Steve
Webb: I beg to move amendment 27, in clause 6,
page 3, line 18, at end
add: ‘and
the costs associated with
disability.’. I
should alert you, Mr. Key, to the fact that my hon. Friend
the Member for Edinburgh, West will also seek to catch your eye on the
amendment. You have probably heard enough of me, but the treatment of
disability is an important issue. As we discussed in the evidence
sessions, people receiving certain disability benefits to reflect
additional costs may have a perverse effect on the statistics as they
are currently constructed. The living standard of those people is
measured by their income, which includes the benefit they get because
they have extra costs, but nowhere are those costs taken into account.
Those people, therefore, appear higher up the income and living
standards scales than they truly are. Their promotion up the ranking is
artificial, because all the benefit does is make good the costs that
non-disabled households do not
face. We
simply suggest that account be taken of the costs associated with
disability, and in a particular way. There are two obvious ways of
taking account of disability benefits. One is to exclude them. I am
grateful that the Under-Secretary of State for Work and Pensions, in
following up a question I asked in a previous Committee sitting, has
supplied us with a briefing note on the impact of excluding disability
benefits from the HBAI measure. In parentheses, the note suggests that
five topics are covered, but marginal deduction rates do not appear
anywhere in it, so I hope we can have the missing section at some
point. The
analysis shows that the aggregate number of those in poverty is pretty
much the same whether or not disability living allowance is excluded.
The totals are not affected. I am grateful for that useful information.
However, we were getting at the composition, not the totals. The
commentary on the numbers precisely states that if DLA is taken out,
the median income is reduced, and therefore a set of children goes out
of the figures. Presumably, they are children in households where
nobody is disabled. However, there is presumably another set of
children who will come into the figures—children in households
where there is a disabled person. Although the total may be the same,
the composition may be different. I do not think we yet have
information about the
composition. If
one is trying to measure relative living standards, excluding DLA is
closer to the truth. One argument for excluding DLA is that we would
get the right children. The total may not be different, but we would
include more children in households with a disabled person than we do
on the current definition, and the policy response may therefore be
different. That all sounds like nerdy statistical stuff, but the point
is that if our poverty figures include more children in households
where there is someone with a disability, we will do more about
disability—it follows. We need to get the right people in the
figures, and not just the right totals. Therefore, there is a case for
excluding DLA.
The
ministerial comment on the Government’s figures stated that if
we excluded DLA and then had a take-up campaign—so that more
people received DLA—it would not show in the figures. That would
be a bit odd, as clearly the Government have done something about
poverty and it would not be fair if that did not show in the figures. I
can see the logic, but our amendment proposes to tackle the issue in a
slightly different
way. We
have linked amendment 27 to the process of equivalisation. At the
moment, we do not quite say that in a household two people can live as
cheaply as one, but rather that a second mouth does not take twice as
much as the first one, so there is a scaling. We take the total
household income and scale according to the number of mouths to feed,
the ages and all the rest of it to get an equivalent income—to
scale households with different costs. We are arguing that we should
have the same process for disability. Hence, rather than exclude a
piece of income that someone is getting, which is one way of doing it,
when we scale different households to reflect their different costs, we
recognise that households with a disabled person have additional costs.
They should have a higher equivalence scale, so that we compare like
with like.
I recognise
that that raises complications. The equivalence scale that the
Government are using in their proposed figures is incredibly
crude—the OECD scale is gobsmackingly crude compared with the
one the Government used formerly, which was much more refined and based
on real living standards. I accept that it may be difficult to graft
the costs of disability on to the
OECD scale, which is horrifying in its simplicity. But we have to do
something. Otherwise, the wrong children will be classified as in
poverty and we will have the wrong policy response. Either we knock the
income out or we take account of the costs. It is not good enough
simply to say that we cannot do anything and we will just put up with
figures that do not include children who are in poverty when they
should be included, and vice-versa. I shall be grateful for the
Minister’s response on how we can address the proper measurement
of living standards of children in households with a disabled
adult. Andrew
Selous: Members might remember that this was a point on
which I questioned the Under-Secretary of State for Work and Pensions
during our evidence sessions last week. I think the hon. Member for
Northavon has made his points well. Disability living allowance is
given to offset the increased costs of disability, which are many and
varied, depending on the disability. Certain types of product may need
to be bought to cope with the disability, and there may be increased
heating costs, extra transport costs, as public transport is
not suitable, or specialised child care costs. The issue will become
larger as individual budgets start to loom on the horizon.
