movement - just a dizzying enactment of laws and initiatives that increase the size and complexity of government programmes.

There are a lot of promises but little delivery. Labour defends the right of bureaucrats to decide where your children should go to school. They defend confusing and often humiliating means-tested benefits. They defend government-knows-best approaches to voluntary sector funding. Their red tape stops empty houses from being made into warm homes for needy families. We will make progressive use of government for the benefit of every citizen.

I have described a different Conservative relationship with the voluntary sector but there is also the independent commercial sector as well. Historically the role of the private sector in areas such as education has been to provide expensive, tailor-made services for the affluent. But we should have the imagination to envisage a different sort of independent sector, one which delivers healthcare and education in the poorest parts of the country and at prices no higher than those of the public sector itself. This is what is achieved in many other countries, both on the Continent of Europe and in America.

I still don't believe people have recognised the creative possibilities of our opening up education and healthcare to delivery by independent organisations outside the public sector. The improved results that can stem from such a change can be seen here at the Tabernacle school. The improved results that stem from such a change can be seen at the Tabernacle School that I visited earlier this morning. Tabernacle School is a small independent school that was established by a black majority church six years ago. It offers an individualised, value-based curriculum to sixty black children aged 3-18. Many of these young people have struggled to fulfil their potential in the state system.

School fees for Tabernacle are very low - a maximum of £3,300 p.a. compared to an average cost of secondary schooling in the state sector of £4,855. However, half of the parents of Tabernacle's pupils receive partial or full bursaries to cover all or part of these costs. From my visit I can tell that the school is providing high-quality education at minimal cost. Pupils who came from mainstream schools who were at risk of social exclusion are now aiming for university.

Tabernacle is succeeding against all the odds. Through the 2002 Education Act, the Government has introduced many onerous regulations for independent schools that will make it extremely difficult and expensive to establish new small schools like Tabernacle. This government is denying most parents the choice of where their children should be educated.

Today it is usually only parents with money and power who have real school choice. Throughout London and our other major cities, many faith communities and ethnic groups are running supplementary schools and other initiatives to raise children's attainment. Some even receive Government funding. But the Government is determined that these groups should not have the opportunity to establish themselves as fully-fledged schools. However many, such as Newham's Eastside Young Leaders' Academy that is represented here today, would love to have that option.

The Conservative Party will give them that opportunity. Our Right to Choose proposals will give a huge boost to schools like Tabernacle. Charities, faith communities and private enterprises will be liberated to set up new state-funded independent schools where Government funding follows the pupil.

Of course, what really matters in public services is not who provides them but the quality of service that is provided. Sometimes the state provides a perfectly good service, but when it fails to do so the consequences are disastrous. For too long, parents whose local school isn't up to scratch have faced three choices: go private, move house, or put up with it.

This is one of the causes of entrenched poverty - that if you're born on the wrong side of town, you're more likely to leave school without the basic skills that you need to get on in life. That's why the classroom must be a key battleground in the war against poverty. It's why we would give parents the right to choose schools where discipline is maintained and effective teaching methods are used. And it's why we would open up the supply of education so that parents can set up new schools if they're not happy with what is on offer.

Housing fits in here too. The Conservative Party has a historic strength as the Party of home ownership and John Hayes is doing marvellous work showing how our principles of home ownership can be applied now to 21st century Britain. Family breakdown and failures of access to housing go together as problems at the heart of our most deprived communities. After all, 53% of people who become homeless do so because of relationship breakdown. The expansion of social housing is trapping many people in a form of housing from which they cannot then escape. We have a four point plan to enable people to move from social housing to home ownership.

First, Conservatives will extend the Right to Buy to over a million housing association tenants who do not have that right at the moment;

Second, we will allow social housing tenants to buy the home of their choice, not just the house in which they currently live. This will be achieved buy giving tenants transferable discounts that can be used towards the cost of any suitable property on the market;

Third, we will enable tenants to steadily build up a stake in their home through a Right to Shared Ownership;

Fourth, we will extend shared equity schemes, dedications at least 50% of the budget for new housing support to shared equity schemes that help people into home ownership by enabling them to initially buy a part share in the equity of the property

It will transform ownership and opportunity for some of the most deprived people in society.

Conclusion

These policies add up to a distinctive Conservative agenda for tackling poverty. They show that compassionate Conservatism is a real and living thing, it is what the Centre for Social Justice is all about.

George Bush warned of the "soft bigotry of low expectations". That is what you are fighting against in this inspiring independent school in a deprived community. But this pernicious bigotry extends beyond education. It's the belief that somehow societies and values must always decay and that we can never restore decent values after they've come under sustained attack. I don't agree with that. I believe we can renew our society. But people can't do it on their own. They need a government that is on their side. That's why they need a Conservative government.

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