Mr.
Stuart: I completely agree; obviously I defer to the hon.
Gentleman on data gathering. Those benchmarks would provide another way
of looking at benefits and, in the context of the Bill, at child
poverty and the reality of what it is like to live in families with
such incomes. The hon. Gentleman makes a good point, as that approach
would help us to understand better the granularity of poverty and the
way in which it impacts differently on families with different
make-ups. He has already noted that, under the existing set-up, couples
technically appear to be more likely to be in poverty, when claiming
benefits, than a lone parent—that is the so-called couples
penalty. Although I hope that the Government will consider the new
clause, it is probing, and I have spoken to it in that
spirit.
Andrew
Selous: We have had a really important debate, and I am
grateful to the hon. Member for Northavon for setting out so clearly
and cogently his case for new clause 2. He claimed that the Bill will
be fundamentally intellectually incoherent and dishonest unless we have
an answer to his question. Notwithstanding the fact that he said he was
not committing his party to spending the money required to bring those
benefits up to the level that would bring all the groups he talked
about out of poverty, the fact remains that he has identified an
inconsistency between what the Bill states it will do and the fact that
benefits are currently set below the poverty targets in clauses 2 to
5. There
are a couple of bigger questions that underlie the whole debate. The
issue of work incentives has been raised—absolutely
correctly—by hon. Members on both sides of the Committee.
Concern was raised about the fact that one could perversely trap
communities—if not in poverty then in the benefits
system—by increasing benefits to a level that leads to problems
with work incentives. The Treasury monitors that issue closely and
looked at it extremely carefully when the issue of income disregards
was addressed, so I shall listen with great interest to what the
Minster says about work incentives.
The other
huge issue that is relevant to the debate is that of the economic and
fiscal circumstances within clause 15 and the overall fiscal envelope
in which the benefits system exists. It is already large and adding
significantly to the debt and deficit problems that the Government
face. We need a wider discussion about that and to be absolutely clear
on the overall limits before going down that
route. With
regard to new clause 4, which was tabled by my hon. Friend the Member
for Beverley and Holderness, I noted what he said and was
reminded of aspects of our discussions about the adequacy or
inadequacy of clause 4, which sets out the absolute low
income target within the Bill, when several hon. Members commented that
they did not think that that was particularly demanding or even
especially useful. My hon. Friend might be on to something there, which
suggests that the minimum income standard route could be an alternative
for examining that matter.
The hon.
Member for Northavon mentioned several European countries with a
similar methodology. I picked up in the course of my reading that a
minimum income standards approach is used in America. It is based on
the cost of a basic but nutritious diet, and then there are dozens of
different poverty lines for different types of household, and they are
updated each year to take account of general price
inflation. 6.15
pm Groups
that dislike that way of looking at poverty—I believe that the
IFS has at times been among them—have said that that would lead
to too small a group being classified as being in poverty, and that
might be a reasonable objection. However, it is interesting to note
that, despite the use in the United States of minimum income
standards-type poverty definitions, the official US poverty rate has
fallen by less than 3 per cent. in 40 years, which would tend
to suggest that people do not get left behind as economic growth
happens, because the figures are updated according to what it costs to
feed a family. The standards actually include more than
food. This
has been an important and interesting debate. My hon. Friend the Member
for Beverley and Holderness said that new clause 4 was a probing
amendment. I shall listen with interest to what the Government say
about it, but he could well be on to something, and the new clause
might give us slightly more useful data than clause 4
would.
Helen
Goodman: The Bill makes a clear and robust commitment to
eradicating child poverty. It is clear in clause 8(5), which covers the
strategy, that financial support is an important building block of an
effective child poverty strategy. We will consider all potential
methods of achieving our child poverty targets when we develop our
strategies, including assessing the role of support for those who
cannot work. I fully appreciate the good intention behind the new
clauses, but we do not believe that they are necessary in practice. It
could actually be unhelpful to include them in the Bill, for reasons
that I shall set
out. We
are committed to ensuring that the tax and benefits system provides
adequate financial support. Families in the poorest one fifth of the
population are £4,750 a year better
off—
6.17
pm Sitting
suspended for a Division in the
House. 6.32
pm On
resuming—
Helen
Goodman: As I was saying, we are committed to ensuring
that the tax and benefits system provides adequate financial support.
Families in the poorest one fifth of the population are £4,750
per year better off as a result of personal tax and benefit changes
since 1997. I would like to draw hon. Members’ attention to some
facts and, picking up on a point made by the hon. Member for Northavon,
show that the tax and benefits scene and the way that different
families are treated in the situation in which they find themselves,
are both complex and not straightforward
issues.
