Examination of Witnesses (Questions 20-39)
RT HON
ED BALLS
MP, RT HON
YVETTE COOPER
MP, RT HON
BEVERLEY HUGHES
MP, RT HON
JAMES PURNELL
MP AND RT
HON STEPHEN
TIMMS MP
9 JUNE 2008
Q20 Chairman: It is nice to know
that a Select Committee has that influence.
Ed Balls: To be honest, from last
June, that was how it was at the ministerial level. De facto,
the CPU was working so closely with Treasury officials that it
was the best and most logical way of doing things. That was the
conclusion that we all reached, as James said, after a particular
meeting with the Chancellor. It had become common practice anyway—we
simply made it formal.
Chairman: Thanks for that; it has cleared
matters up. We are now going to move to the measurement of child
poverty, on which Graham will lead.
Q21 Mr Stuart: Before we move
on, may I ask a question on this issue? Following the Select Committee,
the decision was made to have three Treasury officials be part
of the CPU, but they are not based with the CPU in the DCSF. Why
is that?
Yvette Cooper: It is important,
given the way in which these issues need to feed into pre-Budget
and Budget discussions, that they have close links with other
officials who are working on wider tax, benefit and HMRC issues.
The issue is not where their desks are, but the way in which they
work together. They are commonly and frequently at meetings together
and will continue to be so.
Q22 Mr Stuart: What do you think
made the DWP and DCSF so focused on desks, then? Did they make
a mistake? Was it an error to put people together and have a single
stream of advice when they could all have sat at separate desks
around Whitehall and worked together seamlessly?
Yvette Cooper: No; they have been
working very well together since the CPU was set up and they continue
to work very well together.
Q23 Mr Stuart: They might find
it easier to work together if they sat in the same unit as equals,
if it is genuinely a meeting of the three Departments—is
that not fair? It is odd to have officials come in from the outside
to attend meetings.
James Purnell: There are all sorts
of effective ways of working together. As I said, when we did
school sport together we had people from different Departments
working well together. That works well and is absolutely right.
We want those people to be bumping into people in the Treasury
corridors, so that they can lobby within that structure as well.
I am sure that we can give you a report on exactly where people
sit if you like.[2]
Ed Balls: It is also important
to understand the position of the Treasury in this, and I think
we do. As Yvette said, these are the Chancellor's decisions to
take in Budgets, and there is a degree of confidentiality and
secrecy around the Budget process. I think that the Treasury would,
understandably, be concerned if officials who are working on very
sensitive issues—as they will, as Treasury officials working
on child poverty—were frequently having papers brought over
or sent to a different Department. The Treasury has a different
way of doing things, because of the Budget process, and I think
we understand that, but it does not stop people working really
closely together. In my experience of doing Budgets for 10 or
11 years, I would say that there was a greater degree of willingness
for the Treasury to engage in work on child poverty issues jointly
now, because of the Unit and co-location.
Q24 Chairman: Beverley, with your
particular job, what do you think of this? Is it working as well
as you thought it might?
Beverley Hughes: I think it has
made a very big difference. I worked with the previous Minister
for Work and Pensions, as it was then, over the last 12 months
without a formal remit on child poverty. Obviously it was an area
of great interest to our Department, the ability to bring officials
together like this. I think that the momentum that the establishment
of the Unit has created and the shared focus have been very substantial.
I think it is a big improvement.
Chairman: Are you ready to move on, Graham?
Q25 Mr Stuart: I am ready to ask
my next question, Mr Chairman, if you have finished. Beverley
Hughes has just talked about momentum. The Secretary of State
has said that we have exceeded our expectations over the progress
we could make in the time that we have had. Tremendous. Could
I ask the Chief Secretary by how much you can beat the 2010 child
poverty target?
Yvette Cooper: We have obviously
made considerable progress so far. The figures that we have already
referred to show that, had we not done anything and simply uprated
the tax and benefits system in 1997—
Mr Stuart: You have already said that.
Yvette Cooper: We would have seen
1.7 million more children in poverty as a result. The measures
that we have announced in the Budget take us significantly further,
but there is clearly further to go. We know that. We know that
we have a very challenging target.
Q26 Mr Stuart: How much could
you beat the 2010 target by?
Yvette Cooper: That is why we
have work under way in the Child Poverty Unit at the moment on
how we can go further and looking at what more we need to do,
in terms of both the 2010 target and of the 2020 target. That
is work that we continue to do.
