Call for cap on highest salaries to beat poverty

Divided society: Commission finds 14 million Britons earn half the national average wage and demands limit on top earnings

"There aren't such things as sacrifices when you are a single parent. You have no choice," said Annie Oliver, who brings up her five-year-old son, Alex, by herself. "There are no conscious decisions 'I'll do that or I won't', will it be lean mince or fatty mince, M&S or Tesco's? You just have to survive."

Ms Oliver is one of 14 million people in Britain whom the Channel 4 Poverty Commission say are living in poverty. Until recently, she and Alex lived on benefits of pounds 80.10 a week. In a good week, when there were no bills, she could afford to spend up to pounds 30 a week on food; in a bad week, it might be pounds 8.

Ms Oliver looked for a job and when unemployed did voluntary work. The Channel 4 Poverty Commission believes that more people like her could get into work if a "maximum wage" was imposed to cap levels of high-earning employees.

While much has been made of the idea of a statutory minimum wage - currently suggested at pounds 4.26 an hour - the group say that by also imposing a maximum wage, more people could be employed on better wages. Tackling poverty would also make the well-off up to pounds 55 a week better off, it claimed, through reducing the benefits bill and the costs of crime.

The commission, which travelled around the country for four months interviewing more than 100 people, found that 14 million people in Britain now have incomes of less than half the national average and the number increased very rapidly during the 1980s and 1990s.

Low wages were said to be the single most important cause of poverty in the UK, with one- third of those suffering from poverty in households where one person is working. More than 60 per cent of full-time workers earn less than male average earnings of pounds 375 a week.

The commission called for the highest-paid employee in a company to be paid no more than 10-25 times the wage of the lowest-paid. This has worked admirably in companies such as John Lewis, it said.

"We found companies where the highest-paid was getting 150 times the lowest wage," said Professor Peter Townsend, chairman of the commission. "If the pattern [of wages] becomes excessively unequal, it can lead to a reduction in the number employed at the lower levels of pay, and the amount they are paid to fund those at the higher levels."

The group also commissioned research measuring the costs of poverty to the richest 75 per cent of the population - those on more than half the national average income. "This was not to show that the poor are a burden on society, but to highlight the financial self-interest the well-off have in reducing poverty," said the report.

The research found that the cost of unemployment was as high as pounds 19.45bn [benefit paid plus the amount the government loses in taxes because someone is not in work]; means- tested income support cost pounds 13.02bn and crime, pounds 15.06bn [studies show that between 40 and 70 per cent of reported crime is committed by young, unemployed men].

The commission suggested an increase in funding for schemes to help recently released prisoners back into work and housing to try to combat reoffend- ing, more opportunities for further education and more money should be made available for good, affordable public housing. National Lottery money could be used for such projects.

The Great, The Good and the Dispossessed, tonight on Channel 4 at 7.05pm.