Draft Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014
The Committee consisted of the following Members:
Blears, Hazel (Salford and Eccles) (Lab)
† Blenkinsop, Tom (Middlesbrough South and East Cleveland) (Lab)
† Blunkett, Mr David (Sheffield, Brightside and Hillsborough) (Lab)
Clwyd, Ann (Cynon Valley) (Lab)
† Evans, Mr Nigel (Ribble Valley) (Con)
† Fabricant, Michael (Lichfield) (Con)
† Hemming, John (Birmingham, Yardley) (LD)
† Jackson, Mr Stewart (Peterborough) (Con)
† McCartney, Karl (Lincoln) (Con)
† McKinnell, Catherine (Newcastle upon Tyne North) (Lab)
† McVey, Esther (Minister for Employment)
Mitchell, Austin (Great Grimsby) (Lab)
† Morris, James (Halesowen and Rowley Regis) (Con)
Paisley, Ian (North Antrim) (DUP)
† Ruffley, Mr David (Bury St Edmunds) (Con)
† Stride, Mel (Central Devon) (Con)
† Thornton, Mike (Eastleigh) (LD)
Wood, Mike (Batley and Spen) (Lab)
Sarah Heath, Committee Clerk
† attended the Committee
Eighth Delegated Legislation Committee
Wednesday 26 November 2014
[Hywel Williams in the Chair]
Draft Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014
8.55 am
The Minister for Employment (Esther McVey): I beg to move,
That the Committee has considered the draft Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014.
It is a pleasure to serve under your chairmanship today, Mr Williams. The regulations before the Committee today introduce a new persistent child poverty target, as required by the Child Poverty Act 2010. At the end of the current Parliament, as at the start, the coalition Government are committed to tackling the root causes of child poverty and transforming the lives of the most vulnerable in society. Despite the tough economic climate, we are making progress: under this Government, 300,000 fewer children are in relative poverty.
Employment is at a record high, up by nearly 1.7 million since 2010, and both the number and proportion of children in workless households are now at the lowest levels on record. Under the present Government around 390,000 fewer children are in workless households. That is a remarkable achievement for our long-term economic plan. Poor children are doing better than ever at school. The proportion of children on free school meals getting good GCSEs, including maths and English, increased from 31% in 2010 to 38% in 2013. I am proud to be part of a Government who have brought about such a real and lasting difference to children’s lives.
However, we know that there is more to do. The Government remain committed to the goal of ending child poverty in the UK by 2020. Yesterday, we published the Government’s response to the Social Mobility and Child Poverty Commission’s “State of the Nation 2014” report. That reiterates our commitment to tackling child poverty and achieving lasting change for the poorest in society.
Michael Fabricant (Lichfield) (Con): I note that the definition of child poverty is when the income of a family is below 60% of the median. Does the Minister think that her 2020 target is ambitious, given that so many people are in work and, indeed, the median of average income is constantly rising?
Esther McVey: I thank my hon. Friend for that question; I am pleased to say that in his constituency the figure for children in low-income families is down by 1%, and the figure for children in out-of-work benefit households is down by 6.5% on the year.
Mr David Blunkett (Sheffield, Brightside and Hillsborough) (Lab): Will the right hon. Lady give way?
Esther McVey: Perhaps I can first answer my hon. Friend’s question, before I get a catalogue of them. I will answer Members’ questions in turn.
I believe that our target is both ambitious and consistent with the targets set out in the Child Poverty Act 2010. That is why today we are laying down a figure below 7% for persistent poverty.
Mr Blunkett: Leaving aside for a moment the notion that the last three years of schooling were entirely responsible for the improvement in GCSEs, which is palpably stupid, will the Minister confirm that incomes have not been rising consistently? They have dropped by an average of 8% since 2007.
Esther McVey: I thank the right hon. Gentleman for his intervention, but I think his language is unfortunate, and so is his attitude in questioning the rise in academic standards. I was giving the increase between 2010 and 2013. Given that increase and the Government’s efforts, particularly with such things as the pupil premium, I believe we can take credit for what has happened.
Michael Fabricant: On a point of order, Mr Williams. I think that the right hon. Member for Sheffield, Brightside and Hillsborough may inadvertently have misled the Committee. Incomes have fallen, but only in real terms, not in actual terms, which is what I was talking about.
The Chair: That is not a point of order for the Chair.
Esther McVey: I will take more questions once we have got through the specifics, but I will now proceed to lay down the regulations. The Government recognise that persistent poverty can be particularly harmful to children’s life chances. Responses to our consultation on this target from the Social Mobility and Child Poverty Commission and others put particular emphasis on the damaging effects of persistent poverty. They urged the Government to continue to put this at the centre of policy ambition, and the Government will do so.
