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Despite all of the Government’s efforts—and I will come in a minute to what the noble Lord, Lord Haskel, was saying—in many areas their policies are, unfortunately, not really working. I want to inject that note into the debate and to identify and look at whether the policies are working and to support the very constructive tone of the debate. Our aims are all the same, but after 11 years of Labour government we need to take a long, hard look at which policies are working, and for whom, and which are not.

Like the noble Lord, Lord Haskel, these Benches reject protectionism—he is right about that—and like him we say that there are limits to the market. The climate in this country is changing fast. It is important that we all accept and understand that. The culture of greed, the bonus culture in the City and the idea that one should not talk about social justice are changing fast. We should all be aware how fast that climate is changing.

I thank the noble Lord, Lord Bilston, for introducing the debate. He may not remember, and I am sure he will not—but I do—that 35 years ago, when he was just Dennis Turner, he beat me for the nomination for Halesowen and Stourbridge. Perhaps he does remember that. I think that I had three nominations. He may not have had so many but he did better and very nearly won the seat. He then went on to win Wolverhampton South East, formerly Bilston, on which I congratulate him, which he represented for many years, and about which he spoke movingly.

After 11 years of Labour government, more than 9 million people of working age are unemployed or receiving benefit. More than 2.5 million of them are on incapacity benefit, of whom more than a million suffer from mental health problems. That figure has risen dramatically since 1979, when it stood at only 800,000. That is not a party point as successive Governments, both Labour and Conservative, have used incapacity benefit to hide unemployment. Although there is now broad consensus that that is wrong, we are dealing with a legacy of very long-term under- investment in people.

We believe that work is good for most people. It is the best route out of poverty and provides benefits in terms of confidence and mental well-being. But people trapped in long-term inactivity, many of them in areas and regions of deep-seated deprivation and economic decline, as I said, need a helping hand into work, not a kick in the teeth when they are down. I am afraid that is the risk with the way in which, from time to time, the Government present their programme to get people off incapacity benefit. By chasing cheap headlines in the Tory tabloids, they make people without jobs defensive and fearful that their meagre benefits will be cut, instead of encouraging them to engage constructively and take up the help on offer. By playing fast and loose with ministerial undertakings—I am afraid that I have to say this—given during the passage of the Welfare Reform Act, they are in danger of getting a good policy a bad name.



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As well as focusing on the evidence of persistent regional deprivation, I also want to talk about aspects of the alarm call in the report of the Merits of Statutory Instruments Committee on the Employment and Support Allowance Regulations, published last week, which stated:

Your Lordships will know that is Merits of Statutory Instruments Committee-ese for showing the DWP the yellow card.

The report also stated that,

I do not propose to ask the Minister to comment on each of the bodies individually but I am sure that he will respond generally to the points that we make.

These organisations—the Disability Benefits Consortium, the citizens advice bureau, the Child Poverty Action Group and the Disability Alliance—have written in and make the very effective and powerful points. Their main point is that the ESA rate for single people of £89.50 does not exceed the current rate of incapacity benefit, contrary to government undertakings given during the course of the Bill, and earned income and tax may have a perverse effect on a benefit designed to help people back into work. They are also worried about the potentially negative effect of these changes on households which include children, and restrictions on disabled students pursuing a course of study.

The Government say that they do not accept that the rates which have been announced are incompatible with Statements made to Parliament:

Those are weasel words if ever I heard any and the Disability Benefits Consortium’s letter makes that point. It says:

The Disability Benefits Consortium thinks that up to 40,000 children could be affected by a fall in income from the family from these changes and that that is completely contrary to the Government’s commitment to eradicate child poverty. To quote the noble Lord, Lord McKenzie:

As I have already stated, the figures do not seem to back that up. The consortium also says:

On passported benefits, the consortium says:

It adds.

The CAB is equally concerned. It focuses on passported benefits—and there is obviously a more general problem with the benefits system on the complex nature of means-testing—and points out:

So that is a separate means test, making the claiming process for this group of low-income, disabled people much more difficult than necessary. It concludes:

The CAB is at the sharp end and has to deal with the problem on the ground.

