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19 Jun 2008 : Column 312WH—continued
Large groups of people are opting for the safety of very low income rather than taking a chance. That is especially true in London, because of the much higher rents there. Part of the problem is lack of knowledge and poor advice and guidance about in-work benefits; part of it is the appalling performance of some local authorities in processing housing benefit claims. The current one-month run-on should last for three months. Within that three months a local authority should have to establish the new claim and, if they do not do so, full
run-on should carry on at the local authority’s expense and the cost should not be reimbursed by the Exchequer. That would be a direct inducement to improve performance.
We need to get over people’s insecurity about the point of change. That applies equally to other issues. Housing benefit is the most spectacular example but there are others, such as entitlements to free school meals and school travel. For example, 57 per cent. of authorities still give clothing grants for school uniform, which people lose if they move into work. People take all those points into account in their minds: they are not stupid and they need to know that moving into work, which is supposedly so good for them, will actually work out.
Finally, I want to make two quick points about steps that we need to take to increase further the rate of progress on child poverty. At every Budget time, we see people almost scratching round to find £1 billion here or £1.5 billion there to try to at least hold the figures steady, so here are my proposals. First, if we enforced equal pay—it is nearly 40 years since the legislation came in—that would do an awful lot to reduce child poverty. Secondly, we have to grasp the nettle and increase the minimum wage by above the rate of inflation or the rate of wage increases. If we had a minimum wage of, say, £7 an hour today and enforced equal pay, we would take about 1.5 million children out of poverty straight away. Society and Government have a joint responsibility and an interest in this issue.
It is outrageous that, today, some 40 years after we passed equal pay legislation, 68,000 claims are pending at an industrial tribunal. In local government alone, some 400,000 claims of a class action nature are waiting; there are others across the public sector and many more in the private sector. Forty years on, we really should be saying, “Enough is enough; everybody’s had a chance,” and enforcing the legislation.
The two measures that I have mentioned would have a dramatic effect on the child poverty figures. At the end of the day, that is what matters. We are talking about children. Putting it crudely, these are the people who will be paying their national insurance contributions that fund our pensions in retirement and paying for our care in residential homes, or wherever, and they deserve a better chance than they have at the moment.
2.57 pm
John Penrose (Weston-super-Mare) (Con): I congratulate the Chairman of the Committee on securing this well-timed debate, coming as it does shortly after the news that the number of children living in poverty has risen by 100,000 for the second year running. That stark statistic led the End Child Poverty campaign to say that such a poor result will be a setback to the Government’s target of halving the number of children living in poverty by 2010. The Committee Chairman has presented a pretty thorough, comprehensive survey of many of the points contained in the Committee’s report and, I am sad to say, summarised accurately the Committee’s reaction to the Government’s response, which we had hoped would be substantially more constructive and engaged than it was. I hope that the Minister will be able to embroider and develop the Government’s response and, perhaps, change that perception by the end of this debate.
This problem affects all of us. I am pretty sure that every hon. Member present has pockets of poverty and deprivation in their constituencies, no matter which part of the country they represent. In my constituency of Weston-super-Mare, according to figures released by the Joseph Rowntree Foundation, 19 per cent. of children live in families on out-of-work benefits. That local authority is one of the dozen or so worst in the south-west. In fact, we have seven super-output areas in the bottom 10 per cent. of indices of multiple deprivation, and two super-output areas in the middle of Weston-super-Mare in the bottom 2 per cent. of indices of multiple deprivation. Therefore, the issue affects all hon. Members here today, who will have pockets of severe poverty in their constituencies as well as less badly affected areas.
I want to discuss what we mean by poverty. One of our early recommendations as a Committee was that the Government should change the way in which they measure and report poverty. That might sound like a slightly dry topic, but it has fundamental and profound implications, because poverty, as we all know, is a multifaceted problem: many different factors contribute to it and affect it. Therefore, the Government could pull many different levers to try to improve the situation.
The Government have moved towards viewing poverty through three simultaneous lenses. They use a relative measure, the internationally comparable OECD measure of 60 per cent. of median income, to assess poverty. Whenever we made international comparisons in our report, the Committee used that index as a way of comparing the UK’s performance with that of others.