I, too,
looked at the note we had from Ministers yesterday evening. I will be
grateful if the Financial Secretary can explain something that appears
curious. We were told that 23 per cent. of children were in households
with below 60 per cent. of median income, with DLA and attendance
allowance included as income. We were then given the figure for
children in households with below 60 per cent. of median income, but
excluding those allowances as income. The figure actually fell by only
1 per cent. to 22 per cent., which is slightly counter-intuitive,
unless I am missing something. It tends to suggest that DLA is being
taken up by slightly wealthier families, and that we have a problem
with take-up at the lower end of the income scale. Those figures
certainly are not what I expected, and I am left rather puzzled from a
policy perspective, as to what that tells us and what we should do
about it.
It is really
a question of being honest. I hate to use that word, and I do not imply
anything negative by it, but we have to reflect the reality of
people’s lives. If income is given to cope with specific extra
costs, one cannot really count it as ordinary income in the way that
people who are not disabled would count additional income. That should
be a given across the board; it is not a party political point, but a
statement of the reality of the situation. I look forward to hearing
what the Financial Secretary has to
say. John
Barrett (Edinburgh, West) (LD): My hon. Friend the Member
for Northavon does not often leave his colleagues with much to say on
such issues, so I feel like an apprentice with the master by his
side.
One group of
people who have been very keen on the Bill are those with a disabled
child or a disabled parent in the family, because they realise that the
move towards the targets will have a great impact on them. As has been
mentioned, it is vital that increased costs for heating, diet,
transport or child care are recognised as additional costs on the
family, and that additional income from DLA or other sources should not
be seen
as disposable income that the family will be left with. When we consider
clause 6(c), which
concerns “what
is to be regarded as the income of a
household”, and
when we consider what deductions are to be made, it makes perfect sense
to consider the costs and the deductions that have to be made to put a
family on a level playing field with all the other families who do not
have a disabled person in the house. My hon. Friend’s amendment
therefore makes perfect
sense.
Mr.
Timms: Equivalising incomes to take account of the costs
of disability is tricky, and we discussed the issue in last
week’s evidence sessions. I am not sure whether the hon. Member
for Northavon was proposing a methodology for doing that—if so,
I should be interested to know a bit more—but it is certainly a
difficult issue and there is no consensus on how it should be
done.
Last week, we
were asked whether it is possible to determine the impact on child
poverty levels of not counting DLA as income. My hon. Friend the
Under-Secretary then quickly produced the letter that has been
mentioned. As we have heard, the figures show that there is almost no
difference in the number and percentage of children who are counted as
being in relative poverty using income figures that include, and
exclude, DLA and attendance allowance. The hon. Member for Northavon
explained why that was, but let me express it slightly
differently.
Excluding DLA
and attendance allowance from household income would reduce median
household income. Attendance allowance and DLA are more likely to be
received by families without children. There are, as the hon. Member
for Edinburgh, West has rightly pointed out, families with children who
receive DLA for those children. On the whole, however, it is more
likely to be received by older people who are under state pension age
and who do not have children, or whose children have grown up, whereas
attendance allowance is more likely to be received by pensioner
households. The effect of taking those components of income away would
be to improve the relative position of households with children in the
income distribution, because fewer households with children would have
had their incomes reduced, and to worsen the position of pensioners, as
a higher number of households’ incomes would have been reduced.
That is another way of looking at the issue.
It is also
worth noting that the households below average income series, where our
child poverty statistics are published, is carefully reviewed. As
national statistics, they have to be. The most recent review, in 2004,
which is on the Department for Work and Pensions research website,
addressed the issue of the extra costs of disability and how disability
benefits should be treated. The review recognised that disability
benefit recipients’ position in the income distribution figures
is quite high. That might be a poor representation of their standard of
living, but the review concluded that removing disability benefits from
income would not be the solution, as it would not reflect any changes
over time in the receipt of those benefits, and would then overstate
the living standards of non-recipients who had extra
costs. There
clearly are additional costs associated with disability but, as the
hon. Member for South-West Bedfordshire rightly pointed out, they vary
significantly
in level and nature between individuals. There is no general agreement
on how to measure them, at least not yet, so there is no generally
agreed method to equivalise income to take account of those costs. My
hon. Friend the Under-Secretary of State for Work and Pensions made the
point in the evidence sessions last week that this does not mean that
the extra costs of disability are not picked up by the measures in the
Bill. 5.30
pm Once
again the combined low income and material deprivation indicator comes
to our aid. It allows a fuller assessment of the living assessment of
those households facing particular difficulties due to high living
costs such as the cost of disability because they will then have less
disposable income available to meet other needs. That indicator will
capture families who have an income that is higher than that captured
by the relative low income target, but who still have a lower standard
of living because they have additional costs related to disability or
other additional costs to
bear. In
developing the child poverty strategy, we will consider the evidence on
which groups are likely to be most vulnerable to poverty and what
measures are needed to meet their needs. Those groups are likely to
include children in families with a disabled family member. The
variable nature of the costs associated with disability make it
difficult to equivalise income to take into account the costs of
disability in the way proposed by the amendment. The hon. Gentleman has
once again raised an important point. I am grateful to him for doing so
but I hope that he will accept that his amendment does not give us a
solution to the challenge here.