Q27 Mr Stuart: Could it be a 55%
reduction, or 60%? What do you hope for?
Yvette Cooper: We continue to
work towards our target. Our target is to halve child poverty
by 2010 and to eradicate it by 2020. That is what we are working
towards.
Q28 Mr Stuart: How much will it
cost to meet the 2010 target?
Yvette Cooper: We obviously set
out measures in the Budget—£950 million, I think—that
help us meet that extra half million over the next couple of years.
That important additional investment was made possible by the
measures set out in the Budget. We are continuing to look at what
further measures we can do. We are continuing to look at what
further progress we can make. There is work, for example, that
the DWP is doing in terms of how we get more lone parents into
work. Clearly, the more people that we can get into work, the
greater the impact that that has. That obviously makes a very
big difference, because, as we all know, your chance of being
in poverty drops substantially as soon as parents move into work.
That work is underway as well. As I answered John's question earlier,
what you would not expect me to do is to speculate about future
fiscal measures or future pre-Budget report decisions. What I
can say is that there is an immense amount of work under way through
the Child Poverty Unit and across the Government on what further
progress we can make.
Q29 Mr Stuart: But the point of
having a publicly declared target of this sort is precisely in
order to allow the people, the electorate, to speculate about
future decisions of bodies such as the Treasury. It has been announced
that—we have five Ministers, and various members of the
Cabinet, sitting here today to tell us how—you are all committed
to meeting the target. So you have told us to speculate—we
can expect child poverty to be halved, on current measures, by
2010. What is the speculation about?
Yvette Cooper: Indeed. We have
also set out a series of measures that helps us move towards that,
and also a series of principles, which guides our future decisions
as well. Those continue to be, particularly, supporting people
into work, wherever that is possible, and looking at the opportunities
for children, but also at what more we need to do to help families
who are on low income across the board. We set out the principles
that we operate under, and we have also set out a series of measures,
which will raise family income over the next two years. It is
not simply the measures that have already come in, but also measures
that will come in this year and next year, October of next year
as well. But what I cannot do is to speculate on future pre-Budget
report decisions, and I know that you would not expect me to do
so.
Q30 Mr Stuart: So you cannot promise
that you are going to meet the target. You are coming here today,
formally, to a meeting on child poverty, to say that whether you
will meet the target or not is pure speculation.
Yvette Cooper: No, we have said
that we continue to be strongly committed to our target. In fact,
the Chancellor said to the Treasury Committee only last week,
"I do not think we can be deflected at all from our objectives
in relation to child poverty". The Chancellor has set out
a strong signal in terms of his personal priority. He did that
in the Budget, but he has also signalled that priority for the
future as well.
Q31 Mr Stuart: But that is slightly
different from telling us so close to the deadline that you are
going to meet it. I shall ask you another question. if I may,
Chief Secretary. It is possible to meet the target through expenditure,
is it not? A sizeable number of children have been removed from
poverty as a result of that Budget. So if the money is spent,
the target can be met: is that true?
Yvette Cooper: It is clear that
that £1 billion will help us increase child benefit and child
tax credit and will help in terms of a disregard for child benefit
in relation to housing benefit and council tax benefit. Clearly,
putting that investment into helping those families will help
lift some 500,000 children out of poverty. [3]We
are going to be able to deliver those results over the next two
years.
Q32 Mr Stuart: So it could be
done if the money were spent. Are you saying yes or no to my question?
Yvette Cooper: We have always
said that this is partly about the financial support that we give
to families, but it is not just about that. It is also about whether
we can help parents into work and whether we can deal with child
care issues and access to child care. It is also about whether
we can do more in terms of dealing with the long-term problems,
including, for example, the fact that parents with low skills
may have trouble earning a higher income.
Mr Stuart: We are 18 months away from
2010.
Chairman: Let the Chief Secretary finish
her answer, then you can come in. Yvette, have you finished?
Yvette Cooper: Many different
things affect our ability to make progress on tackling child poverty.
We have demonstrated a strong commitment not simply to talking
about the importance of tackling child poverty, but to putting
large sums of investment into helping families in the short term
and into some of the long-term measures that DCSF and DWP work
particularly on that help families into the future.
Q33 Mr Stuart: I should like,
through you, Chairman, a straightforward answer to my question.
