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4 July 2006 : Column 189WH—continued
“all parties...to commit to eradicate child poverty.”
It is saying that that should not be a vague aspiration or notion, but must be a hard and firm commitment to tackling what I have indicated is the crux of the issue—income inequality.
The CPAG says that there should be “poverty proof policies”—no doubt, Lisa Harker might be part of that in respect of the cross-cutting overview—making each policy consistent with eradicating child poverty. We need to avoid the silo idea and to ensure that one Department is not doing something that damages or acts against others’ interests.
I have exhorted the Minister to do all he can to eradicate what I would term the “glitches” in the tax credits and benefits system—others might put that differently. I support the tax credits system, as does the CPAG, but I ask the Government to examine take-up, because it is classically known in welfare work that it is possible to have a perfect system of benefit for something, yet people do not take it up or access it. The latest Government figures that I have seen showed that in 2004, 79 per cent. of those eligible for child tax credits were accessing them. If we could up that figure, income inequality would be addressed, almost by definition.
In general terms, but not in terms of income inequality, we should ensure that all children have access to decent education, school meals, uniforms, physical activity and jobs that are, as the CPAG said, not just jobs, but better jobs.
My constituency has one of the largest council estates in the country, and the mums that we have been able to encourage back to work have benefited on two fronts. First, they gained confidence because they had never worked, or had not worked for such a long time that they did not have the confidence to go back to the world of work and had become convinced that they could not. Secondly, they gained upskilling and training around those issues and obtained national
vocational qualifications in various subjects, such as maths, English and IT skills, which enabled them to work. It is important to ensure that training opportunities are available.
The Government set out in the right direction and should be congratulated on having the courage to take on the issue. One of the groups that I have referred to said that no one underestimates the scale of the task. It is not easy and could have been ducked. The Government did not duck it, but we are not quite there and we may miss the target, so I ask them to redouble their efforts.
10.12 am
Mr. David Laws (Yeovil) (LD): I congratulate the hon. Member for Wirral, West (Stephen Hesford) on raising such an important issue today and for an extremely thoughtful and non-partisan speech covering an extensive subject.
The hon. Gentleman talked about trying to engage the population at large with child poverty and to make them understand it. That is important. I regret that more hon. Members were not present to listen to his speech on what is a flagship element of Government policy. That may say something about the difficulty of engaging with an extremely large subject that crosses many portfolios. If we have problems engaging hon. Members in the debate, that demonstrates the difficulty of explaining to people in the wider country how extensive child poverty is and making them understand what poverty is in Britain compared with poverty in developing countries, which they understand better, and securing the sort of consensus that the hon. Gentleman and the Government talked about to continue the progress made in recent years.
I was pleased that the Secretary of State recently indicated that child poverty will be the No. 1 priority for his Department and I congratulate the Minister on having responsibility for the issue in the Department. Although I anticipated having less time than is available, this is still an extremely brief debate to cover an important and complex issue. I may be wrong, but I believe that this is the only debate on child poverty that we have had in the House since the general election. That is surprising, and it highlights the difficulty of engaging people with a subject that is the No. 1 departmental priority that we have not had other opportunities to debate it. I hope that the Minister will reflect on that and talk to the Secretary of State about it. Perhaps an opportunity can be found later this year for a more extensive debate to allow the issues to be aired in the main Chamber, in which many more hon. members could participate.
I started by congratulating the hon. Gentleman on raising the subject, and I must also congratulate the Government on making the matter a priority since they were elected in 1997. There was an extraordinary rise in child poverty after 1979 through the 1980s and into the early 1990s. During that period, our child poverty rate went from 14 per cent., which was towards the bottom of the European league table, to the astonishing level of 33 per cent. or one child in three living in relative poverty. The country should be ashamed of that horrific figure, which put us at the top of the European league table. It must be of concern to all of us that such
a large proportion of our children were growing up in poverty, and there must be a read-across from poverty to other problem areas such as low skills, which increase people’s chances of staying out of the labour market and going into crime, social exclusion and declining social mobility. One concern in recent years has been that the figures seem to indicate that social mobility has been falling over the past few decades instead of rising as would be expected in a wealthier and more meritocratic society.
