Select Committee on Children, Schools and Families Minutes of Evidence

Examination of Witnesses (Questions 40-59)


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

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