Finally, the Child Poverty Action Group, which again is very close to the action, if I can put it like that,

Those are detailed but important points and, as I said, there is a great danger that a good policy will get a bad name unless these very real concerns from very reputable organisations are seriously addressed.

I turn now to the regional dimension and the persistence of unemployment, on which I touched previously. We have obviously talked a little bit about how incapacity benefit is a form of hidden unemployment but it is also quite interesting to look at the actual published unemployment rates over the past 11 years. In general, there has been a very worthwhile fall, but the problem is it has not been equal throughout the country. The 10 constituencies that have the highest unemployment rates are Birmingham Ladywood, Birmingham Sparkwood, Liverpool Riverside, Birmingham Hodge Hill, Manchester Central, Liverpool Walton, Leeds Central, Middlesbrough, Bethnal Green and Bow and Birmingham Erdington; and the pattern is continued lower down. Those with the highest unemployment rates today are also the ones where the fall in unemployment since Labour came to power has been the lowest. In every single one of those constituencies, the fall in unemployment has been less than the national average over the past 11 years.

I give just one further example. I thought I would look at the former constituency of the noble Lord, Lord Bilston, about which he spoke so movingly. Wolverhampton South East, where unemployment is now 13th highest in the country, was 577th in the league table of how fast unemployment has fallen

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since Labour came to power. The places with the biggest problems, which are the Labour heartlands, are the places that have suffered the least improvement. That must be a very worrying pattern.

I touched on the index of multiple deprivation briefly in response to the right reverend Prelate. We had one in 2004 and one in 2007. The index of deprived areas is a multiple deprivation measure. The two key points are income and employment deprivation, which are obviously related. They account for about half the definition. The problem, again, is persistent and concentrated deprivation in certain regions. Both in 2004 and 2007, no fewer than 46 out of the 50 most deprived areas were in the three regions of the north-west, Yorkshire and the Humber and the north-east, with a very heavy concentration in the north-west. That is not changing. Again, if one looks at the unemployment figures at the other end—the places where the improvement has been fastest—one sees that they are constituencies such as Boris’s and Dave’s, if I can put it that way, which are Henley and Witney. The rich areas and the Home Counties have had the fastest improvement. It has been unfortunate that, while overall there has been some progress particularly on child poverty, it has not been getting through to the areas that really need it and the areas that really matter.

I do not propose to go into the 10p tax mistake today, although the noble Lord touched on it. It was not a reduction; I do not think that a 10p tax rate is the very best way to help people out of poverty. Our position is that that should not be changed unless and until measures have been taken particularly to increase the tax thresholds and to take more people out of tax altogether at the bottom. That is the right way to do it. I suppose that I had better ask the noble Lord, since the architect of new Labour has very helpfully made the point today, whether he agrees that scrapping the 10p starting rate in tax was a big mistake.

It is not surprising that the problems or disillusionment that we saw last week were most striking in what I call the Labour heartlands. We understand why they feel let down. From the statistics that we have seen, and from the points that the noble Lord, Lord Bilston, made, we can see that, for all the good intentions, achievement has lagged well behind that in the poorest regions of our country. I look forward very much to hearing what the Minister has to say, not just on the individual initiatives, but in particular on how they can be linked to long-term investment in our regions. It is much more about regional policy. It is no good telling people to stop shirking and start working if they live in places where there are very few worthwhile jobs within reach. Somehow, that form of joined-up government really needs to start.

3.59 pm

Lord Skelmersdale: My Lords, as the noble Lord, Lord Haskel, remarked towards the beginning of this very short but very valuable debate, this is the third debate on poverty in two months. I congratulate the noble Lord, Lord Bilston, on achieving it, not least because, if the debate of the most reverend Primate the Archbishop of Canterbury, for which alas I was absent, showed nothing else, it showed that the

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Government would do well to concentrate on the reasons why there are so many people, and therefore children, in our society in poverty, rather than pouring out ever-increasing amounts of money which go only to paper over a dismal set of statistics—statistics, which in this case mean people.

