Examination of Witnesses (Questions 420
- 439)
TUESDAY 13 MARCH 2007
MR DOUGLAS
HAMILTON, MS
CLAIRE TELFER
AND MR
JASON STRELITZ
Q420 Mr McGovern:
Throughout this inquiry we have heard evidence in various locations
and from various groups and it would appear that there are quite
a number of forms of poverty—fuel poverty, pensioner poverty,
urban poverty, rural poverty, child poverty—so why would
child poverty be the most important, above all others?
Mr Hamilton: I think from our
perspective we are saying with children it is about the present
but also about the future. The risk of children living in poverty
is quite severe. Even though we have met the targets, we are still
talking about 23% of children in Scotland who are in poverty;
it is such a high number. I know that pensioners are another key
group and there is a large percentage more likely to live in poverty.
However, I think we would be arguing for the focus to be on child
poverty. We are not saying that we should not deal with the other
aspects—
Q421 Mr McGovern:
Of course not.
Mr Hamilton:—But from where
we are coming it is the link into that life cycle and if we do
not tackle child poverty now we are storing up massive problems
for the future because the evidence shows that children who grow
up in poverty are more likely to be adults living in poverty and
their children are going to be living in poverty, so we need to
try and break that cycle as early as possible. We have been arguing
for the importance of a focus on child poverty and we are very
pleased as well that the Government, both at a UK level and at
a Scottish level, have recognised that and made tackling child
poverty a priority.
Q422 Ms Clark:
The Government has set itself targets of halving child poverty
by 2010 and eradicating child poverty by 2020. In your memorandum
you say that whilst government policies have been successful in
lifting many children out of poverty, current policies have no
effect on the very poorest children and their families. Does that
mean that you think the Government has only been partly successful
in its own aims?
Mr Hamilton: I think, yes, they
have only been partly successful, particularly around the 2005
target for example. At one level if you are taking very topline
measures, you are saying 60% median income as being that kind
of barrier there and if we only ever look at that we are ignoring
the reality of the different levels of poverty that exist beneath
that. What our evidence has shown from our research in Britain's
Poorest Children and Britain's Poorest Children Revisited
(and we have actually got a further follow-up study which is going
to come out later this year which we want to share with the Committee)
is that the group living below 40% of median income, to use the
income measure, has not actually changed very much, and I think
what we are aware of, and in our discussions with politicians
at Scottish Parliament level and with officials at local authority
level, et cetera, I think there is a general recognition that
this group exists, is that current policies are not reaching the
very poorest. The success that has been achieved has been maybe
with those who are closest to the poverty line, if you like, sort
of lifting them over that threshold, the ones who were maybe closest
to getting back to work or those who had an income level just
below the poverty line. For just under 10% of children in Scotland
who we describe as living in severe poverty the policies are just
not reaching them, so we really need to look at how we can refocus
attention now. We need to carry on with the current policies that
we have because they seem to be having an impact on a large number
of children, and we are pleased with that, but there is a big
group that it is missing out on and unless we do something about
that now then these longer term targets are never going to be
met because it is going to be even harder in future years because
the gap is going to increase even more.
Q423 Ms Clark:
Could you remind the Committee of what your definition is of "acute
poverty" as opposed to "poverty"?
Mr Strelitz: We have got a couple
of definitions which mirror the Government's definitions. One
that we use is 40% of median income as a pure income measure and
then there is the forthcoming research which will be out over
the next couple of months which is a mirror of the Government's
mixed measure using income and deprivation, so there we would
use a measure of 50% of income (whereas the Government in their
mixed measure are using 70% of income) and adults and children
lacking basic necessities.
Q424 Danny Alexander:
Mr Hamilton, in your opening remarks one of the things you said
was that in some areas the poorest children's situation is actually
getting worse. I would be grateful if you could expand on that
in two ways. One is in what ways is the situation of the poorest
children getting worse? You also used the phrase "some areas".
Have you been able to pinpoint certain parts of the country, for
example? Is that an urban phenomenon or a rural phenomenon? I
know from my experience in the Highlands for example that there
are a lot of issues (and we heard about some of them when we were
in Inverness) affecting children in remote communities. I would
be grateful if you could expand a bit on that statement you made
right at the beginning.
