Examination of Witnesses (Questions 500-519)
11 FEBRUARY 2004
RT HON
ANDREW SMITH
MP AND MR
TOM TAYLOR
Q500 Mr Goodman: I was asking about news
on the old cases. I was under the impression you have just given
us that, but you have not, have you? You were referring to new
cases?
Mr Smith: I was referring to the
performance of the new system which, as I said, has improved,
but it still is not good enough.
Q501 Mr Goodman: So where are we on these
new cases? You come before us again and again and Doug Smith comes
before us again and again and we were told when Doug Smith last
came that new software was expected that would enable the transfer
to take place, but we also read that there are some 40 million
mistaken items which are holding up the transfer of the old cases
to the new system. Now, where are we on this and do you have a
timetable for transfer?
Mr Smith: It is not that there
are particular items holding it up. The fundamental problem here
is that the new system still is not working well enough and that
is because of design and software failings. Obviously we are continuing
first of all to withhold significant payments from EDS. Obviously
the Chief Executive, others and myself have had EDS in. We have
been assured that there is a recovery programme in place, that
we will be seeing the milestones against which that recovery can
be judged, and that the system is retrievable, in other words,
can be made to work properly rather than needing to be scrapped,
but I am certainly very impatient to see delivery by EDS of the
commitments they have made.
Q502 Mr Goodman: But you have not got
a date? You have just said that the system is retrievable, but
you have no date by when?
Mr Smith: We have actually got
a programme for the recovery of the system to a satisfactory operating
standard of some six to nine months, so we are talking about by
the autumn of this year.
Q503 Mr Goodman: From now?
Mr Smith: No, from the beginning
of the year.
Chairman: Thank you. I really do not
want this turned into a Child Support Agency inquiry because we
are doing that in another context. This is about child poverty.
Q504 Andrew Selous: Another aspect of
the CSA which I am still at a loss to understand the Government's
policy on is the enforcement side of it. Given that we know that
70% of parents with care are either getting nothing at all or
less than they should be, and I accept the problems with old and
new systems but where there is a calculation in place and parents
know what they should be getting, 70% either get nothing or get
less than they should. You have a range of enforcement powers
at your disposal that you are very loathe to use. Could you elaborate
on that? Does that make a critical difference?
Mr Smith: I share your concern
about this. When I was last in front of you I said I would take
a personal interest in it, and I have been doing that. I told
you there was a review of enforcement under way, as indeed there
has been: that will be complete next month and when we have the
report I will share it with the Committee.
Q505 Mr Dismore: Going back to what you
just said a couple of answers ago, has consideration been given
to scrapping the new system?
Mr Smith: If it could not be made
to work properly you would not have an alternative, would you?
Q506 Mr Dismore: Because what you said
was, going back to the previous answer, you seemed to be inferring
that thought had already been given to the possibility of scrapping
it?
Mr Smith: I think I can add to
what I have just said. Clearly when you have been through the
sort of experience we and all the clients of the CSA have been
through on this you ask some hard questions about whether it really
can be made to work, given that the original design and original
commitments that were made were not fulfilled. Now, we are assured
that it can be but, if that turned out not to be the case, then
you might have an alternative.
Q507 Mr Dismore: Moving on to the questions
I really wanted to focus on which are some of the regional issues
relating to child poverty, if one looks at the figures, half of
the wards in London fall into the most deprived 20%; London has
the greatest percentage of wards in the most deprived 20%; if
you look at the highest rates of income, deprived children comparatively
in 1999 one London borough was in the top four, and in 1999 there
were eleven London boroughs in the top twenty. If you look at
the figures for 2001 we now have three out of four London boroughs
in the top four; five out of six in the top six, and thirteen
out of twenty in the top twentyor bottom twenty depending
on how you look at it. Why?
Mr Smith: I agree with you that
there is a particular challenge in London, both on poverty and
on employment. I think the costs and the barriers to moving into
work in London in a number of respects are high, and where other
urban conglomerations, including as they all do inner city areas,
exhibit some of the barriers to moving into work, London exhibits
just about all of themfactors like costs of travel to work:
the interaction, we have discussed previously, of housing benefit
with work incentives: readiness and affordability of people to
travel across London's labour markets: the ethnic composition
of the capital, therefore replicating some of the other barriers,
including discrimination, which I referred to earlier.
Q508 Mr Dismore: On that basis, would
you accept that unless we can make real inroads into child poverty
in London, the prospect of the Government achieving its targets,
bearing in mind how many of the children live in London compared
to nationally, is not possible?
Mr Smith: Yes, I would agree that
progress in London is an absolutely necessary condition towards
hitting our target.