I congratulate the Government on making the matter a priority. There is a major challenge to make people in the wider country understand the relevance and validity of the concept of child poverty, which a number of recent reports, including the Fabian report, commented on. The hon. Gentleman referred to cross-party issues and the desire for cross-party consensus. I shall not comment on the position of the other Opposition party. All I say is that we are committed to continuing the Government’s policy of reducing child poverty and are in the middle of a policy review dealing precisely with that issue. I hope that over the next year we will be able to set out our strategy clearly—I shall say more about that later—and how it compares with that of the Government.
Complex issues are involved in setting the right targets, which is why we have been determined not simply to sign up unthinkingly to whatever targets the Government have lifted off the shelf. We know that there is uncertainty about what their targets mean. The most important measure of poverty is the relative poverty indicator, and the Government have set a target of 2020 for eradicating child poverty according to that indicator. When we found out more about what that means, we found the target had been set to bring child poverty in the United Kingdom down to around the lowest rate in the EU. Perhaps that is the only sensible way of setting a target for child poverty, but it is not eradication and it depends to some extent on what is happening in other European countries. The Government have set a target that they cannot control.
Targets for child poverty must be seen in the context of the rest of the benefits system and poverty for other groups in society. The Government have made good progress in recent years in reducing child poverty and, to some extent, pensioner poverty. However, because those have been the two priorities, the poverty rate for people without children and who are out of work has remained unchanged. What is often forgotten is that children live in families with adults who are in poverty and if the benefits and incomes that those adults are on are anchored to price increases rather than earnings increases, it is more difficult to achieve targets for child poverty. I accept that child poverty has a special resonance and that we come from a position of having a particular problem with it, but the strategy for dealing with it must be seen in a wider context.
I shall comment briefly on three areas on which the Government need to focus in relation to their own policies if they want to help themselves achieve the child poverty targets: tax credits, the Child Support Agency and the regressive council tax. We could discuss tax credits for hours, and I would be more than happy to do so, as the Paymaster General knows. I can only say to the hon. Gentleman that his constituency experience does not match mine. I warn him that the
more he talks about some of the problems with tax credits, which he may not do in his constituency, the more the people who come to his advice centres will not be the people who have defrauded the system or not bothered to inform the Inland Revenue of their problem, but those who, through no fault of their own, have ended up with overpayments that have driven them further into poverty.
Stephen Hesford: The hon. Gentleman gently chides me, because he finds it difficult to understand why my figures are so low. I assure him it is not because I have run away from the issue, which I have publicised through the local newspapers and my newsletters. Despite that, I am where I am.
Mr. Laws: I accept that. I remember having this debate with the Paymaster General a couple of years ago when I warned her of the number of cases of overpayment occurring in my constituency. She said that there must be something odd about the south-west or the Yeovil constituency. Then came the figures that confirmed the problems. The parliamentary ombudsman produced a fantastic report on the administrative problems with tax credits a year ago. Sadly, only about four of the 12 recommendations—probably the four least important—have been implemented to date. The most important was about not recovering money until it is confirmed that it is recoverable under the code of practice, and about mechanisms for recovering it and for writing off cases in which an official error has caused the overpayment. The Government have not adopted those recommendations, which would make a tremendous difference to those people whom the tax credit system is precisely designed to help, and who, in many cases, have been driven further into poverty.
The problems of the Child Support Agency are well known; we expect a statement on the matter within the next couple of weeks. Again, we could debate that for hours, but it is worth pointing out that £3.5 billion maintenance arrears have accrued since the CSA was set up by the Conservative Government in 1993. The £3.5 billion that has not got through to families with children would have made an enormous difference in tackling child poverty, and until there is a working CSA, it will be more difficult to tackle the problems of child poverty.
