Examination of Witnesses (Questions 40-59)
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
Q40 Fiona Mactaggart: If it were
just our economy doing well and not hugely unequal incomes following
our economy doing well, it would not necessarily have the same
effect, would it?
Ed Balls: These are median incomes.
Yvette Cooper: We have deliberately
chosen a relative poverty target, which is important. This is
effectively about unfair inequalities that can face young children
as they are growing up and in their chances in life. The poorest
families have ended up being £4,000 a year better of as a
result of our changes to the tax and benefits system and so on.
That is hugely important, but we have also had growth in the economy
as a whole and all sorts of changes, and we know that there is
an increasing return to skills. As part of a global economy and
technological change, people with higher skills will do better.
People who have no skills at all are at risk of falling further
behind. That is why this is partly a long-term way to address
the skills gap that exists for many parents as well as a consideration
of what more we can do in the short-term. The fact that we face
such wider social and economic challenges in how the economy works
and in the importance of skills does not mean that we should not
try. It actually means that we should try harder. That is how
we have been trying to respond over the past few years.
Q41 Fiona Mactaggart: I am very
interested in what works at different levels. The evidence that
you have given us shows that there are a number of strands, including
those people in the most serious poverty. One thing that there
is pretty compelling research about is the happiness of children
and adults in the most deprived families. It suggests that actually,
there is not a direct correlation between happiness and deprivation,
except in that very bottom group, where there is a profound and
substantial correlation just because people have so little money
that the situation is most serious. It seems to me that despite
the progress that we have made, one reason why Britain is not
scoring better on child happiness and so on in the United Nations
measures is the group of children who are still substantially
deprived. What are we going to do about them? I can see that the
DCSF outdoor play strategy is designed to connect to the basket
of measures about access to outdoor play, but what other things
are we doing to ensure that those very, very deprived children
are happier and get chances of success?
Ed Balls: May I take you down
that road by referring to the pilots that we announced at the
time of the Budget? For example, one thing that we are looking
at is a child development grant, which would be extra support
for mothers on the lowest incomes with children aged, say, two,
if they are coming to children's centres, and if their children
are getting their vaccinations—if they are doing the kind
of things that we are trying to encourage more mothers to do with
their children. There is a direct route through the child development
grant to try to match resources to that kind of activity, which
can often be good at laying the foundations for children to be
successful in later life. The work that we are doing on the child
health strategy is about trying to ensure that we identify early
children with health or, particularly, mental health issues and
address them. I would say that our Department in general is about
trying to spot the likely causes of unhappiness, of getting involved
in crime or of leaving school, and trying to adjust them at a
much earlier stage. That is where the leadership that Bev provides
is important, because it often means intervening in the earliest
years, before children have even started in the schooling system.
Beverley Hughes: On your general
proposition, Fiona, which is tremendously important, although
there is obviously no perfect correlation between happiness and
the indicators of children's well-being and low income, there
are none the less some very strong, more general correlations.
Children in persistently low-income households are shown to be
in much poorer health and they are more likely to be obese. Children
in workless households report feeling much greater stigma, and
they feel a positive benefit of parents—interestingly, particularly
mothers—going into work. That relates particularly to when
lone mothers go into work but also to couple families. Therefore,
there is some important evidence that the well-being of those
children in the poorest families is actually related to income
and can be lifted if parents get into work, not just because of
the higher income and benefits to quality of life but because
of psychological well-being and the reduction in feelings of stigma.
Many mothers in work entry schemes in children's centres speak
to me in an emotional way—it makes me feel very humble—about
how, when they get work, it impacts on the whole family, particularly
on their aspirations for their children and their children's aspirations
for themselves.
