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19 Jun 2008 : Column 337WH—continued

Of course the Government have acted in most of those areas, although not all of them, but I am not convinced that they believe that those other areas are integral to achieving our objectives.

On social mobility, I am sure that I am not alone in being appalled by the fact that a boy born poor in 1970 has a 38 per cent. probability of remaining poor as an adult, when in 1958 the figure was 31 per cent. As a Conservative, that offends me deeply. I think that everyone here would want bright children from the lowliest backgrounds to be able to achieve their undoubted potential. The fact that only a quarter of pupils on free school meals gained five good GCSEs, compared with half for the overall population, is also deeply worrying. That shows how entrenched some of these characteristics are and that we need to intervene early.

The hon. Member for Bristol, East challenged me to come out with some of our policies. I think that I can partially reassure her, because we have a number of policies in place—we do not yet have the full suite, not least because at my latest count the Government have taken nine of our principal policies, and we would like to keep one or two in the locker until the general election. The report by my right hon. Friend the Member for Chingford and Woodford Green, “Breakthrough Britain”, has been largely acknowledged by independent commentators with no link to the Conservative party as one of the most serious pieces of work on poverty by any political party in recent times.

I shall return to school reform and how we can give children the best possible chances of turning their lives around so that they are not condemned to poverty for their entire lives. I am pleased that following our debate on the use of synthetic phonics in teaching children to read, it became a common cause. We have also proposed creating more than 220,000 good new school places through expanding the academies programme innovatively, and we want to ensure that money will be targeted at the poorest pupils, with more money made available for children from the poorest backgrounds through a pupil premium, so that we get rid of the disgraceful statistic that I just raised: that children on free school meals do half as well in their exams.

There are also human factors at work, however, for which the Government cannot be directly responsible through legislation. When some children, from rich or poor families, go home at the end of day, and walk through the door, they will be grabbed by the parent or carer, fed, sat down and told to get on with their homework. In other homes, a parent might not be
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available, because they are out, and in others the attitude towards school work will be completely different. That is not an indication, per se, of material advantage. I accept that it is more difficult in poorer homes, because the parents might be working antisocial hours, and other difficulties might be at play. But I could take Members to plenty of poor homes in my constituency where education is really valued and parents ensure that homework is done. We cannot demand that the Government deliver on that, but why is the high value placed on education by some of our immigrant communities not prevalent among the population as a whole? That human factor is critical in dealing with some of the very important issues raised by the Select Committee.

The Committee’s report mentioned soft skills and getting people ready and fit for work. What key disciplines does a person require if an employer is to be hungry for their services? I would put reliability and self-discipline pretty high on that list. An employer wants someone who will turn up, do what they are asked to do and be trustworthy. If children who are in difficult family circumstances are not getting those skills, what is the role of institutions? Schools have a huge role to play in developing those attitudes and qualities in children, but so do organisations such as the scouts and cadets, which the Government—all credit to them—are talking about expanding. If children are not getting those skills and disciplines at home, through their family relationships, such organisations can play a key role in achieving the outcomes that the Select Committee is rightly looking for.

The Conservatives are absolutely signed up to the notion of work as the best route for getting children out of poverty. It is not the only route—there is absolutely a role for direct state intervention—but we see work as the primary way of doing that. The Government have stated that that is their intention, but the UK has the highest proportion of workless households in the whole of the European Union, including countries such as Bulgaria and Romania. That statistic is from the 2007 EUROSTAT figures. That is surely an indictment of our country’s ability to participate fully in the labour market.

The hon. Member for Bristol, East asked me for some policies. We have come out with innovative welfare reform policies, and the Government are moving in the same direction; indeed, only the Liberal Democrats are not. We think that every claimant who may be able to work should be engaged in full-time activity as part of the back-to-work process. In some cases, that will be through mandatory community work for the long-term unemployed. That might seem callous and unkind, but I argue that it is exactly the opposite. We all know that the longer people are out of the labour market, the less work-ready they are. They are less able to get up early enough to get to work every morning and they lose the ability to get on with the people whom they would have to work alongside.

We want to enable and give much more freedom to private providers, and pay them by results only when they have got people into sustained work. I assure Labour Members that we would structure contracts in such a way that they would not cherry-pick. There must be help for those who are furthest from the labour market as well as those who are easy to approach.

Mr. Rooney: Will the hon. Gentleman give way?

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Andrew Selous: I know that the hon. Gentleman disagrees regarding this area, and I am delighted to take an intervention from him.

Mr. Rooney: I do not disagree at all. What the hon. Gentleman has just proposed has already happened, so why does he want to reinvent the wheel? Contracts have already been let and structured in that way.