Q509 Mr Dismore: So does it make sense
for so much of London's resources to be taken out of London to
other parts of the country whilst we are still trying to tackle
these serious problems here?
Mr Smith: Well, there is a substantial
resource being spent in London. I would, though, point to some
of the initiatives I have already mentioned, where I would put
it to you that we have acknowledged the strength of the case that
you are making and which London has. In relation to costs, for
example, the fact that the in-work credit, the extra £40
a week for the first year of employment for lone parents is to
be rolled out in general across London with the exception of the
employment retention and advancement project area in north east
London, is an acknowledgement of that. I referred earlier to the
extended childcare pilots. Two of those are in London, in Lewisham
and in Hackney, and other measures that we are taking, for example
the work I referred to under way to tackle barriers to ethnic
minority employment, will help us address this challenge.
Q510 Mr Dismore: The problem, Andrew,
is this: it used to be an East End problem and that is how it
was perceived, but now the problem is in east London, west London,
central London, south London and north London. It is a pan London
problem if you look at the top twenty boroughs and districts that
have child poverty, and that is before you even get into the question
of pockets of deprivation in what have always been perceived as
the wealthier boroughs. My borough, Barnet, has been perceived
as one of the wealthier ones but we have real significant pockets
of deprivation at ward level and below on a district level. My
concern is that the position is getting worse despite the measures
the Government has been taking, not getting better, not standing
still, and the figures I have put to you show that the position
is getting worse. Now, I imagine you are going to tell me the
2003 figures are going to show a miraculous change; how are we
really going to make enough impact in the very short time left
to start to get the Government's targets met?
Mr Smith: By ensuring that the
range of measures we already have in place work even more effectively
in London. It is one of the reasons why we, for example, transferred
the bulk of the New Deal for Lone Parent provision in London to
employment zones. There is the in-work premium to which I have
already referred. It is not just a figure plucked out of the air:
that £40 difference is something which survey work we have
done shows in London in particular could make a crucial difference
in terms of the gains and incentives to move into work, but we
have to do more on the other initiatives we are taking and do
better, frankly, on the wider determinants of poverty that I mentioned
right at the beginning of this session, which again particularly
focus in London around education, around health, and around housing.
Q511 Mr Dismore: Obviously the £40
is a welcome initiative but if one just looks at the question
of the differential in child care costs in London, never mind
the travel to work costs which you also mentioned, frankly it
is not going to meet the difference?
Mr Smith: But, of course, they
will on average, and I think the figures bear this out, be receiving
more in relation to child care costs. I accept that the child
care costs are particularly high and that these are issues on
which rapidly the analysis which we are able to undertake and
review of policies for the future will need fully to take into
account.
Q512 Mr Dismore: Can I infer from that
that the data is going to be made available much more quickly
and more localised as well, so that we can get a much better handle
more quickly on what is going on in the boroughs?
Mr Smith: Yes, insofar as we can,
certainly. What I was trying to signal there is that I do appreciate
the urgency of the challenge
Q513 Ms Buck: You will not be surprised
to know that we wanted to ask you a few questions about the definition
issue about housing costs which was in the media today, and I
think very much this argument fits into the questions we have
just been asking you about regional variations. I understand that
the argument is to bring the definition into line with that of
other European countries, although when we were discussing earlier
some of the issues about measurement of poverty and about an approach
which is both relative and based on budget standards, it was pointed
out that other countries do develop a budget standard approach
which we seem to find difficult, so I am not entirely sure that
the binding nature of bringing things into line and having a definition
with other EU countries is always inviolate. Could you tell us
a bit more about why you made this decision, and could you also
tell us what you think the impact of that decision is going to
be?
Mr Smith: Certainly if we are
to judge whether we are amongst the best in Europe it makes sense
to be looking at the relative component on the same basis of measurement
as the rest of Europe is using, but one thing I would stress on
the new measure is that it has these different components but
we have to look at it in the round and I believe that, as you
do so, especially taking account of part of the combined material
deprivation of relative measure, if there are particular variations
because of variations in housing costs then it will be picked
up there.
Q514 Ms Buck: So are you giving us an
absolute commitment that you will continue to produce and measure
the after-housing cost statistics so that we are able to continue
monitoring what the variation is between BHC and AHC?
Mr Smith: Certainly, as far as
the Government is concerned, that is our intention. The proviso
I have to put in this is national statistics and independence
and all of that, but I think it is right that information should
be available.
Mr Taylor: Adding to that, I asked
my national statistics colleague who controls the HBAI publication
whether National Statistics has any plans to move away from publishing
both before housing costs and after housing costs, and he said,
"No, definitively not".
