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Westminster Hall

Thursday 18 July 2002

[Sir Alan Haselhurst in the Chair]


Motion made, and Question proposed, That the sitting be now adjourned.—[Angela Smith.]


The Parliamentary Under-Secretary of State for Work and Pensions (Malcolm Wicks) : We suggested a debate on poverty because of its obvious contemporary significance. For at least 100 years, Parliament and poverty have been intertwined. Perhaps that is inevitable given the rise of the mass franchise and the unstoppable march of British democracy in the past century. Earlier, Disraeli argued to his Tory party the need for one nation. When introducing his Budget of 1909, the Liberal, Lloyd-George, declared it to be

His Liberal Government laid the foundations for the early welfare state in the 20th century. From my party's point of view, the creation of the Labour party is in many respects a passionate cry against poverty.

For 100 years, the debate about poverty has been informed by research. In his book, "Life and Labour of the People in London", Charles Booth detailed the extent of poverty in our capital, drawing on evidence from the period 1887 to 1892. He was followed by that great Quaker, Seebohm Rowntree, whose book, "Poverty: a Study of Town Life", I found on my own library shelves yesterday evening. Rowntree's study documented the extent of poverty in the city of York in 1899. Today, the Rowntree Foundation and the other Rowntree trusts make a major contribution to our understanding of poverty.

In their different pioneering studies, both Booth and Rowntree reached similar, if not remarkable, conclusions. In London, Booth found that 30.7 per cent. of people were in poverty, while in York, Rowntree found that some 27.8 per cent. were. Rowntree's York study is also instructive in detailing the nature of poverty at that time. Comparing it with the situation today helps us to understand contemporary poverty—its nature, characteristics and extent, and the demographic, social, familial, economic and employment trends that have shaped and shaken poverty, as well as the challenge that it presents to Parliament and the Government of the day.

When one looks at the famous Rowntree study, one is struck by the fact that poverty in those days had such predominant causes and associations. Rowntree reckoned that almost 52 per cent. of poverty was in households in which there was regular work but wages were low. Large family size was a factor in 22 per cent. of households, and the other major factor in the cause of poverty was the death of the chief wage earner, which accounted for almost 16 per cent.

When one examines the trends since then, one can identify some of the things that have helped to tackle poverty. Reduced early mortality and widowhood or

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widowerhood, mean that those factors are a less significant cause of poverty today. Smaller family sizes have enabled many people to come out of poverty. On the other hand, we have seen a great ageing of our population. Lloyd-George introduced old-age pensions in 1908 because of the unique historical and demographic fact that working men were outliving their working lives and needed an income, which is why Parliament first discussed the need for an old-age pension almost 100 years ago. The issue of pensioner poverty still confronts us in Parliament.

We have also seen fluctuations in unemployment levels. Unemployment in the 1920s and 1930s shaped the consciousness, consciences and social politics of the nation. The depression had a great impact after the first world war on contemporary politicians such as Attlee, whose Government were influenced by the analysis of Beveridge and Keynes. Harold Macmillan hated the poverty and unemployment that he saw between the wars, which shaped an era of one nation Tory politics. Those politicians would have agreed with Beveridge in his 1942 report that of the five giant evils that needed to be overcome in the post-war world—want, disease, ignorance, squalor and idleness—idleness was the largest, the fiercest and the most important to attack. Beveridge also said that if we could not get that right all our other aims, such as improved educational attainment, were out of reach, which was a message that contemporary politicians understood. We still have to address unemployment, which rose for economic and political reasons in the 1980s.

We have also seen a growing awareness of both physical and mental disability and their capacity to be a force for insecurity and poverty. It is no surprise that recent Parliaments and Governments have had to confront disability through our social security systems.

A final factor is the nature and the force of family change. This country and the rest of Europe have reflected patterns in North America through the great rise of divorce as a mass phenomenon. There has also been a rise in what demographers accurately refer to as the single never-married mother. Both those things, and particularly the latter, are new forces for poverty. Many of our children grow up for much of their childhood, or sometimes all their childhood, living with just one parent, typically their mother.

One interesting issue that we may want to discuss this afternoon concerns the way in which—this is why I started my speech in that way—most poverty in 1899 obviously concerned economic insecurity. The causes of financial poverty today are not only economic but relate to demographics, family structure and family fracture.

Mr. Archy Kirkwood (Roxburgh and Berwickshire): The Minister is absolutely right to discuss past reformers who looked into some of those questions, because historical context is important. Does he agree that some of the early work by Booth and Rowntree was made more useful by the fact that they tried to define poverty? The relationship between relative and absolute poverty has changed over the period that the hon. Gentleman has just described, giving rise to genuine

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difficulties. Will he discuss what the Government can do to capture a consensual definition of poverty, which would make the debate easier?

Malcolm Wicks : In our annual report on children and poverty we tried to capture the multi-dimensional nature of poverty. Finances are crucial, but poverty is not simply about that. The hon. Gentleman, who is Chairman of the Select Committee on Work and Pensions and is closely associated with one of the Rowntree trusts, is right to say that Rowntree was in the business of talking about a minimum standard for "mere physical efficiency". Today's debate is more complex and difficult and I am interested in it. I would welcome any comments from the hon. Gentleman, should he catch your eye later, Mr. Deputy Speaker.

Returning to family fracture, one of the difficulties today for politicians, Governments and Parliaments is that some of the consequences of adult behaviour, and of the difficulty that some men and women have in maintaining their married or cohabiting relationships, impact seriously on children. That is difficult territory for the state, but the state cannot ignore or dodge it. The controversies surrounding the Child Support Agency illustrate the difficulties in, and the importance of, getting the right outcome.

As I have implied, there is no one definition today of who the poor are, or of why they are poor. Poverty is multi-dimensional and means different things to different people. We do not have robust information on all the relevant factors, but some groups are clearly at particular risk. Women predominate among the poor, which is what some people call the feminisation of poverty. I suspect that to some extent it was ever thus, but it is certainly true now. Women make up the vast majority of lone parents. They are more likely to be among the poorest of the elderly. They enter old age with fewer income and capital resources and they outlive men. Much elderly poverty concerns women.

People in some—I emphasise some—minority ethnic groups are particularly likely to be at risk of poverty. More than six in 10 working-age adults from Pakistani or Bangladeshi background are on low incomes. People with disabilities are of course liable to poverty. Working-age adults are almost twice as likely to be in the bottom quintile of income distribution if the household contains one or more disabled adults. Although I have mentioned the difference between now and then, between York in 1899 and today, with the smaller family sizes that we now have it remains the case that those from large families, with three or more children, are more likely to be in poverty. Those families are twice as likely to have no one in work and more likely to have a low in-work income. They may have a poorer financial incentive to work because it is difficult to pay for child care. We need to recognise that. Many of those factors overlap. For example, families from certain ethnic groups tend to be larger than average.

There is a strong association between a person's earnings in adulthood and their family's income when they were a child. Children growing up poor are more

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likely to be economically inactive as young adults, especially if they were poor in pre-school years or adolescence.

Mr. Paul Goodman (Wycombe): On youth unemployment, the Minister recently promised that he would confirm to me whether youth unemployment stands at 4,500, as the Prime Minister recently stated to the House, or at about 240,000, as the Minister's Department maintains. The Minister wrote to me recently to say that he would let me know the answer soon. Does he have any news for me?

Malcolm Wicks : I remember that exchange, and I will write to the hon. Gentleman. I think that we are talking about the difference between a snapshot picture of youth unemployment and long-term youth unemployment, but I will let him have that information.

Today, I am trying to approach the matter slightly less confrontationally. There are times when we could have a ding-dong, and I am happy to have one later if that entertains the hon. Gentleman, but it is important to approach some of the issues in a more thoughtful way, because they have confronted Governments and Parliaments for many years.

The children whom I was mentioning have worse school attendance records, are less likely to remain in school after the age of 16 and are up to 10 per cent. more likely to have no qualifications. There is an obvious relationship between being in work and not being on a low income. Only one in seven working-age adults lives in a household in which no one works, but they account for almost half of those on low incomes.

I shall refer to some hard statistical definitions. In 2000-01, some 12.9 million people lived in households with less than 60 per cent. of contemporary median income after housing costs. Of those, some 3.9 million—30 per cent.—were children, of whom 44 per cent. were in lone-parent families. Some 51 per cent. were in working age groups and 18 per cent. were pensioners.

I have already referred to the importance of disability, which affects the three groups that I have mentioned. We know that 36 per cent. of the 1.5 million children living in a household containing one or more disabled children have household incomes of less than 60 per cent. of the median. Some 31 per cent. of children live in households with less than 60 per cent. of contemporary median earnings.

We also know something about persistent low incomes. One can approach definitions of poverty in different ways. Snapshots are always interesting and I do not dismiss them, but it is significant and worrying if children and adults are in persistent poverty. Indeed, 16 per cent. of children lived in low-income households in three out of four years between 1996 and 1999. We need to ask questions about that.

Great regional disparity exists and, within regions, spatial distributions will be of interest to hon. Members. In the south-east, 21 per cent. of children are in poverty, in the sense that they are in a low-income household. In the north-east, it is 36 per cent. I am struck by the fact that in London, 41 per cent. of children are in poverty. That is worrying for all of us, but particularly for those of us who are Londoners or who represent London constituencies.

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I have spent some time presenting that analysis, and have roughly but accurately drawn historical comparisons. I hope that hon. Members have found that of some interest and use. Although it is not often said in the House, understanding how our society, economy, family life and demographics are changing aids us greatly in discussing, and even arguing about, what needs to be done.

What about strategy? Employment is crucial. That was understood by Beveridge, Keynes and other great political figures of the post-war era, earlier by Lloyd-George, and later by Macmillan, Clement Attlee, Aneurin Bevan and the rest. One of the interesting things that we are now trying to do, having been through the turbulence of the 1980s and early 1990s, is to reconnect employment with our welfare state and social security. Most of us would not need much convincing that, wherever possible, the best social security of all is a job. "Work for those who can" is our slogan and our approach. It is about getting the macro-economic framework right; we heard about that earlier this week from the Chancellor of the Exchequer.

We must see whether there are particular micro policies—labour market policies and social policies—that can help those who find it more difficult to seek work on their own. Most of us would agree that there has been much success. Some 1.5 million more men and women are in work than five years ago. Our employment rate—the percentage of men and women of working age in jobs—is very high, at almost 75 per cent. The figure for March to May 2002 is 74.7 per cent.

Mr. Michael Weir (Angus): I am interested in what the Minister is saying, but is he aware that the trend, at least in Scotland, seems to be reversing? The latest figures published this week show that in the three months to May unemployment had risen by 8,000, and that it jumped by 28,000 in the past year. That is the single largest annual rise since such figures were first produced.

Malcolm Wicks : I am certainly aware that the figures released earlier this week were disappointing. Nationally, some of the trends are beginning to move in the wrong direction, although the changes are very small. More significantly—this is the hon. Gentleman's point—I am aware that there are important disparities throughout our United Kingdom. That is one of the reasons why the UK Government have a major role to play, but the Scottish Executive, regional development agencies and local authorities are also very important if we are to understand the causes of that phenomenon and seek to remedy it. That is why, for example, I met Glasgow MPs some months ago to talk about some of the initiatives in that city that would make work possible for people. We need to understand causation if we are to get that process right, so I am grateful for the hon. Gentleman's intervention.

I hope that people will recognise that although the regional and spatial characteristics are important, we are moving in the right direction overall. We have attained record employment rates. The contribution from the new deal policies for young people, for those aged 25 plus and for lone parents shows that the micro labour market policies are very important. If one considers Europe as a whole, we have a far higher

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employment rate in the UK than in France, Germany or Italy. That is one European league table that we are close to the top of, and we can take some satisfaction from that.