Mr Hamilton: Some of that evidence
we have around that is anecdotal stuff from our visits round local
authorities. As part of Save the Children's future plans we have
been doing a lot more work to try to find solutions towards how
we reach the poorest children who are in severe poverty and how
we can work with those families and those children to improve
their situation. When we have gone to talk to potential partner
agencies and other authorities about that we have described our
research which has basically shown that things have remained the
same. The comment I have had back now two or three times has been,
"We know the areas you are talking about in our local authority
area and in some respects we think actually it is getting worse."
Using the Scottish Index of Multiple Deprivation to confirm analysis
of that (which we still have to do) might help us to pick out
exactly where those areas might be. When we are talking about
the situation getting worse, it tends to be small, concentrated
areas in most authorities and more children in those areas who
are living in situations of severe poverty.
Q425 Mr Davidson:
Can I ask about your view of the Social Fund and how much is it
a success and how much a failure and are there things that could
be done that would greatly improve it?
Mr Strelitz: We think the Social
Fund is clearly not meeting its purpose and there is a whole range
of ways in which there could be improvements. Our primary concerns
are about the size of the pot and its reach. Far fewer people
are able to take up Social Fund loans and a great many people
do not even know about its existence. There are also concerns
about levels of repayment and a real need to expand the system
of grants. We also have concerns about eligibility. Just one example—last
week we published a report called The Poverty Premium looking
at a range of ways in which low income households pay more for
purchasing essential goods and services. One example that we looked
at was the cost of a cooker from Argos, which would be £160,
and then looking at the same cooker from a shop targeted at people
on low incomes with poor credit ratings where the overall cost
to them would be over £400. Clearly we are missing a trick
here if we are putting a lot of concern into the way in which
money is going into the pockets of low-income families but not
having concern about the way it is coming out. If a low-income
family is paying nearly twice as much for a cooker, that is going
to be a cause of great concern and it is an area where the Social
Fund could be coming in and offering the kinds of low-cost loans
for really basic essentially goods and services that it should
be there to do. Looking at critiques of the Social Fund over recent
years there have been two aspects that have been drawn out. People
have repeatedly called for an expanded system of grants and at
the same time called for a renewed approach on the loans as well.
One thing we have been calling for is a seasonal grant, a grant
to low-income families at winter and summer, which are the two
toughest times.
Q426 Mr Davidson:
We will come on to that later on. Let me just stick with this
question of the Social Fund, if I may. There is an issue about
repayments but there is also an issue about the amount of the
loans that you are prepared to give to people on the basis that
you give them too much then they simply cannot pay it back. There
is a whole set of issues about all of that. I am not clear whether
you are saying that there should be more grants, in which case
how is the issue of repayment is overcome, but then there is a
perverse incentive for people to remain on things like the Social
Fund because I get in a poor area of Glasgow quite a lot of people
complaining to me that there are those who are on benefits "who
are far better off than we are because of ..." and they will
reel of a whole number of things including access to the Social
Fund. How do we strike that balance correctly taking into account
that disincentive?
Mr Strelitz: Currently over two
million people are taking doorstep loans, paying 177% APR or equivalent
to take out loans, so clearly people have a need to go into debt
to support the very basic needs that we all have. That in itself
is a call to expand the Social Fund because the need is clearly
out there and it seems people on low incomes are not particularly
responsive to changes in the levels of interest which they are
charged for loans. They are much responsive to the amounts as
of their weekly payment and hence they are willing to take on
extremely large amounts of debt if it can be offered in a flexible
and affordable way (in terms of week-to-week). In terms of your
point about incentives, I think we have to continue to make work
more affordable for people. I think part of the issue about eligibility
of the Social Fund or a renewed system of budgeting loans with
a far expanded pot is whether we can make it available to people
experiencing in-work poverty. 50% of children in poverty today
are in families where someone is working. There is a whole range
of ways in which we can address that kind of issue but one way
is to have a system of loans that was available to people in work.
Q427 Mr Davidson:
And is that something that you are advocating?