James Purnell: I was going to
make the same point. It underlines the reason why welfare reform
is so important. If we break that cycle of inter-generational
worklessness, not only do families have more money, but their
self-esteem goes up and the life chances of the children are transformed
as well. We have 1 million fewer people on out-of-work benefits
compared with 10 years ago. The more that we can do on that, the
more that we can help to deliver the agenda. I am talking about
not just the agenda for 2020 but for 2010 as well. We think that
our reforms of lone parent conditionality will lift 70,000 children
out of poverty. Welfare reforms can make a big contribution towards
those goals.
Q42 Fiona Mactaggart: Yet we know
that social mobility for this generation is slower than for previous
generations. Why is that?
James Purnell: We do not know
that yet. You will have to wait 20 years to find out what happened
to the children.
Fiona Mactaggart: Okay. I am saying the
1980s compared with the 1970s.
James Purnell: Given what we were
talking about with regard to child poverty over that period, it
is not surprising that social mobility for that generation—they
are now in their 30s—was slower. That is why we believe
in this so passionately. If you want people to have fair life
chances, that will not happen if they are poor when they are growing
up. It is not just about poverty, but about education, health
and the whole range of things that we have been discussing. A
sine qua non of it is ending child poverty to give people
fair life chances.
Q43 Fiona Mactaggart: Knowing
that is one of the key things that I find difficult and frustrating.
I can tell that there is a degree of commitment. This is not just
an aspiration but a target that you are keen to be accountable
for. Knowing what is happening, however, is sometimes confusing
because of the way in which changes are reported. We had the ritual
at the beginning when you said, "We cannot tell you the present
figures". That is ONS rules, and we recognise that having
an independent statistical service means that you have to tolerate
those rules. In the Opportunity for All strategy report,
which is published by your Department, there used to be a pretty
good way of seeing how these different changes mesh together.
You could see the difference in the income for those on the lowest
level, and what the progress was on the whole target and so on.
It seems to me that this is a really important piece of information
for holding people to account. Unless you get, in a single place,
a pretty accurate report on progress, we will not be able to do
the job that we are trying to do today of holding the different
Departments to account for the different things that need to be
done. For example, there are households in poverty because of
no work, and there are households in poverty because of low public
sector pay. Arguably, a different tactic, or policy delivery,
is needed to try to change the circumstances for their children.
James Purnell: In effect, two
parts of that document have been separated. We now have a joint
policy statement and approach that is set up in the Ending
Child Poverty document. We published all the data in the Opportunity
for All report. Everybody can still access that data, as they
will tomorrow.[6]
I do not think that people will find it hard to find those figures.
If you want to recommend that we go back to that, we will consider
it. When I questioned my officials they said that the document
had run out of steam. They were under the impression that people
had stopped taking an interest in it and had abandoned it. We
did not have an ideological reason for doing that and we would
be very happy to reconsider the matter. It is better to have a
document that has the joint strategy of our three Departments
rather than, as a matter of ritual, present our Opportunity
for All document, in which we have to reiterate what our policy
is.
Q44 Fiona Mactaggart: I agree.
I thought that the document that was published in October was
good and that it accounted very well. The point is that we need
to have progress reports. It is the same with children. We can
have a document that says, "Right, this is the level that
we expect children to achieve at Key Stage 2", but we then
need to know whether the children are achieving it, in what parts
of the country they are not and what we are doing about it. We
need a pretty comprehensive report to make a difference to such
things. If you are running up or down an escalator, you really
need the best information possible in as real time as possible
to know when things have made a difference. Graham suggested that
you may have just picked the low-hanging fruit. You refuted that
suggestion, but we need to know the number of different bits that
are making a difference.
James Purnell: If we write to
the Head of the Office for National Statistics and ask what would
be appropriate, given the new regime, we can send you a copy of
the letter that we receive, and you can make a recommendation
based on that and we shall consider it favourably.[7]
Fiona Mactaggart: Thank you.
Q45 Chairman: Some of you will
know that we have had brushes with Departments in the past about
changing the statistics in annual reports that make it impossible
to get a linear analysis.
