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Based on the experience of similar schemes abroad, the Conservatives are confident that our radical welfare reform programme will return at least 600,000 people to work—enough to pay the cost of ending the couple penalty. That will mean that 1.8 million of the poorest couples with children will gain on average £32 a week and 300,000 children in two-parent families will be lifted out of poverty. The long-term effects will be
greater still, as it is the first truly significant proposal to reduce family breakdown in a generation.
On debt, I welcome the forthcoming inquiry by the Select Committee on Scottish Affairs into the credit union system, as it can make a significant contribution. Debt is a serious problem for millions. Furthermore, it could easily become a problem in the future for even more people. An energy crisis, a recession in the US, global terrorism or a substantial fall in house prices could change the economic climate, plunging many more people into a severe debt crisis.
Debt is a particular problem for people on low incomes. With few savings to fall back on and still little or no access to mainstream banking facilities, they are more vulnerable than other income groups to unexpected changes. As the report by my right hon. Friend the Member for Chingford and Woodford Green entitled “Breakthrough Britain” said, possible solutions to the debt crisis include improving financial literacy, providing more information and more accessibility to savings for low-income families, strengthening the role of credit unions and increasing competition in the home credit market. This could be matched by more transparency of interest rates and charges, better regulation of the advertising of credit, data sharing among lenders and greater care in lending practices, particularly for low-income families.
Finally, drug abuse and crime are issues for the Scottish Government, but I point out, particularly to Members from the Scottish National party, that the Conservative group in the Scottish Parliament forced the minority SNP Administration into developing a drug strategy for Scotland and putting a real 500 extra police on the beat, by making that a precondition for supporting the Administration’s Budget.
I have already mentioned the “Breakthrough Britain” report produced by the Centre for Social Justice, but I am sure that many Members are aware that a specific study on Glasgow was undertaken by the centre. Greater Glasgow is an area that impacts significantly on the poverty statistics for Scotland, and it is right that it was chosen for such a study. As I said in my opening remarks, I was particularly pleased that Glasgow city council and others who are usually described as “stakeholders” gave this important report such a warm welcome. The report praised at some length the burgeoning number of voluntary projects and workers who were
“battling largely unsung in their efforts to rebuild the lives of the many people left behind by Glasgow’s economic rebirth”.
It is all too easy to look at just what the Government are doing, but we should never forget the impact of charities, faith-based organisations and even individual acts of kindness in the fight against poverty. They can be more responsive to local needs than central Government. Third-sector groups often achieve excellent value for money.
Community groups are especially valuable, as they are well placed to put people with experience of poverty into the front line of action against it. I was struck recently when the Church and Society Council of the Church of Scotland said on its annual visit to Westminster that, just as the civil rights struggle in America could not have been won if it had been led by white people, and the feminist movement could not
have achieved its aims if it had been led by men, so action against poverty will be truly effective only if it is led by those who have first-hand experience of poverty.
Tax credits are an essential part of modern welfare policy, but as I have said, I want to see them simplified, and the disincentives to work, which are the unintended consequence of the system, cut back. I also want to see much better support for people looking to get back into work, with effective practices adapted from other countries and an expectation that the unemployed are to take part in welfare-to-work programmes.
Most important, much more focus should be put on preventing the root causes of poverty. This means tackling educational failure, family breakdown, indebtedness, drug abuse and crime. I also want to see the UK’s devolved and local government support voluntary and community groups in their efforts against poverty, even if that means giving up some control.
Sir Winston Churchill, who is always worth a mention, summed up welfare policy in two images when he talked about a ladder—
“We are for the ladder. Let all try their best to climb”—
and a net below which none should fall. It is time to reinterpret those images for the 21st century, and I hope that this debate will contribute something towards doing that.
2.54 pm
Mr. Mohammad Sarwar (Glasgow, Central) (Lab): I thank the Government for initiating this important debate, and for their positive response to the Scottish Affairs Committee report on child poverty in Scotland. Tackling child poverty is the key to creating a fairer society. We have a responsibility to help children who are living without the essentials that so many of us take for granted. We must take the opportunity to break the cycle of deprivation, in which poverty is handed down from parents to children. That will help not only today’s children, but generations to come.
The Scottish Affairs Committee’s recent inquiry on child poverty in Scotland discovered that there are 250,000 children living in poverty in Scotland today. In such a rich country, it is unacceptable for any children to grow up deprived of the opportunity to have a rich and full childhood. That is why the UK Government have committed themselves to halving child poverty by 2010, and to eliminating child poverty entirely by 2020. Those are ambitious targets, but good progress has been made over the past 10 years. In 1997, child poverty rates were at record levels. Since then, child poverty in Scotland has been reduced by a quarter, meaning that more than 100,000 Scottish children are no longer living in poverty. That has been achieved by raising family incomes through the introduction of the national minimum wage, as well as through targeted programmes such as the child tax credit programme.