The Government policy that is pushing against their own targets on child poverty is council tax, which is probably the most regressive tax in Britain—it has increased by about 100 per cent. since 1997. There are about 800,000 households with children who are in relatively low-income poverty and not in receipt of the council tax benefits to which they are entitled. In other words, about 50 per cent. of households with children in poverty who are entitled to council tax benefit are not in receipt of it.
The Government’s vehicle for dealing with the regressive nature of council tax is very ineffective, so we have a very regressive tax, which is making the Government’s job of reducing child poverty much more difficult.
The hon. Member for Wirral, West gave us a number of signposts about future issues. He indicated that
without a continued increase in transfer payments from the Government it will be very difficult to meet the ambitious targets that have been set. I agree; getting more money into low-income families is a crucial part of the complex policy challenge of giving those children greater opportunities.
The hon. Gentleman’s right hon. Friends have flagged up some major issues, not only in respect of the administration of the tax credit system, but about the balance between means-tested and non-means-tested benefits. The number of people facing very high marginal deduction rates as they go back into employment has risen, as the hon. Gentleman knows, by about 1 million since 1997. Although those facing the highest marginal deduction rates have come down, that figure remains extremely high. Recent reports, including that from the Fabian Society, suggest that there is a debate about the right balance between means-tested and non-means-tested benefits, and in that respect the hon. Gentleman’s point about take-up rates is highly relevant. The Government should be engaging in a debate on that matter, and by retaining the child benefit element alongside the child tax credit, they clearly indicate that they think that those two elements need to be part of their child poverty strategy.
The hon. Gentleman mentioned the child trust fund. It is clear that under any Government spending rounds in the next few years will be considerably less generous than those since 1999. Scarce resources will have to be spent where they will make the most difference. Our view is that the child trust fund is not the priority when setting aside £2.25 billion per Parliament as money that will be accessible by an individual only when they reach 18, by which time most of their disadvantages, such as poverty and problems in early years education, will already have been consolidated. We would much rather that that money went in at an early stage and was spent on additional help to low-income families to make a difference to people’s opportunities, rather than its coming to them at the age of 18.
I want to touch briefly on two other, vital, issues. Recently, in his speech on child poverty the Secretary of State questioned whether ultimately the strategy of simply increasing benefits and tax credits could ever deliver on the very ambitious targets that have been set, and he was right to do so. One reason why there are such high child poverty rates in this country is the number of children in workless households and in single-parent households, although it is extremely difficult for any Government to do much about the latter.
We need to get more parents into work; that is an issue that relates to single parents and to people on incapacity benefit who have been written off in the past but who could be moved into employment. I hope that they will be important elements in the Bill that has been published today. It is clear that low skills are associated with worklessness, so the skills agenda and early years agenda are vital.
Housing is also vital. About 32 per cent. of the income of low-income families is spent on housing costs, a much greater percentage than in higher-income households. Housing costs have been rising rapidly in recent years, and the housing market is not working. If
we are to hope to meet the very ambitious targets, we cannot rely on one policy vehicle alone, we must tackle problems in the housing market and in worklessness, and we must address the skills agenda.
I again congratulate the hon. Gentleman on securing the debate and hope that we will have further opportunities during the rest of the year to debate the issue in greater detail.
10.26 am
Miss Anne McIntosh (Vale of York) (Con): I welcome you to the Chair, Mr. Martlew, and say what an honour it is to appear before you. I welcome the debate, and congratulate the hon. Member for Wirral, West (Stephen Hesford) on securing it. He is a brave man, perhaps lacking the political ambition of some of his colleagues who have chosen to stay away from this debate, for a reason that eludes me.