We know that children living in persistent and long-term poverty have radically different experiences growing up, compared with other children. The longer a child remains in poverty, the more likely he or she is to experience poor outcomes such as social exclusion, below average attainment and reduced life chances. Our child poverty strategy for 2014 to 2017, published in June, sets out the action we will take to tackle this most important of issues. From tackling entrenched worklessness to increasing support for child care, we are dedicated to ensuring that poor children do not grow up to become poor parents.
We will continue to focus action on breaking the cycle of persistent poverty and exploring what further steps can be taken to reduce persistent poverty as far and as fast as possible. The new persistent poverty target is a declaration of the Government’s commitment to tackling this most harmful aspect of child poverty. It reflects the effort we are already putting into addressing the issue, and will ensure a continued and relentless focus on the matter in coming years by the Government and others with a part to play.
The regulations help us to meet our obligations under the Child Poverty Act 2010, which sets statutory targets for reducing child poverty by April 2021. The Government
firmly believe that, in the long term, a revised set of child poverty measures are needed that underline our commitment to reducing child poverty and better reflect the evidence about its underlying causes. We are not yet in a position to put those new measures forward. However, in the absence of those, we remain committed to meeting our existing obligations under the 2010 Act and to introducing a persistent child poverty target by the end of this year.As outlined in the regulations, the definition of persistent child poverty is any child living in a “household in relative poverty” for at least three years out of a four-year period. A household is in relative poverty if it has an income of below 60% of the current median household income in the UK in a given year, before housing costs. The regulations will set a persistent child poverty target of less than 7%. That means that the percentage of children living in households in relative poverty in at least three of the four years up to 2020-21 will be less than 7% of all children in the UK. Our decision to select a target at that level is evidence-based and is a consistent approach. It is based on analysis of the historical relationship between relative and persistent poverty, and is consistent with the ambitious relative poverty target of less than 10%, as set out in the Child Poverty Act 2010.
Persistent poverty is particularly harmful. We want to take action to ensure that the number of children affected is as low as possible. We need a target that is consistent with the high degree of ambition of existing targets. The evidence shows that, in a given year, levels of persistent poverty are typically 50% to 70% of relative poverty. According to past trends, when relative poverty reaches around 10%, persistent poverty should be somewhere between 5% and 7%. However, the proportion of children in persistent poverty could be as high as 10% of all children. That is because the children who face the most disadvantage as the number of children in relative poverty reduces are likely to make up a much greater proportion of the group, if not all of it.
We have looked at this carefully and considered all the arguments put forward in response to our consultation. We believe that a target of less than 7% is sensible, ambitious and reflects the evidence base. As our evidence base develops, we will keep the degree of ambition of the target under close review. In summary, a target of less than 7% is most consistent with the relative poverty target, gives the most coherent overall package of targets and will drive continued efforts to address persistent child poverty. On that basis, I present a persistent child poverty target of less than 7% to the Committee and ask for its approval.
9.4 am
Catherine McKinnell (Newcastle upon Tyne North) (Lab): It is a pleasure to serve under your chairmanship, Mr Williams. It is also a pleasure to be standing in for my Department for Work and Pensions colleague, my hon. Friend the Member for Stretford and Urmston (Kate Green), although this is not an area unfamiliar to me, as child poverty falls within my shadow Treasury brief. As the Minister has helpfully set out, the draft regulations provide for the fourth and final child poverty target for children in persistent poverty, alongside the targets already set out in primary legislation for relative poverty, absolute poverty and material deprivation and
low income. As the Minister explained, the Child Poverty Act 2010 required the Government to set out a fourth child poverty target, through regulations, by the end of 2014. We therefore support the Government’s finally bringing forward the necessary regulations to add this fourth and final child poverty target to the statute books.However, I did not recognise the figures that the Minister set out in her opening comments, which seemed to suggest that the Government are succeeding in tackling child poverty. Serious concerns have been raised on various occasions—most recently, yesterday—about the Government’s commitment to significantly reducing child poverty by 2020. It is a concern that the Government’s advisers on child poverty, the Social Mobility and Child Poverty Commission, have raised on a number of occasions. Responding to the Government’s latest child poverty strategy, the Commission was damning:
“The government’s approach falls far short of what is needed to reduce, yet alone end child poverty in our country.”