Steve
Webb: I very much welcome the commitment that the Minister
just gave to the adequacy of benefit levels. Can she clarify whether,
when the benefit rate for, say, an under-25 single person is set at
£50.95 a week, that is deemed to be adequate, based on what an
under-25 needs to spend money on? Is it set with reference to anything
real? Is there reference to what they spend on food, fuel, clothing and
so on? Is the figure concrete, or is it just what it was last year plus
a
bit?
Helen
Goodman: If the hon. Gentleman will give me a little time
to develop my argument, he might understand our
position. Benefits
are linked to various indices. For example, at present,
jobseeker’s allowance is linked to the retail prices index,
housing benefit is linked to the Rossi index, child benefit has gone up
25 per cent. in real terms since 1979, and child tax credit was
increased by £75 above the earnings index in 2009. We have in
statute various indices to which benefits are linked in order to
achieve various policy objectives. Obviously, one of the key policy
objectives since 1999 has been raising the standard of living for
families with
children. Consequently,
if hon. Members look across the whole period, they will see that we do
not stick to the indices. We make subjective judgments to set increases
over and beyond the statutory indexation provisions. That means that,
for a lone parent with one child aged five, the real terms increase in
the period from 1997 to 2009 has been 30 per cent. For a lone parent
with two children, it has been 50 per cent. For a couple with two
children aged five to nine, the percentage change in real terms has
been 27 per
cent. Another
factor that we need to take into account is passported benefits.
Obviously, the calculations to which the hon. Member for Northavon
refers do not take account of the value of passported benefits, such as
free school meals. If we were going down his suggested route, we would
need to take that into account, too. Finally, when looking at those
benefit levels, we need to take account of the new benefits that we
introduced to supplement people’s standard of living at
particular times. For example, we introduced the health in pregnancy
grant and the Sure Start maternity
grant. The
situation is complex. I suspect that the hon. Gentleman tabled the new
clause before research was done by the Library. He had anticipated that
all the
benefit levels were below the relative poverty threshold. He is smiling,
so I know that I have hit the point. As the hon. Gentleman said, for a
lone parent with one pre-school age child, the threshold is
£205. The benefit is £235, so that family are above the
threshold. As for the couple with two children, the benefit is
£330, as is the relative poverty threshold, so that family is
not below the poverty
threshold. I
could talk about the additional support for families with disabilities,
the implications of housing benefit and the differences between tax
credits, but I hope that members of the Committee will accept our
record, which is one of not only indexing benefits but, when
opportunity allows, raising them and improving the relative position of
such families. One of the crucial aspects of the Bill is that it must
be based on a growth strategy for the economy. Once the economy is
growing, it will, of course, be easier to be more generous with
benefits—something that will remain open to
us. New
clause 2 would require the Government to pursue the method of
guaranteeing that the level of out-of-work benefits would be sufficient
to lift children out of poverty. However, placing that guarantee in the
Bill would reduce the flexibility that it provides for forthcoming
strategies. It would force a focus on a particular approach to tackling
child poverty that might not be as effective as other options, but we
are not sure that it would be a sustainable approach to tackling
poverty. We all know that escaping poverty through work has wider
beneficial impacts on families compared with escaping through financial
support alone. Entering work has many social benefits. It will reduce
stress in the family and provide role models for children. A major
problem with the new clause is the impact on financial incentives to
enter employment, and we need to consider that negative impact
alongside the other perfectly sensible things to which the hon.
