Q202Steve
Webb: Our understanding is that the figure of 10 per cent.
was chosen ostensibly because 10 per cent. is about as good
as you get in the EU at the moment, but obviously 10 years ago 5 per
cent. was about as good as you got in the EU. Should the goal of a 10
or 12-year strategy be as good as we have at the moment or as good as
it credibly could be? Is 10 per cent. too unambitious or would 10 per
cent. be extraordinary given where we are
starting? Donald
Hirsch: It depends on what you are measuring it
against. If you measure it against what Tony Blair said in 1999, it is
a retreat. If you measure it against what is a really ambitious goal,
it is a fantastic target. In fact, I noticed that the Bill talks about
“relating to” eradication rather than saying that this is
eradication. If you look at the Bill carefully, nowhere does it say
eradication is 10 per cent. That might be a healthy thing, but it does
represent a retreat.
Q203The
Parliamentary Under-Secretary of State for Work and Pensions (Helen
Goodman): What do you think will be the impact of having
the four measures? You have all talked as though there were just the
one relative low-income target, but there is also the material
deprivation, the persistent and the absolute poverty level. Do you not
think that that makes the impetus of the policy much tighter?
Dr.
Ridge: I certainly welcome four measures—we
have had several measures for a while, anyway—particularly
bringing in and keeping material deprivation. That is how we can
directly make a difference in children’s lives. Some of the
things that children themselves identify as critical for them are not
necessarily things that will be picked up by an income measure, but
they are important in everyday well-being in childhood, which is one of
the things that we need to keep focused on—the experience of
being a child in childhood rather than the future investment that we
make in that child as a future worker, for
example. The
persistent poverty rate is important, because it will give us a chance
to monitor and try to make a difference in the lives of children who
experience long periods of poverty and deprivation. However, I would
say from my work— particularly with children and young people,
and we ought to bear in mind that there is a lot of talk about
persistent poverty, which is a severe and important problem—that
time is a strange thing in childhood. An experience of poverty at a
critical time in the child’s life can be significant for them in
their future well-being and how they carry on through childhood. Two
years in my life, sadly, is nothing like the equivalent of two years if
you are moving between a primary and a secondary school and unable to
make that transition healthily and securely.
Donald
Hirsch: I think that that is right, as long as we are
not concluding, as has in some ways been suggested by some Government
documents, that it does not matter if people are not in long-term
poverty or not in poverty three years out of four. In fact, as Tess has
said, a few months or a year of poverty might have a very damaging
effect. I would agree with what you say as long as the multiple targets
are seen in the sense in which they are presented, which is that you
have to succeed in all of them in order to succeed. The risk is that
the Government say, “We have succeeded in two of them, so we
have done half well.” The reason that one is tempted to think
that is because of the way in which the absolute poverty target is
formulated, which talks about whether in 2020 a target is
met relative to incomes in 2010, which is a 10-year period in which we
hope we will have some growth in real incomes. That is so unambitious
and it is hard to understand what the use of it is if it is saying,
“What is the difference between meeting three targets without
that one and meeting that one?” It is not an additional
constraint, so why is it there, other than to be able to say,
“At least we have met this one”?
Mike
Brewer: I think having four targets is better than
having one, but they are all about income, and I share the reservations
that Neil expressed earlier that all the targets are about family
income. It is ironic, given what most of my research has been about. I
wish that there were a broader range of indicators and perhaps some
that related directly to children’s well-being rather than their
parents’ income.
Neil
O'Brien: On the specific points about the material
deprivation, the data quality is poor in a lot of the survey-based
measures. For example, it would appear from the material deprivation
statistics that those who are below 40 per cent. of the median income
are better off than the children who are between 40 and 60 per cent.,
which is obviously counter-intuitive. So there are big problems, which
the Department for Work and Pensions acknowledges, with that as a
measure. In one sense, you are responding to the concern about it all
being about income, but it is not a particularly good way of doing
that. As has been mentioned, it is still tied to income, because you
have people who are 70 per cent. of the median. In a sense you are
acknowledging a problem with those targets but not really to my mind
addressing it.