However, if making work possible is the crucial first step, making work pay is also of significance. We all know constituents who are on benefit, would like to get a job, have difficulties with child care and wonder whether it is financially worth their while to work. We need to assure those people that it is, and we now can. The national minimum wage benefits some 1.5 million people, and the tax credit policies that have been among the most innovative of tax-benefit social policies during the last five years mean that more and more people—soon not just families with children but those who are single or childless couples—will benefit from a tax credit that will improve their net income. Making work pay is vital.

A third strand is to make work skilled. We understand that what some have referred to as the knowledge economy depends on the skills of people. That is not just the skills and qualifications of children leaving school, but the skills of the adult population. We should recognise that we all need to re-skill from time to time in order to re-educate ourselves for new jobs, or our current ones. The skills strategy is vital to that process. In my constituency, Croydon—and this will hardly be unique—many companies and public services are crying out for skilled workers. They have a problem with vacancies that is common to the public sector. However, almost around the corner from those organisations, some are currently unemployed because they do not have the right skills. Some may not have the basic literacy and numeracy skills to undertake that work. We need to address the skills gap as part of our war on poverty.

Making work family-friendly is also vital. Men and women were not simply born to work; we are not just economic animals. We have relationships, children and caring responsibilities for elderly relatives. Achieving that work-life balance is vital. The announcement this week of a new interdepartmental unit to ensure a more joined-up policy for children under five is very important.

I hope that we have not neglected the other part of our approach, which is security for those who cannot work. We have seen some real progress in benefit rates for income support for children. We are now spending substantial amounts of money on disability benefits for those who are not at present able to work and who, because of their disability, are on benefit and need a decent benefit level.

A fourth strand is support for children. One feature of this Administration—it is certainly one of which I am proud—is the record rate of increases in child benefit. Since 1997, there has been a 25 per cent. increase in benefit for the first child, and total expenditure has increased by more than £1 billion in real terms. If we view those trends together with the children's tax credit and Child Support Agency reforms that will ensure that the so-called absent father—the non-custodial parent—pays maintenance for his child, we see that we have a real family policy in place.

It is vital that we do our best not only to tackle child poverty today, but to prevent it in the future. In our constituencies, parents sometimes come to see us with

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their children, who may be in trouble and who may be excluded from school; often, they are preciously young. We must ask ourselves what would make the difference for such children, albeit they live in the most adverse, and sometimes the most chaotic, family circumstances.

The success of our literacy hour and our numeracy strategy in schools is encouraging. The sure start strategy to provide better health services for some of our poorest children is also encouraging. The strategy to reduce the rates of teenage pregnancy, which are appallingly high in what is meant to be a modern and educated society, is another vital strand.

I should add that this weekend's announcement on the roll-out of education maintenance allowances is vital. Gone should be the days when children left school at 16 and went straight into jobs to which no training was attached. We need to enable more of our boys and girls to pursue education at 16, although they need not necessarily take the academic path. They should, however, be able to take the training or vocational route. The education maintenance allowance announcement is as important to our strategy to combat poverty as some of the obvious social security issues before us.

The evidence shows that we are making real progress, and nearly all the indicators that we monitor annually in "Opportunity for All" are moving in the right direction. The latest edition of "Households Below Average Incomes"—for 2000-01—contains more recent figures for low incomes. It shows that significant income growth has been shared evenly by all income groups and that poorer individuals have shared in rising living standards. There have been large falls in the numbers of people below the absolute low-income thresholds, which suggests that incomes for those at the lowest end of the income distribution have increased significantly in real terms since 1996-97. We are continuing to reverse the trend of rising relative income poverty for children, despite the moving target of strong growth in incomes generally. The results show that about 500,000 fewer children are now below the 60 per cent. contemporary median incomes threshold, so we are having some success in our attack on child poverty.

I have focused mainly on families with children, but we should acknowledge that 1.1 million fewer pensioners are now below the 1996-97 real 60 per cent. median income threshold. There are also encouraging signs that we are reversing the trend in the number of pensioners on relatively low incomes.

I am also proud of the fact that, in spring 2001, 300,000 fewer children were living in households where no one worked than in spring 1997. We all understand that children who grow up in families where no one is in work get the wrong message and learn the wrong role . We have real progress to report, but I want to reflect on the changing nature of poverty and the challenges that it presents us in Parliament and in government.

2.59 pm

Andrew Selous (South-West Bedfordshire): It is a great pleasure to be able to take part in the debate. I very much welcome the general tone adopted by the Minister and his broader, discursive deliberations on poverty. I shall try to continue in that spirit. I applaud the Government's explicit commitment to tackling poverty, specifically child

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poverty. In my preliminary comments, however, I should like to fire a few warning shots across the Minister's bows in relation to the current situation.

Before the Prime Minister was elected in 1997, he said that he wanted to reduce the bill for social failure—something that we would all applaud—but it is interesting to note that, during the past seven years, the increase on welfare expenditure has been £34 billion, whereas the increases in expenditure on health and education have been £28 billion and £22 billion respectively, which seems to show a move in the opposite direction from that for which the Prime Minister hoped before he was elected.

We have never received a convincing explanation from the Government of why the avowed intention of the Prime Minister and the Chancellor to reduce means-testing, especially for older people, has not come to fruition. One third of all benefits are now means-tested, but in the case of pensioners the figure is approaching 60 per cent. There is worrying evidence that the take-up, especially by pensioners, of means-tested benefits is low, and in the case of pensioners, much lower than when money was given to them directly through a higher basic state pension, which could be targeted according to age. There has been common cause on that issue between the right hon. Member for Birkenhead (Mr. Field), the Liberal Democrats and the official Opposition in previous debates.

The Minister referred to "Households Below Average Incomes". The survey concluded that there was no statistically significant change in the proportion of households below various income thresholds compared with the situation in 1994. Two indicators in particular seem to be moving in the wrong direction, although I do not place blame for that at the Government's door because the trends are related to greater changes in society as a whole.

The Minister mentioned the number of children in workless households. There was a small increase in that figure between spring and autumn 2001. Some 15.7 per cent. of children live in workless households. In the year to autumn 2001, workless lone-parent households increased to 45 per cent. of the entire lone-parent household population. It is important to put on record those few caveats, but I do not intend to make a nit-picking, party political speech.

I now want to talk about three broad areas where it is essential to get things right if we are to be successful in tackling poverty. I completely agree with, and welcome, what the Minister said about work being the key to reducing poverty. A job is the best social policy to help any person lift themselves out of poverty. The Government have made a major effort to ensure that work pays. However, there are some differences between the Government's approach and that of the authorities in America. Much of the administration for tax credits falls on the employer in this country, but the administration for the earned income tax credit in America, for instance, falls on the Internal Revenue Service, the equivalent of the Inland Revenue. Some anecdotal and possibly stronger evidence suggests that smaller employers—those that do not have large personnel and human resources departments—have difficulty administering some of the tax credits, so I urge the Government to consider the matter.

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On the various new deal schemes, the creation of Jobcentre Plus, and programmes to get people into jobs, it would be wrong for me to pre-empt anything that the Select Committee on Work and Pensions will say in its forthcoming report on employment strategy. I would not dare to do so with its Chairman sitting just to my left. However, I will say that, as the Minister may be aware, the Committee travelled recently to Europe and America to consider various means whereby other countries try to get people into jobs, especially those whom it is the hardest to help into work.

Our country can learn lessons from a much closer relationship between those in the voluntary, private, independent and not-for-profit sectors and employment staff alongside whom they work to help people back into jobs. On my visit to America, I was struck by how unthreatened and pleased the staff of the federal and state agencies were to work with people from local community colleges, the Seattle jobs initiative, the Oregon "Steps to Success" programme and the Transitional Work Corporation in Philadelphia. There was no fear or resentment on the part of the Social Security Administration staff in Philadelphia, Seattle or Portland in Oregon towards such organisations.

Much more intensive work is required on a flexible basis with the hardest to help, designing them individual programmes and especially considering matters such as soft skills, the basic life skills that so many of us born in more fortunate circumstances take for granted. Dress, appearance, getting on with people, working in a team, accepting instructions and getting out of bed at the same time every morning are often the issues that provide the largest barriers to putting people into work.

I also want to consider area-based regeneration. I want to flag up my grave concern about the number of initiatives that the Government have put in place. That is not a party political criticism, as the right hon. Member for Hartlepool (Mr. Mandelson) and some Ministers have drawn attention to the subject in reports on the work of the social exclusion unit and elsewhere.

Let us consider six of the most deprived boroughs in the country. From Manchester to Hartlepool, an inordinate number of different schemes operate to assist local groups to raise their communities out of poverty. Manchester has 22 schemes, Tower Hamlets and Liverpool have 21 each, Newham has 20, Hackney has 19 and Hartlepool has 18. I ask the Minister to put himself in the position of a playgroup leader who wants better facilities, or of a community group leader who wants closed circuit television in a local park to protect playgrounds from vandalism. He could have up to 22 different schemes to refer to, which is too many. There is a strong argument for much more single-pot funding to make it easier for such groups to improve the environment that so many people who live in poverty have to put up with.

I also think that there is an issue about which parts of the country are able to access the schemes. For example, in South-West Bedfordshire we do not have access to neighbourhood renewal fund money or sure start money. In my constituency there are pockets of extreme poverty in three towns. Why should the people living in poverty in such small pockets in areas that are generally better off not be eligible? I urge the Minister to drill down to the micro level—ward, sub-ward or as low as possible—to examine the funding of schemes. If we are serious about tackling poverty, we need to tackle it wherever it occurs. Of course,

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some areas have multiple problems and need a special approach. However, the current methods of operating are far too focused on a few areas, and discriminate against others.

The third area that I want to discuss, which the Minister also touched on, is that of family life, relationships and children. We know from the "Households Below Average Incomes" report, published on 11 April, that lone-parent families are particularly at risk of having low incomes. Our statistics for teenage pregnancy, the proportion of dependent children living in lone-parent households, divorce and separation are the worst in Europe.

The Minister mentioned mortality. I have to tell him that our level of infant mortality is the second worst in Europe; only Greece has worse figures. Unless we are really serious about trying to stick together family life, we shall never be successful in tackling poverty. We should make common cause on it across the House. We sometimes view that as an excessively ideological approach, but it is not; it makes common sense to look at the problem on a cross-party basis to see what we can do about it.

In 1999, the National Family and Parenting Institute commissioned MORI to do a survey of people who were having problems in their relationship. That showed that nearly seven out of 10 people agreed that relationship support could make a difference if families had problems, but just under half of those surveyed said that they would not know where to go to get advice and help for family problems. That is significant, and a big area that we should focus on if we are to bolster the stability of family life.

Interestingly, the report also looked at Germany, where a major study was done into Church-based marriage preparation for couples. The result there was encouraging. When couples were taught communication skills and such skills as self-disclosure, positive responses to their partners and accepting responsibility for conflict, they were more likely to stay together. There are things that we can learn. I am particularly upset that the funding for national marriage week was cut so severely by the Government earlier this year. That is going the wrong way—the National Family and Parenting Institute's survey flagged up that we need a greater concentration on such issues.

However, I commend the Government for sure start. That is an excellent scheme. There are also small charities, such as Homestart, doing excellent work in the area. There is a particularly good group in Leighton Buzzard in my constituency. We should spread that more widely, as it can really make a difference.

Mr. Goodman : Would my hon. Friend commend to the Minister the statistic raised by the writer Jill Kirby, in her pamphlet "Broken Hearts", which points out that within five years of the birth of a child, 52 per cent. of cohabitees have split up compared with just 8 per cent. of married couples in the same situation? Does that not emphasise the importance of marriage for the happiness and prospects of children?

