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New clause 1, which the hon. Member for Northavon (Steve Webb) moved, would include in the Bill a target for relative low income measured after housing costs. The consequential amendments are amendments 1 to 20. The new clause would impose a new target that is additional, as he knows, to the relative low income before housing costs target in clause 2 and the other targets in clauses 3 to 5.
Whether poverty should be measured before or after housing costs and the impact of housing quality on children's outcomes were debated at some length in Committee. I emphasise that the Government recognise the importance of housing costs to families' disposable incomes and the impact of those costs on their living standards. That is why the Government have placed, and will continue to place, significant focus on the availability of affordable homes. For example, the latest investment of £290 million at the end of November, delivering almost 5,500 affordable homes throughout 149 local authority areas, brought total Government help for house building since June to £1.8 billion.
As we discussed in Committee, however, there is a number of reasons why the Government have chosen to use before-housing-costs measures of poverty in the Bill. First, measures of housing quality are currently included in the list of items that are used for the combined low income and material deprivation measure, so if a child is experiencing poor housing, that will be reflected in their material deprivation score. More importantly, families who cannot afford items because of their high costs, such as high housing costs, will be picked up in the material deprivation measure. For example, looking at poverty statistics by region, it is clear, using the combined measure, that London has a far higher average risk of poverty than the relative low income measure would suggest, highlighting the additional costs-particularly the high housing costs-of living in London.
Secondly, it is important to note the drawbacks associated with an after-housing-costs measure. As the hon. Member for Northavon said, measuring income after housing costs can understate some individuals' relative standard of living because they pay more for better-quality accommodation. Conversely, income measures that do not deduct housing costs may overstate the living standards of people whose housing costs are high relative to the quality of their accommodation. Therefore, the relative low income indicator before housing costs, in conjunction with the combined low income and material deprivation indicator, ensures that we effectively capture the issue of affordability of housing. Given the drawbacks of the alternatives, we consider the material deprivation indicator to be a better way of capturing the impact of housing costs.
The hon. Gentleman asked why housing benefit should be included as income in the before-housing-costs measure of poverty. The obvious answer is that housing benefit is income, but I shall give him a fuller response than that. Households in receipt of housing benefit pay their housing costs using their total income, including housing benefit. Households that do not receive housing benefit need to pay their housing costs from their total income. Including housing benefit enables like-for-like comparison between the incomes that households have with which to pay housing costs and to meet their other needs. To deduct housing benefit from the income of those who receive it would be to underestimate the total income that they had with which to meet their housing costs and other needs.
Helen Goodman: That is not a very difficult trick question, because, as the hon. Gentleman knows, housing benefit rates vary around the country to take account of the different costs of housing in different parts of the country.
The hon. Member for Northavon asked a slightly more tricky question when he gave the example of two pensioners living next door to each other, one of whom owned their house and one of whom was on housing benefit, with the latter appearing to be better off on a before-housing-costs basis. There are similar arguments against an after-housing-costs measure. Imagine two families on the same income and with the same number of children. One family decides to spend a lot of money on a house in a nice area, and the other decides to spend less on housing because they have other priorities. On an after-housing-costs measure, the first family are considered to be poorer. I am sure that the hon. Gentleman can see the logic of my case.
We discussed in Committee the fact that other European countries measure poverty before housing costs. We have stated our ambition to be among the best in Europe. The ability to make comparisons is vital because they allow us to benchmark our performance.
The new clause would not change the approach to measuring child poverty set out in the Bill; instead, it would add a further target to the Bill, which we do not consider necessary. As members of the Committee, including the hon. Gentleman, highlighted, further targets run the risk of creating a lack of focus. Having four comprehensive targets covering financial poverty is sufficient and enables us to capture the different facets of poverty. As noted, the combined low income and material deprivation indicator will ensure that those whose high housing costs impact on their living standards will be captured.
The new clause proposes a target level for the measure of less than 10 per cent. The level of less than 10 per cent. for the before-housing-costs relative low income
measure in clause 2 was selected on the basis that that is the lowest that has been achieved and maintained over time in other modern European economies. The vast majority of European countries publish poverty statistics using only a before-housing-costs measure of relative low income, so there are no comparative data to establish whether a target of 10 per cent. on an after-housing-costs measure is either realistic or in line with our ambition to be among the best in Europe.
Although the targets in the Bill should be ambitious and stretching, they should not be unrealistic. The present level of relative poverty after housing costs is 31 per cent., or 4 million children. Meeting the proposed target would require a reduction to fewer than 1.3 million. I would argue that it is unrealistic to envisage our achieving that in the next 10 years. We published the principles of our child poverty strategy in today's pre-Budget report, outlining five principles, including cost-effectiveness and affordability. That is key if we are to meet our objectives in a sustainable manner.
