Select Committee on Children, Schools and Families Minutes of Evidence

Examination of Witnesses (Questions 20-39)


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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