Mr. Selous : My hon. Friend is right to point that out. The most telling evidence is arrived at by comparing married couples with cohabiting and other couples from the same income background and the same district or location. Even then, there is a difference.

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There is an argument that people who marry generally come from better-off backgrounds and their relationships are therefore more likely to survive. However, I would argue that there is much evidence that, taking like-for-like relationships in the same income bracket and the same area, marriage is indeed a social good. We should not be ashamed to say that or feel that we shall be seen as condemning anyone who is not married.

I often use what I call the folic acid example. If one goes into one's local health centre, one will often see a poster on the wall, saying, "If you are trying to conceive, folic acid is good for you." All the evidence says that it is, and none of us feels upset or offended by such a poster—it is up to us to decide whether to take folic acid. I would say exactly the same thing about marriage. We should not be ashamed merely to show the benefits, statistically or otherwise.

Yesterday afternoon my hon. Friend and I attended a meeting of the all-party parliamentary group on poverty, which the Minister addressed fairly recently. We had a fascinating time. A group of children from Tower Hamlets showed us some harrowing photographs of the environment in which they live. The vandalism and desecration of play equipment shown in photograph after photograph was soul-destroying. We should all focus our minds on how to turn around the individuals behind that desecration.

One of the girls in the group particularly caught my attention. I asked her, "Why do you think some people do this, and others don't?" She told us that her mother makes sure that she is always back early and in bed on time and that she is not out on the streets late. Her mother knows where she is and makes sure that she understands what her view will be if her behaviour errs on the side of ill-discipline. Her mother makes sure that she does her homework every day when she gets home from school.

I contend that that girl's life chances are infinitely better than those of many of her peers. She is lucky enough to have a mother who instils discipline in the home, making sure that she is not vandalising the local play equipment, and encourages her to do her homework. If we can teach more of the families in this country, whether through sure start or Homestart or any other means, to maintain such discipline and spirit in the home, we shall be setting many of our children on a much better road to the future.

3.18 pm

Mr. Wayne David (Caerphilly): May I begin by thanking the Minister for the historical perspective that he provided at the beginning of his speech? That was very important, because it set the scene for the issues that we are tackling today. The contribution of Joseph Rowntree looms large and the work that he started informs many social reformers today. In fact, he still makes a material contribution through the trust that he established.

I represent a constituency in south Wales, and the experience of the 1920s and 1930s still looms very large for me. I am aware, as are many of my contemporaries, of the great hardships that the 1920s and 1930s created

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for the people of the south Wales valleys. The times of mass unemployment and depression, the general strike and the soup kitchens are all part of the consciousness of the people there today. Indeed, the experiences of those years materially helped to create the politics of the post-war period for much of Wales. It was because of the experience of the '20s and '30s that Aneurin Bevan, the architect of the national health service, began to formulate his views.

Jim Griffiths, another miners' leader, was greatly influenced by what he personally experienced during the harsh years of the inter-war period. Ness Edwards, one of my predecessors as Member of Parliament for Caerphilly, was another miners' leader who saw at first hand and personally experienced poverty for many years. That helped to shape his politics and those of the whole region, and it meant that when the second world war was over, those leaders, who came organically from their society, meant to make certain that their experience was never repeated for their children and grandchildren.

That is why the agenda of the 1945 Labour Government was so vital in recreating the whole social agenda for the country. The welfare state was established and, linked to that, there was a commitment to create full employment. For many people at that time, rightly, the creation of full employment was regarded as a welfare strategy. It was recognised that the surest way to ensure that the great mass of working people did not experience poverty was to make sure that everyone who wanted a job could find one.

The consensus established in 1945-51 more or less continued through the 1950s and into the 1960s. Today, however, we still have poverty, although it is clear that the poverty that people all too often experience now is different from that of the past. One reason is that society is different: it has become increasingly complex, and there are no longer straightforward solutions to create a society free from poverty.

The Labour Government have adopted the right policies by targeting groups in society who disproportionately experience poverty; for example, the elderly, and especially elderly women, as the Minister said. The fact that ethnic minorities suffer poverty also exercises the mind of the Government, and there is a new focus on child poverty. The evidence shows that the Government's policies are having a big impact. The Government's central thesis is that the best way to ensure that our society is free from poverty is to create and maintain full employment. We must ensure, too, that all our policies are imbued with the idea that it is better for everyone to be encouraged to come off benefit and go into work.

I turn now to economic inactivity as it affects areas like my constituency. In my area, as in many others, unemployment is low, and in some cases, historically low. However, there are high rates of economic inactivity, especially in the south Wales valleys. The further one travels up the valleys, the higher one finds the level of economic inactivity among the population. In many valleys communities—in a swathe of wards across the heads of the valleys—one in four people of working age experiences economic inactivity. There are many reasons why people are economically inactive rather than unemployed. A key reason is ill health, which is prevalent in these working-class communities.

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There is a high instance of cardiac-related illnesses, arthritic complaints and severe mental health problems in those wards.

The great despair and impoverishment to be found in poor communities is not only experienced collectively; individuals who experience such poverty and deprivation have a traumatic lifestyle. In cold economic terms, it is worth pointing out that the high number of economically inactive people contributes to the low gross domestic product of many regions in the United Kingdom, not least south Wales. The valleys and west Wales have objective 1 status, which is useful in attracting extra Government and European money, but it is not something to be proud of. It is given in recognition of the fact that the GDP of two thirds of Wales is less than 75 per cent. of the European Union average. One of the main reasons for that is the high level of economic inactivity.

We must consider that question in a broad macro sense but also at a micro level. Since its advent, the National Assembly has given a great deal of attention to the matter, and is increasingly focusing on issues that remain to be tackled. The national economic development strategy "A winning Wales" sets a target for increasing the number of people in work in Wales and for creating a more equal society with more opportunity.

Wales has a number of other initiatives. The communities first initiative is targeting some of the poorest communities in Wales, not only to provide extra resources but to bring together local authorities, the voluntary sector and a range of other agencies to tackle collectively the deep-seated problems of those communities. In addition to the work of the National Assembly, work by the Government is having an impact in many areas and they are becoming increasingly proactive.

The Department for Work and Pensions is taking a monumental step forward by bringing the Benefits Agency and the Employment Service together in Jobcentre Plus. The completed pilot schemes have shown that it is the way forward, and I am glad that the Department has committed itself to extending it to the whole country. Employment zones have successfully been used to target high levels of unemployment and areas of high economic inactivity; they work more informally and flexibly through action teams, and relate to people more effectively than has been the case in the past.

What south Wales really needs, however, is greater co-ordination between what should be joined-up services. We have a National Assembly and the non-devolved services of central Government, but we really need a mechanism in which they can all work together in a complementary and coherent way. That is important for developing community regeneration and linking it to job creation.

It is important also to recognise that, although there are common features and common problems, every community is different. We need a tailored approach to tackle the specific problems of some of the hardest pressed communities. Above all, we need to recognise that issues such as poor health can have a huge impact on people's wealth—or lack of it—and their employability. In crude terms, it is not enough for

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communities that are experiencing high levels of economic activity simply to be given the opportunity of jobs or training; we must ensure that people can avail themselves of those opportunities. We must have programmes designed to improve the health of many people in our poorest communities, so that they are able and willing, enthusiastically, to avail themselves of the opportunities for training and jobs. If we take a holistic approach to the problem of poverty and job creation, we will go a long way towards creating a fairer society for everyone.

3.30 pm

Mr. Paul Goodman (Wycombe): The first intervention in the debate by the Chairman of the Work and Pensions Committee, under whom my hon. Friend the Member for South-West Bedfordshire (Andrew Selous) and I are so happy to serve, was about the measurement of poverty. It is sometimes assumed, although I am sure that the hon. Gentleman was not making such an assumption, that poverty can simply be measured by the income that people receive and that, if they have both low income and low capital, they are poor. It is important, however, to distinguish between temporary poverty and permanent poverty, and it is about the latter that I shall speak this afternoon.

For example, let us consider a student who is temporarily poor. He or she may be making a trade-off, trading in low income now for what will hopefully be higher income later. But what about the elderly widow in my constituency who visits my surgery? She wants to claim the minimum income guarantee or the pension credit, but is confused by the complexity of the forms that she must fill in. What about the young Asian kid from a broken family whose housing is poor and who attends a school that is less good than others, who faces the danger of drifting into crime and drug use, and then of finding it hard to hold down permanent work later? What about the black lone mum, who is looking for a stable relationship and a second income to support her children? Unlike the student, such people are in danger of permanent poverty and it is about them that I wish to speak.

Sometimes, society is depicted in debates such as this as a machine. It is suggested that if politicians push the right buttons and pull the right levers, the machine will work and poverty will be abolished. However, society is not a machine; it is more like an organism, and politicians are not engineers. We know from the history of the previous century that when politicians try to act as social engineers, societies go horrendously wrong. It is important to remember that the biggest engine of wealth creation in history is the market economy. This year, the Government look to spend about £418 billion. The total gross domestic product of Britain this year is estimated to be about £1,051 billion. It dwarfs the scale of the Government's spending, and it is the main engine of wealth creation.

I am sure that Conservative Members agree with other hon. Members here today that it is important to remember that a rising tide does not raise all boats. The boats of the widow, the young Asian kid and the black lone mum who are in danger of permanent poverty may not rise because they lack what has sometimes been called social capital—the inherited wealth, connections, skills, self-confidence and mobility that some others

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have. Often those who lack social capital also lacked the childhood love and security that some of us who had it are prone to take for granted. Those who lack social capital do not lack talent and ability; it is simply that that talent has never been unlocked. I want briefly to discuss how it may be unlocked.

It is important to distinguish between those who can work and those who cannot, which brings me to pensioner poverty. The Minister made a thoughtful speech, and I acknowledge that there are some good things about the pension credit that the Government have introduced. However, along with Age Concern, Help the Aged and the National Pensioners Convention, I and my colleagues envisage a problem that can be described in one word—take-up.

According to the Government's own figures, between 300,000 and 750,000 pensioners who are entitled to the MIG have not taken it up. A senior civil servant in the Minister's Department, Alexis Cleveland, recently said in public evidence to the Work and Pensions Committee that as many as 1 million pensioners may not have received the MIG—about a third of those who are entitled to it. I am trying to be fair to the Government, but I have not, as yet, seen evidence that the take-up of pension credit will be any higher.

Take-up is alarmingly low because many elderly pensioners are baffled by the forms and the complexity involved in trying to claim the MIG. The Select Committee, which is of course dominated by the Minister's party, said:

Among those who do not take up the MIG and who may be unlikely to take up the pension credit, elderly women are particularly predominant because, as the Minister said, women stand to gain rather less from the pension credit than many men, as their contribution record is more likely to have been broken over the life cycle. That is why my hon. Friends the Members for Hertsmere (Mr. Clappison) and for Havant (Mr. Willetts) made common cause, as my hon. Friend the Member for South-West Bedfordshire said, with the Liberal Democrats and the right hon. Member for Birkenhead (Mr. Field) and formed an all-party consensus for additional resources to be targeted on the most elderly pensioners, many of whom are women and who face considerable poverty. Perhaps, when the Minister responds to the debate, he will tell us the targets for the take-up of pension credit or, if he cannot, when he might be able to do so. I hope that he will think aloud about whether he will try to guarantee a target of—this is only a suggestion—90 per cent. over five years.