Ed Balls: The pre-Budget report
provides an opportunity for that. We have also made a commitment
to the Committee to produce a report on the Children's Plan one
year on, before the end of the year, which will set out our progress
on all our joint objectives. It is another opportunity for the
moment. We cannot make the assessment, as you rightly say, without
the most public and comprehensive analysis of the evidence. Perhaps
we should think about the pre-Budget report, our joint work through
the Child Poverty Unit to update and publish information, and
our Children's Plan one year on document, and think about how
we shall sequence them in the autumn. The autumn is the right
time to come back to such matters.
Q46 Fiona Mactaggart: Do you think
that you would work as hard at the issue if it were an aspiration
rather than a target?
Ed Balls: No. We would,
but a target is quite a different thing. It is something that
we would not say in an airy-fairy way that we would like to achieve
at some unspecified time, measured in an unspecified way and delivered
by unspecified mechanisms and charities. We would say that it
is something that we shall do. We would define it, measure it,
set a timetable, and we would be held to account for it.
Q47 Chairman: We want to move
on, but I shall come to the Chief Secretary, and perhaps Beverley
will come in. You have been describing help for families in poverty—whether
in-work poverty or not in work. Do you think that there is a feeling
out there—it is certainly the feeling that I get when I
visit schools—that there is a tax credit fatigue and a yearning
for people just to be able to earn a wage that does the job? Do
you not think that there is tax credit fatigue? Beverley said
that people have greater self esteem if they are in work. Is there
an intermediary stage at which it is nice to have a job, even
if you are in work because you have been helped by tax credits?
Is it not even better to earn a salary that frees you from all
that?
Yvette Cooper: As you know, we
introduced the minimum wage, and that is important. To operate
without a minimum wage could cause all kinds of problems. We need
it for underpinning purposes. Equally, families face additional
costs when they have children. Children bring additional expenses
with them. It is right that, as a community and as a whole, we
should support that. That is why the principle of child benefit
was introduced many years ago. The child tax credit really builds
on that principle, but it does so in a way that helps us to target
child poverty. It is the principle of progressive universalism
where we do a lot to support all children, but it is particularly
for those families on the lowest support. Yes, you need the minimum
wage. Yes, you need to help people earn more by improving their
skills and help them gain skills to get better-paid jobs and to
stay in work. Some of what we have been looking at in the pilots
is about how to keep people in work, so that they do not just
get a job for a little bit and end up losing it. That can cause
all kinds of problems. We must also recognise the cost of buying
extra clothes for the kids or all those costs that come with a
family with young children.
Q48 Chairman: But do you not sometimes
get a little tired, Chief Secretary, of a global company operating
in your constituency that pays about £13,000 a year? It gets
£1,000 a year if it takes on an apprentice. All the subsidies
seem to be going to the employer rather than the employee. It
is a pity that some major companies do not pay a living wage.
Yvette Cooper: You sound like
you have a particular company in mind in your constituency.
Chairman: I might have, but we will pass
on from that. It is an irritation about wanting a fair wage for
people.
Ed Balls: It is important to look
at what the minimum wage and tax credits together provide for
somebody in work. Adding those two things together for someone
who is in work ends up with an effective minimum wage for a couple
of well over £7 an hour, but over £12 an hour for a
single parent. That could never be achieved by the minimum wage
alone, but the minimum wage and tax credits together are an incredibly
powerful way of boosting in-work earnings—the effect of
the minimum wage is much higher.
Chairman: That is interesting. You have
just put that more succinctly than I have heard it put for a very
long time. We will move on. Paul will lead us into the work first
approach to child poverty.
Q49 Paul Holmes: This is following
on from where we have just left off. If the core of the strategy
for tackling poverty is work first, how do we deal with the problem
that in a lot of cases it is not working? A total of 50% of children
in poverty have a parent who works at least part time, and 21%
of children in poverty have a parent who works full time. In a
two-parent, two-child family with one parent working on the minimum
wage, they could work 50 hours and still be £67 below the
poverty level. Does work first actually work?