The debate is particularly timely and gives us a welcome opportunity to bring together some of the strands underlining child poverty. At the outset, for the benefit of the House, I ask the Minister for Employment and Welfare Reform whether the Government will confirm their definition of poverty for the purposes of child poverty? The Library briefing note prepared for today’s debate states:
“The standard definition of income poverty is living in a household with an equivalised household income that is below 60 per cent. of the median household income. Income is ‘equivalised’, meaning it is adjusted to take account of variations in household size and composition to make it a better measure of standard of living.”
As we know from the Department’s press release in March, the target on child poverty was only narrowly missed before housing costs were taken into account, yet on closer examination the gap in missing the target was greater after housing costs were taken into consideration, and there are a number of reasons for that.
Let us consider the geographic spread represented by those present in the debate—the north-west, Scotland, Yorkshire and the south-west. It is interesting to note that the average house in north Yorkshire is the most expensive in the country. It is important that housing costs are taken into consideration in setting child poverty levels. Will the Government confirm that that is their understanding, and that it will remain so?
It fills me with dread when the Government appoint a tsar to a policy area. The hon. Member for Wirral, West alluded to the appointment of Lisa Harker as the tsar for child poverty. The Minister issued a press release at the end of June setting out her remit. The Secretary of State yesterday set before the Select Committee the reasons for the Government’s failure—that is perhaps why the hon. Member for Wirral, West, finds himself alone on his Benches today, regrettably—saying that of all the aspects of the Department’s work, the hardest is eradicating child poverty. The Secretary of State claims that child poverty rates have been falling because of the introduction of tax credits and the improvement in the employment rate of parents, particularly through the new deal for lone parents.
If there is one thing that the tax credit system and the Child Support Agency share, it is a lamentable failure of their computer systems. The hon. Member
for Yeovil (Mr. Laws) referred to the £3.3 billion not yet collected by the Child Support Agency. I simply add that £2 billion of that is deemed uncollectible. What do we say to the parents with care who are owed that money and who will possibly never get it?
The Secretary of State claimed that the target had not been reached because not enough lone parents had got back into work. The Child Poverty Action Group, to which I pay tribute for its work over the years, commented in a November press release:
“Child poverty cannot be eradicated without significantly raising the safety net of the welfare state, supporting more people into employment, ensuring that work pays and making further improvements to the administration of tax credits”.
The Secretary of State said that two key areas are focusing more heavily on getting lone parents back into work and improving child support. The National Audit Office last week came out with the most damning indictment of the Child Support Agency. That should be taken together with the damning report by the Work and Pensions Committee, which came out before last year’s election, and which went to the heart of the matter. Some very good people work for the Child Support Agency—indeed, the Minister might take this opportunity to thank them for their work, often in difficult circumstances—but the Select Committee said that they lack training and that their skills were not necessarily deployed to best advantage.
We are poised to hear, any day now, a statement by the Secretary of State on the result of the David Henshaw review; obviously, that will give us more time to focus on the issue, but I would like to rehearse the reasons why the Government failed to reach the last target and to say why we believe a course of action can be followed that will eradicate child poverty more quickly.
Will the Minister say why Northern Ireland is not included in the figures? That gives a distorted view of the child poverty picture, because a third of children in Northern Ireland live in poverty. Will he provide a letter, to be placed in the Library for the benefit of all right hon. and hon. Members, giving the data with the figures for Northern Ireland aggregated into the total? Also, will he, on a regular basis, give the target both before and after housing costs are included, and explain which of the definitions the Government will use?
The Government have a quantifiable public service agreement target for child poverty in 2005; levels of child poverty are to be at least a quarter lower than in 1998-99, using the poverty line of 60 per cent. The Government missed their child poverty targets for 2005 and are on track to miss them again in 2010. I have to say that the two biggest problems in my constituency surgeries are overpayment of tax credits—that can have an impact in thrusting a household into poverty, because the Government try to claw back the overpayment in one go—and child support cases.
Stephen Hesford: I have already made a point about tax credits but, for the record, I do not think that I said I thought that the Government were on track to miss 2010; I think that I made the point that we ought to put in place measures that help us get there, having accepted that we missed 2005.
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