I turn now to those who can work and my theme of social capital. The Select Committee's inquiries into Jobcentre Plus and the Government's employment strategy, to which my hon. Friend the Member for South-West Bedfordshire referred, are obviously not yet complete, but like him I have been struck by a theme throughout both. One of the biggest barriers to work is the lack of "soft skills". That is a relatively new phrase, but the Minister will know that it means the things to which my hon. Friend was referring earlier: turning up on time, being properly dressed for work, reliability,

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politeness and, perhaps, mastering a drug or alcohol problem. Most commentators and academics would agree that those social capital skills are built up partly at school but more largely at home, and a consensus has emerged that kids are best placed to build up social capital if there are two role models at home. If a boy's father lives at home and works in the economy, he is likely to pick up the work ethic and work habits.

We know from evidence that parents are more likely to stay together if they are married, as I pointed out in the midst of my hon. Friend's speech. Politicians should be very cautious when talking about the private life and personal conditions of those whom they are elected to represent and govern, but the mass of evidence is incontestable. It suggests that kids whose parents stay together and marry are more likely to achieve better outcomes, and it is in that spirit that I welcomed the Prime Minister's words in the Government's 1998 consultation document, "Supporting Families", in which he wrote that

The Minister will agree that the test of the sentiment is not words but deeds. Obviously a pro-marriage Government would increase child benefit, which gives women choice about how they want to provide child care. They would not discriminate against one-earner couples but instead consider introducing transferable allowances to enable them to have greater choice about work. They would keep a marriage allowance too.

I pay tribute to one Government success by saying that I agree with the Minister's comments on child benefit, on which the Government's record is good. However, they have not introduced transferable allowances, and the tax credits that the Minister mentioned tend to discriminate heavily against one-earner couples. The Government have also scrapped the marriage allowance, and I am slightly concerned about press reports, which may or may not be inaccurate, that there is a danger that child benefit will not be paid to all parents as it is now. Will the Minister restate the Prime Minister's 1998 commitment to marriage and guarantee that child benefit will continue to be paid on the same basis as at present?

I want to mention other ways of building up social capital and improving soft skills. As my hon. Friend the Member for South-West Bedfordshire said, the Select Committee has just returned from a trip to the United States of America, where it examined projects that build up soft skills and social capital. We visited three Democrat-run cities—Philadelphia, Portland and Seattle—and I was very impressed by the way in which the private and voluntary sectors worked with city, state and federal Government to harness the skills and talents of people whose potential is not being realised. My hon. Friend referred to that in his speech.

I will name only two projects, as other hon. Members want to speak. We saw the work of the Reinvestment Fund in Philadelphia, which is a community development financial institution that builds wealth and opportunity for people on low incomes by lending about $130 million to projects with social goals and returns. We also saw the Seattle jobs initiative, which builds up soft skills and social capital by producing tailor-made programmes to help individuals out of poverty and social exclusion.

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It is not for my hon. Friends or me to anticipate the Select Committee report, but I want a similar approach here. Jobcentre Plus does some good work—there is an excellent project in my constituency—but a weakness may be that it tends to focus on getting people into work rather than keeping people in work. If more power and responsibility were devolved to managers and those who work in Jobcentre Plus, they could work more closely with the voluntary sector to provide the sort of tailor-made packages of support that we saw in the United States. That model of devolution and localisation is a model for any Government for reducing poverty and social exclusion, because it is Britain's Churches, credit unions, charities and voluntary organisations that have the commitment and ability to build up social capital and create the social entrepreneurs of tomorrow.

I pay tribute to the Government for reducing poverty to a degree, although, like hon. Friend the Member for South-West Bedfordshire, I think that the Minister's figures were slightly glossier than the reality. The present method is likely to be the most effective way of tackling poverty in the long term. I am concerned, as some members of the Government may be, by the Government's Treasury-led fixation with measurement, centralisation and control which has led to the bewildering variety of funding streams to which my hon. Friend referred.

The Minister made a graceful reference to Disraeli's speech on one-nation politics, but real one-nation politics would seek to devolve and localise, not centralise. Hughenden manor, where Disraeli lived, is in my constituency, and it is an awesome thought that Opposition Members have his example from which to learn. The approach of localisation and decentralisation is best placed to reduce poverty, build up social capital, free Britain's communities and unlock the talents and abilities of the poor and socially excluded, whose ability is all too often untapped.

3.47 pm

Mr. Michael Weir (Angus): In his wide-ranging speech on the history of poverty, the Minister made the point, as have other hon. Members, that poverty is relative. That is true: it has always been relative, but it is none the less debilitating for that. The sad fact is that as we enter the 21st century, the inequality gap is widening, despite the actions of Government. From 1990 to 1996, income inequality decreased, but from 1996 to last year, it rebounded; the gap between rich and poor has grown again.

The Government have made their pledge to lift children out of poverty a cornerstone of their policy—a laudable aim, which I am sure all hon. Members support. However, the fiasco of the claim that 1.2 million children had been lifted out of poverty when the true figure was 500,000—a reasonably good figure—damaged the Government's credibility. That still leaves almost 4 million children in poverty. In many ways, it is a matter of priorities: if the Government had used the £2.4 billion tax cuts of April 2000 to tackle child poverty, a further 600,000 children could have been lifted out of poverty.

I do not want to be too critical of the Government, but they announce a laudable long-term policy of lifting children out of poverty, then come up with bizarre ideas

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such as withdrawing child benefit from parents whose children commit crimes or do not attend school. That policy was roundly condemned by the Child Poverty Action Group, whose director Martin Barnes noted:

Joined-up government is an issue in this respect. Laudable long-term goals sometimes seem to be submerged in short-term headlining—that is the difficulty with the policy. It is worth noting that the proportion of children in poverty in Scotland has remained static at about 30 per cent. for nearly 10 years. That is a heavy indictment of Governments both Conservative and Labour.

Some Opposition Members took up the Minister's reference to the difference between permanent and temporary poverty. He said that 16 per cent. of children live in permanent poverty. That is the real problem of poverty—the day-after-day, week-after-week, month-after-month grind. The longer children or families live in poverty, the harder it is for them to get out of it, as the hon. Member for Caerphilly (Mr. David) hinted. Early action is needed to take children and families out of poverty before it becomes endemic. In some areas of our countries, there is second-generation, even third-generation, poverty because of high unemployment over the past 20 or 30 years.

Unemployment is obviously one of the key reasons for poverty. As I mentioned in an intervention, although the Government talk about putting more people back into work, according to International Labour Organisation figures unemployment in Scotland rose by some 8,000 during the three months to May. That means that unemployment in Scotland has jumped by some 28,000 in the past year—the single largest annual rise since the figures were first produced. The Scotland Office has stopped issuing press releases on unemployment figures.

We also have to ask what the true level of unemployment is. I refer the Minister to a speech made by the hon. Member for Glasgow, Pollok (Mr. Davidson) in a somewhat more rumbustious debate on this subject in the Scottish Grand Committee. He said:

That is an opinion not from me but from a Labour Member representing a Glasgow constituency. It is worth noting that four of the 10 poorest parliamentary constituencies in the UK are in Glasgow. There is a problem identifying the full extent of unemployment and the poverty that it brings.

In the context of pensions, Conservative Members commented on the complexity of the minimum income guarantee and of the pension credit system. It is worth

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noting that Age Concern has said that, according to the Government's own figures, 750,000 pensioners do not claim means-tested benefits to which they are entitled. Help the Aged surmises:

That is the difficulty of introducing means-testing, which is something that the Government originally said they would not do. There has been a massive increase in means-testing and, as has been pointed out, it presents particular difficulties for pensioners.

The complexity of the forms is not the only problem. We must all have had pensioners coming into our surgeries and, having looked at their income and told them that they cannot claim the minimum income guarantee, heard the reply, "Oh no, son, I have never claimed income support in my life and I am not going to start now." There is a real problem with the pride of our elderly people: they do not want to claim such things as income support, the minimum income guarantee or pension credit. The only way to deal with that serious problem is to make sure that the standard state pension is set at a reasonable level.

Research carried out recently by the insurer Prudential shows that 3 million pensioners throughout the UK are not claiming the full range of benefits to which they are entitled. It is interesting to look at the main reasons they gave for not claiming their full entitlement, and the fact that 43 per cent. of them said that they did not realise that they were eligible for certain benefits. The Government have to take up that issue to ensure that people get the benefits to which they are entitled. My constituents often come to me with the problem that although they have approached the Department for Work and Pensions, they are not advised about benefits that they could get but are not claiming. The Government have to consider whether more information can be given at local offices.

Of the pensioners surveyed, 23 per cent. did not know that a benefit to which they were entitled existed, and a further 18 per cent. were put off by red tape—the complexity of the forms has been mentioned. From a Scottish point of view, it was reported that 18 per cent. of Scottish pensioners were likely to shun means-tested benefits compared with a UK average of 10 per cent. Increased means-testing therefore has a disproportionate effect on Scottish pensioners.

It is not only pensioners who have difficulties. The Minister and other Members have referred to the disabled. I should declare an interest because, although I do not claim benefits, people on disability living allowance come into my surgery and tell me that they have great difficulty with getting their incapacity benefit renewed. They are put through a procedure involving umpteen medical reports and then they are refused. They come and see me in a great deal of distress.

Many of those people have been on disability benefits for a number of years, but find themselves being put through a distressing procedure. Most of them should get the benefit. A vast number of people are refused disability living allowance on their first attempt to claim it but are successful when they appeal; there must be

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something wrong with a system that allows that to happen. That must be looked at to make sure that disabled people get the benefits to which they are entitled, because poverty among disabled people is real.

The associated group of those who care for disabled people continually come in to see me because they are having great difficulty with the benefits system. They comprise one group in our society that seems to have been well and truly left behind. In effect, they are being penalised for giving up their time and lives to look after others. I shall give an example. A constituent of mine, a lady in her 50s, had worked all her life but gave up her job to look after her elderly mother. She claimed income support: as a single person, she was at that time entitled to a rate of £53.05, to which was added the carer premium of £24.40, making a grand total of £77.45—hardly a fortune. She also claimed invalid care allowance of £41.75, but it was catch-22 because that sum was deducted from her income support, bringing her benefit back down to £77.45. In effect, she received no benefit from the invalid care allowance.

It gets worse: if a cared-for person does not live in the same home as their carer and the carer claims invalid care allowance, it is deducted from the benefit payable to the person being cared for. That is one form of double jeopardy that the Government do not seem keen to abolish. The effect is that both carers and the persons for whom they care are almost propelled into poverty because they cannot have sufficient funds and do not have the opportunity, as others may have, to go out to work.

In a recent Westminster Hall debate, the Under-Secretary of State for Health, the hon. Member for Salford (Ms Blears), announced that new regulations would be introduced to allow carers to claim carers allowance after reaching retirement age. That was broadly welcomed by all sides. However, after being contacted by a carers' organisation in my constituency, I tabled a parliamentary question to ask for clarification of whether that would be paid on top of pensions. The answer is well worth repeating:

The effect of that is that people will not receive the allowance in addition to their retirement pension. People who reach retirement age will lose their invalid care allowance unless they are on a very low income, in which case they will receive the carer premium of £24.80 a week.

People who selflessly give up the opportunity of full-time work are plunged into poverty, regardless of the fact that they are saving the state a vast sum of money, as has been recently pointed out. I pursued that question with the Department, and asked how many people in my constituency and in Scotland as a whole were in that position. I was told that 300 people in Angus, and 20,600 people in Scotland as a whole, were in receipt of both income support and invalid care allowance. That is a vast number of people to be suffering in that way.

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It is worth mentioning that poverty is not solely a problem of cities. We often think of poverty as being found in inner cities, but there is a real problem of rural poverty. A report by the Scottish Affairs Committee in 2000 pointed out that one in four people living in rural areas live in poverty. That is a real problem—and often a hidden one—which has been exacerbated by the recent problems in agriculture following BSE and foot and mouth. The Government have to ensure that their message gets across in rural areas. I think that they are failing to do that in many ways.