I draw the hon. Gentleman's attention to the fact that in preparing a UK child poverty strategy, consideration must be given to any necessary measures required in respect of housing to support the tackling of child poverty, as set out in clause 8(5)(d). We are currently analysing the impact of housing on child poverty to inform the first child poverty strategy, and that analysis will determine the key principles for that policy area and, subsequently, appropriate monitoring arrangements.
Finally, we are committed to ensuring that the "Households Below Average Income" series continues to publish income figures after housing costs, so that it will always be possible to monitor child poverty trends on an after-housing-costs basis and to keep under review the impact of housing costs on families' living standards.
Mr. Graham Stuart: The Minister may not have been passionate in her espousal of the importance of housing in tackling poverty, but she has at least acknowledged it, and I welcome the extra money that is coming to the East Riding of Yorkshire for additional affordable housing. Can she explain, however, why a Government supposedly committed to eradicating child poverty have built fewer houses in any year of their time in government than were built in any year of the previous Conservative Administration?
Helen Goodman: I have described this afternoon the investment that we are making, which is providing a record improvement in the decent homes standard. That is having a significant impact on people's standard of living.
New clause 2 and amendment 23, tabled by the hon. Member for South-West Bedfordshire (Andrew Selous), suggest that regulations under the Bill should set targets on a potentially wide range of outcomes that can be said to be the causes of child poverty, and that the child poverty strategy should set out what progress needs to be made to address those causes in order to meet the targets in clauses 2 to 5. The causes of poverty drew comments from many Members in the debate, including my right hon. Friend the Member for Birkenhead (Mr. Field), who brought his usual compassionate and well informed perspective to bear.
My right hon. Friend began by congratulating the Government on their excellent record and the scale of their ambition to tackle child poverty, but he suggested that the Government's approach had been too mechanistic. I point out to him that we are not focusing simply on incomes, taxes and benefits but, as I think he acknowledged, we are also tackling worklessness and education issues. He suggested that benefits had been increased too much compared with income, so I hope that he will welcome the better-off credit that the Chancellor of the Exchequer announced earlier. It will ensure that everybody in full-time work is better off. I remind him also of the significant reductions in the marginal deduction rates that we have recently achieved.
In the discussion about the root causes of poverty, the hon. Members for South-West Devon (Mr. Streeter), for Upper Bann (David Simpson), for Beverley and Holderness (Mr. Stuart) and for Henley (John Howell) mentioned family formation. It would not be particularly fruitful for me to detain the House on that matter for long, but I point out that it is extremely difficult to say precisely what is the correlation between family structure and poverty levels. I remind hon. Members of the experience in Denmark, which has the highest level of lone parenthood in western Europe but also comes out at the top of the UNICEF table on child well-being. The lesson that we can learn from that is that the structures and policies that we put in place are far more significant than particular matters of family formation. In any case, it is not clear that those matters are under the Government's control.
Of course it is important that any Government tackle the broad range of issues and policy areas related to poverty. Clause 8 requires the UK child poverty strategy to do precisely that, but that does not mean that targets on them should be set in the Bill, as that would risk diluting the clear focus on income poverty and material deprivation that is at its heart. Such issues were debated substantially in Committee, and I refer hon. Members to the arguments that were expressed. As we said then, income poverty and material deprivation must be at the heart of the Bill because of the evidence of the impact that they have on children's lives, both in their experiences now and their chances for the future. Income poverty has an impact on children's education, health and social lives, the relationships with and between their parents and their future life chances.
Andrew Selous: Does the Minister not agree that making progress on dealing with the causes of poverty is very likely to result in the Government achieving their income poverty targets? The two go together.
Our strategy needs to be multi-faceted if we are to break into generational cycles of poverty, and so truly end child poverty. That multi-faceted approach is supported by the Bill. The UK strategy will need to meet both purposes set out in clause 8(2). As well as showing how the targets will be met, the strategy must meet the purpose of ensuring, as far as possible, that children in the UK do not experience socio-economic disadvantage. That second purpose ensures that the strategy will be broad in scope and that it will focus on a wide range of
policy areas, rather than relying on a narrow range of policies related simply to raising household income through financial support.