Mr Strelitz: That is something
that we are advocating. We are involved in discussions with other
children's charities and a range of other groups about a renewed
Social Fund pot that may be able to use the money within the Social
Fund to lever in a significant amount of private investment, for
example. That is one thing that is being discussed to really increase
the size of the pot and make it available to a wider group of
people.
Q428 Chairman:
Do you not think that we have to strike a balance here? If you
give people too big loans and they are then unable to make the
repayments, do you not think we are pushing them in a debt trap?
Mr Strelitz: We have definitely
got a responsibility to think about that but, like I say, two
million people are taking out incredibly high-interest loans which
are totally unaffordable and which send them into a cycle of debt,
and I think we have a responsibility to face up to the fact of
the way people are actually living their lives and try and adapt
the systems that we have so we can offer people more affordable
loans to try and meet their needs. People on low incomes are on
very low incomes and do not have enough money to make ends meet,
to pay for essential items, to pay for large, one-off items that
they need to purchase throughout the year, whether it is replacing
a cooker, buying school uniforms or buying smart clothes to go
to work. Whatever those lump sum items are, people cannot afford
them and people need some way of being able to get a lump sum
amount of money, and so that is why we are advocating the grants,
which we can come on to shortly, but also an expanded system of
loans.
Q429 Mr Davidson:
You are arguing that the state should move into the Provident
cheque business in that you would undercut Provident cheque by
offering the same amounts of money at much lower and affordable
rates of interest. Is that correct? I am not necessarily against
it, I just want to be absolutely clear what it is you are saying
to us.
Mr Strelitz: Yes, we are saying
that there should be a very widely expanded system of low-cost
loans available to people on low incomes.
Q430 Danny Alexander:
Is not what you are describing a kind of market failure in the
business of lending money because often, as you rightly say, the
only credit to which a lot of families on very low incomes can
get access to meet the one-off costs that you are describing is
through doorstep lenders, and that is at least in part because
those are the only lenders who are available in that local community.
The banks are not there, the bank branches have long since left
and, so on and so forth, so the person coming round the door often,
as Ian says, offering "Provi cheque" is the only person
they have access to. The solution that you are proposing, which
is a much expanded Social Fund, is potentially one part of the
answer. I wonder if you think as well that for example post offices
could have a role here because post offices are one of the few
institutions that still have a representation in small rural communities
and in deprived urban areas, where people can access public services,
people can access financial services and access cash, and there
may be a role here. This is something the Government could look
at, given its responsibility for the post office network, using
post offices as a way of providing that additional means of financial
support that you are describing, rather than through state-sponsored
products through financial products which would offer the same
sorts of low interest rates as you are describing and through
having a presence in the local community, which would encourage
people to pay back on a regular (perhaps weekly) basis like the
doorstep lenders do?
Mr Strelitz: I think there is
great potential there. It is a market failure in one very great
sense: if you look at repayments of the Social Fund, the defaults
on those payments are incredibly low, so it presents lenders,
whoever the lender is, with a very good opportunity to make a
secure loan, so I think there is a great potential in using the
post office service for some kind of expanded system of low-cost
loans.
Mr Hamilton: The market failure
aspect is an interesting angle to bring in and we can send you
another report from an agency in Scotland called the Scottish
Council Foundation which have recently done a report called Making
Markets Work and they have addressed that particular issue
of market failure and had some really interesting examples come
in (which I could not give you the detail of just now) from the
States and from Canada of where financial institutions can work
to provide lower cost loans and credit facilities for lower income
households and these companies are still making money off it,
so there is that aspect of things as well. I think you are right
in saying it is a combination. We are advocating for a lot of
change to the Social Fund, but it is not just that, we still need
to look at what the private sector can do and their responsibilities
in all these issues as well. That is part of Save the Children's
approach at the moment. Our calls are not just coming straight
to government in all of this. We feel there is a much more increased
role for the private sector and the voluntary sector in working
together to tackle child poverty.
Q431 Chairman:
These financial institutions are charging people who are in the
most need very high interest rates and then applying penalties
if they do not make the payments on time and then those people
end up in real trouble. Are you proposing that there should be
some check and balance on these financial institutions so that
they do not make money at the expense of poor people?
