Westminster Hall
Thursday 19 June 2008
[Ann Winterton in the Chair]
Deprivation/Child Poverty
[Relevant documents: Second Report from the Work and Pensions Committee, Session 2007-08, “The Best Start in Life? Alleviating Deprivation, Improving Social Mobility and Eradicating Child Poverty”, HC42-I; and the Government response, HC 580.]
Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Timms.]
2.30 pm
Mr. Terry Rooney (Bradford, North) (Lab): I was rather hoping that the hon. Member for Cardiff, Central (Jenny Willott) would be here today, because she took part in the Committee’s deliberations, but as she is now a Liberal Democrat Front-Bench spokesperson and dealing with the same subject, I understand why she is not present. Our congratulations go to her; she has been a valued member of the Committee since 2005.
We are here to discuss the Government response to the Select Committee’s report. I might as well get the bad news out of the way first: the Committee found the response very disappointing. It was complacent, defensive and a restatement of existing policies, despite being published two days after the latest child poverty figures came out showing an increase of 100,000 children in poverty. Perhaps existing policy is not working. We need to put that on the record at the start.
I accept that there were significant announcements in last year’s autumn performance report and the 2008 Budget, which we hope will take 650,000 to 700,000 children out of poverty. However, there is still enormous pressure to deliver on the 50 per cent. reduction target for 2010. No doubt the Committee will return to the subject and remain watchful and vigilant, as I am sure the Minister would expect it to be.
This debate is particularly relevant when we look not only at the less than 60 per cent. of average earnings definition of poverty but the material deprivation figures, especially given what is happening at the moment in food and fuel prices. That will obviously have a significant impact on material deprivation, although it might not have an impact on incomes. We need to recognise that it is an ongoing and serious issue for families on low incomes.
I shall talk first about the education aspects of our report. The Government have long recognised that we need to deal with generational inequalities, worklessness and similar problems. The key to breaking that cycle is getting today’s poor children the best education possible.
It might be against the law, but it is a fact that many schools send letters home to parents saying that a school trip can go ahead only if contributions are received. The parents have the right to refuse to make a contribution, but if they do not make a contribution and the trip gets cancelled, word soon gets around about who has denied the rest of the class that opportunity. No matter how much that practice is against the law, it
is happening. I have nine grandchildren, and they experience it week in, week out and month in, month out. It really is a problem. Children’s education is incomplete when, because of poverty, they are unable to take advantage of those educational opportunities.
The practice extends further. Because things like music lessons are charged for in our schools, the vast majority of poor children are denied that opportunity because their parents cannot afford to pay. The cost is significant, but music lessons are part of that rounded educational experience that children should be getting, above and beyond the national curriculum.
Most poor children are self-excluded from extra-curricular activities, because they need to have games kit and equipment, such as cricket bats or whatever, and the family budget does not stretch to those items. The total educational experience is just not there for those children, and that leads to diminution in their happiness and performance at school, increased truancy and other effects. The child poverty unit is, as my right hon. Friend the Minister knows, the result of a partnership with the Department for Children, Schools and Families. This problem with extra-curricular activities is a key issue for it.
The other side of this problem is that, although we know that children in poor families have worse records of truancy, achievement and everything else, we have a benefits system that penalises their parents if they endeavour to take educational courses themselves. The 16-hour rule is far too rigid, stringent and perfidious and, as I say, it penalises parents who want to improve their life and better themselves through education. That is not a good message to send to children, is it?
Quite rightly, the state spends a fortune—billions of pounds—on supporting students into higher education. They then become higher earners and will, we hope, enhance and develop the economy, but those who are at the bottom of the pile get punished and penalised for taking educational courses. I know that there were some announcements in the Budget, particularly about lone parents, and I know that there are pilots running to help 16 and 17-year-olds who are not in education, employment or training. Generally speaking, however, the benefits system penalises those who try to improve their education and thus their employability.
I understand the argument that it is not the job of the welfare system to support students, but when people are trying to improve their employability and thus their ability to lift themselves and their family out of poverty—particularly when we are talking about courses in basic subjects such as maths and English—a degree of flexibility is needed in the rules and regulations. Perhaps that is an area that might be looked at further.
I would like to state some basic facts about child care. Only a third of those who are entitled to child care tax credit take it; that is an incredibly low take-up. Nationally, 22 per cent. of child care places are vacant. There are all sorts of problems, especially in London, with the cost of child care, including fees having to be paid up front, with some outfits even demanding a term’s fees in advance. All of those costs militate against people getting child care.
Child care is crucial, not just for lone parents but for several other family structures. Having read the documentation, I think that the Treasury has really got
a grip of this issue. Its review of child care tax credit and the work that it has published on that subject is spot-on. However, we need some rapid progress.