On the
fluctuations and continuing poverty, I think that is an extremely
important point, because people are constantly moving in and out of all
those things. You are still just looking at income. The way to hit the
target is still to increase benefits, because then you get the number
of people down. I am not sure that that is, necessarily, the best use
of the money.
Q204Andrew
Selous (South-West Bedfordshire) (Con): I would like to
ask about severe poverty, which is generally regarded as being below 40
per cent. of median income. The figures that I have seem to suggest
that that has increased slightly over the past decade. Picking up on
our earlier point, on the basis that you should do the most for those
who need the most and are in the greatest difficulties, do you think
that there would be any merit in tracking those in the most severe
poverty, particularly severe, persistent
poverty? Dr.
Ridge: I have had a tendency, and I think that I
probably still have that tendency, to be a bit cautious about the
severest poverty, because so many families are moving and fluctuating
in their experiences and income. Families enter poverty for lots of
very different reasons and the experience can be very different across
families. If we start to focus more and more on families in the
severest poverty, we may miss families moving into that
and lose the focus. Overall, we have a significant problem for children
and they may experience it differently over time, depending on the
position of their family at any one time. If we focus more and more on
one particular group, there is also a danger that we focus on them in
an unhealthy rather than a productive way in terms of support and
encouragement.
Q205Andrew
Selous: So you think 60 per cent. is where it should be
and you are
comfortable? Dr.
Ridge: I think that 60 per cent. catches a lot of
experiences of poverty, as my research has indicated to me. I am not
saying that there is not a problem about being in the severest poverty
and having long durations of poverty, but family lives can change so
much; there is a lot of fluidity in family life. People are trying to
get in and out of employment. Some of the poorest children, research
has shown, are in those families that are moving between employment and
benefits. If you focus just on the 40 per cent., increasingly, you will
miss what, certainly for children, is one of the most problematic
experiences. Research that we have done at Bath, longitudinally,
looking at children’s experiences of employment—lone
mother employment—over time has shown that the loss of
employment, the drop out of the labour market, the attempts to get back
in and then, perhaps, another drop out of the labour market is
experienced in a very particular way by children. It is very
problematic. Not only is there other research evidence to show that
some of those children can be the poorest children but also that that
experience can be particularly problematic.
Donald
Hirsch: It is obviously very worrying that people are
living at such a low level, but one very useful, I think, by-product of
such a high-profile campaign as has existed over the past decade has
been highlighting the 60 per cent. It seems to have set at least some
level of aspiration. The research that I have been involved in on
minimum income standards, which looks at what ordinary people believe
you need to have an acceptable minimum standard of living, shows that
60 per cent. is certainly not too high, and that you cannot, in
general, even at that level get to an acceptable standard of living.
The idea that has been put around by this campaign and this
statistic—that people below that are at a level that our society
does not want to tolerate—is helpful and correct. One would not
want to feel, “Well, actually 40 per cent. is now what we
don’t find acceptable.” I am not saying that that is what
you are suggesting, but one would have to guard against that
risk.
The other
thing about looking at 40 per cent. is that I think that it is fair to
say that entitlements would normally bring families with children
significantly above that, in theory. The reasons for people being below
it will be complex and varied, and will include things such
as having to repay tax credits and having transitionary
situations. In so far as you are looking at solutions to that issue,
you have to look at things that are probably about process as much as
anything else, so it is a different set of issues and we need to bear
that in mind.
Mike
Brewer: I can see the desire to worry about the
children who seem to be the poorest in society. We should presumably
worry more about someone on 40 per cent. than someone on 60
per cent. of median income, but, as Neil intimated, I am not sure that
the data are up to having a statistical indicator, particularly one in
the Bill.
Q206Andrew
Selous: Why are the data more robust at 60 per cent. than
at 40 per
cent? Mike
Brewer: The data are particularly unrobust at the
bottom of the income distribution. As Neil said, if we look at the
material deprivation level of people who report very low incomes, we
see that they are less deprived than those between 40 and 60 per cent.