Chairman: Stephen Timms. It is about
time we got you in against him.
Stephen Timms: I think the answer
is that it does. The risk of poverty for children in workless
families is almost 60%. It is 14% where one or both parents are
in work. One parent being in work makes a very big, positive difference
to the risk of poverty. You are right, there is still an issue
about child poverty in families where a parent is in work, but
there is a big, positive break in people's circumstances when
a parent goes into work. That is why it is so important that we
have made such a lot of headway in helping lone parents into work
over the past 10 years.
Q50 Paul Holmes: Is there a danger
that in the enthusiasm for that, there could be examples where
it becomes counter-productive? There is a better off in work credit
which is totally misnamed. As the Work and Pensions Committee
pointed out, it is a deception to tell people that they are better
off in work if that is not the case, or if a person would be worse
off once a time-limited benefit runs out. The better off in work
credit does not allow for the fact that you might lose free school
meals, transport benefits and so forth.
Stephen Timms: The better off
in work credit is not a deception. It has the great virtue of
being a straightforward calculation. It allows people to make
very personal assessments about other issues such as free school
meals and other impacts on their income. I would caution against
trying to do too much in the better off in work calculation—it
is better to have a straightforward assessment and allow people
to make their own adjustments based on their own circumstances,
in a way that a job centre personal adviser might find it difficult
to do.
Q51 Paul Holmes: But how far can
they make those judgments? People look at what transport costs
they will have and what benefits they might lose, but do they
really have a choice? As the Work and Pensions Committee argued
in its report, the way that jobseekers allowance and the sanctions
that enforce it work means that people can be pushed in. People
can be required to take jobs that leave them worse off, and therefore
it might not be many months before they drop out of work again.
Stephen Timms: There are a number
of points there. First, the evidence is clear that—not only
financially, but as we have discussed also in other respects—families
and children are better off when there is a parent or parents
in work. There is a significant impact on child well-being from
a parent being in work. The gains from work are certainly financial
but not purely so. On the better off in work credit, one of the
concerns I hear is that people would like those calculations to
be more widely available. The feedback I receive is that people
find them valuable, and we want to extend their availability for
that reason.
Q52 Paul Holmes: It would obviously
be valuable to have such clear calculations available, but if
the individual says that as a result of doing something they would
be worse off, they do not have a choice. They are forced into
work through the threat of sanctions anyway.
Stephen Timms: I have made the
point about the impact on well-being from being in work, which
is a very important one. However, one of our aims, of course,
and you touched on this a moment ago, is that employment will
increasingly be sustainable, so that once people are in work they
will be able to have access to training and they will be able
to develop in their work, so that they can progress and their
income will rise accordingly. So, one of the very important things
that we are working on at the moment is the integration of skills
support with employment support, so that when people are getting
employment help and help to get into a job they will be able to
get pointers towards appropriate training as well, in order that
employment will increasingly be sustained employment, leading
to people being able to progress. In that way, they can raise
their income as well.
Q53 Paul Holmes: None the less,
the Work and Pensions Committee raised the problem of churn fairly
recently. In the last Parliament when I was shadowing DWP, we
had this argument constantly. That is the problem of people being
forced into jobs: they are worse off and they drop out of the
job later, or the job is fairly short-term. You have said that
there is a well-being factor from being in work, but if it is
unsustainable work that loses you money and you drop out of it
after three, four or six months, the effect will be quite the
opposite. There will not be a well-being effect on the child;
it will have quite a detrimental effect, especially given the
fact that, once people drop out of work, getting the benefits
to catch back up in that situation can involve quite a lengthy
delay.
Stephen Timms: That is one of
the reasons why this new focus on skills and the work, which we
are doing with John Denham's Department, is so important—it
will effectively address the problem of churn that you describe.