Mr Strelitz: I do not think we
are there yet. We published a report last week, like I said, on
the poverty premium and we are going to take forward a lot of
the evidence that we gathered in putting together that report
in trying to work out some solutions here. We would say that we
think the private sector needs to act more responsibly but I do
not think we are exactly where you are saying yet.
Mr Hamilton: I think the point
Jason made earlier is the point we are at just now, which is recognising
the way that people on low incomes actually work and how they
respond to the challenges that they face and then adapting things
like the Social Fund, working with the private sector as well,
so we can actually respond to the way people access financial
services. We have to look at why people get themselves into debt
in the first place, and it is not that they are unaware that they
are being charged extortionate rates of interest but, as Jason
said, it suits their method of budgeting. Again our evidence and
experience shows that on things like pre-payment meters with electricity
supplies and gas supplies in the home, households know that that
is more expensive than other ways. Sometimes they are forced down
that route and other times they choose it because it is a way
they can control their finances. If we can understand and recognise
how people organise their finances and respond to that, it then
means we can come up with solutions and find the solutions that
work in the public sector and are actually going to meet those
needs, rather than create a system that is inflexible and not
actually work for the families that want to use it, therefore
they go to these people who, as you say, are robbing the poor.
Q432 Mr Walker:
I was going to ask you another question, but on reflection it
probably does not need to be asked because this is much more interesting.
"Corporate social responsibility" is an oft-used phrase
by large, multinational organisations including UK banks—the
Halifax Bank of Scotland, I am sure the Royal Bank of Scotland,
both of whom are making enormous profits at the moment. I am deeply
uncomfortable with the profit motive, but I am extremely concerned
that big companies talk about corporate social responsibility
but do not actually apply it. I personally would like to see the
major banks take a far closer interest in the welfare of those
currently excluded from the mainstream financial services; would
that be a view that you would share?
Mr Strelitz: Absolutely. One specific
example is around the area of basic bank accounts which have been
introduced, and many more people have access to them, but it is
not clear that banks put much energy into pushing them, they do
not see the people who are going to take up these basic bank accounts
as particularly useful customers for themselves, so they do not
push them enough, and it is also not clear that basic bank accounts
are set up in a way that meet the needs of the low income customers
who use them. They can do much more.
Q433 Mr Walker:
My concern is that poor people who are living on very restricted
incomes may well be concerned and put off from opening bank accounts
because if they fail to balance their account at the end of the
month by £5 here and £5 there and go into an overdraft
for £10, they could end up paying £60 in penalties and
then of course that is deducted the next month and so on and so
forth. There is not enough sensitivity from the major banks to
the constraints and budgetary restrictions that many people on
low incomes operate to, and there does not seem to be a willingness
to understand and engage with these people. That is very disappointing.
Mr Hamilton: I am not going to
defend some of these companies. We are at an early stage at in
working with the banks on these types of issues, and I know there
have been lots of other initiatives such as the Bank of Scotland
initiative in Westerhailes that people are aware of in terms of
community banking, and it has seemed to be successful in the past
as a way of addressing some of these issues. The key thing for
us as campaigners on these issues—and politicians are able
to assist with this process—is working with the banks to
show them that actually there is a market there, and actually
by working in a more flexible way with lower income consumers,
there are benefits to the bank as well. They are missing customer
bases around that, they are missing a trick on what they can do
and it is not something which is inconceivable. As I say, we know
there are examples from the States and from Canada about how this
can work, and we can do more to try and encourage banks to do
that. I do not know the banking sector inside out, but I am guessing
that the things that are going to motivate them the most to do
things are to increase their customer base and increase their
profits. There is some evidence to show that they can do that,
whilst at the same time providing a good service for lower income
families and households.
Q434 Mr Walker:
I would actually slightly disagree with you there because there
does not necessarily have to be a market there for banks; it is
about time that banks in Scotland and across England stood up
and demonstrated tangibly their claim to be socially responsible.
My personal view is that banks in this country are not doing enough,
with their vast profits, to help the most excluded.
Mr Hamilton: I would absolutely
agree with you on that point. The point I was trying to make is
that it is how we get there with the banks and the process for
how we can encourage them to do that.
