asked Her Majesty's Government:

What is the proportion of wealth currently held by the richest 10 per cent of the population.

My Lords, in 2003—the latest year for which figures are available—it was estimated that the richest 10 per cent of the population owned 53 per cent of the wealth in the United Kingdom.

My Lords, I thank my noble friend for that reply. For a number of years now, many of those with the highest level of income derived from their wealth have, by various means, avoided paying the rates of tax paid by those with much lower incomes. This should not continue indefinitely. But more immediately, why have the Government not made a fairer relationship between normal taxpayers and those with large incomes by introducing tax on a new level of income greater than 40 per cent?

My Lords, if the noble Baroness, Lady Noakes, will allow me to answer a question relating to tax, the GD co-efficient of wealth distribution shows that a significant widening of inequalities of wealth during the 1980s and early 1990s has reversed somewhat in the current decade. In part, that is a consequence of tax policies, the national minimum wage and benefits. The proportion of tax paid by the wealthy continues to increase. The top 10 per cent of income tax payers pay more than 50 per cent of all income tax proceeds.

My Lords, does the Minister accept that if you are talking about wealth as opposed to income, the relevant taxes are those on capital? Does he see the merit in having a capital gains tax rate that applied at the same level as income so that the wealthy did not have an incentive to go down a capital gains tax route, which means that they are paying tax at a lower rate than ordinary rate taxpayers?

My Lords, earlier this year steps were taken to increase the rate of capital gains tax to match it with income tax in respect of the general partners in private equity firms. The Chancellor of the Exchequer gives very careful consideration to tax rates. If he wished to change those rates, he would no doubt do so as part of his Budget Statement.

My Lords, what effect does the Minister consider the recent turmoil in the financial markets will have had on the figures he gave in his initial response to the noble Lord, Lord Sheldon?

My Lords, that is a difficult question to answer with any precision, but it is likely that the decline in the value of marketable securities, land and property will have had a disproportionate effect on wealthier people.

My Lords, would the Minister care to cast any light on the proportion of national wealth enjoyed by the richest 10 per cent in socialist countries? For instance, in the former Soviet Union, was it not rather nearer 90 than 53 per cent?

My Lords, I am not in a position to give the noble Lord a precise answer to that question. However, according to the OECD, we have seen the most significant move towards wealth and income equality recorded this decade within the OECD countries.

My Lords, perhaps the Minister could make clearer for simple people like myself what he meant by "disproportionate". Did he mean that the wealthy had suffered more or less than other people under the present financial circumstances?

My Lords, I apologise to the noble Baroness if I was not clear. I mean that they will have suffered more in proportion to their wealth.

My Lords, does not the fact that a severe stock market crash has reduced wealth inequality show that we have a somewhat false way of calculating true wealth? Perhaps we ought to revise our consideration and include houses not at current prices but at the long-run supply price: that would give us a more realistic account of what wealth is. We cannot have wealth being high one day and low the next: that cannot be true economics.

My Lords, there are limitations to the methods used by the ONS and HMRC for calculating wealth and wealth distribution. They use the Gini coefficient, which is derived from the Lorenz curve. They use probate material that they supplement by modelling adjustments. At the heart of the question of the noble Lord, Lord Desai, is a very acute and correct observation. More importantly, a new wealth and assets survey has been introduced, covering a cohort base of more than 32,000 people, which will measure the progress of their wealth, including assets such as pensions claims. As times goes by, we will get much more reliable data from this new series, on which we will make our first report next year.

My Lords, around 13 million people in this country are estimated to be living in poverty. If the Government are going to use any proportion of tax revenue, however raised, to spend their way out of recession, what financial help will be given to those who support those at the poverty end of the wealth-inequality spectrum, such as credit unions and workers' co-operatives? What will be done to provide more help for hard-pressed agencies such as the CAB and debt centres, which are so vital at the poverty end of the spectrum, particularly in this economic downturn?

My Lords, the right reverend Prelate may be seeking to draw me on what might be contained in the Pre-Budget Statement next week. In that, he will fail, because I am not aware of what will be said on issues to do with taxation.

This Government have done much to help those who are in poverty, as defined by national statistics, through benefits, credits, the national minimum wage, housing assistance, winter fuel allowances, child trust fund arrangements, savings gateways and open-market home-buying. There is a series of initiatives to help those people and the agencies on which they rely for support.

My Lords, the Minister said that the Government have been doing rather well on poverty. However, the plain fact is that there are rather more people in relative poverty than there were in 1997, and child poverty has been increasing for the past two years. What do the Government say about that?

My Lords, 2 million people have come out of poverty since 1997.

My Lords, with the suggestion that the CAB, for instance, needs to be supported at this time, local government will be hard pressed to continue with grants to local citizens advice bureaux. Can the Government give an assurance that they will keep an eye on this and make sure that the CAB is there to meet the needs of this crisis?

My Lords, the Government have placed great emphasis, in their programme of addressing the consequences of the global crisis that has affected our financial institutions, on promoting responsible lending, by engaging with banks to ensure that they behave responsibly with customers and borrowers who are experiencing difficulties. One core condition attached to the bank recapitalisation arrangements that we introduced was that the banks have committed to expend more funds to support the relationship with customers experiencing difficulties. We recognise that, in particular, citizens advice bureaux play a very important role in helping people who are experiencing difficulties. We commend their work and hope to be able to continue to support them.