As the Minister said, hundreds of thousands of children will be
removed from poverty as a result of the measures in the Budget.
So it is possible to do so through expenditure, putting aside
the long-term issues about getting people into work, improving
educational opportunities and the like, which will be playing
a peripheral role between now and meeting the 2010 target, although
they may have a much more significant role in the eradication
of child poverty by 2020. Could the Chief Secretary just confirm
that, if the money is put in place, it is possible to meet the
2010 target? That means a decision by the Treasury, not performance
by DWP or DCSF.
Yvette Cooper: I disagree with
your premise. Part of the reason why we have made progress so
far is because we have seen a drop of around 400,000 children
living in workless households. That has been hugely important
in terms of our being able to make progress and lift families
out of poverty. Yes, the amount of financial support we are able
to give families through child tax credits and child benefit is
also important. That is why we announced significant increases
in those things as part of the Budget, but we set up the Child
Poverty Unit because, in the end, we cannot address the problem
of child poverty in Britain purely through measures to do with
financial support; we also have to address some of the root causes
of child poverty, which means helping families into work and looking
at the next generation of parents, who are currently in school
age 11 or 12, and seeing what more we can do to help them raise
their skill levels so that they are able to earn more in future.
Our commitment to eradicating child poverty is unprecedented,
compared with countries right across the world. It is a huge commitment,
but we should not underestimate its scale and significance and
the need for everybody to be part of working towards that, rather
than have one Department or one measure dealing with it.
Q34 Mr Stuart: For the purposes
of the 2010 target, is the definition of relative low income as
60% of median income before housing costs still justifiable, considering
the impact of the credit crunch and the cost of housing in different
parts of the country?
James Purnell: Yes, because we
have a basket of measures. We have the relative poverty measure
and the absolute poverty measure. We also have the material deprivation
and low income measure. A third of those catch the effect of rising
prices. It looks at whether families in the bottom part of the
income distribution can afford a range of goods that would typically
be seen as standard for people to have. If there were any effect
from the credit crunch on those families, it would be picked up
by that measure.
Q35 Mr Stuart: The TUC estimates
that 3.8 million children are living in poverty on the basis of
an after-housing measure as opposed to the Government's 2.8 million
figure on before-housing costs measure.
James Purnell: That is a Government
figure actually—the 3.8 million.
Q36 Mr Stuart: Okay. Without intervention,
are the outcomes for the additional 1 million children identified
by the TUC likely to be any better than for the acknowledged 2.8
million children in priority?
James Purnell: The measures that
we take will affect both of those. In fact, both of those figures
have fallen by an identical amount—by 600,000. We target
both. The reason that we have those three measures is for the
very fact that poverty is multidimensional and we want to have
a set of measures that capture how a family is doing relative
to other families. Clearly, if children at your school are able
to go on school trips that your children cannot go on, or if they
have certain advantages that your children do not have, or certain
things are expected to be standard in your community and you cannot
have them, that can be shaming for the children involved, so we
have a relative poverty measure for that. We have an absolute
poverty measure to see how we have done since we started out on
this target, and we have a material deprivation measure because
that captures a common-sense idea of what it is to be affected
by low income.
Q37 Mr Stuart: Critics would say
that the Government have announced their targets for eradicating
child poverty in a generation—they announced their targets
for reducing it by a quarter and then a half—and that in
a spirit of self-congratulation they have since applauded themselves
for their ambition. Mostly, what has happened is that those children
who were statistically just below the line have been lifted up
over the line. When the 25% reduction target was missed, the Government
were not deterred from their self-congratulation. They look like
they are heading towards missing their 50% target while they carry
on telling themselves that they have done a great job—for
example, through the language you have used today about what a
fantastic and brave effort it has been. In fact, the poorest in
our society and those who are the hardest to reach—in other
words, the people who it is difficult and challenging to make
a difference to—are missed. What reassurance can you give
us that the most seriously deprived children will see benefits
before 2010?
James Purnell: The reassurance
that I can give you is that that accusation is not true because
the measures we have brought in do not just affect people just
below the poverty line; they affect everybody. Everybody gets
child benefit and everyone who claims it gets child tax credit.