The Scottish Affairs Committee made various recommendations about benefits in general. It recommended that the Government continue to increase the minimum income guarantee, especially for the over-80s. I know that the Conservatives and Liberal Democrats have also pressed for such a policy, but it has not been introduced. The Committee also recommended that the Government look carefully at how they might further promulgate advice to pensioners and maximise take-up of benefits. A simple first step would be to ensure that a full benefits check is offered to all people of retirement age, and that they are then encouraged to take up what is offered. During the passage of the State Pension Credit Act 2002, a proposal to that effect was put forward, but it was opposed by the Government.

The Committee also recommended that the Government introduce take-up targets for the responsible Department, then the Department of Social Security. That connects with the point that I made earlier: the Department for Work and Pensions should ensure that elderly and disabled people are told about the benefits to which they might be entitled so that people who do not understand the system do not end up enmeshed in the bureaucracy when they try to claim them. Poverty in this country is relative, but it is real, and in a rich country that is a terrible indictment of all Governments.

4.3 pm

Mr. Archy Kirkwood (Roxburgh and Berwickshire): I am pleased to be able to contribute to the debate, which I acknowledge takes place in Government time. I appreciate the sensitive way in which the Minister introduced the debate. The historical context he gave was valuable, and the debate has been better for the way in which he cast his opening remarks.

Although I know that he cannot do everything, I am a little disappointed that the Minister did not get a chance to explain to hon. Members what the consequences of the comprehensive spending review might be for the Department. It looked to me as though it would be business as usual for the next three years. That may be so, which is not to say that with sensible savings—there are always ways of making sensible savings in a Department—that extra resources could be found.

Over the next three-year period, will there be any new directions, investments or significant plans over and above those with which we were made familiar before the Chancellor made his statement last Tuesday? Are we to assume that the plan is for steady state finance and that we will need to find money in existing departmental estimates to make changes at the margins? I have no complaints about that approach, and I do not think that

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the interesting speeches of other hon. Members challenged the fundamentals of the strategy, but there are significant details of implementation to address and extra resources will be required to make progress.

The Minister was absolutely up front about using the household below average income figures that were published earlier this year. They were instructive and historical, dealing with the four years between 1996 and 2000-01. The Government are at liberty to say that changes since 2000-01 have not yet been reflected in statistics, and I accept that things might look better when the plans that have been introduced since the end of that period are assessed. My complaint is that our policy-making ability is diminished by the fact even when the statistics are correct—sometimes the Office for National Statistics manages to get them spectacularly wrong, or the Department interprets them wrongly—they are too late to be of any value in formulating a policy response.

I recognise that the absolute poverty situation has improved, but the relative poverty situation has been little better than static. That is important to put on record. However, even though the relative situation may have been static between 1996 and 2000, people's expectations have substantially changed. I can offer the Minister only anecdotal evidence: last week, in the high street of Hawick, I spoke to a number of people who were fed up with some captains of industry and angry about corporate profligacy, share options, and so on—even the Director-General of the BBC is receiving £100,000 bonuses.

People see such things on television, set against a background of local authority pay offers such as the ones that have been seen recently. It is not surprising that in this day and age workers become vexed about the fact that they are slipping further and further behind in the income stakes. The Minister speaks of the old days with relish, and I shall not challenge him on the details because I know that he has studied them, but in Seebohm Rowntree's days, all the people in the villages around York in which he was working were in the same boat; they all supported one another.

This country is not quite as bad as America in terms of income disparities. The Select Committee's study tour of America was instructive in many ways, and I am grateful to the hon. Members for Wycombe (Mr. Goodman) and for South-West Bedfordshire (Andrew Selous) for referring to that interesting experience in their speeches. The disparities of income found in the United Kingdom lead people to believe that they are being treated more unfairly now than in the past. That is a factor to take into account when assessing people's perception of poverty and whether it is real to them.

It is perceptions with which we must deal in political life. There are some big statistics: 9.7 million people or 12. 9 million people—the figures before and after housing costs are taken into account—live in household poverty, and 3.9 million children and 2.3 million pensioners live in households below the poverty line. Those statistics trip easily off the tongue, but we must remind ourselves that such households are under huge pressure to resolve resource conflicts in their weekly budget. They are forced to choose between basic household items and food, and between proper transport to get to work and social activities that put

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them in a position similar to that of their neighbours. We often forget to add access to services to the list. In all such poverty debates we must remember that although progress is being made and policy may be heading in the right direction, there is still an inordinate and unacceptable number of people in households suffering such deprivation.

Such poverty leads to stress, and the Minister was right to mention family backgrounds and situations. The hon. Member for South-West Bedfordshire made the argument one of his unique selling points, and good for him, because it is true. Stress resulting directly from an inability to meet household budgets leads to family breakdown, and that is immensely costly to the state. The more we can do to prevent that happening, the better off we will all be.

The other thing that the statistics do not cover adequately is the current level of indebtedness. The one thing that is certainly different from Seebohm Rowntree's days in York is the fact that today people have access to credit. My young son has only just graduated—hooray for that, says the Kirkwood household—from Glasgow university, but he has already been approached by literally dozens of financial institutions, saying, "Welcome to the new life of the graduate. You will have a secure professional career over the next 40 or 50 years. Can we offer you £5,000 credit?" My son is able to cope with that because he has a rather stern father who sits on his shoulder and gives him sound advice about such things. It is much harder for people on income support not to take advantage—if that is the right word—of debt from all sorts of sources, including loan sharks.

There are real problems with the social fund. We have discussed that, and I know that the Minister's heart is in the right place, but we have not made much progress in making the social fund a more reasonable and effective vehicle for tiding people over life crises. That would be possible with just a bit of extra money but, as I said earlier, I do not think that there is much extra money in the departmental pot.

We are living in a great European age, and I was struck by some recent Eurostat figures. One Eurostat publication, "The social situation in the European Union 2002", contains the claim that the proportion of people at risk of poverty in the UK is only slightly lower than in Greece. That rather surprised me, even though the hon. Member for South-West Bedfordshire indirectly referred to that. The risk of poverty in the United Kingdom is very high.

The second Eurostat publication of note that crossed my desk recently was "European social statistics: Income, poverty and social exclusion 2002". It declares that the United Kingdom has the highest proportion of children in households with income below 60 per cent. of the median for 13 European countries. The Minister might say, with some credibility, that there are changes in the pipeline that will address the issue, so that our relative position in Europe will improve—but those changes had better be made, because the fourth biggest economy in the world should not have to face such statistics, even though some of them may be an overhang from 18 years of Conservative Government.

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We cannot be complacent about any of the figures. We need to work harder and get policies in place that urgently address the problems.

Earlier this week during the Prime Minister's appearance before the Liaison Committee, there was an exchange about child poverty. I was slightly taken aback in 1999 by the Prime Minister's claim, in his Beveridge lecture at Toynbee hall, that he would abolish child poverty by 2020. There were two staging points in that process. He set out policies that would reduce child poverty by a quarter by 2004-05—that is, within the next three-year spending review period. Can the Minister tell us whether the Government are on target for that? The Institute for Fiscal Studies considered that claim carefully and concluded that unless there were significant increases in benefits or more people were put into work, the chances of reaching the target as currently defined were remote. However, if the target is not to be met—targets sometimes are not met—I am doubly worried. The Government's consultation on defining poverty finished a few days ago, and I am concerned that there is to be an attempt to change the criteria by which poverty is measured before 2004, so that, come 2004, the Prime Minister can say, "In 1999 I got it right."

The consultation is important because it deals with vital concepts and concerns about definition that I put to the Minister in an intervention. Definition is now essential. The Work and Pensions Committee, in its previous guise as the Social Security Committee, did some serious work in that regard in the course of earlier inquiries. It concluded that minimum income standards—which are used by our sister European nations as a matter of course—are necessary in order to establish definitions with which all can agree. I do not care whether targets or benefits, if they are measured against minimum income standards, are not met every year.

It is time that we drew up a set of material conditions that provide a modest but adequate family life in the United Kingdom and measured benefit levels against them. That would be a very strict discipline and I hope that that will be the sort of suggestion that comes out of the consultation that has just concluded. If the Government are thinking of trying to work a flanker, as my granny used to say, and move the goalposts on how poverty is measured between now and 2004 merely so that the Prime Minister can say that he has met his target, that would be entirely unacceptable and would give rise to the sort of cynicism and disconnection among the population that cause us such concern.

The Minister talked about a strategy for putting people into work. I agree with that in principle. There have been some welcome developments, and the statistics on those who are nearest to the employment market have been relatively impressive. However, it is not safe to rely on the assumption that work means that people are not in poverty. When working tax credit comes on stream next year it will help, although there are some significant questions about take-up. I am still not satisfied—I do not think that the Government are putting enough effort into it. However, if the Government are saying that anybody who is in work is not poor, they are wrong.

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The New Policy Institute has found that half the adults and children who fall below low-income thresholds are in working households—in families that are in the happy situation in which at least one member is in full-time or part-time work. It is not safe to depend on a policy of work to tackle poverty. Although it can be argued that the breadth of poverty has declined, the depth of poverty—how far people are below the low-income threshold—is increasing. If I had longer, I could trade statistics with the Minister to persuade him of that. There are aspects of tackling poverty that go beyond the important measure, which I endorse, of getting people off benefits and into work.

I shall say only one more thing, because I do not want to delay hon. Members for too long. Pensioner poverty is a crucial issue. I am very disappointed that the pension credit take-up target is not more ambitious. We heard further words on that from the Chancellor in his statement on the comprehensive spending review. I believe that before the Chancellor's statement, the target was 67 per cent. by 2004; now the target for pension credit take-up includes another 200,000 pensioners, increasing the target by 6 per cent. to 73 per cent. by 2006. That is not an ambitious target. The extra resources for pensioner households are welcome, but the Government need to work much harder. The comprehensive spending review statement was disappointing in that respect.

The Government must concentrate on the number of people on incapacity benefit who want to work, but they must approach the matter sensitively. If they attack the issue inappropriately, people will feel that they are being forced into work when their ill-health makes it impossible for them. That will require additional resources because those cohorts of the work force are currently the furthest away from the active labour market.

Members of the Work and Pensions Committee have visited countries such as the Netherlands, where people take a far more sophisticated approach to working with such groups. Private sector and voluntary groups of specialists get alongside those folk who are in what they describe as the hardest-to-help phase. They have had signal success, not only in getting people ready for work, but in following them through and supporting them during their first three to six months in the labour market. That policy works. The additional support costs money, but the departmental budget will need extra resources if it is to deal with the problem of incapacity benefit. There is a problem in the Netherlands, as there is here, but I hope that the problem will remain on the ministerial desk.

Additional help for child care was announced in the comprehensive spending review earlier this week. That is welcome because child care is an essential item that we must take seriously. I took that message from our study tour to America, but the Select Committee will consider that issue in due course.

Regional job gaps in areas such as Glasgow are another serious issue. The Chancellor goes about giving everyone the impression that there is work to be had all over the country. That is true in the majority of areas, but it is not true in downtown Glasgow, downtown Liverpool and downtown London. That is why the unemployment figures are difficult to explain regionally. The Government's strategy does not take account of

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those gaps—they seem to think that a one-size-fits-all strategy of welfare to work will deal with the problem. Some employment zone projects have been positive; they are being extended, and I hope that they will be further extended. However, job gaps remain which people—even if they have training and the soft skills to which the hon. Member for Wycombe rightly referred—cannot bridge because there is simply no work to be had.