Andrew Selous: I am pleased to hear that, but my conversations with people such as Debbie Scott from Tomorrow’s People lead me to believe that there is further to go. The Government are complacent about the state of the labour market. There are more jobs than ever, but if this country has the highest number of workless households, there is much more to be done in this area if we are to tackle child poverty. We can go further, and we need to consider new methods—not from a particular political philosophy, but based on what will work. Much of what David Freud has said is good. Providers such as Tomorrow’s People have been outstanding and their results speak for themselves.

With regard to the labour market, which is key to dealing with these issues, I am informed by the Statistics Commission that, since 1997, between 53 and 81 per cent. of the new jobs created in this country have gone to foreign nationals. In many cases, they have provided vital skills, but there are people of all races, colours and backgrounds in our welfare system—nearly 5 million people on a range of out-of-work benefits. Our first duty is to make sure that such people, of all races and nationalities, are not in the welfare system for years, but come into the labour market.

Using work as a means of reducing child poverty is a primary focus, and I am concerned about the tripartite agreement in the child poverty unit. I understand that the lead Department for child poverty is the Treasury and that the unit is physically located in the Department for Children, Schools and Families, so the Minister is, in a sense, the junior partner of the three Departments, which is a great shame. Responsibility for child poverty should be firmly centred in the DWP, with the Secretary of State for Work and Pensions being accountable for meeting targets. He would certainly need to co-operate with other Departments, as well as the Treasury and DCSF, such as the Department for Communities and Local Government. We have heard about the problems with child care and local authorities, on which I have much sympathy with the comments of the hon. Member for Leyton and Wanstead (Harry Cohen).

I am not alone in worrying about the tripartite agreement. The Treasury Committee said in its report on the 2007 comprehensive spending review that

We have heard excellent contributions on whether it pays to go back to work. I shall not repeat what has been said, but I should like to consider the issue from a slightly different perspective—marginal tax rates and the withdrawal of benefit income as people go into work. I think that we all agree that with a progressive form of taxation, the best-off should pay the most tax, but we have a system in which the poorest pay some of the highest rates of tax or have benefit income withdrawn.

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Let me give some figures. Income support and jobseeker’s allowance are withdrawn at 100 per cent., housing benefit and council tax at 85 per cent. and working tax credit at up to about 70 per cent. in many cases. In its “Benefits Simplification” report, the Work and Pensions Committee said that if 41 per cent.

I agree. I also agree with earlier remarks on this issue.

The Minister for Employment and Welfare Reform (Mr. Stephen Timms): I am listening to the hon. Gentleman’s comments with interest. What would his policy response be and how would he reduce those withdrawal rates?

Andrew Selous: I freely admit that it is not easy, but the Minister has all the clever people behind him and the very bright civil servants, a number of whom are in the Chamber, who are able to do that. In broad terms, we need to consider having a more gradual taper so that there is not such a dramatic cut-off. We have heard examples from Labour Members about people who are worse off. The Chairman of the Select Committee said that some people are £30, £40 or £50 worse off, in spite of the “better off in work” calculations telling them that they will be £25 better off. That particular case was probably because of the loss of passported benefits. If the benefit system were analysed in detail—I accept that that is serious work and is not something that the Department could do overnight—I think that that would be found to be a serious issue and a major barrier to getting people back into work. I commend to the Minister and his officials the need to consider that area.

The benefit system in this country, as opposed to most other OECD countries, to a marked degree treats couples much less favourably than single people. The Government’s equivalisation tables say that a childless couple need about 75 per cent. of the combined incomes of two single people, as single people and single parents need to receive more, and a couple should not need twice as much. The Government say that a couple with two children need about 80 per cent. of the combined income of a lone parent and a single person.

However, when one analyses the benefit system in rather greater detail, one finds that workless couples receive only about 60 per cent. of the benefits received by two workless single people. There is a range of countries that have a different benefit system and do not discriminate against couples in the way that our benefit system does: Canada, Iceland, Germany, Luxembourg, Norway, Ireland, France, Belgium, Spain, Finland, Austria, Sweden, the Netherlands and Switzerland, to name just a few.

Mr. Rooney: Very briefly, the rates that we have today were set in 1988 under the Social Security Act 1986 and uprated by inflation. The opportunity was there in 1988 to do things differently. At that time, it was not thought right to do things differently, and it was not thought right to do things differently at any time up until 1997, so why the change now?

Andrew Selous: I am certainly not the sort of Conservative who defends everything that my party has done in the past. I say quite frankly to the hon. Gentleman that I do
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not think that the rates were right then and I do not think that they are right now; just because it is wrong now does not mean to say that it was right under a Conservative Government.