The vast majority of that is claimed. It is not a choice between
people just below the poverty line and people in the deepest poverty;
it is a question of tackling both. Measures such as our changes
to tax credits have lifted all of those people further up. You
then need to have a set of targeted interventions for the people
who face the biggest barriers. That is where, for example, the
family intervention project comes in, which we might talk about
later if you ask us about it. That is also where the social exclusion
strategy and the reforms to the welfare state come in. Those reforms
will tackle the problems faced by people who have the biggest
barriers to work. You need to do both. It is said that having
a measure at 60% for median income means that you ignore people
at the bottom; actually it does not mean that at all because the
measures we have brought in have lifted all of those people. The
final thing I will say on your point about the target is that
I would much rather have a tough target and be committed to a
target, as that is an important part of the test of whether people
are serious about the issue. I would rather have a tough target
that lifts more children out of poverty because it is such a challenge
to achieve, than have something that is easy to achieve and helps
fewer children.
Q38 Mr Stuart: But it is also
important that the Government are held to account. If they say
they will meet a target, there should be brickbats for making
that promise, announcing it, basking in the glow of positive publicity
for such a positive act, and then failing to deliver. It is important
that the Government do not just wriggle and roll on the punch
and suggest that they should not be given any grief. I do not
want to cause a division around any table—Cabinet or otherwise—but
my key question relates to this. The Secretary of State for Children,
Schools and Families indicated to us previously that—I hope
that this is fair—for 2010 it would be on other Departments,
and we understood that to mean the Treasury, notwithstanding the
importance of educational opportunity and getting people into
work. Fundamentally, to meet 2010 would be about the Treasury.
Will the Secretary of State comment on that?
Ed Balls: Both comments were made
in January, and they were made in the context that, as I said
at the beginning, there was a small rise in child poverty in the
most recent figures, which disappointed us. I said then, and we
have all said since, as has the Chancellor, that it is important
to redouble our efforts. What happened was that the Budget included
a package of measures, a small but important amount of which—around
£125 million—will help in the long-term; £1 billion
was for action through tax credits and child benefit particularly,
which will have an immediate impact. I said in January that in
the short-term those measures would have the quickest impact,
and the Chancellor delivered with a £1 billion package. It
turned out that my prediction in January was correct. We have
been careful not to be self-congratulatory. The fact is that in
2004 we did not meet the target—we just missed it—and
I remember that in our earlier discussion I said that if you set
ambitious targets and get as close as possible and try really
hard, you can either throw your hands up in the air and say that
it was all a betrayal, or you can redouble your efforts because
it is really important to get there. We have had the fastest fall
in child poverty of any European country since 1997,[4]
which is a source of pride, and a good thing. We started from
the highest level of child poverty in any European country in
1997 following a doubling of child poverty, which was a matter
of shame. That is the difference.
Q39 Fiona Mactaggart: Secretary
of State, you referred to the fact that between 1979 and 1997,
child poverty probably trebled for Britain to reach the top of
the European league. What do you think about the fact that we
have overtaken only three countries in that league, despite all
the effort that we have heard about? That connects to James's
point about running up down escalators but, nevertheless, we are
still not even in the middle of the child poverty league.
Ed Balls: That spurs us on, but
also reflects the scale of the challenge that we started to face.
The fall has been the largest in any European country,[5]
so we have been able to do more than anyone else. If you start
with a big challenge, it takes time. I have the same issue in
education, because 638 schools have below 30% GCSEs, including
English and maths, which is below the acceptable standard, and
we are addressing that tomorrow. In 1997 it was 1,600 schools—more
than half of all secondary schools. Do you look at that and say,
"638 is not good enough"—I do—or do you
say that reducing that number by 1,000 since 1997 is real achievement?
I think it is. We have further to go because we started with very
substantial problems in our education system that had to be fixed.
The same is true in work, support for work, margin incentives,
and support for families. That takes time, and it is hugely expensive
and very long-term, but we are going in the right direction and
it is important that we are not thrown off course as a country.
James Purnell: Perhaps I could
add that the fact that we have been one of the most successful
economies in that group has also made it harder because the target
is relative to median incomes, and if the economy is doing well,
the down escalator is going even faster. The fact that our economy
has done well has made the challenge even greater, and that is
combined with the fact that, as Ed says, there was a long way
to go at the beginning.
2 See Ev 21 Back
3
Note by witness: It is the past three fiscal events (Budget
07, 08 and PBR 2007) together that will lift around 500,000 children
out of poverty Back
4
Note by witness: For the years where we have comparable
data between 1997 and 2001 Back
5
Note by witness: Over the period for which we have comparable
data Back
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