I do not know the answer; I did some of the research, but I do not know
why that is the case. I think that there are various possible
suggestions. It is partly a statistical argument. At the moment, I do
not think that our data are good enough to accurately measure how many
families have the lowest incomes. If we could do that, I think that
having an indicator that tracks how many children are in severe poverty
would be a very good
idea. Neil
O'Brien: In one way my answer to your question would
be yes, because I think that you have to look at as many different
measures as possible. I also think that the concept of deep poverty is
important. On the other hand my answer would be no, because it is
essentially the same type of target. You have the same—in fact,
worse—statistical problems. It is certainly the case that only
half of those who are below 60 per cent. of median income are below 60
per cent. of median spending, so that is one illustration of the
problems with the data. If you look at the family resources survey,
which all this is based on, you will see that about 600,000 people say
that they have an income of less than £10 a week. There is
clearly a problem with the data there, because they would not still be
here if that were the case. So you need to look at as many different
measures as possible and have the broadest base of understanding, but a
40 per cent. of median income target suffers many of the same problems
as a 60 per cent. of median income
target.
Q207Mr.
David Gauke (South-West Hertfordshire) (Con): May I follow
up on the point about robustness? I was struck, Mr. Brewer,
when you said that the 40 per cent. measure is particularly unrobust.
How robust are data relating to income and material deprivation at
60 per cent. of income? You have just touched on that,
Mr. O’Brien. How reliable are the surveys and such
like on which the assessments are
made? Mike
Brewer: There is nothing particularly magical about
40 per cent. being the figure below which you suddenly disbelieve the
data. It is just that for much of the income distribution, you can see
a very clear relationship between the amount of income and the level of
deprivation—the lower the income, the higher the deprivation.
That relationship breaks down entirely once you get to incomes around
30 or 40 per cent. of the median, such that the lower the
person’s income, the less deprived they are. I feel like I am
verging on giving a statistics lesson, but that is partly about sample
size and reliability. There are fewer families who report low incomes,
so it is always less reliable to count them. There are more families
with incomes lower than 60 per cent., so it is easier to count them. It
is also to do with the nature of the families who, in the survey,
report that they have no, or very low, income. They are just there, and
I just do not believe that income level, or at least I do not believe
it as an accurate representation of their long-run
resources.
Mr.
Gauke: But is there still a problem at 60 per
cent.?
Mike
Brewer: Yes, there is still a problem at 60 per
cent., but it is a smaller problem, because it is basically about a
group of families at the bottom whose income does not reflect their
standard of living. If you look at those below 40 per cent. you will
see that those odd-looking families represent such a high proportion
that it distorts the
statistic.
Q208Mr.
Gauke: The draft orders have been circulated among members
of the Committee, and one of the things that I found it somewhat
difficult to get my head around was the equivalisation of net household
incomes, which involves a complicated formula. How objective and
scientific are the equivalence scales? Or is that a matter on which a
degree of judgment is used in determining what they should be? There is
clearly an issue about families of different sizes and the income that
you need. How does that
work? Donald
Hirsch: I think it is very arbitrary, ultimately. The
system was changed two or three years ago to accord with an
Organisation for Economic Co-operation and Development way of weighting
the different family members, which was itself rather unscientific. The
real question is: does this really reflect extra costs in families? The
work that I mentioned earlier on income standards, where we have
actually looked at the needs of different families, gives some clues
about that. The system that we have at the moment is very simplistic,
because it gives quite a small weighting to children who are under 14,
and then it suddenly doubles when they get to 14. Our research shows
that there is an increasing cost over time as the children get older,
but it is much more continuous than is shown.
The other
point that is particularly interesting concerns singles and couples.
The evidence we have collected seems to show that there is a
significant underestimate of economies of scale. That is to say, it
shows rather higher poverty than would otherwise be the case for
couples than for singles. It assumes that couples need more relatively
than would be the case with the weightings that we have measured. That
could be one reason why one has to be cautious about the evidence,
which seems to show that under the present system lone parents have
done rather better in reducing their poverty. You have to qualify that
by saying that it might be that, in relative terms, the needs of lone
parents are being
underestimated.
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