The Government’s response is that it is the responsibility of a local authority to ensure that there is suitable and adequate child care provision in its area. However, when that provision is failing, it is the Government’s responsibility to step in and deal with it. The Government simply cannot say to local authorities, “That is your responsibility and if you’re not doing it right, get it sorted.”
Last week, the Secretary of State for Children, Schools and Families announced that 658 secondary schools were not meeting their targets; they would get seven weeks to come up with an action plan, otherwise they would be taken over. Well, why do we not have the same focus and impetus when dealing with authorities that are failing to deliver adequate child care? The policy on child care is a national one—it is key to our strategy on cutting child poverty—and if local authorities are failing it is up to central Government to deal with that situation, and not to say that it is a problem that must be sorted out by others. Sadly, far too many authorities have been extremely complacent. Billions of pounds of Government money has gone into child care provision, but far too little regard has been paid to holding people to account for delivering what is necessary.
A further point is that although most people are adequately covered by child care provision between 8 am and 6 pm, lone parents in particular tend to work unsocial hours, evenings and weekends, and that is when child care is least likely to be available. The other big group facing difficulties is the parents of disabled children. Getting child care for a disabled child is inordinately expensive. Not only does the child care tax credit go nowhere near to covering the cost, but there is a paucity of supply. We know that the family of a disabled child is four times more likely to be in poverty, so we really need to do some serious analysis of how we can resolve that problem. The child care tax credit system will never work. More direct provision is required—a sort of drop-in facility, rather than parents having to go through all the rigmarole. I understand that a review is being done but that no commitments have been made.
Child care tax credit is limited to the first two children. There is no help at all if one has more than two children. Child care costs anything between £80 and £250 a week, depending on where one lives. If parents are getting a bit of cover for two children but have to pay for everything for two other children, moving into work is too uneconomic even to think about.
As I said, the Treasury is conducting a review, I hope in conjunction with the Department for Work and Pensions. I am encouraged by the scenario that it painted of the basis of the review. I hope that we will see some positive results from it, but it is obvious that child care has been a hindrance to moving into work for lone parents in particular, but for others as well. If that is the case—if it is such a key matter—we have to be big enough to say quickly that what we have been doing is wrong and that we will take the necessary action.
The Government’s response on the “better off in work” calculation was, frankly, one of the most disappointing aspects of the document. A calculation
should be just that. Jobcentre staff should be able to say to a claimant who is considering a prospective job what the difference in their income will be, after expenses—people should be able to see where they are now and where they would be if they were in work. To say, as the Government do, and as they reiterated in their response, that any incidental expenses connected with moving into work will not be taken into account in the calculation is, frankly, to be deceptive. A lone parent with three children immediately faces a bill of about £25 a week for school meals, where previously the children had free school meals. I accept the Government’s argument that expenses related to moving into work are variable and that only standard expenses can be calculated, but the cost of school meals is standard, as are the costs of things such as prescriptions and everything else that one loses. For somebody who is on constant medication, that needs to be factored in. Transport costs, too, are constant.
It is insupportable to tell someone that they will be at least £25 a week better off in work when, in practice, they will be £30, £40 or £50 a week worse off. I repeat what we said in the report: that is a deception. Both sides of the equation must be put to people. Otherwise, they will lose confidence in the calculation. They will tell their friends, relatives, neighbours and other mothers at the school, and loss of confidence will rapidly decline into disbelief.
John Penrose (Weston-super-Mare) (Con): Does the hon. Gentleman agree that it is not just the end result of the calculation that is gravely flawed, but the fact that it can take up to half an hour to do it, even with the aid of an advanced piece of software and a benefits expert? By that time, any notion of an incentive to work is stone dead on the floor.
Mr. Rooney: I understand why some people waiting for the calculation to be completed lose the will to live. But, as always with such things, there is probably a simple solution that would be 70 per cent. wrong, or a longer solution that hopefully would be a bit nearer to being right. It is the components of the calculation that matter. The calculation has to give an exact and honest assessment of where people will be.
Harry Cohen (Leyton and Wanstead) (Lab): Is there not an added factor? Is there not real risk of jobcentre staff saying that the person would be better off in work when in reality they would be worse off? Jobcentre staff are adopting a tighter sanctions regime, which might be based on their own thoughts about people being better off in work, even though that is not the reality.
Mr. Rooney: I thank my hon. Friend for those remarks. I shall come on to sanctions in a moment, if he will permit me.
The Committee had the pleasure about 18 months ago of visiting Stratford jobcentre, which is very large. I am sure that my right hon. Friend the Minister knows it well. A huge number of people go through it. We met a group of lone parents who had some horrifying stories to tell about their experiences. Most of them had not even been offered a “better off in work” calculation, and those who had and then had it checked somewhere else—by the citizens advice bureau and so on—found that it was far from accurate. That shattered their
confidence in the system. They felt that they were being used, abused and misled, and that does not help anybody. It damages the reputation of Jobcentre Plus and the whole welfare to work programme, and it undermines credibility. That really needs to be reviewed.