The Commission’s annual report for 2014, reporting on the Government’s progress to date, made for even more worrying reading. There is one sentence that perhaps best sums up the coalition Government’s progress to date. It said:
“The impact of welfare cuts and entrenched low pay will bite between now and 2020. Poverty is set to rise, not fall. We share the view of those experts who predict that 2020 will mark not the eradication of child poverty but the end of the first decade in recent history in which absolute child poverty increased.”
Michael Fabricant: I am rather pleased that the hon. Lady represents the Treasury brief for the Labour party. Although I do not claim that the situation is perfect— far from it; there is so much more to do—does she not agree that the aspirations cannot be reached unless we have a thriving economy? With the United Kingdom being the fastest growing economy in the G8, is it not the case that we are going in the right direction?
Catherine McKinnell: I appreciate the point that the hon. Gentleman makes and that he makes it in all sincerity. However, it depends on the type of economic recovery we are experiencing and whether it benefits the people we are talking about in Committee today. All the indicators so far suggest that the issue will not be tackled between now and 2020 and beyond. It is important to reflect on that. I will go into a little more detail about the specific issues that we need to address.
The Chair: Order. I think we need to return to the subject of the regulations.
Catherine McKinnell: I give way to my right hon. Friend the Member for Sheffield, Brightside and Hillsborough.
Mr Blunkett: I give way to the Chair’s wisdom. I do not want to fall foul of the Chair.
Catherine McKinnell: Thank you for keeping us on track, Mr Williams.
We know we can expect the number of children in absolute poverty to increase between now and 2020. The latest Institute for Fiscal Studies forecast for child poverty, published this week, shows that the number of
children in both absolute and relative poverty is expected to increase by between 700,000 and 900,000 between now and 2020. Those are serious figures. We cannot brush them under the carpet of a supposed economic recovery that really needs to benefit those children.Mr Stewart Jackson (Peterborough) (Con): Is the hon. Lady embarrassed by the fact that under the previous Labour Government the number of children in workless households doubled? We have reduced that by 600,000 in the past four years. Is she not showing a brass neck in the criticisms that she makes?
Catherine McKinnell: I do not recognise the figures that the hon. Gentleman cited, and he shows a strange attitude in a Committee that is focused on child poverty. The fact is that we know that more than two thirds of children living in poverty today are in working households, so the hon. Gentleman’s intervention is also not entirely relevant.
This week’s figures come after the latest statistics on households below average income were published in July, which showed that the number of children in relative poverty and material deprivation—the third measure that the Government have quite rightly introduced—had increased by 200,000 compared with a year earlier. On all child poverty measures, we see a worrying trend. Given that disappointing context, will the Minister tell the Committee exactly what the Government are going to do to meet the target that we are setting today? We seem to be quite wildly off track for the three targets that are already in place.
It might be helpful to reflect briefly on the recommendations of the Social Mobility and Child Poverty Commission’s latest report; I am sure that the Minister will wish to respond to the concerns that I am about to raise. The report identifies five key challenges that the Government must recognise to enable the UK to meet the 2020 challenge. They are that we must: bring down the deficit in a fair way and allow the Office for Budget Responsibility to monitor policies and their impact on child poverty; re-couple economic growth with earnings growth, which is the only way that we will earn our way out of the cost-of-living crisis currently faced by many families; devolve powers and funding to city and county regions to ensure that economic growth is tailored and driven locally; build more houses and take action in the private rented sector by making longer-term tenancies the norm for families with children; and tackle low pay and job insecurity through boosting the living wage. I would be interested to hear the Minister’s views on those challenges and proposals, which have been set down by the Government’s own child poverty commission.
We are present today to scrutinise the fourth and final part of what the Government’s child poverty experts call the 2020 challenge. Although the regulations are welcome because they cement the commitment of the previous Labour Government to tackle child poverty in all its forms, we appear further away than ever from meeting the goals. The challenges are clear, but the actions that the Government plan to take to overcome them are less clear. When she responds, I hope that the
Minister will recognise the challenge and reassure the Committee that the poverty target for which we are legislating will actually be met.9.12 am
Mr Nigel Evans (Ribble Valley) (Con): It is a pleasure to make a small contribution this morning, Mr Williams.
The shadow Minister was less charitable than she could have been. I do not see child poverty as a political football; we all wish to see it eradicated. Indeed, I think that making child poverty history unites every political party in the country. I sat on the International Development Committee for a couple of years. As I went around the world, one of the most moving things for any of us on that Committee was to see not just poverty, but abject poverty, the likes of which it is difficult to describe. It is easy for us to look at it, stare at it, and then walk away.