Our witnesses were unanimous in welcoming the reduction in child poverty in Scotland, which many of them attributed to Government policies and a significant increase in resources. It is estimated that state financial support for children in the UK has grown by 52 per cent. in real terms since 1999. Written evidence submitted by the Joseph Rowntree Foundation stated:
“There can be no doubt that government policy has played a major part in the reductions in child poverty in Scotland”.
Giving oral evidence to the Committee, the head of the Child Poverty Action Group in Scotland, Mr. John Dickie, said that
“the progress in child poverty has reflected the political will and investment that has gone into tackling it.”
It now appears that all parties, including the Conservative party, agree that there is a need to tackle child poverty. That is a welcome development. In our report, the Scottish Affairs Committee stressed the importance of co-ordination to the fight against child poverty. The UK Government and the Scottish Government must continue to work together on that. Scottish local government also has a vital role to play, providing key services such as education and child care.
To make the most of the resources dedicated to fighting poverty, a joined-up approach is needed, integrating the services provided by the UK Government, the Scottish Executive and local authorities. In fact, my Committee’s inquiry found that Scotland has done better at reducing child poverty than the UK as a whole. Some of that success may be due to the productive way in which the UK Government have worked in partnership with the Scottish Executive since 1999.
That has allowed anti-poverty strategies to be tailored to local needs. Such co-operation needs to continue in future. I am glad that the Minister has expressed her desire to work in co-operation with the Scottish Government, and I hope Scottish national party Members in the House will urge the Scottish Government to recognise that co-operation, not confrontation, will help to resolve the vital issues that our communities face in Scotland. Of course, we would like to spread Scotland’s success more widely. We hope that the UK Government can learn lessons from the strategies that have been successful in Scotland and use them to benefit children throughout the UK.
Although much has been done, a lot remains to be achieved. The Committee report found that the reduction of child poverty was in danger of slowing down. In order to reach the target of halving child poverty by 2010, we found that the Government would need to match, if not surpass, the level of resources and of commitment of the past decade. I am pleased by the recent announcement in the Budget of an additional £1 billion per year to families through additional tax credits and child benefit. These measures renew the fight against poverty and will lift up to 250,000 more children out of poverty across the UK.
That has rightly been welcomed by many organisations that take a keen interest in child poverty in Scotland, including Barnardo’s Scotland and the Child Poverty Action Group in Scotland. However, we should not underestimate the scale of the task that faces us in eradicating child poverty. The very poorest children are living in families with less than 30 per cent. of the national average income or about £130 per week. The Committee was concerned to hear evidence that up to 80,000 children living in the severest poverty in Scotland may have been left behind by the recent reduction in child poverty rates. Those are the children in greatest need. We must make sure that their welfare is our first priority.
Child poverty is a result of the family circumstances in which children live. Financial measures such as tax credits and child benefit go some way towards raising
family incomes, but there are other considerations. As the Government have recognised, getting more people into work and making work pay is the best way to raise income levels, but child care is a barrier to work for many parents. Our inquiry found that parents may be prevented from taking a job because they cannot find affordable or suitable local child care. That is an even greater challenge for parents of disabled children.
Pete Wishart: The hon. Gentleman is right when he states that the objective is to get people back into work in order to alleviate poverty. Has he any views or comments about the abolition of the 10p rate of income tax? If that is taken away, people who find their way back into employment could find themselves in further and worse poverty.
Mr. Sarwar: I am sure the hon. Gentleman is well aware that since 1997 the Government, through their positive approach, have taken millions of people, including children, out of poverty. Three million more people are employed. I know that hon. Members on the Opposition Benches—the Conservatives and the Scottish national party—are obsessed with the 10p tax rate, but in his letter to the Chairman of the Treasury Committee, the Chancellor confirmed that all those who will be disadvantaged because of the abolition of the 10p tax rate will be compensated.
Our inquiry found that parents can be prevented from taking a job because they cannot find affordable or suitable local child care. The challenge is even greater for parents of disabled children. It also found that 80 per cent. of mothers with a disabled child are unemployed, and that disabled children are twice as likely to be in poverty as non-disabled children. Disabled people experience poverty of income, choice and opportunity. The Scottish Government should do more to ensure that resources reach disabled families, who are disproportionately affected by poverty. That is a massive issue, which I hope the Scottish nationalists will pass on to the Scottish Government so that the money allocated for families of the disabled reaches the most needy in our communities.
Mr. Weir: Does the hon. Gentleman not accept that the concordat into which the Scottish Government and local authorities entered is aimed at allowing those authorities to use the money in the best way possible for their areas? It is not a question of taking money away; the ring-fencing is being taken away, and that is a different matter.
Mr. Sarwar: I accept entirely that it is for the Scottish Government to decide how they want to spend the money. However, our inquiry found that disabled people suffer worst from child poverty. That is why our report urges the Scottish Government to do more to help the families of the disabled in Scotland.
Mr. Tom Clarke: Will my hon. Friend, along with me, invite our Scottish National party colleagues to accept not only that he, I and others consider that our Government got it wrong on the 10p rate and are putting it right, but that the Edinburgh Executive got it wrong on disabled children? Will they help us to put that right?