As the Minister knows, a trial is being done in Yorkshire and Humberside, where my home is. I shall keep a close eye on it and report regularly and frequently about any discrepancies that I find.
Tom Levitt (High Peak) (Lab): My hon. Friend is absolutely right that the passporting of benefits must be fully taken into account. At present, it is not taken into account when we look at in-work poverty. He may recall that in its current investigation of the role of carers, the Committee came across carers who work for 16 hours a week. Because of their caring responsibilities, they do not have the time to work more than that. As the national minimum wage has risen, they have had to reduce their hours in order to retain their carer’s benefit. Is not that another example of how in-work poverty is not being tackled by the measures that the Government are contemplating?
Mr. Rooney: My hon. Friend is absolutely right. There is a link between the minimum wage and the £95 a week disregard in carer’s allowance. There is a similar problem with permitted working limits for incapacity benefit. If the two figures do not change at the same time, there can be a period when somebody suddenly finds that they are breaking the rules although they have done nothing wrong. There is an easy solution, and I hope that the Department is considering looking at it just once a year instead of at the point of change.
My hon. Friend the Member for Leyton and Wanstead (Harry Cohen) mentioned sanctions. The Minister is well aware of my personal opposition—and, indeed, the Committee’s opposition—to moving lone parents on to the jobseeker’s allowance regime. I am grateful to him and accept that he has been extremely helpful, as has the Secretary of State, regarding how the regulations will be implemented. A great deal of flexibility will be allowed.
The decision has been made, so that is where we are, but there is still the problem of lone parents who get moved on to the JSA regime being exposed to a much harsher sanctions regime. It does not increase the child poverty numbers if somebody is sanctioned, as they are already in poverty. It just means that they are even deeper in poverty. I hope that the message is going out loud and clear that sanctions must be the last resort.
There is a general problem with sanctions. Too often, people do not know that they are being sanctioned; if they do know, they do not know why; and if they do not know why, they do not know how to put things right. The whole idea of sanctions is to change somebody’s behaviour, but if communication is not clear, and if it is not apparent how behaviour can be corrected, the function of the sanction is lost. The research into the sanctions relating to the work-focused interview, which is a serious issue for lone parents, is due in about two weeks. It will be interesting to see what it has to say. I accept that there has to be a sanctions regime, but it has to work and it has to be understood by the claimant as well as the personal adviser or the decision maker.
By the bye, two large contractors who have pathways to work contracts have told me that they get a 40 per cent. no-show of referrals from Jobcentre Plus, but, although they send the names back for a sanction to be considered, nothing happens. One wonders whether these are just teething troubles in the early days, or whether people are saying, “We’ve got rid of that problem now; it belongs with the contractor so we don’t need to do anything.” Again, there is different treatment for different groups of clients.
I shall draw my remarks to a close, because I know that other hon. Members want to contribute to the debate. The key issue in relation to child poverty, identified by the Select Committee and by a number of other groups, is the point of change. People have to feel comfortable at the point of change. Too often, we are told that people on benefits are more comfortable with that much lower income—knowing that it is secure and will come every week, and most importantly knowing that the rent is paid and there is a guaranteed roof over their family’s head—rather than with the haphazard world of work. A clear majority of lone parents are in work, so for some people it obviously works, but we do not do enough to find out what made it work for them and try to apply those lessons to the people who are left. Too often, we ask people, “Why aren’t you pulling your finger out?” instead of trying to marry up the experiences of people who have successfully moved from benefits into work.
The fear that people experience is genuine and heartfelt. We talk a lot in the report about in-work poverty, but the fact is that if people move from benefits into work, their income increases significantly, albeit it might not lift them all the way out of poverty. If people are still nervous about taking that step, there is something wrong with the advice and guidance procedure beforehand. To help, we can be a lot more imaginative with benefit run-ons—there is a run-on on housing benefit, for example. The Work and Pensions Committee has published a report on research on social housing and worklessness in which we say:
“The complex interaction between earnings, housing benefit, tax credits and resulting net income makes it difficult for tenants to fathom the financial consequences of entering work. Difficulties understanding this interaction and being able to compare net income in work compared to out of work were apparent among the people interviewed. Few respondents appeared to be aware of the operation of housing benefit as an in-work benefit, raising concerns about their ability to cover housing costs when in work.
This uncertainty expressed by some respondents about the income implications of entering work was in stark contrast to the certainty of their current situation, which allowed the development of personal strategies for ‘getting-by’. Many also drew attention to the insecure nature of the work available to them and contrasted this unfavourably with the stability of benefits”—
despite their paucity. That encapsulates the problem.
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