In addition to the relative measure, the Government use material deprivation, which is very closely linked with the indices of multiple deprivation that I was just discussing. Under that measure, it is a question not just of how much money is coming into a household—the income relative to the national median—but what someone can buy with that money. The Chairman of the Committee rightly pointed out that in London, where living costs are high, a person can have the same income as someone who lives in another part of the country, in which the cost of living is lower, and yet be able to afford fewer of the essentials of life and, therefore, be comparatively worse off. That is a particularly important issue given the environment in which we live at the moment, with rising fuel and food prices. Many of the essentials of life are becoming rapidly more expensive. Therefore, material deprivation will become more of an issue. It is appropriate for the Government to consider poverty through that lens as well.
The final measure that the Government use relates to social mobility and the persistence of poverty. Again, that is a crucial measure. It is question not just of whether someone’s income briefly falls below 60 per cent. of the median, but how long it stays there. If people are temporarily out of work—even if it is only for a week or two—their income could theoretically fall below 60 per cent. of the median. As such people may only be out of work for a week or two before getting another decently paid job, that should not push Government policy in a particular direction. We must address the problem of those who find themselves stuck in poverty for an appreciable length of time because obstacles prevent them from getting out of it.
The Chairman of the Committee made some important points about people who are affected by change and who find it, if not comfortable, comforting to remain in
a situation that is stable and safe rather than take the risk of going into work. They may worry about how all the unknowns, which have overcomplicated the benefit system with multiple interactions, will impact on their situation if they take that risk.
It is appropriate for the Government to look at poverty through those three different lenses. It is vital as well because this is not just an academic debate about the causes of poverty. Were we to choose only one of those views of poverty, it would have profound implications on the policies that we pursue to relieve poverty.
For example, were we to choose the relative measure of poverty and say that it is important to minimise the number of people who are below 60 per cent. of the median income, it would unavoidably push us in the direction taken by the Scandinavians to relieve poverty. We would have to have significant rises in taxes to effect substantial rises in benefits, particularly out-of-work benefits and possibly the minimum wage as well. The Government have not gone down that road. It is not Government policy solely to use that method of alleviating poverty, and my party would probably agree with them on that. There are other things that we need to do. With the possible exception of the hon. Member for Leyton and Wanstead (Harry Cohen), who might think that the perfect solution to relieving poverty, there is not a widespread political consensus that that is the only road out of poverty, even though it works for other societies such as those in Scandinavia.
Therefore, it is vital for the Government to be clear about what they are trying to do to alleviate poverty. If they are to hit their target in 2020 of substantially wiping out child poverty—even if as gently and elegantly as they can they are backing away from the notion that they will hit their halfway-point target in 2010—it is essential that we all understand what the Government aim to do. Many of the essential planks in their platform will take effect not between now and 2010 but from 2010 to 2020—in particular, the welfare-to-work reforms.
Those reforms are critical because the Government are effectively saying that they will not rely purely on a Scandinavian attempt to raise taxes and benefits, but on getting more people back into work and off benefits, allowing them to take the step through the point of difference—to which the Chairman of the Committee referred—believing that they will be better off in work. We hope that the “better off in work” calculation will be simple, easy to understand and right. A combination of earnings and in-work benefits, or tax credits, is the way to lift people either out of severe poverty and improve their earnings or to lift them entirely out of poverty over time. I hope that that is a statement of where the Government are going.
Mr. Barry Sheerman (Huddersfield) (Lab/Co-op): Would the hon. Gentleman couch that in terms of the broad philosophy that David Freud has brought to Government policy in the Department for Work and Pensions and other Departments? He says that so many of our interventions to get people out of long-term sickness, disability and unemployment are very short-term—they last 12 weeks and then there is the revolving door and so on. Does the hon. Gentleman think that one of the answers is more concentrated help over a longer period, and not being fussy about who the agents are to supply that change?
