Joan Smith: There is only one route out of poverty

It's always gratifying when the Tories show their true colours. Yesterday, as new figures demonstrated the widening gap between rich and poor, the Conservatives denounced a deal giving modest rights to 1.3 million of the most vulnerable workers in Britain. "Business will be dismayed that when they most need a Government on their side, they have a Government getting on their backs," thundered the Tory employment spokesman Jonathan Djanogly, son of a wealthy industrialist.

Bosses' organisations joined in, complaining angrily about the "interfering nanny state" and raising the spectre of Labour's employment policy being dictated by the unions, even though the new rights for temporary workers are the result of a deal between the European Union and the British Government.

Welcome to the Tory future, only two years from now, when ministers from privileged backgrounds will join forces with their mates in business to protect the low-wage economy which condemns millions of people to a lifetime of poverty.

It's not as though temporary staff are about to get occupational pensions, sick pay, company cars, private medical insurance or the right to claim unfair dismissal; after 12 weeks, they will be entitled to the same pay, overtime, holidays and rest periods as permanent workers, however, and that's what's driving the Tories mad. They couldn't resist taking a swipe at the Prime Minister, claiming that the deal agreed by John Hutton, Secretary for Business, Enterprise and Regulatory Reform, is "another blow to Gordon Brown's authority".

A more serious charge against him is that Labour has yet to meet its 2005 benchmark of reducing child poverty by a quarter, while the number of poor pensioners increased by 300,000 in 2006-07. Many Labour voters believed that Brown was more redistributive and committed to social justice than his predecessor, so the latest figures are bound to increase the sense that this is a faltering premiership.

But what they also suggest is that Brown's failure to meet targets on eradicating poverty, and that of Tony Blair before him, isn't just a consequence of New Labour's reluctance to raise taxes. What the Government has done over the past 11 years is use tax credits, which are a form of negative income tax, to compensate for the meanness of employers in the private sector; at the same time, it's poured such vast sums into public services that the employees with the highest earnings last year were health professionals, with a median pay of just over £1,000 per week.

Full-time earnings in the public sector are higher than in the private sector, where a combination of low pay, part-time working and the gender pay gap are the cause of poverty well into old age. These people, the working poor who have gruelling jobs in the cleaning industry and privately-owned care homes, are as angry as any middle-class reader when they hear about people claiming state benefits they aren't entitled to; they fear and resent the arrival of foreign workers, even those who are worse off than themselves, because they can't afford the basics of life, let alone luxuries like holidays.

The boarded-up houses and crumbling amenities on the poorest council estates are a dramatic contrast to the busy shopping centres and airports most of us experience; it's easy to forget that a culture of conspicuous consumption, symbolised by Premiership footballers like Wayne Rooney, doesn't mean that everyone's affluent or even comfortable.

The Government's own figures show that the incomes of the poorest 20 per cent of households fell by 1.6 per cent between 2005-06 and 2006-07, before the current economic downturn, while those of the richest households rose by 0.8 per cent. The 2007 Annual Survey of Hours and Earnings showed that the bottom 10 per cent earned less than £252 per week, while the top 10 per cent earned more than £906 per week. According to the Institute for Fiscal Studies, inequality in Britain is at its highest level since records began in 1961, which may be one of the reasons why the abolition of the 10p tax rate caused such an explosion of pent-up anger earlier this year.

Yesterday, the shadow Work and Pensions Secretary, Chris Grayling, seized the opportunity to attack the Government, warning that children being brought up in "some of our most deprived areas" would pay the price of the Prime Minister's failures to meet his own targets.

This is rich, coming from a party which reacts hysterically to any attempt to improve pay and working conditions for some of the poorest members of society; don't forget that the Tories, egged on by the CBI, vigorously opposed the introduction of a national minimum wage.

However touch-feely David Cameron appears to be, it's impossible to see how poverty could do anything other than increase under a Conservative government; if Labour ministers can't bring themselves to confront the devastating economic and social consequences of low pay, the Tories are even less likely to do it. There's no doubt that the situation would be even worse without the measures Blair and Brown have taken to tackle poverty, or that inequality is likely to accelerate under a Cameron administration.

Low pay is a blight and a scandal in this country: last year, almost 300,000 jobs paid less than the minimum wage for young people and adults, amounting to 1.2 per cent of all jobs in the labour market. That's 231,000 adults earning less than £5.35 per hour, and no amount of lecturing them about the need to save for retirement is going to stop them joining the thousands of pensioners living below the poverty line. People in part-time work are almost three times more likely than full-time employees to be paid less than the minimum wage, and women are disproportionately represented.

"Poverty in the UK has a female face," according to the Fawcett Society; women working full-time earn on average 17 per cent less an hour than men, while the gap for part-time workers is 36 per cent. More than a fifth of women have a persistent low income, compared to 14 per cent of men, denying them the opportunity to build up assets they can use in times of hardship. Female poverty is a major cause of child poverty, for obvious reasons, and any strategy to eradicate it needs to start from that fact.

There are obvious measures Brown's government could take to tackle the pay gap, the most significant being to impose a requirement of absolute transparency about pay rates on employers. But the persistence of poverty in Britain, despite the Prime Minister's undeniable good intentions, should give him pause.

Tax credits are better than nothing, but the route out of poverty for most people is a fair wage for a day's work. Millions of people don't have that, and they're even less likely to get it if the Tories win the next election.

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