Finally, I concur with the hon. Member for Moray (Angus Robertson) that rural poverty must not be forgotten. Much valuable innovative work is going on in inner cities; I have seen it for myself and it works, but I see no sign of anything special being done for people who live 15 or 20 miles or further away from employment opportunities. Unless the Government maintain a rural-urban balance in their policies, we will fail people in rural areas. The strategy is right, but the funding for the next three years may be inadequate for the important task of fine-tuning the implementation of policies. I hope that the Minister will deal with those points when he makes his winding-up speech.

Mr. Deputy Speaker (Mr. Edward O'Hara): Order. The Minister must have at least 10 minutes to respond to the debate. There are two Front-Bench spokesmen in the Chamber, so if they wish to use all the time available, they may consider it appropriate to use no more than half the time each.

4.24 pm

Mr. David Heath (Somerton and Frome): I should just like to confirm that the debate finishes at half-past 5, so we have sufficient time to make our points. This has been a valuable debate. We have heard some well-reasoned contributions, not least from my hon. Friend the Chairman of the Select Committee on Work and Pensions, whose expertise on the subject far exceeds my own and who managed to say almost everything that I want to say. That shows admirable consistency.

I congratulate the Minister on allowing such a full debate, as it is extremely important that the House debates the issue regularly. In our political activity, we often do not give it sufficient attention. In my own small way, I helped matters in the previous Parliament by securing a debate on rural poverty. That might have been the only time that we had the opportunity during that Parliament to consider some of the issues in the round.

I commend the Minister on how he approached the debate. He applied his usual rationality, and I hope he will accept that if I disagree with him, I do so in the belief that we have the same intentions on poverty reduction. We seek to find the best mechanisms to achieve results. He brought optimism to the debate, as well as satisfaction with what the Government have done. Not all of that was misplaced by any means, as there has been some success.

I am concerned by the possibility that we may not be doing as well as we hope, however, and I want to dwell on that. As my hon. Friend the Member for Roxburgh and Berwickshire (Mr. Kirkwood) said, 30 million people fall into the present definition of poverty. I do not want to get into a debate about how we define poverty in relative or absolute terms; to some extent, that is a sterile debate other than to give us points of reference, so that we know whether we are improving the situation or whether it is regressing.

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My hon. Friend made an important point when he drew attention to the analysis by the New Policy Institute of what is happening. It rightly refers to the Government's success in reducing the total number of people who fall within the definition of poverty. However, on closer examination it reveals that the main component of that reduction is people who find work. That is no mean achievement. Let us celebrate the fact that people are finding work and going into employment, and let us hope that that is largely a result of Government policies functioning well.

We disagree with the Government on aspects of compulsion and benefit sanction, but we do not disagree with their view that tailored programmes to deal directly with people who find it difficult to move into work are the right way to reduce unemployment. My concern is that there is inevitably some fragility.

We have drawn attention many times to the sharp decline of this country's manufacturing base in recent years, and the increasing reliance on service industries. We have also pointed out more recent changes that mean that even new industries such as information technology and financial services are shedding labour. There is a danger that we may go into a world recession that will affect this country, even if not because of our internal policies. If so, unemployment would rise markedly, and we would not be able to maintain even the improvements made to date.

The greater worry brought to light by the work of the New Policy Institute is the evidence that many of those in work are still in poverty. Low income in work has not changed as a factor in terms of the number of people who fall within the definition of poverty. As my hon. Friend the Member for Roxburgh and Berwickshire said, half the adults and children below the threshold—I shall leave pensioners aside for the moment—live in working households. That is a matter of concern, because it suggests that the Government's policies have not yet reached the people at whom they are targeted—those who are in work but still on low incomes. There is plenty of evidence to suggest that that is particularly true of households in which only one person works and of people who are engaged in part-time work.

Why is work no guarantee that a household will be taken out of poverty? If we look behind the figures, it is clear that part of the reason is the reduced take-up of the working families tax credit, which, at 62 per cent., is not adequate. Housing costs are another component, as is the sheer insecurity of many people in low-paid and, very often, temporary employment.

My hon. Friend said that we had seen a narrowing of the poverty base but not a reduction in the depth of poverty. We should be clear about the fact that marginal changes that simply move people from just below poverty level to just above it work well in statistical terms, but they probably do not matter that much to the household and do not change its lifestyle.

It is noticeable that the headline figures are remarkably consistent, with the exception of those for the south-east and eastern regions. Broadly speaking, there has been a reduction, although not, perversely, in the west midlands. A big gap is opening up in the south-east and eastern regions, and it is a concern that the

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proportion of people in poverty in London will soon be twice as big as that in the area that surrounds it. That aside, the figures for the different regions, including Scotland and Wales, fall within a 5 per cent. range. That shows that we have a national problem, not a regional one, although there is a regional dimension.

The Government have rightly made child poverty a prime target. It is an hereditary condition, and those who experience it in childhood will often lack opportunities for educational achievement and will face difficulties in finding employment. As a result, a new generation of children will live in poverty. If we tackle child poverty, we shall make a substantial contribution.

We know that the Government are keen on making progress, although they sometimes overstate things. Immediately before the election, the Chancellor of the Exchequer said that 1.2 million children had been lifted out of poverty, but the official figures later showed that 500,000 had been—a marked disparity. That was immediately followed by the Department's consultation on changing the definition of poverty, although I make no causal connection.

My hon. Friend the Member for Roxburgh and Berwickshire also drew attention to the targets and to whether there is any degree of fudge. I hope that there is not and that we are as crisp now in our objectives as we always were. Objective 1 of the public service agreements still commits us to ensuring the best start for all children and to ending child poverty in 20 years—hooray to that. The 2000 target read:

However, the 2002 target takes a subtly different position, and reads:

I hope that they are consistent targets, but there is at least a worrying suspicion that we may not achieve one of them, that that will become part of the context in which we move towards the other and that there will be scope for slippage. I also observe that 1.5 million children who are in poverty are in working households, a point that I made earlier. Unless we can target the assistance given to working households more effectively, so that those who work are genuinely better off and taken out of poverty—I know that the Minister is committed to that objective—we shall not have achieved our aims.

The second major concern is pensioner poverty. Again, we have differences with the Government about what approach should be taken. We believe that the basic state pension makes an important contribution to reducing pensioner poverty. It has the benefit that it reaches the great majority of pensioners, unlike more targeted measures that, although targeted, often miss those whom we seek to support. I hope that the Government are slightly more ambitious for their own programmes.

Another concern is that the 2002 spending review predicts that more than 1 million pensioner households will miss out on the pension credit. The Government have produced a target to pay pension credit to only three-quarters of those entitled to it—and that is three

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years after it was introduced. It seems that even the Government do not believe that they can reach the needy pensioners who are the supposed target of the measure. If so, that suggests either that the measure is wrong or that something radical needs to be done to encourage uptake.

I commend something that the Minister has not yet mentioned publicly, and I shall ask him to do so today. Last week, I visited the Care Direct pilot scheme in Taunton, which is being trialled in the south-west. It is co-located with NHS Direct, which is a sensible arrangement, and it has the full support of an active social services department. Most important, seconded officials from the Department for Work and Pensions are working proactively within Care Direct. As a result, people can ring up and, whatever the subject, they are directed to all the benefits to which they may be entitled; they do not have to apply for the benefits and then be told that they do not qualify.

That approach is to be commended, and I hope that the scheme will be rolled out to other parts of the country. I hope that doing so will not reduce the effectiveness shown by the pilot schemes. The scheme has had almost no publicity, but it has a high take-up and it is genuinely doing something to the benefit of pensioner families in my area.

Lastly I turn to rural poverty, a subject mentioned by the hon. Member for Angus (Mr. Weir). It was also the subject of my debate in the last Parliament. I make one plea: we should remember that it is much easier to see urban poverty. The hon. Member for South-West Bedfordshire (Andrew Selous) mentioned Tower Hamlets. When in London, I live there—only a stone's throw from Brick lane—and I am aware of what happens there. Indeed, it is impossible not to be aware of it. I am also aware of the relative affluence of those who live in the mean streets of Tower Hamlets and of the City next door, with its untold wealth.

That difficult juxtaposition must be difficult to bear—but let us not forget that many poor people in rural areas are virtually invisible because of a perception that the countryside is an affluent place—a misconception, but nevertheless a conception. Those who are less well off not only have the difficulties of living in a society where they may not be the norm but they have no access to the services necessary to support them. Unfortunately, they have no prospect of access to those services because the Government understandably target those areas with the highest concentration of need.

I shall give an example of that trend, although it does not fall under the Minister's Department. The Department for Culture, Media and Sport targets sports facilities for the most deprived wards. Such help does not apply in my area at all, although people there are poor, live 16 miles from the nearest facility, have no means of getting there, no public transport and no prospect of any access to it. Help is given to areas that already have good facilities on their doorstep. Because they are defined as deprived areas, they receive help while my area receives none. I cannot argue with the most deprived areas being at the head of the queue, but I can argue with the fact that those who are less well off in smaller pockets of the population, such as market towns and villages, are forgotten about altogether. That is wrong, and the Government need to address it.

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The hon. Member for Angus referred explicitly and helpfully to carers and the disabled. I shall not repeat his words. My belief is that a test of not only this Government but all Governments is how they deal with chronic poverty, which did not go away in the Victorian period and was not a matter that the 1906 Government could afford to forget about. It is a matter for today and for this Parliament and Government. Not only are there economic costs of not addressing issues as effectively as possible, but there are huge personal costs in terms of despair, stress and break-up of relationships. That is what we should be addressing and that is what makes this debate so important.

4.41 pm

Mr. James Clappison (Hertsmere): I welcome the opportunity to contribute to the debate from the Conservative Benches. It has been a good debate with interesting contributions from all quarters, including the speech that we have just heard from the hon. Member for Somerton and Frome (Mr. Heath). I shall follow some of the pathways already laid out by other hon. Members.

I enjoyed the Minister's opening remarks in which he set the historical scene and the bipartisan way in which he recognised the achievements of other great historical figures from different political traditions. I shall join in in the same spirit. Just as the Minister paid tribute to some prominent Conservatives, I pay tribute to the previous generations of Labour and Liberal politicians who played their part in tackling poverty. He referred to Lloyd-George, who in his early years in Government harnessed his undoubted energies and talents in the war against poverty, later using the same talents to wage war against the central powers during the first world war. Then, unfortunately, he waged war against some of his Liberal colleagues. However, we shall draw a veil over that and refer to the work that he did in his early period.

Mr. Kirkwood : Withdraw!

Mr. Clappison : I am happy to withdraw that remark, Mr. Deputy Speaker was a great man and one of our great historical figures, but I should not continue for too long on that theme.

I agree with the important points made by my hon. Friends the Members for Wycombe (Mr. Goodman) and for South-West Bedfordshire (Andrew Selous), both of whom referred to the work done by voluntary groups and others besides the state in tackling poverty. My hon. Friend the Member for South-West Bedfordshire was right to draw attention to the way in which a closer relationship between the state and voluntary groups can help those most in need. My hon. Friend the Member for Wycombe made the same point and made some important distinctions between the different types of poverty.

I join with my hon. Friends in paying tribute to all those in the voluntary sector, in charities and in various other groups who work to tackle the problems of poverty. I have seen that work being done in different parts of the country. Just this week, for example, I visited Brighton and met community-based groups of the sort to which my hon. Friends referred. Those groups worked together, sharing premises, to help many

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vulnerable people on the south coast. I met individuals who help the homeless, young people with serious—in many cases, disabling—health conditions, recovering alcoholics and those who are HIV positive. I pay tribute to the work done by all those individuals. Those whom they help also deserve our respect and support.

I shall follow other hon. Members today and take a broad approach to poverty. I do not want to become bogged down in statistics and definitions. I shall raise one or two specific points with the Minister, but I shall not become involved in arguments about the differences between relative and absolute poverty.