Moreover, clause 8(5) establishes that the strategy must consider what measures if any ought to be taken across a range of key policy areas. Those building blocks of the strategy have been determined on evidence that shows that those policy areas have the potential to make the biggest impact in tackling the causes and consequences of growing up in income poverty. It follows that amendment 24 is unnecessary, because the strategies will already need to set out the specific actions that need to be taken to meet the targets, and the annual reports will monitor delivery, tracking a wide range of indicators that may change over time, as determined by the needs of the strategy.
As well as being unnecessary, amendment 24 is unhelpful and problematic, because it seeks to require the strategy to define causal relationships that in reality are tenuous and difficult to establish. The strategies will review the evidence on the underlying causes of poverty, seeking to establish clear evidence of causal relationships where they exist, but the problem with amendment 24 is that in many cases it is not possible to establish evidence of clear causal relationships. In many cases, the evidence shows that there are strong associations or connections between growing up in relative poverty and material deprivation, and experiencing poor intermediate outcomes in a range of areas, including educational attainment, health and other aspects of well-being. It also shows that there are strong associations between those intermediate outcomes and the risk of experiencing poor final outcomes in adulthood, including the risk of experiencing poverty and material deprivation. However, the causal relationship goes both ways. Income poverty has both direct and indirect effects on other policy areas, including health and education. Defining the causes of poverty, as the amendments would require, is therefore not possible to achieve at present owing to gaps in the evidence base and limitations in the data available.
The development of the strategy will involve identifying those groups of children most at risk of being in poverty, including particularly vulnerable groups, and assessing what action needs to be taken to meet all the targets on income poverty and material deprivation. The indicators that should be tracked will change over time, as determined by the needs of the strategy, but our ultimate goal-the ending of child poverty-remains constant.
I shall now turn to new clause 3, which was tabled by the hon. Member for South-West Bedfordshire. I understand the need for transparency on progress towards the 2010 target. However, I shall explain why the new clause is unnecessary. Opposition Members have been full of doom and gloom about our prospects for 2010 and achieving those targets-the hon. Gentleman asked a number of questions about where we are and where we think we are going to be in the light of the Chancellor of the Exchequer's announcements.
As the hon. Gentleman knows, the Government previously forecast that measures taken since 2008 would reduce child poverty by a further 500,000 in relative terms, but the Institute for Fiscal Studies says that the number is 600,000. The measures that the Chancellor announced earlier today will produce a further reduction of at least 50,000. He announced an extension of free
school meals entitlement to primary age children whose parents are on working tax credits, and an increase in child benefit of 1.5 per cent. in April 2010, which is well ahead of what it would be if we had stuck with the indexation in legislation. I contrast that with the freezing of child benefit under the previous Administration, which meant that by 1997 it was lower in real terms than when they took office in 1979.
Steve Webb: I understand that it has been revealed since the pre-Budget report-it was not apparent in the statement-that the 1.5 per cent. increase in child benefit is actually a draw-down of the following year's increase. The following year will have not a full inflation increase but inflation less 1.5 per cent.-a real-terms cut. Was the Minister aware of that?
I turn now to the amendments tabled by the hon. Member for Oxford, West and Abingdon (Dr. Harris). Amendment 33 would add a further regulation-making power to clause 6, enabling the Secretary of State to make regulations setting out the circumstances in which a child living in "communal accommodation" may be regarded as living in a qualifying household. That came out of the report by the Joint Committee on Human Rights, of which the hon. Gentleman is a member. I would like to make it very clear that our goal is to eradicate poverty for all children: the framework that the Bill establishes for achieving that goal-using national child poverty strategies and duties on local government-applies to all children in the UK.
To ensure accountability for and progress towards the goal, clauses 2 to 5 define targets for a range of poverty indicators. As I am sure hon. Members appreciate, those targets will be effective only if progress towards them is measurable. That is why they do not apply to children who are not covered by the surveys that we use to measure poverty. Targets for those children would not be measurable, and therefore would be an ineffective way to ensure that their experiences of poverty are tackled. The Bill therefore sets out that the targets apply only to children living in "qualifying households".
For many children living in communal establishments, the concept of household income is simply inapplicable. However, we have other policies to address the well-being of those children. For example, in residential care homes, minimum requirements include the provision of healthy meals, clothes and sufficient financial resources.
I am concerned to satisfy the hon. Gentleman's concerns, because these issues are especially important. The Joint Committee on Human Rights said that the targets discriminate against children not living in qualifying households. In fact, the targets do not discriminate, as only actions can discriminate. He is making a jump in logic and setting up a situation that assumes that the policy that flows from the targets will be discriminatory. That is a mistake and that is why, with the reassurance that the objectives apply to all children, I hope that he will not press his amendments. I hope that other hon. Members also will not press their amendments.
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