Steve
Webb: If the amendment prompted the Department to do more
work on the costs and impact of disability to assess the adequacy and
coverage of disability benefit levels, that of itself would make it
worthwhile. I accept that there is not a straightforward way of doing
this and perhaps the work required to do it might delay the whole
process, which we do not want. I notice the Minister again relies on
the argument that the material deprivation indicator would pick this
up. It is going to pick up disability costs and housing costs so it
will take quite a fine statistician to work out what is going on in
this catch-all. We need to pick these things up a bit more directly. I
beg to ask leave to withdraw the
amendment. Amendment,
by leave,
withdrawn. Clause
6 ordered to stand part of the
Bill.
Clause
7The
Child Poverty
Commission
Steve
Webb: I beg to move amendment 48, in clause 7,
page 3, leave out lines 29 to
32. I
had not planned to table the amendment, as is apparent from the
numbering, but the subject arose during the evidence sessions. The
amendment would remove the part of clause 7 that provides for the child
poverty commission to be abolished. I must admit that I had not noticed
that, which is why I had not tabled an amendment on the subject, but
when we were looking at
the Bill and discussing it, I suddenly realised that it gives the
Secretary of State power to abolish the commission. On the face of it,
that might seem reasonable: one could argue that we do not want a
plethora of quangos and that once it has served its useful purpose, the
commission should drift off into the
sunset. I
do not think it is quite as simple as that. Tackling child poverty is a
bit like running up a down escalator. If we do not do very much, we end
up going backwards. We had a discussion this morning about poverty
rates in Europe and it was noticeable that in all sorts of different
countries with different Governments of different complexions and
different social environments, overall child poverty rates are going up
because there are global forces at work. Globalisation has implications
for the wage structure. There are social changes going on across
Europe. There are forces at work which tend to lead to greater
inequality and greater child poverty. I therefore find it hard to
believe that, even if we reach that happy day in 2022, for example,
when we decide that the 2020 target has been met, we are not then going
to want to have some sort of infrastructure for not taking our foot off
the pedal at that
point. The
Minister said—I paraphrase ever so slightly—that it is
all very well the Finns getting 5 per cent. for a few years, but they
could not keep it up, could they? Likewise, if the United Kingdom
happened to reach the 10 per cent. target and so on in 2020, that is
marvellous compared with where we are now, but could we keep it up and
sustain it? What happens beyond the end of that period? Given that the
child poverty commission is not some sprawling bureaucracy that is
going to leach vast amounts of taxpayers’
money—£180,000 a year or whatever, for four meetings a
year and some biscuits—it does not seem to be unduly onerous for
it to have a rolling role, just as the Committee on Climate Change will
go on until 2050. In other words, the bit of clause 7 that we are
trying to delete makes the assumption that child poverty will be fixed
somehow—that will be a box that we can tick, and we would not
even have the slightest overseeing, reporting mechanism that the child
poverty commission would
provide. I
would like to see the child poverty commission kept going
post-2020—not just because it provides jobs for academics. It is
said that the poor are always with us, so we cannot afford to take our
foot off the pedal. We need a body that is always there to prod and to
probe on child poverty so, with the amendment, I would like to remove
the ability of a future Secretary of State to abolish the child poverty
commission. Mr.
Gauke: May I say for the first time today,
Mr. Key, what a pleasure it is to serve under your
chairmanship? I
rise to make a couple of brief points. First, the amendment raises an
interesting question. As the hon. Member for Northavon said, we could
see the Bill as being about achieving the 2020 target and, clearly, the
child poverty commission has a role in that. Once that target is
achieved, assuming that it is, what then is the ongoing role for the
child poverty commission? Is there an argument for it to be abolished?
We do not believe that quangos should exist for the sake of it. We are
interested to hear what the Minister has to say about that and about
his defence of the Secretary of State’s ability to abolish the
commission.
My second
point is a technical one, which is that the amendment does not do all
that it should do. It proposes the removal of clause 7(4), but
subsections (5) and (6) should also be struck out. For that reason, if
the hon. Gentleman intended to press the amendment to a Division, we
could not support it. However, an interesting point is being made and
we would be grateful to hear the Minister’s
views.
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