Gentleman has
referred. We
must also recognise that many aspects of the benefits system are
designed to provide short-term support in response to changing
circumstances, such as short-term unemployment rather than long-term
sources of income. The new clause does not take account of that purpose
of the benefit system and could have an unintended impact on its
effectiveness. As drafted, the new clause requires the changes to be
introduced on Royal Assent, and that is not
achievable. Guaranteeing
that out-of-work income is sufficient to lift a family out of poverty
would be technically difficult to deliver. The poverty line for a year
can only be calculated after the year in question has ended and once
the median income has been calculated. Therefore, the Government would
not know exactly how much benefit would need to be paid to a particular
group of households to raise their incomes above the current poverty
line. I
shall now deal with new clause 4, even though the hon. Member for
Beverley and Holderness, who tabled it, is not here. On 22 October, the
Committee heard evidence on the role of minimum income standards in
tackling child poverty. New clause 4 proposes that the Secretary of
State should have regard to minimum income standards in carrying out
his or her duties, and that he or she should commission research into
the subject. The Government welcome the Joseph Rowntree
Foundation’s research on minimum income standards, and we
continue to follow its research with interest. However, although we
recognise and appreciate the intention behind the amendment, we do not
agree that the approach should be enshrined in
law. The
Government have consulted extensively on the long-term measure of child
poverty. Minimum income standards were ruled out because different
research methods tend to make different assumptions and it is difficult
to get one answer to the simple and single question: how much income is
enough? Family circumstances obviously vary considerably. Even if it
were possible to define income adequacy on a fully consistent basis, it
would be difficult to generate a long-term robust time series, which is
essential for measuring progress. In fact, the researchers explicitly
say that their minimum income standard should not be treated as a
poverty threshold, though they propose that it is relevant to the
general discussion of poverty and living
standards. We
have consulted extensively on the nature of the targets and there is
widespread consensus and support that they accurately reflect the way
to tackle poverty in the UK. Taken together, the four income targets in
clauses 2 to 5 define a stretching goal. Achieving them will not only
mean the lowest poverty rates since records began and in line with the
best in Europe, but will tackle material deprivation and mean that the
same families are not persistently poor. Although temporary periods of
low income, such as that caused by a short spell of unemployment, can
create difficulties, the most damaging effects of poverty are caused by
long-term and recurrent spells of relative low income. The approach set
out in the Bill—using a combination of four targets—is
therefore a crucial part of ensuring that poverty does not affect
children's life chances over the long
term. Finally,
there were also technical difficulties with new clause 4, with adhering
to the minimum income standards. With the survey techniques we use to
assess household income it is not feasible to ensure that no household
falls below a certain income level. That is why other targets have been
set at levels of 5 or 10 per cent. rather than
zero. New
clause 4 also suggests that the Secretary of State should commission
research on minimum income standards. Such research is important.
However, as the latest research by the Joseph Rowntree
Foundation—published in 2008 and updated this summer—is
robust, it would not represent a particularly good use of Government
resources to seek to replicate
it. In
advising the Government on their strategy, the child poverty commission
will be completely free to make a full exploration of the minimum
income guarantee. The Government would be perfectly happy for it to do
so when it is formulating its advice on the strategy to the Secretary
of State. I therefore hope that the hon. Member for Northavon will
accept what I have said on these matters, see that the Bill puts in
place measures for achieving improvements in the incomes of our poorest
families, and withdraw the new
clause.
Steve
Webb: The first half of the Minister’s
reply—“We have put benefits up by more than
inflation”—was the answer to a different question. I do
not dispute the statement, but that was not the point of either
amendment. The point was, “Are benefit rates set relative to
something
real?” The fact that they are higher than they were last year,
plus a bit, still does not make them relative to anything
real. The
Minister said that the Government want flexibility, but the only
flexibility that my new clause 2 prevents them from having is the
flexibility to pay benefits below the poverty line. She made a serious
point about the difference between short and long-term support. If the
Government were to commit to those who are on long-term
benefits—for example, the children of the long-term sick might
be guaranteed not to be living on poverty benefits—that might
represent progress. She seemed to make two conflicting comments. One
was that there would not be minimum income standards because people
would disagree on how to set them, and the other was that she did not
want to commission research because the Joseph Rowntree Foundation has
just published robust research. If we could not have statistics because
people disagree on how to obtain them, we would not have the Bill
because there are plenty of variations in the figures that we have.
That is not a credible
argument. When
we heard evidence, it was pointed out that a young woman under 25 is
allocated £50.95 a week to live on, but evidence suggests that
£43 a week is needed for food for a decent, healthy living
standard. Fuel and other bills cannot be paid from the remaining
£7-odd, so young women in that age group who are on benefit are,
by definition, eating less than is healthy for them. If they then
become pregnant, they will at that time have been eating
unhealthily. 6.45
pm Budget
standards and minimum income standards would enable us to consider what
such young women need for a decent standard of living, and to make that
the benchmark. Fiscal considerations would determine whether we hit the
benchmark, but not knowing what the benchmark is is unacceptable and
inexcusable. I know that the hon. Member for Beverley and Holderness
will not press his new clause, and that is a shame because it would add
something to the
Bill. I
accept that new clause 2 would immediately incur a lot of cost, and
that there are difficulties when measures are introduced
retrospectively, so I will not pursue it, but I hope that it has given
Ministers and their officials food for thought. We cannot legislate on
child poverty without thinking about benefit rates relative to the very
thresholds that we are enshrining in legislation. If we have achieved
even that in the debate, we have achieved something. I beg to ask leave
to withdraw the
motion. Clause,
by leave,
withdrawn. Ordered, That
certain written evidence already reported to the House be appended to
the proceedings of the Committee.—(Mr.
Timms.) Question
proposed, That the Chairman do report the Bill, as amended, to the
House.
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