Mr. Sarwar: I agree with my right hon. Friend. I am sure that the Executive will do the right thing—apologise and allocate the resources to the disabled people and their families in Scotland.
Work can provide a route out of poverty, but only if there are good-quality jobs with decent career paths and reliable incomes above the poverty line. Many children living in poverty in Scotland come from households in which at least one parent is working. To continue to reduce child poverty, we must tackle the problem of low pay, promote job retention and create advancement. The tax and benefit system is an important safety net. As a minimum, we must make sure that no one in full-time work is living in poverty; that applies not only to parents, but to young single adults, who are the parents of tomorrow.
Our report on child poverty in Scotland emphasised the importance of simplifying the welfare system, which is still too complicated. Child tax credits have been a key factor in reducing child poverty, but the process of claiming them is complex, and we know that many people do not claim the money to which they are entitled. The tax and benefit system must be flexible enough to respond to the changing needs of families and must make it easy for people to move into work, when they find a job, without losing out.
During its inquiry, my Committee had difficulty in obtaining disaggregated poverty statistics for Scotland. In some cases, only UK-wide figures were available. We urge the Government and others to publish a breakdown of statistics whenever possible. My Committee was concerned by the evidence that we received that children living in the severest poverty in Scotland may not have fully benefited from the recent reductions in child poverty rates. The poorest children are not helped if the Government meet their targets by reaching only those just below the poverty line—a strategy that would also endanger the Government’s longer-term targets for the total eradication of child poverty. That view is shared by Save the Children and many other organisations.
Major progress has been made in reducing child poverty in Scotland during the past 10 years, and my Committee wants to see that progress continue in the next 10 years. We intend to ensure that child poverty remains high on the political agenda in Scotland and throughout the UK. During our inquiry, it was brought to our attention that debt is a major contributory factor to poverty in Scotland and in the United Kingdom. We were astonished to learn that our financial institutions, moneylenders, and building societies charge interest rates of up to 100 per cent., and impose very high penalty and service charges. I passionately believe that there should be a cap placed on the banks and financial institutions, and that the courts should be given powers to decide whether banks and building societies are charging fairly those who are most vulnerable, needy and poor in our communities. It is sad to note that financial institutions are exploiting the most vulnerable in our society. I hope and wish that the Government will seriously concentrate on tackling that problem. We are not talking about loan sharks, but about legal moneylenders that are exploiting poor people in our society.
It is nice to see many members of my Committee here today. I am grateful for the kind words of the hon. Member for Dumfriesshire, Clydesdale and Tweeddale
(David Mundell); I am not sure whether they were good for my political career. The hon. Gentleman is a very important member of my Committee. As you will know, Mr. Deputy Speaker, the Conservative party spent more than £1 million on Scotland in the general election, which produced one Conservative Member. The hon. Gentleman is therefore the most expensive member of my Committee, and the most expensive Member of the House, so I am grateful for his kind words. Once again, thank you for giving me the opportunity to speak, Mr. Deputy Speaker.
3.12 pm
Mr. Alan Reid (Argyll and Bute) (LD): It is a pleasure to follow the hon. Member for Glasgow, Central (Mr. Sarwar), and I congratulate him and his Select Committee on producing its excellent and well-researched reports on poverty in Scotland and on child poverty in Scotland. I also welcome the Government’s allocation of this afternoon for this debate.
The extent of child poverty in Scotland has reduced in recent years—there is no doubt about that—but despite that reduction, the level is still high by international standards. One in four children, or 250,000, live in poverty, 90 per cent. of them in severe poverty. The statistics also deliver the disappointing news that the good rate of progress achieved in recent years is slowing and, with the UK economy facing a slowdown with poor growth forecasts, concerted action is needed at all levels of government to lift children out of poverty.
Poverty is neither a reserved matter nor a devolved one. To tackle it we need co-operation between all levels of government—the UK and Scottish Governments, local authorities, community groups, and charities, and we must work with those who find themselves on low incomes. Action to tackle child poverty necessarily targets parents, attempting to lift children out of poverty by raising family incomes. We also need to increase the incomes of young single adults because they are the parents of the future.
Concerted action must be taken by all levels of government. However, today I want to concentrate on the reserved powers—mainly the tax and benefit system. In the Budget, the Chancellor announced an extra £1 billion throughout the UK to tackle child poverty, but that is £2.5 billion less than what most independent estimates believe is required to meet the Government target of eradicating child poverty by 2020. More needs to be done.
Specific measures that need to be taken include increasing child benefit and reforming the tax credit system by making the overpayment rules fairer and taking higher earners out of it altogether. We would increase child benefit by £5 for the first child, thus making all families £250 a year better off. That would take about 15,000 Scottish children out of poverty. It would also reach all families, including those who do not claim tax credits. The take-up rate of tax credits is only about 80 per cent., whereas that of child benefit is nearly 100 per cent.
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