John Penrose: I agree with large parts of the Freud report. The hon. Gentleman is right to say that Freud recommends introducing far more variety of supply into the welfare-to-work arena so that more organisations, particular those in the third and charitable sectors, can get involved in getting people in hard-to-reach groups back to work. Also, we must ensure that organisations are paid by results over an extended period. It is not enough to give someone a couple of brief courses, get them into a job and then wash our hands of them. We must ensure that the job is sustainable and that the person remains in work for an appreciable period. In a previous report, the Committee recommended that the person should be in work for at least a year before the welfare-to-work agency receives full payment. That would help to ensure that the problems mentioned by the hon. Gentleman are avoided.
Mr. Philip Hollobone (Kettering) (Con): My hon. Friend made the point earlier that the “better off in work” calculation should be simple. Should it not be as simple as possible? Almost from the first step, when getting on or off benefits, it should be a question of one, two or three presses of a button to do the calculation. If we can make the process really simple—almost from the first calculation that is done—it would encourage people to say with confidence, “I would be better off in work and off benefits.”
John Penrose: I could not agree more with my hon. Friend. Two things would need to happen for that to be achieved. An incredibly complicated piece of software must be updated in enormous and excruciating detail every time there is a benefits change to simplify the calculation. However, we can only go so far in improving that software to try to reduce the number of keystrokes in the way he describes. The fundamental problem is trying to model the effects of an appallingly complicated benefits system with multiple interactions and interdependencies. In an earlier report, one of the Committee’s conclusions was that only a limited amount can be done by improving the software. We will need to simplify dramatically the benefits system and its interaction with tax credits before we will make much headway. It is fundamental, but that is the way that we need to head.
May I finish off this point about the Government’s overall approach to poverty by pressing the Minister on a particular question? As I understand it, the Government have committed themselves to three ways of viewing poverty and have, therefore, committed themselves to the policy outcomes and approach that I have just been describing. As I mentioned, one of those ways of assessing poverty is the internationally comparable OECD measure of 60 per cent. of median income. I had thought that that measure was part of the Government’s approach; indeed, it appears throughout our report, and every time we made an international comparison, that was the measure that we used. However, in a recent debate about poverty—it was about pensioner poverty, but child poverty and pensioner poverty clearly share a common definition of poverty—two of the Minister’s departmental colleagues sought to rubbish that measure of poverty. They said that the calculations by EUROSTAT, which seeks to make international comparisons, are somehow not to be believed.
I appreciate that the Minister’s colleagues were probably seeking to avoid embarrassment on the Floor of the House because they were being accused at the time of
having engineered a situation in which Britain’s pensioners were worse off than those anywhere else in the EU, apart from Latvia, Cyprus and Spain. However, the Under-Secretary of State for Work and Pensions, the hon. Member for Warwick and Leamington (Mr. Plaskitt), said:
“The EUROSTAT survey measures the median income of each country and that of pensioners. The UK is relatively well-off so our poverty line is higher, and so our “poorest pensioners” are better off than the “poorest pensioners” in other countries. The motion’s claim is therefore spurious.”—[Official Report, 4 June 2008; Vol. 476, c. 880.]
In the same debate, the Minister for Pensions Reform said:
“Because we are a wealthier country, our poverty level in the EUROSTAT statistics is set higher than that for most European countries. That is the way the EUROSTAT statistics are set...Our pensioners are therefore much better off than those in most other countries.”—[Official Report, 4 June 2008; Vol. 476, c. 848.]
I hope that the Minister will clarify the situation. The whole point of the measure using 60 per cent. of median income, which the Government and his Department have used until now, is that it is internationally comparable. It allows international comparisons to be made and conclusions to be drawn in the way that the Committee has just done in its report. It is therefore a little awkward, to put it politely, for the Government to want to have their cake and eat it by using those international comparisons when they show the Government’s record in a flattering light, but back-pedalling rapidly when they come up with conclusions that Ministers do not like. Perhaps the Minister could therefore make it clear that the Government remain committed to that measure of poverty as one of the three that they use and that his colleagues were perhaps paddling rather furiously to avoid embarrassment on the Floor of the House, rather than necessarily being bang on in their representation of Government policy at the time.
The Chairman of the Committee has covered the points made in the report in fairly comprehensive detail, so I shall focus on just one additional issue—child care. Child care is clearly one of the most important obstacles to taking parents and their children out of poverty. Although the Government have managed to engineer a substantial increase in the number of child care places over the past few years, that increase has come at a cost. There is not just the financial cost, although the Government have clearly come up with extra money to finance child care places. In increasing the number of places, however, they have also dramatically increased the amount of regulation, red tape and bureaucracy, as well as the expectations, surrounding child care places.