I remember being in a community in Bangladesh where, quite frankly, it seemed to me that things had not moved on much since mediaeval times. We had to travel to the community in a small boat. There was of course much interest from the people living there, who wanted to see what we were about. They were as interested in us as we were in them. I remember, as we got into the boat to go back to the coach that would take us to Dhaka, staring into the face of a young lad, and I could see a sense of hopelessness that moved me greatly. He was looking at me, and I was looking at him. He knew that I was going back to a good life, and I knew that he was going back to the squalor that he and his family had lived in for generations.
When we talk about poverty, clearly we talk about relative poverty—poverty relative to the rest of the people living in our community. I must say that I am proud that as a country we are doing our bit to tackle poverty in the rest of the world. When people say to me, “You should not be spending 0.7% of your budget abroad; you should be spending it on child poverty in this country,” I say, “Hold on. I believe that we have a duty and an obligation to help the very poorest in the world at the same time as we help the poorest in our country.” I am proud of the 0.7% target and I will fight for that argument at the next general election.
As far as child poverty in this country is concerned, I am proud of what we are doing. One of the most important things is breaking the cycle. There must hardly be anything worse for a child whose parents are not in work or not showing any interest in them than having their hope—the hope that I talked about in Bangladesh—removed from them, too. We must ensure that they are given hope. Getting a good education is vital for children, as is ensuring that they get food. The free school meals for all infants will give nourishment to youngsters. One thing that is great about the United Kingdom doing much better economically than a few years ago is that far more people are in employment and fewer are in unemployment. Indeed, the amount of money that people now get because of the rates of increase in the taxation threshold means that parents are keeping more of their own money to spend on their families. That is vital.
Another thing gets thrown at us from time to time: people say, “Look at the food banks. Isn’t it appalling that food banks exist?” We even have a food bank in Clitheroe, which, I have to say, is one of the most
relatively prosperous places in the United Kingdom. The fact is that the food bank in Clitheroe, which I visited last year, is doing a great job. We have always had some forms of poverty and crisis poverty in the United Kingdom. The fact that those people now have somewhere to turn is absolutely superb. What is also good about the food bank in Clitheroe is that, when too much food is contributed, it is redistributed to neighbouring areas that are poorer than Clitheroe. Some of that food goes to supporting families and youngsters in other parts of Lancashire, and that should be supported.I am delighted that food inflation is less than 1.5%. I can remember—I am sure that you can, Mr Williams—when inflation was 14% and the price of food in shops was higher one week than it was the week before. That must have been very unpredictable for families trying to budget for their children and the rest of the family. I believe that the Government are tackling child poverty on multiple levels. Everyone in this country can support that.
I talked about employment earlier. I represent a rural area—Ribble Valley—where unemployment is less than 1%. When we talk about these targets, it does not matter whether it is less than 7%. If there is just one child in poverty, that is one child too many. I want to thank the Minister, because it was her intervention and her Department that ensured that the employment centre in Clitheroe stayed open. That centre gives support to people living in rural areas, so that they do not have to travel further for the assistance they need to get into employment. I thank the Minister for that.
Mr Jackson: My hon. Friend might also mention something which has had a big impact in my constituency, where I have pockets of serious deprivation in some super output areas—the pupil premium. It is part of a coherent strategy to drive up educational attainment for children from the lower socio-economic groups whose families are perhaps not in work. That impact is very positive and is feeding through into those youngsters being able to get jobs.
The Chair: Order. That is beyond the scope of the regulations.
Mr Evans: I will not dwell on it, Mr Williams, but I will say that child poverty is being tackled on multiple levels. That is vital. My hon. Friend talked about pockets of deprivation. We have to recognise that, even in the most affluent areas, there may be families still living in poverty. Monitoring this is vital to ensure that no family is bypassed and that, where poverty exists, even in affluent areas, it is properly targeted and sufficient support is given.
I congratulate the Minister on her target and I want to give her further encouragement. I hope that when she comes back with new targets, the Government will continue their efforts to reach the time when we can say, “There is no child and no family living in poverty in this country.”