Q515 Ms Buck: That is reassuring, but
will you as a Government as well continue to at least demonstrate
to us so that in addition to whatever EU comparisons we are making
we are able to see a trend over time based on before and after
housing costs? When Helen John was giving evidence last week I
asked her if the Treasury had a view as to whether there was a
potential by widening gap between the numbers as measured before
housing costs and after, and she was not sure. My worry is that
this is likely to be the case given the issue about variable housing
costs and the trends in housing costs in different parts of the
country.
Mr Taylor: I think it is important
that the information is available and that people can reach a
judgment on these issues, including the trend in the gap, but
the point I was making earlierand I think this has been
missed in some of the commentaryis that if you assume for
the purposes of argument the housing costs are particularly high,
of growing importance in the way you suggest, and that this is
somehow overstating our progress on poverty because the before
housing costs measure is being used, then because of the interaction
with material deprivation what you would expect is that, even
though people might have nominally quite a high before housing
cost incomeone that puts them over the thresholdif,
because of the extent of their housing costs, the kids cannot
afford to have friends round or a swimming lesson or heat the
house adequately, which are the sorts of effect you would expect,
those will be picked up in the material deprivation survey. If,
on the other hand, you found that there were quite high housing
costs but they were not having that sort of effect on the constellation
of indicators that reliably indicate material deprivation, then
clearly there would not be so much of a problem. What I am saying
is there is a discriminator there which is meaningful in terms
of the progress we are making, meaningful in terms of popular
understanding of what poverty is about, that will highlight this
problem even if the main relative measure is on a before housing
cost basis.
Q516 Ms Buck: "Up to a point, Lord
Copper", I would have thought is the answer to that because
yes, that is an additional useful set of indicators, but what
would worry me very much is that we were replacing a very hard,
very visible, very clear measurement of household income with
a basket of goods approach which may or may not give you that
range of data?
Mr Smith: It is not simply replacing
the basket of goods approach because you have the other components
of the measure as well but careful statistical work goesit
is not just a random collection of goods and servicesinto
identifying those which really are the best indicators of poverty.
Q517 Ms Buck: What worries me is this:
you know I am all for Britain on this subject but when it comes
to the measurement of exactly this issue in respect of private
rented accommodation, we know how many people are meeting part
of the cost of their rent out of their income supportit
is a well known fact, we know next to nothing about it other than
by going out and doing specific local research in places like
Brent. We know there are hundreds of thousands of families subsidising
their rent at income support level and we know next to nothing
about their characteristics, and I have always thought that was,
frankly, a disgrace, and it would really worry me if, by adopting
this change, we made it harder to grasp that minorityand
I completely accept it isthat very needy, very vulnerable
minority who can get below the radar.
Mr Smith: As I was saying, I believe
this will be picked up in the surveys on which goods and services
people cannot afford because of the impact it would have and the
circumstances you describe on what people have got money to spend
on, but I am not disputing that to have an after housing cost
measure out there as another check on this and another pointer
to areas of research is useful, as I said earlier, we will maintain
the other series of indicators that we use in opportunity for
all, as well as the other statistics that are available nationally.
It will enable people to make a rounded judgment and if, over
time, there are particular issues like this then more intensive
work can be done to show the gains we are making, or the lack
of progress, if that is what there is.
Q518 Ms Buck: But do you accept that
at the moment we know very little indeed about the pressures and
characteristics of the families living below the income support
standard? We know how many there arewe have a statistical
measurement of thatbut we know next to nothing about them.
Do we accept that we do have a bit of a gap in knowledge there?
Mr Smith: I certainly accept that
more knowledge in this area would be helpful. I am also putting
it to you, though, that our proposed tiered approach composite
measure is going to be telling us more about this in certain respects
than the measures we are using at the moment.
Q519 Ms Buck: So you are confident that,
having already recognised that there is a possibility that there
will be households with high housing costs where we overstate
their living standards with the present measures, your approach
will track them, identify the numbers and identify their characteristics?
Mr Smith: I certainly accept that
pressure on housing costs. Where I think you start to run into
a difficulty is how far some of those housing costs are discretionary.
I accept many people have very little choice about these matters
but there is some choice and, of course, as you know, we are bringing
forward the local housing allowance to enable people to exercise
those choices. It is not as though there are no other components
of some people's budgets about which you might make a similar
argument. Extra costs of disability, for example, might be one
of them. We have to judge these issues in the round: our proposed
measure is a sound way of capturing the essence of poverty. Of
course, the more that is amplified by a more diverse specific
range of statistics, including the after housing cost measures,
including surveys of the choices that are facing people in those
poor households, and what the impact is on their living standards,
the health and welfare of themselves and their children is all
valuable as well. It all goes towards the rounded judgment that
we and the public need to make.
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