There are sometimes excellent reasons for the changes. Some have happened because of child protection issues and because we have needed to ensure that Criminal Records Bureau checks on child care providers are done correctly. In other cases, the concern has been to improve the quality of child care, and that has led to regulations governing child care providers’ minimum qualifications and the minimum ratios of child care providers to children. As a result of such provisions, however, the number and range of child care providers has been dramatically reduced as fewer organisations have been able to provide the care envisioned in the Government’s guidelines, which have become substantially tougher
and more serious. The cost of child care has also grown dramatically, and one direct result of that, which we can all see, is that child-minding provision has declined dramatically.
As the Chairman of the Committee said, we have therefore ended up not only with an increase in the number of child care places, but with a dramatic increase in the number of vacancies and unused places, which now account for about 22 per cent. of places up and down the country. I suspect, as do many others, that that means that we have a monolithic, bureaucratic, over-engineered set of providers providing what the Government have defined as the right kind of care, which will, however, almost inevitably not match what parents want and need.
Mr. Sheerman: The Select Committee on Children, Schools and Families has just returned from two intensive days’ work in Copenhagen. What the hon. Gentleman says strikes a particularly discordant note for someone who has just come back from a country that supplies very high-quality early-years care. Does he not agree that if we are to stimulate young children as early as we can, it is the quality of the setting that matters? He would surely agree that part of what the Government are trying to do is to squeeze out below-standard child care. I, too, would like to have my cake and eat it and to have low-cost, stimulating, high-quality care. At this point in the 21st century, however, society can surely no longer accept the fact that poor children go into environments where they are not well stimulated because the pay and training of those who work there is poor.
Ann Winterton (in the Chair): Order. Before I call the hon. Gentleman to respond, let me say that interventions should be somewhat briefer. I allowed the previous one to end naturally, but I trust that hon. Members will bear in mind what I have said.
John Penrose: I completely agree with the hon. Gentleman’s point about the importance of quality. The point that I am trying to make is that although the regulations that the Government have introduced in an effort to achieve their laudable aim have improved quality in some respects—I am sure that hon. Members on both sides of the Chamber would sign up to that aim—they might also accidentally be squeezing out some potentially high-quality providers. I have no problem with squeezing out poor-quality provision—that is absolutely fine—but highly regulated, bureaucratically defined provision can often lead to other, unusual, different kinds of high-quality provision being excluded too. I suspect that that is one of the problems that we are seeing at the moment, which is why we have a mismatch between what parents want and what is being provided, and that has resulted in a large number of underused and vacant places in the existing child care sector.
I was therefore concerned by the Government’s response, which did not seem to address the issue or suggest that any material change was in the wind. Clearly, there must be some way of providing a high-quality but far more flexible set of services at an affordable cost or at a different time of day, a different day of the week or a different month of the year. In that way, people who do
not want to work from 9 to 5, but at other times of the day, or those who want to continue their jobs during school holidays, would not have to give up their jobs when the existing level of provision caused them child care problems.
I was filled with gloom when I read the Government response. Yesterday, however, the clouds parted, and I saw a ray of sunshine. Two of the Minister’s colleagues came to give oral evidence to the Committee on the issue of care. That was part of an inquiry into social care, but there are clear parallels and overlaps with the causes of child poverty, as I am sure that the Minister will understand. The difference between the Government’s approach to social care and what they said in response to the Committee’s report was stark.
Yesterday, the Under-Secretary of State for Health, the hon. Member for Bury, South (Mr. Lewis), who has responsibility for care services, said that the Government were trying to move towards a system of personal budgets and personal accounts, giving people control over the money that is spent and allowing them to choose who provides their care services. He said that the Government were looking at three different models. In one, people would employ their own staff and run their own operation. In the second, they would get the money and pay a traditional care provider to provide a service. In the third, the person would want the maximum ability to articulate their own needs and would want the authorities to settle the bills because they would not want the hassle of the bureaucracy. He then went on to tell the Committee that
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