Q435 Chairman:
Are you aware of the campaign which is led by a number of the
media and certain organisations to claim back money from the banks,
which have overcharged their customers to the tune of £2
billion? A number of my constituents have made claims to the banks
and some of them have been successful to get money back from the
banks; do you not think we should lend our full support behind
those organisations who are trying to help the people who have
been charged wrongly by the banks?
Mr Hamilton: Absolutely, I do
not disagree with that at all. Our concern would be particularly
for the lower income end again, those children living in poverty,
and unfortunately the situation is that many of the families we
are talking about do not actually have the bank accounts in the
first place to be overcharged, and they are having to go through
other routes, use more unscrupulous businesses, banks that are
making lots of money at the expense of the poor. We have already
made reference to some other businesses that are making even more
profit in a more unjust way than some of these banks.
Mr Walker: I am finished, Chairman;
that is enlightening.
Q436 Danny Alexander:
To change the subject slightly, the recent Unicef report which
analysed the experiences of children in 21 industrialised countries
put the UK at the bottom of the league, and your director quite
rightly condemned that as shameful. Given that that report analysed
the experience of children on a number of measures, not just income,
but a whole range of experiences in their lives and seemed to
present a very comprehensive measure of children's experience,
there are two questions really. Having had time to reflect on
that report, are there any further comments you would like to
make on it because it seemed to be a very significant contribution
to the debate? Secondly, do you through your experience of working
in Scotland particularly see any difference between the experience
of children in Scotland that might have been found in that report
and analysed separately for Scotland compared to the rest of the
UK?
Mr Strelitz: The report was hugely
significant and received some stick from some quarters, but it
is pretty clear if you look at the range of hard outcomes in the
report, the UK comes very low as we know on income poverty, but
also very low down the league in terms of infant mortality, the
numbers of children born at a low birth weight, the proportion
staying on at school and the proportion being in work, education
or training between the ages of 16 and 19. These are all very
significant outcomes and it is, as our director said, shameful
that the UK, one of the richest countries in the world, remains
towards the bottom of the league table in these kinds of indicators.
Take the example of children aged 16 to 19 being out of school
or training or work, being in that situation is strongly predicted
by childhood disadvantage and in itself independently strongly
predicts later life disadvantage, yet in the UK as a whole and
in Scotland the numbers of children not in education, employment
or training has remained fairly stagnant for a number of years
now. It is a really significant factor.
Mr Hamilton: In terms of the question
is it different for Scotland, I do not know in terms of the actual
statistics. The picture that is described is one that we are familiar
with in Scotland as compared to the rest of the UK and it would
be helpful to have a particular Scotland focus on it so that we
can try and pull out some of that, and I know that colleagues
in other agencies are looking to do that type of work, so we do
have that picture of where Scotland is placed against the rest
of the world on a number of those issues. Two points I suppose
are worth flagging up: we do know from our own research and from
other research that we have got coming out soon on children's
access to services, the experience in Scotland is probably worse
than I originally anticipated when we set out to do this research.
The basic services such as children's leisure activities et cetera,
the children are not able to access because of the extreme levels
of poverty they are living in. We will send copies of that research
to the Committee once it is published in April. We are looking
at stories where a child cannot go to a youth club because the
parents do not have the 50p for them to go; we are not talking
huge amounts of money here. That kind of element of being able
to participate in society and that side of things comes out in
these sorts of reports and it is clearly being missed out on by
children in Scotland. As I said I do not know much about the difference,
but it clearly mirrors what has been said across the rest of the
UK. Some of the situations we are amazed by in Scotland, we are
doing worse on some of the indicators—around child health
in particular—but the Scottish Executive has recently produced
a draft report for the UN committee on the rights of the child;
that has been submitted down to the DfES and it will be submitted
to the United Nations later on in the year. The thing that really
jumps out on that is the health indicators, particularly for the
poorest children and young people, indicators around breastfeeding
statistics and around teenage pregnancies. It is fair to say that
Scotland will fare worse in a number of those areas internationally
than you will probably find in England and Wales.
Q437 Chairman:
Would you like to say anything on the Unicef report, particularly
the comments made by the UK Director of Save the Children?