I recognise the fact that in Britain today people of different ages who live in urban and rural areas find life a struggle. We must think of how we can help them. Conservative Members are certainly aware of such problems. The Conservative party has a long and fine tradition of one-nation conservatism. The Minister was right to say that that dates back to the time of Disraeli, whose novels drew attention to the differences between the two nations.

At the memorial service for Lord Hailsham, I was reminded of the experiences of the 1930s, to which the hon. Member for Caerphilly (Mr. David) and others referred. People in south Wales and other parts of the country suffered particularly badly during that depression and their experiences shaped the values of a generation of Conservatives among whom the late Lord Hailsham was one of the most distinguished. While the problems of the 1930s were different from today's in scale, nature and background, today's are serious in their own way. It is with that in mind that we take seriously our duty to hold the Government to account for their policies, and there are several issues to which I want the Minister to respond when he winds up the debate.

Other hon. Members have rightly said that tax credits are one of the Government's policy instruments. We have heard a little about them already. There has been no shortage of such policy developments. Between October 1999 and April 2003, the Government will have introduced five new tax credits for families. Four have already been abolished and two new ones introduced. There has been a great deal of activity in tax credits, but if we are to be fully informed about them and their effectiveness, we need to know the take-up figures.

The hon. Member for Somerton and Frome said that there was 62 per cent. take-up for working families tax credit, but the Minister must put on record the precise figure. From time to time, Ministers have made assertions about take-up, but thus far in written answers they have not given the precise figure, even though working families tax credit is now in the process of being abolished. We still have not been given the full picture. It is necessary to have such a figure, and I should be grateful if the Minister gave an account today of the take-up. What proportion of working families tax credit has been taken up in terms of case load and expenditure? Will the hon. Gentleman say how many people are entitled to working families tax credit, but are not in receipt of it?

My hon. Friends referred to another of the Government's chosen policy instruments—the multiplicity of area-based initiatives. There has been no

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shortage of such developments. My hon. Friend the Member for South-West Bedfordshire mentioned the inordinate number of schemes found in some areas. I believe that there are now at least 30 area-based schemes. As he said, often several run side by side at the same time. In Manchester, there are 22 schemes; in Liverpool and Newham, 21. That is an awful lot of schemes for people and communities to get used to.

In 2000 the performance and innovation unit concluded that:

It was no doubt in response to such problems that the Government set up the regional co-ordination unit. It would be useful if the Minister were to discuss the co-ordination of those schemes through that unit, and told us whether the problems that the PIU unit identified in 2000 still exist and what progress the unit has made. We heard today about another unit being set up to co-ordinate Government activities. We should like to hear what has been achieved by the regional co-ordination unit that has already been set up.

We, too, are worried about pensioner poverty. I shall ask the Minister about child poverty, but it is worth remembering that poverty is a problem for other groups, in particular pensioners. I mention pensioners because it is not always as easy for pensioners to move out of poverty as it is for members of some other groups, as hon. Members on both sides said. Many pensioners, especially older ones, live in poverty, and we are worried about them in our approach to the matter.

We are also conscious of the fact that many people who are soon to be pensioners are apprehensive about their future living standards in the light of the crisis in funding pensions. Against that background, I ask the Minister to say a little more about pensioner poverty and to deal with the points that made, including the arguments about benefit take-up by pensioners, which is important. We heard today that 1 million pensioners might not be receiving the minimum income guarantee, which is the successor to income support. Is the proportion of entitled pensioners who take up the minimum income guarantee rising or falling? It would be useful if the Minister were to give an account of the size of that proportion.

Pensioners must grapple with ever-increasing complexity in the system. An increasing proportion face many serious problems, and an increasing number face means-testing in future. The Minister may be aware of recent exchanges about the proposals for the Pension Service and home visits. Hon. Members on both sides of the Chamber referred to the way in which pensioners have to grapple with a complex system. We have been led to believe that the Pension Service will help pensioners, but there have been differences of opinion on how it will operate. It would be useful if the Minister were to give a definitive statement about how home visits will operate, and in particular whether any pensioner who wants a home visit will be entitled to one.

Delivery of services to pensioners and other benefit recipients is a specific and pressing subject. Will the Minister say a few words about the universal bank, which is intended to provide a service for many poorer

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people and to which many sub-post offices are looking as a source of relief? This is our last opportunity to raise the issue with Ministers for several months, and time is pressing on. The universal bank is scheduled to open in April 2003 to coincide with the introduction of automated credit transfer, and it is important from all points of view that that is co-ordinated. For some time, Ministers have been telling us that progress is being made, but we would like the Minister to reassure us today about the latest position on the universal bank.

We share the concern about child poverty and the questions about what has been achieved. No doubt the Minister heard the points that were made and wants to respond to them. We share the objective of tackling child poverty and the consciousness of the problem of rural poverty, concern about which was expressed from certain quarters. The remoteness of rural services can affect people living in rural areas, and they can face quite different problems of poverty. We regard those problems as being every bit as serious as poverty in urban areas and other settings.

I hope that the Minister will not mind me pressing him on these points, but they are important to people who are less well off. It is important to get at the facts about poverty. We recognise the challenge that poverty presents to all political parties. Issues of significant public interest are at stake, not least the substantial sums of public money involved in his Department's budget and the Treasury spending on tax credits. My hon. Friend the Member for South-West Bedfordshire rightly referred to the scale of that spending compared with that of other Departments, especially the Department of Health and the Department for Education and Skills. We want to hold the Government to account on those significant issues, but share the concern and consciousness of poverty and the expressed wish to tackle poverty effectively in Britain today.

4.56 pm

Malcolm Wicks : I welcome you to the Chair, Mr. Deputy Speaker, albeit late in the day. I note that, this week, you have chaired debates in which I have spoken, not least that on the Housing Benefit (Withholding of Payment) Bill that was introduced by my right hon. Friend the Member for Birkenhead (Mr. Field). It is a pleasure to see you again in the Chair, although you may not be so pleased to see me.

It is customary on these occasions to say that this has been a useful and interesting debate. It is true that we have heard several distinguished and interesting contributions, and I thank colleagues for the way in which they have addressed the issues. I indicated to the Chair that I might require 10 minutes to reply. That is still my intention, but it could be quite a long 10 minutes, as I want to do my best to reply to the detailed points raised. As is usual on these occasions, not least with regard to the more statistical and technical issues, it might be more sensible if I write to colleagues.

The hon. Member for South-West Bedfordshire (Andrew Selous) made a thoughtful and helpful contribution, and I will pick up on one or two of his more detailed points. I think that he was saying that social security expenditure has increased despite the Government's intentions. That is true, especially when one brings the tax credit system into the equation, as one

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must. Our objective was always to reduce what we call the costs of economic failure. The evidence shows that we have reduced those costs in the social security system. The figures that I have to hand show that expenditure on unemployment benefits—to use the old-fashioned language—has declined since 1996-97 by £9 billion. I am sure that we would all welcome that. We proclaim the fact that, perfectly properly, we are spending more money on child benefit and pensions, and none of us would consider that a great economic burden. We must consider whether the components of social security spending are moving in the right direction. I contend that the evidence base shows that they are.

I was intrigued by the hon. Gentleman's account of what was clearly a useful Select Committee study tour to the United States of America. I look forward to reading the report. It seems to have been an interesting visit, and I am rather envious because I used to be a member of the Committee. I accept the point about the need to work closely with people who are excluded or alienated from the labour market. One of our greatest challenges is to work out how to help a range of differently excluded groups. For example, we must help the man—they are often men—in his mid-50s who has not worked for five or more years and who feels that he will never get a job again. We must work with him to combat the age discrimination that affects him. Another serious example is that of a hard drug addict, but we now have resources in the Department to tackle that extremely difficult problem.

However we work with such groups, the face-to-face contact with a personal adviser is crucial. I remember visiting a mobile unit that was part of our action team for jobs on an estate in Glasgow, and I was told about an 18 or 19-year-old man who had not been in work since leaving school at 16. His adult life had had the worst possible start, but people worked with him and counselled him, and he was offered an interview at a warehouse. He did not have a jacket, tie, shirt and the rest to wear to the interview. However, because of the flexible funding available under the action team for jobs and an arrangement with a local clothing store, he was kitted out, got the job and is now working well. That is an example of the intensive care that some people of all ages need.

When we proclaim the achievement of having almost 75 per cent. of people of working age in work, we must ask who make up the other 25 per cent. and how can we work to help them. It is true almost by definition that working with that group will always be more difficult because of the exclusion that some people experience. [Interruption.] Word reaches me that a vote in the House is imminent.

The hon. Member for South-West Bedfordshire also spoke about pockets of deprivation in affluent areas. I understand his point, and the area approach has been discussed. In the late 1970s when I was very young, I worked in the Home Office deprivation unit on generating area approaches. The Conservative Government pursued the policy as well, so it has been a feature of all Governments. However, I understand that there can be a great deal of poverty in seemingly affluent areas, sometimes spatially concentrated and other times more dispersed. The sure start scheme is conducting research on how to direct help to children in rural areas and to what the hon. Gentleman described as small pockets of deprivation.

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There was good news in this week's announcement that the education maintenance allowances, about which I knew something when I was a Minister in what was the Department for Education and Employment, are now to go nationwide. We piloted them extensively in poor areas in a third of the country, and they will mean that a 16-year-old in Bedfordshire, Croydon or wherever who stays on in education or training, or who needs to be persuaded to do so, will benefit from that education maintenance allowance. There are some steps in the right direction, at least.

I turn to the contribution made by my hon. Friend the Member for Caerphilly (Mr. David), who had to leave the debate earlier because of other business but has now returned. He drew on his experience of Wales and of its history—the economic disadvantage that has so shaped the thinking of the people of Wales and their political representatives. He mentioned the important generation that included Jim Griffiths, who, as I recall, was largely responsible for the national insurance system after the war, following on from the Beveridge report. My hon. Friend understandably emphasised the importance of full employment.

As I think I implied earlier, when reflecting on what I have heard about the United States visit, in some respects, our difficulties today are greater and more complex, although that might seem a foolish thing to say. We are no longer talking about an economy in which literally millions of men—they were mainly men—worked in the great industries such as steel, the shipyards and coal mining. We are now talking about an era in which more and more jobs are in small and medium-sized enterprises. We need to understand the individual. The task of Jobcentre Plus therefore becomes more complex in some respects, although I am not saying that today's circumstances compare economically with the difficulties faced before the war. I would not say anything as naive as that.

My hon. Friend mentioned high rates of economic inactivity, and that issue has been a feature of our debate. We need to recognise that, although the figures for unemployment are moving in the right direction, it should not hide the fact that, many people, not least those in their 50s, are economically inactive. They are not in work and are often on incapacity benefit. I seem to recall that about one in three men aged 50 to 65 across our country are economically inactive. We need to ask serious questions about that.

5.7 pm

Sitting suspended for a Division in the House.

5.22 pm

On resuming—

Malcolm Wicks : Before we went to vote in the Chamber, I was making the point to my hon. Friend the Member for Caerphilly that the issues raised by economic inactivity rates are very important and quite challenging. We recognise that many people have physical incapacities or disabilities, such as the muscular or skeletal problems found in those who worked in

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heavy industry, and we also recognise that, in the last decade or so, the number of conditions associated with mental stress seems to have grown.

There is absolutely no question but that those with serious disabilities have an absolute right to be on benefit—there should be no doubt about that—but the fact is that the numbers drawing incapacity benefit are now three times higher than they were in 1980. Therefore, some serious questions must be asked. One of the future strands of thinking has to be how we better join up—I am afraid I use that phrase again—different aspects of government to offer a rehabilitation service for people with such disabilities. Economic inactivity among the over-50s—and some younger people—is now one of the great challenges facing the Government. I welcome the way in which my hon. Friend introduced that important subject.