It is important to note that, quite often, people go through a
series of jobs before they find a job that they are happy in,
comfortable in and can progress in. So, the fact that people go
through a series of jobs need not necessarily be a bad thing in
itself. However, if that is an indefinite state of affairs, I
agree that it is a bad thing and there is evidence that that situation
can be quite damaging for the children in the family too. Nevertheless,
as we are increasingly able to focus on helping people to develop
their skills, we will see them being able to stay in jobs longer
and progressing in them too.
Q54 Paul Holmes: This is the last
question from me. Developing skills has to be a fairly long-term
thing; it does not help someone this year who is unskilled and
who goes into a job where they are effectively getting a cut in
their income, because of loss of benefits, and then they are out
of work six months later. The fact that they might get better
skills in five years' time, or three years' time, is not going
to solve that problem.
Stephen Timms: No, but skills
training can happen very quickly. Indeed, there is a lot of work
going on at the moment in pre-employment training. We are helping
people before they reach their work in the first place. There
is a long-term Government commitment to invest in skills. We have
announced just how much increased investment there will be in
skills training over the next few years and pre-employment training
is one of the areas in which that increased investment is going
to prove very valuable.
Q55 Lynda Waltho: I would like
to look at the area of women and work. Low pay is a particular
problem and we know that the majority of lone parents are women.
Indeed, today's Children's Commissioners report says in paragraph
120, on health and welfare, that Government's strategy to end
child poverty is not sufficiently targeted at groups of children
at greatest risk in particular. Then there is a whole list, within
which there are lone-parent families, children with disabilities
and children with disabled parents. That is a carers issue, which
I would like to move on to afterwards, perhaps with James. So,
if Level 3 or better qualifications are really what we need to
get these women aiming at, how can the Government facilitate access
to that level of qualification and education?
James Purnell: I would argue that
we are taking a segmented approach, and indeed that is exactly
what the Ending child poverty: everybody's business document
does. It goes through that segmentation, asking what are the particular
barriers that people face. We recognise the fundamental point
that the Commissioners are making, which is that there will be
different barriers faced by someone who has a disability from
those faced by someone who is a lone parent, and from those faced
by someone who has both those to overcome. I would say that we
are taking a rather specific approach to lone parents. We have
just announced that we will roll-out the in-work credit for lone
parents, which will mean that they are £40 a week better
off—£60 if they are in London. As Stephen was saying,
we have also announced that there will be pre-work training, job
trials to help people into work and, importantly, that they will
have an adviser after they have got back into work so that they
have someone to talk to if they have any concerns. There will
also be a discretionary fund that they can use with their adviser
if, for example, there is a problem with their child care—up
to £300 to help with any specific issues. In the medium-term,
we are looking at the employment retention and advancement pilots
that we are currently undertaking. They are significant pilots
of some of the approaches that we have already rolled out and
other things that we will look at in due course, along with reforming
lone parent benefits and moving parents of children over seven
on to jobseeker's allowance as a way of reducing child poverty
by 70,000, as I was saying. We have a specific approach for lone
parents, as we have towards disabled children, where we are trying
to increase benefits uptake and looking at the barriers to work
that disabled parents also face. We will look at that in the welfare
reform programme. Thanks to the document and the work of the CPU,
we have adopted exactly that segmented analysis and approach.
Q56 Lynda Waltho: I would like
to extend that to carers. This is slightly unfair, because I wrote
you a letter today, James—obviously, you will not have seen
it—asking you about the carer's allowance and the review,
on which we are hoping for a response quite soon. Generally, it
is felt that the carer's allowance can act as a barrier to work.
At £50 or £55 a week, it is very low. However, to get
it, a carer must work at least 35 hours a week in care, which
is about £1.44 an hour. Of course, many carers do not get
financial support because they want to work, so they are limited
in the number of hours that they can do. In terms of what we can
do for carers, the allowance is definitely a barrier to work.