Ms Telfer: Just to add really,
as Jason said, the difference between hard and soft aspects of
the report. The hard information is obviously important in terms
of material deprivation, but I do not think we should lose sight
of the fact that a lot of children's views are in that report
and a lot of children in the UK obviously have very low opinions
of their lives, of things to do with relationships with their
peers, relationships with their parents, that is the kind of thing
that came across quite strongly that they are not happy with.
We need to not dismiss that, but take that on board and see why
children have these opinions and look at those more closely.
Q438 Mr Davidson:
I wonder if I could just follow this up and your point about not
having the 50p for the youth club. It seems to me there are two
ways of tackling that and that relates also to your question of
the charges for swimming and school uniform which is mentioned
in the report, charges for things in school and trips. Either
these are free to everyone, in which case there are multiple costs
obviously because you are not targeting, or you are essentially
means-testing and you are either providing free access to some
children in some circumstances, or you are trying to give them
more benefits. What have you taken into account when coming to
a conclusion and what is your conclusion?
Mr Hamilton: The conclusions from
our forthcoming research are being written up just now, but one
of the things that we are discovering from that is that while
services may appear to be free at the point of access, that is
still actually excluding children and young people from taking
part. Looking at how people access these services and how they
interact in real life—and it came as a surprise to me as
well, some of the things that are coming out. If we take swimming
as one of the key examples around that, free swimming is provided
as you will be aware in Glasgow and other authorities in Scotland.
Some of the young people we were talking to were saying there
is free swimming, but they could not afford to get to the swimming
pool. One of the most important things, which is obvious when
you think about it, one of the kids said "Yes, I would like
to go but I've never actually learnt to swim and my parents cannot
afford the armbands so I can go swimming." Actually when
you then look at the cost of swimming lessons, these sorts of
things have a cumulative effect that keeps on going so even if
we make some of it free—even if we made all the youth clubs
free, around that particular thing as well some of the children
come back and say yes, there is a free youth club in their area,
but they do not go because there is a tuck shop there. These are
the sorts of things that make them feel so excluded because actually
even if they go to the youth club they are not able to buy any
food, so people will think they are different, or when there is
a trip they have to say they cannot go to it. I do not know if
we have an answer around that just now, but it is up to us to
find one. We can make things free for everybody and open them
up, but there is still a problem there which you still need to
address in order for these children to be able to access them.
Q439 Mr Davidson:
This is almost a "we are all doomed" sort of answer,
in the sense that if you do this you store up another problem.
I know the point about the free swimming, I have a lot of complaints
from working class women of a certain age who bitterly complain
that they cannot use the swimming pools when the free kids get
in on the basis that they are so disruptive and noisy and mock
them and all the rest of it, so by caring for one group you actually
end up alienating another, which is a problem for us. The second
point related to that is in relation to public services. It is
my impression, and I would be grateful if you could give us your
view on it, that public services generally, in areas of deprivation
and the like, particularly those caring for children where they
are relatively inarticulate, tend to be worse than elsewhere and
the youngsters are therefore multiply under-provided for. Is that
your impression as well?
Mr Hamilton: Again, from this
research we are hoping to have some of the answers, but we would
probably agree with your perception that the services in some
of the more deprived areas are not as good as the services that
exist in some of the more affluent areas. Our research, just to
explain what we have been doing, is looking at the experiences
of children in urban and rural deprived areas and non-deprived
areas, living in families with low incomes and relative affluence,
to try to pull together the differences in experiences. It is
clearly coming out that the children in the more affluent areas
have greater access to better services, as we describe. I also
think that one of the key things which comes out is the importance
of what type of service becomes important then in the more deprived
areas, and the importance of areas such as leisure facilities—they
are not actually that concerned about a health club or a gym within
their area, it is the park and the safety of access to the local
park and local open spaces around that. It is not that one size
fits all and we can just improve the same types of services in
an affluent area and maybe take it into the deprived area, it
is actually recognising that the children in those areas are more
likely to access the open spaces, the parks and those types of
facilities because it is free for them to go, there is no stigma
there. It is the point I was making earlier, they do not have
to worry about being different because they have not got money
to buy things when they are there. Yet those facilities as well
are still probably poorer in those areas than in some of the more
affluent areas. There are multiple issues and reasons that we
could go into as to why that is.
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