The hon. Member for Wycombe (Mr. Goodman) put emphasis on those in permanent poverty. He picked up on a point that I raised concerning the statistics. Clearly, students are relatively poor, as I seem to recall from my experience. Nevertheless, if children spend too much of their childhood in poor families, they get off to the poorest, in all senses of the word, start in life.

I was interested in what the hon. Gentleman said about a lack of social capital. We have something to learn from some of our ethnic communities. We often talk about ethnicity and ethnic minorities in a global, generalised way, which I find unhelpful, not least in my constituency of Croydon, North where different ethnic communities make up perhaps one third of the electorate. I am always struck, not only when I meet families and talk to them about education but when I see the data, by how well our children of Indian origin—they are mostly Gujarati in my constituency—are doing in schools. They outperform the indigenous white population. When I visit homes and see children doing homework in cramped conditions, I realise that the ethic is about improvement. A huge value is placed on education. Parents accept that their role is as important as that of the teacher and the school, and many other communities should reflect on, and draw upon, that example.

Pension credit has been a feature of one or two contributions. We understand the problem of entitlements not being taken up by older people. We are doing our best to simplifythe claim process for the minimum income guarantee—indeed, we have simplified it—and will seek to ensure that pension credit claims are as simple as possible, which is important.

We should acknowledge that means-tested benefits, whether they are new forms such as pension credit or more traditional forms, always have advantages and disadvantages, and I have been interested in that debate for some time. The great advantage of means-testing is that one can concentrate resources on the poorest, but a disadvantage is that one needs to work hard to explain and communicate the details of such benefits. Whether it was national assistance, supplementary benefit, income support or pension credit, all Governments since the war should have worked harder to get the message across, and we need to acknowledge that.

Mr. Kirkwood : The Minister is right that we need to be honest. The new Pension Service is using new

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technology, making contact by telephone and is well placed to persuade people to take the extra step and claim their entitlement. That is why the increase in the targets over the next three-year period is very disappointing.

Malcolm Wicks : The new Pension Service, which is a new aspect of business in our Department, will enable staff to talk to people on a one-to-one basis about their entitlement. Staff will use the opportunity of telephone contact to answer not only the immediate query, which might be about a pension, but to talk to people about other entitlements. There will be home visits where appropriate and we need local outlets, but the service provides us with one way in which we can start to tackle an issue that remains a problem.

Mr. Clappison : The Minister has just said that there will be room for home visits where appropriate, and I want to press him on that. If a pensioner wishes to receive a home visit, will they receive one?

Malcolm Wicks : Yes, that is the intention. If someone wishes to receive a home visit they should receive one, and we are developing our ideas about that. The Pension Service is very new, but that must be the approach. I imagine that the hon. Gentleman probably makes home visits when they are appropriate in his constituency. I certainly do in my constituency. People often want to show one something in their home or they may be too infirm to visit a constituency office. Any decent service has to provide an entitlement to home visits.

Andrew Selous : I must admit to becoming increasingly confused on the specific point about whether pensioners will be entitled to a home service if they want it. The chief executive of the Pension Service, Alexis Cleveland, clearly told the Select Committee that the Pension Service will decide who gets a home visit. Normally, it will be a telephone-based service and home visits will be granted at the say-so of the Pension Service and not at the choice of the pensioner.

Malcolm Wicks : If the hon. Gentleman finds it helpful for me to write to him in greater detail, I shall. The purpose of the new Pension Service is to offer a better, customer-focused, more individual service to our elders. We know from experience that many prefer to have interaction over the telephone, and that often works well. We are thinking hard about how to localise the service. Many people—not a huge proportion, but thousands of cases—would welcome home visits, and the service has to provide that. I shall write to him with more information on that point. I am more a Minister for work than for pensions, but I shall try to clarify the issue.

I understand the complexities that pensioners face. It might help if I briefly say something about a recent decision on housing benefit. By and large, people on housing benefit have to reapply for it every year. They have to fill in a new form and produce the necessary documentation. As the Minister responsible for housing benefit, I have recently examined the issue and decided, not least because I was influenced by the logic of pension credit, that we will end that rule. Yes, if people win the

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lottery, they will have to report a change of circumstance. We must secure the system, but the idea of an 85-year-old having to reapply every year for housing benefit when circumstances have not changed is nonsense. I know from constituency cases that reapplying can cause real distress, so we have decided to abolish the need for that, and the decision will take effect in the near future. I hope that I have outlined our approach to the matter.

The hon. Member for Wycombe raised marriage as a sub-theme of our discussion. He understandably made the point that politicians must tread carefully on such issues. I agree. However, I do not think that treading carefully on issues such as family policy necessarily means walking backwards fast. I accept the prejudice, based on substantive and quantitative evidence from the 1958 longitudinal study, that children brought up in stable families do better over a whole range of indicators than others. There is no doubt about that in my judgment. Usually, such results are associated with marriage, but I want to be deliberately careful when mentioning that. As a demographic or sociological point, whether the results are related to the marriage per se or to the stability and seriousness of couples who decide to get married rather than have other arrangements, that is something that we could debate. Nevertheless, we must not be too complacent about marriage because, as has been acknowledged, this country has exceedingly high divorce rates. Many children suffer as a consequence of the divorce of their parents. We are certainly in difficult territory.

The hon. Member for Angus (Mr. Weir) was a little more pessimistic than some—he should cheer up. I am not complacent when I consider the issue of poverty. I have been trying to do something about it for much of my career, but some of the indicators should make him happier than he seems to be. He was trying to have fun with the estimate of the number of children now out of poverty, but there are different ways of looking at that.

The fact that a million or so children might be financially better off because their parents have cash in their pockets is important. However, the real improvement—I mean real in the technical sense—is that 500,000 children have been taken out of poverty since the election. That is an achievement from which we should take some satisfaction, as we gather up the strength and confidence to go further down that path.

Mr. Weir rose—

Malcolm Wicks : The hon. Gentleman has cheered up and wants to intervene.

Mr. Weir : The Minister said that I was having fun. I was not. The point is that the Government tried to spin the issue in a certain way, but that backfired on them. No one disputes that 500,000 children have been taken out of poverty. That is a good thing, but the Government then claimed that the figure was 1.2 million; and then, as the hon. Member for Somerton and Frome (Mr. Heath) pointed out, they attempted to redefine poverty.

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Malcolm Wicks : I am committed, as an egalitarian, to concepts of relative poverty, but I recognise that my constituents are not so fascinated by it and are more interested in whether they have enough money in their pockets to buy things for their children. Both perspectives are important.

The hon. Gentleman was slightly unfair about our position for pensioners. Whatever his misgivings, the Government have spent a great deal more money on pensioners—an extra £6 billion a year in real terms—as a result of the policies that we have introduced since 1997. Although many people debate the earnings link—I always listen; it is an interesting debate—we are now spending three times more than an earnings link since 1998 would have given pensioners. We must put these things into perspective.

I realise that there is still too much unemployment throughout the nation and in Scotland. There is also a spatial dimension to that. I have mentioned my discussions with Glasgow Members about some interesting projects there that guarantee work in intermediate labour markets, and I am committed to helping such projects. However, the employment rate in Scotland is 73.5 per cent., which is slightly less than the Great Britain total. Unemployment rates on both measures are rather higher in Scotland than in England, but the employment rate has risen by more than 3 per cent. since 1997. The unemployment rate on both counts has fallen, so we are moving in the right direction.

The hon. Member for Roxburgh and Berwickshire (Mr. Kirkwood)—I think of him as my hon. Friend; he was Chairman of the Select Committee when I was a member—asked about the spending review. We know that spending in recent times has been directed towards priorities in health, education, transport and so on. My Department already accounts for 29 per cent. of total public spending, although that figure may include tax credits. However, that is a huge percentage of the total budget. We have been engaged in redirecting that budget as unemployment reduces, directing instead towards priorities for children, pensioners and those with disabilities.

We have not been forgotten by my right hon. Friend the Chancellor of the Exchequer. We have made sure of the money that is needed to roll out Jobcentre Plus, and we have also secured £200 million over three years to help local authorities achieve national performance standards in housing benefit. I felt vulnerable when asking housing authorities to improve their act on housing benefit because I could not offer them the financial support that they needed. We now have the money, and there will be a 50 per cent. increase in funding for anti-fraud work for all local authorities who take up the verification framework. I know that the hon. Member for Roxburgh and Berwickshire is interested in that. As a quid pro quo we offered—the offer has been accepted—to introduce the first anti-fraud housing benefit target of a 25 per cent. reduction by 2006. We are investing in local authorities, but the tackling of fraud has to be a priority for them.

The hon. Gentleman raised important points about the public's perception of the greed of company directors. My only comment on that would be that we are all engaged, in our different ways, in trying to make sense of the balance between rights and responsibilities in society and in trying to promote an ethical framework

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for what we do in our private lives and in terms of public spending. The debate about housing benefit sanctions, which the House is holding tomorrow, is an aspect of that. Those who are already powerful and rich must not be seen to be undermining that framework. Our position is that, if responsibility is good enough for the poor and the powerless, it is certainly good enough for the rich and the powerful. It undermines what we are about if all our citizens do not accept that.

I was asked about the child poverty target, for which my Department has joint responsibility with the Treasury. The target is to reduce by a quarter the number of children in relative low income below 60 per cent. of median by 2004, against a 1998-99 baseline. It will be monitored using household below average incomes data. The results show that we are around a third of the way there, after a third of the time. That represents good progress.

On rural areas, we should be very sensitive. All of us, not least those of us who are Londoners, tend to think about poverty in terms of urban conglomerations, inner-city poverty and housing estates. As we recognised in the earlier discussion on Bedfordshire, there is rural poverty and the Government understand that. There are success stories, however. I am told, for example, that the jobcentre in Argyll and Bute has a high success rate with the new deal. We are thinking hard about the new technology available, such as the job points in jobcentre offices. We should consider how we could put those job points into rural areas and other locations, using premises in the voluntary and private sectors if necessary, and some in the public sector, such as post offices. Technology can help, although I am not implying that it is the whole answer.

The hon. Member for Somerton and Frome (Mr. Heath) reminded us of the world economy and was thoughtful about its impact on jobs. I reiterate the importance of skills in relation to that. The more that we can skill-up our work force—starting with the young but going right through to those who are jobless in their fifties—the stronger our position will be should the world economy take a more difficult path. The Learning and Skills Council in England, the equivalent body in Wales, initiatives in Scotland and the Connexions service for young people will all help with that.

The hon. Member for Hertsmere (Mr. Clappison) paid tribute to voluntary groups, acknowledging their important role. Although the state must properly take the lead in producing a more socially secure society through employment and social security and tax benefits, the voluntary sector or other agencies of the welfare state in local government and the health service can do very important work with families in great difficulties.

The hon. Member for South-West Bedfordshire mentioned Homestart. I have seen its work in my constituency and it plays a remarkably good role with fragile families that need help with skills and on other fronts.

Some interest was expressed in the take-up figures for the working families tax credit. We should all acknowledge that there are now nearly 450,000 more awards under that system than there were under the family credit. Whatever the take-up problems, there has been a great deal of success. I am advised—this is an

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Inland Revenue matter and we are in close touch—that it is not possible clearly to identify how many families could be entitled to tax credit.

On the universal bank, I am not in a position to add to the statements that have already been made. We have done our best to keep the House informed of progress. We are committed to the bank as we move towards automatic credit transfer, which is necessary to help us

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in the battle against fraud and to enable more people to have bank or post office accounts and to become part of the financial mainstream. Nevertheless, we shall safeguard the desire of many of our pensioners to continue to be able to go to the post office—

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