When can you respond to that? Have you formed any ideas?
James Purnell: I think that we
are doing that this week. I shall look out for your letter. However,
to put that in context, it is worth saying that the poorer families
will get income support and the carer's premium on top of that.
I can put in writing to you exactly how much that is, but I think
it is about £80.[8]
The poorest carers get that much, and then the carer's allowance
is for people higher up the income scale.
Q57 Lynda Waltho: Do you really
believe that the "work first" approach to parents of
disabled children is the right one? I am concerned that it is
not.
James Purnell: Where children
are on the higher or middle rate of DLA, we will not apply that
JSA regime. The whole point of the change to lone parent benefits
is to say that where parents can find reasonable work, child care
fitting around their children's needs and school hours and all
those things, we think it appropriate to give people an extra
incentive to work. However, we want to introduce it flexibly so
that if, for example, a child is excluded from school, the conditionality
will not be applied. Furthermore, if a child is disabled in that
way, the conditionality will not be applied. Sometimes, people
talk as if that is a great departure for Jobcentre Plus, but it
is exactly what we do now for people with mental health issues.
It is much better to have a regime that moves lone parents towards
work more quickly, but does so sensitively, rather than saying,
as the system does at the moment, that a lone parent has to wait
until their youngest child is 16 before they have to engage with
the conditionality regime. I think that that balance is too far
in the other direction. Moving towards seven strikes the right
balance.
Q58 Lynda Waltho: Are you confident
that the system can be sufficiently sensitive? Disabled children
have far greater needs, and it is obviously much more difficult
to accommodate them. Can the system be sensitive?
James Purnell: I think we would
take those children out of that system, so we would not apply
the conditionality regime to lone parents where there was a disabled
child on the higher or middle-rated DLA.
Ed Balls: It is important to say
that when you talk to disabled children's families, they say that
they face major barriers to work—more complex barriers than
those for other families—but often they are undeterred from
wanting to pursue the work route. One of the things that we are
doing in both the provision of child care and the operation of
child tax credits is to try to see what more we can do to remove
barriers for families with disabled children. They have a great
desire to work if they can, so long as we have a degree of flexibility
and extra support.
Q59 Annette Brooke: I would like
to start with some benefits questions, but I am heading towards
child care. I shall put two different benefits questions together,
if I may, James. First, on the child care element of the working
tax credit, the Select Committee report commented on its complexity
and I have had reports that parents find the forms difficult to
deal with. Given the problem of affordable, good quality child
care provision, that particular benefit is of great importance.
Are there any moves to simplify it and make it easier? The second
benefit issue is something that came up in the work of the commission
chaired by Tom Clarke, when it examined benefits for families
with disabled children. Parents made the point that the forms
for Disability Living Allowance were very complex and the commission
took away the view that the complexities should be looked at.
My question is, can you simplify the forms and the processes so
that people in the position that we are talking about can access
the benefits to which they are entitled?
James Purnell: I shall answer
the second question first. We are happy to look at the DLA form.
We keep all of our forms and their simplicity under permanent
review. The difficulty is that the DLA is trying to cope with
a huge range of different types of circumstances—children,
adults. A number of people over pension age claim DLA, as well
as it being about all types of impairment and disability. Necessarily,
if you are going to have one benefit with one form that will cover
everything from autism to severe mobility problems, that form
will be long. If there are specific issues that the Committee
would like us to look at, we can certainly do so. Your basic point
is absolutely right, but there is inevitably a trade-off between
a form that is comprehensive and therefore lengthy, or something
that is much more simple and short, but which would not cover
as many different types of impairment.
6 Note by witness: The Secretary of State for
Work and Pensions was referring here to the new Households Below
Average Income (HBAI) data, published on 10 June 2008. Opportunity
for All indicators are published year round on the Department
for Work and Pensions website. Back
7
See Ev 21 Back
8
See Ev 21 Back
|