John Penrose: I am sure that my hon. Friend remembers that the level of single-parent family formation back in 1988 was dramatically lower than it is now, and therefore the problem is getting much worse in modern times.

Andrew Selous: My hon. Friend is absolutely right. Let me just remind the Committee that children of separated parents are twice as likely to be in poverty as those of parents who remain together. Therefore, when I raise the issue in this debate, it is for no other purpose than wanting to reduce child poverty. As I say, the fact is that if someone is the child of separated parents, they are twice as likely to be poor than if they are fortunate enough to have parents who have stuck together.

It is interesting that, around the world, other Governments of the left seem to get this concept. Australia gets it, with Kevin Rudd’s Government maintaining the focus on families that John Howard’s Government introduced, with the family relationship centres. In President Clinton’s welfare reform Bill, there was an explicit measure to promote marriage and the two-parent family. I also note that only last week Barack Obama, the Democratic candidate for the US presidency, was talking about the fact that in America,

So I say to the Minister that I would love this issue not to be an area of difference between us. I can enjoy the situation politically, because I happen to think that the Government’s policy is lousy and in a debate we can probably knock spots off it. However, I say to him that I genuinely do not want to go down that route. I would love it if he were to join those on the left and centre-left in Australia and America who realise the importance of family issues and the importance of strong, stable, committed families in reducing child poverty.

Again, it is not just me who is saying this. Let me quote a report from the Joseph Rowntree Foundation, entitled “What are today’s social evils?” The report does not just reflect the foundation’s views, but those of the people interviewed in its research. At the top of their list—this is not my preference as a Conservative that I am putting forward—was:

The hon. Member for Bristol, East did the debate this afternoon a service by raising this issue. I say to her that it is definitely not an either/or situation. Reducing child poverty is not just about providing the money to help people to get out of poverty, or promoting these softer emotional commitment and family issues; it is a both/and situation, where both factors matter. I will accept that poverty leads to couples splitting up, when money is scarce, but I think that it works the other way round as well, in that, in any given set of circumstances, a more stable and committed family relationship helps children
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to stay out of poverty. As I say, that is reflected in the data; children whose parents separate are twice as likely to be poor.

Again, we have some proposals to improve matters within the working tax credit system. We will increase that credit by £38 a week, to try to do away with this couples penalty. That measure will help 1.8 million of the poorest couples with children, so there will be some big gainers from that.

In the family area, we have also said that we will increase the health visitor service. Under our proposals, the very youngest children will receive six hours of home support in the first two weeks; a visit every two weeks in the first six months; monthly visits in the next six months, and two visits a year between the ages of one and five. It is critical to do that work at those very early stages.

I would just like to raise briefly with the Minister the issue of people in poverty with mortgages as opposed to living in local authority housing. There are 2.56 million families with mortgages living in underlying poverty, as opposed to 2.75 million families in local authority housing living in underlying poverty. When I was on the Select Committee, various people who gave evidence were concerned about the former group: those with mortgages. I may have missed any reference to them in the current report—I do not know whether there is any reference to them—but it is an issue that should not be off the radar screen. There is a very significant issue with this group of people, too.

Regarding the debt that people get into, the issue of affordable credit is incredibly important for families that are existing on low income, for the reasons that the hon. Member for Bristol, East quite properly gave. Someone’s fridge can stop working, or the classic example is that someone’s boiler stops working in winter; if they do not have insurance, that situation can send many families totally over the edge.

Again, there is a major piece of work to be done on the area of affordable credit. I will not be specific or prescriptive now. However, I am not convinced that the social fund works nearly as effectively as it could or should. There are opportunities, perhaps through working with private finance, to expand greatly what the social fund does, perhaps in collaboration, or separately, or in addition to the work of credit unions and friendly societies. Financial literacy is also something that we need to look at, given that there is evidence that people are wasting up to £700 a year by taking poor financial decisions.

Can I please encourage the Minister to do more on the issue of pre-payment meters? We had a recent pledge on this matter, but it really is scandalous that the poorest are paying most for their fuel. I raised this issue in the House on 23 March 2006; I was told then that nothing could be done. The current Secretary of State for Environment, Food and Rural Affairs called for action on this issue in 2000, when he was a Back Bencher, and he has been in the Cabinet since 2003. This issue has been around for a long time; many people from all parts of the House have raised it, and with fuel prices as high as they are and possibly going up by another 40 per cent. next winter, as we have heard yesterday and today in the news, something needs to be done urgently.

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I was particularly shocked to see in paragraphs 381 and 382 of the Committee’s report that

The report goes on to say that

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