9.20 am
John Hemming (Birmingham, Yardley) (LD): When we consider the number—7, 5, 6, whatever it may be—we must think carefully about the range of different
families in society. I worry about families with children with disabilities. The Government produce a target to reduce absence from school, and Ofsted applies that to schools. I know of a case where parents were forced to take a child out of school because the absence levels were too high—the child was ill. The parents then could not work because they had to home-educate the child and they fell into child poverty. That is an unintended consequence of a strongly imposed target. We need to be sensitive and look behind the figures, and not simply say that the 7% are all the same. Behind that are families with disabilities. Parents might have disabilities and the children might be carers for the parents. We need to be subtle in how we deal with families, even when we are considering whether the number should be 5, 6, 7, 8, 9 or 10.9.21 am
Esther McVey: I thank my hon. Friend the Member for Ribble Valley for his contribution and observations not only on his constituency, but on the position nationally and internationally. He was right to mention the points that he raised. Food prices have fallen year on year. We have the lowest rate of food price inflation since 2002. The Government are helping and supporting young children. In September, we introduced a free school meal every day for all infants, and we are investing £100 million a year in Healthy Start schemes, so we are supporting young children and families. My hon. Friend raised key points. He is right to say—we would all agree—that any child in poverty is a child too many. We have to set out a coherent strategy. We have to work together within the 2010 Act and say, “How can we tackle this? How can we move forward and ensure that children have the best start?”
I also thank my hon. Friend the Member for Peterborough. He correctly brought up the pupil premium, which falls within this debate and which has done so much to break cycles and take people out of poverty. There are key things that an individual, a family and a child can do: get into work, not be part of a workless family, and have higher aspirations and attainment in education. The pupil premium goes to that. In my opening speech I said that good A-level grades for children on free school meals have increased by 7% since 2010.
Figures have bandied around by members of the Committee. Labour Members mentioned some pessimistic figures, but let us be clear. What is the truth? Relative child poverty is at its lowest level for 30 years; 300,000 fewer children are in relative poverty since the election; and 390,000 fewer children are growing up in workless families. We know that children are three times more likely to be in poverty if they grow up in a family where people are not in work, so the Government’s aim is to get the economy growing and to get people back into work. That is key to breaking the cycle of poverty.
Catherine McKinnell: I appreciate the Minister’s suggestion that we reflect on reality, but does she accept that, since 2011-12, relative poverty has stayed the same, because the wages of so many families throughout the country have been falling, and people are really struggling to make ends meet? Also, does she accept that two thirds of the children who live in poverty are in
working households? I hope that the Government will say something more reassuring about what they will do to tackle that issue.Esther McVey: The number of people in in-work poverty fell by 300,000 according to the most recent figures, so that is what we know. We also know that 600,000 fewer people are in relative poverty. There are 670,000 fewer workless households. There are 300,000 fewer children in relative poverty. Those are the figures, so we know what is happening. I know that Opposition Members do not particularly want to agree, because workless households doubled under Labour; unemployment went up under Labour. We know what we have had under this Government. Opposition Members have to understand that the figures that we are giving are independent figures. We know that we have created 1.7 million more jobs since the general election. Opposition Members were gloomy then. They said that 1 million more people would be unemployed. That was never the case.
Can we get back to what is happening and the targets that we have set out? We have set out targets that are coherent and consistent within the Child Poverty Act. We are looking at something that is both ambitious and consistent. That is why we have set the target today at 7%.
The hon. Member for Newcastle upon Tyne North talked about bringing down the deficit in a fair way. That is exactly what we are doing. We have brought the deficit down by one third. We are doing that in a fair way. We are talking about growth and earnings; we need both growth and earnings. Obviously, Opposition Members will be pleased to hear that wage growth has increased above inflation this month. If people have been in work for a year or more, wage inflation is up by 4%.
We are looking at devolved processes, but equally people need to know that 80% of the jobs that were created were outside London. We are looking at building
more houses. We are building more houses; we have put billions of pounds into building more houses. We look at low pay and at wages. We know that we have had the biggest increase in the minimum wage since 2008. It went up in October to £6.50.All the questions asked by the Opposition were about things that we are doing. Things are moving in the right direction.
Mr Blunkett: Will the Minister give way?
Esther McVey: I will not give way at the moment, thanks. Things are going in the right direction. In terms of the points that we raised about all forms of poverty, the figures are going in the right direction.
In conclusion, as I stated in my opening remarks, this Government are committed to tackling child poverty. We have a strong record. Relative child poverty is at its lowest level for 30 years. There are 300,000 fewer children in relative poverty since the election, and now there are 390,000 fewer children in workless families. We are especially committed to tackling persistent poverty and breaking the cycle that sees poor children grow up to be poor adults.
Mr Blunkett: Will the right hon. Lady give way so that I can congratulate her?
Esther McVey: I will not, but I thank the right hon. Gentleman for the kind offer.
That is why I am proud to present these regulations, setting out an ambitious target of 7% and so meeting our obligations in the Child Poverty Act. I commend the regulations to the Committee.
That the Committee has considered the draft Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014.