Putting people first, the number living in severe poverty defined as less than 40 per cent of the median income has risen by 600,000 since 1997. If you measure this after housing costs the situation is even worse: alongside the low unemployment figures mentioned by the noble Lord, Lord Bilston, those in severe poverty stand at the highest level for the same period, 30 years, at 5.2 million people or 8.7 per cent of the population. The Minister may dispute this—I have no doubt that he will try—but those figures are based on his department’s own data.

As was pointed out in previous debates, the average income of the poorest 10 per cent is lower than it was in 2001, which one can set against the fact that the average incomes of the richest 10 per cent have risen by more than £2,000 a year. Even the Prime Minister’s Strategy Unit has been forced to admit in Strategic Priorities for the UK in 2006 that,

You can say that again.

It is axiomatic that poorer parents mean poorer children, and the Government are right to seek to eliminate child poverty by 2020, and to halve it by 2010. To make this meaningful you have to define your terms, which is one of the few things I remember from my economics lessons all those years ago. The Government define poverty as households having less than 60 per cent of the median income, adjusting for family size. After falling for several years, child poverty, on this basis, it is now rising, last year by 100,000. As I pointed out in the first debate in this series, it is hardly surprising that when income is rising, so does the poverty level, so the Government are working with one hand tied behind their back. Perhaps the Government expect median income to fall. No, I am not being serious, but I am serious in saying that tackling poverty is the duty of any and every Government.

It was not helpful in this context for the Prime Minister to say on the “Today” programme on 30 April:

Only yesterday at PMQs this was translated to, “We have taken 1 million children out of poverty”.

Using the definition that the Government use and I have just described, I should have thought that the true figures are that, as of today, 600,000 have been lifted out of poverty since 1998-99. Will the Minister take this opportunity to clear up what I hope from his point of view is a confusion in my mind?

However, pouring money into the system is only a stop gap. As the median wage increases, so more and more money is required. It is all very well as a start to do what the Chancellor committed the Government to do in his recent budget, to which I referred late last night. I will not repeat that reference except to say that it was extremely generous but helpful to meeting the

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target that from October 2009 child benefit will be disregarded in calculating income for housing and council tax benefit. I applaud that as I did last night.

The Chancellor also wants to be innovative in the approach to increasing parental employment and raising incomes and is initiating pilots to look for solutions to the problem. Pilots are all very well when one has no idea what might happen, but in this case there is an existing formulation. There is no need to reinvent the wheel. The Government already subcontract job finding for difficult-to-place people from job centres to charities, which is having some success in places such as Brixham, for example. The problem is though that these contracts are not long enough and are paid for in rather strange lumps. In a debate some time ago the Minister said that he would look into this and come back to me. It may be that my memory is at fault, but I cannot recall him ever doing so. I do not want to dilate, like the noble Lord, Lord Oakeshott, on the fallout from the Welfare Reform Bill, but I will happily repeat, as I said several times during consideration of that Bill, that it was a sensible and well intentioned measure, because work is certainly the best way that I know out of impoverishment.

Returning to the wider aspects of this debate, there is much more that could and should be done to take people out of poverty. The risk has hardly changed since 1997 for children in two-parent families, and actually rose last year from 21 per cent to 23 per cent. The Government should take responsibility for that and propose solutions. Even worse, poverty among working-age adults rose by some 700,000 last year to 7.2 million and has risen overall since 1997. What are the Government doing to address that horrendous situation?

Unless the Minister wishes to dispute my figures, he and I—at least, I hope that it is he and I, not just I—await this year’s report, Households Below Average Income, which should have come out in March, but was subsequently due to come out last Thursday—presumably because it would be a good day to bury bad news. Ministers in another place have now told my honourable friends that the statistics will not come out until June. Why, for goodness’ sake?

Unlike the noble Lord, Lord Oakeshott, I believe that the answer to poverty lies at the input end of the equation, rather than the output end. I agree with the right reverend Prelate the Bishop of Liverpool that much of this should be tackled locally, but it is the Government who set the parameters most of the time for local activity. Why is it, for example, that parenting skills are getting less and less from generation to generation? I am all for teaching parenting in schools, but on the evidence that I have, which I admit is flimsy, it is not yet working. I am sure that other noble Lords with better knowledge of education than mine would be able to correct me if I am wrong.

What are the Government doing to raise the aspirations of young people? I agree with the noble Lord, Lord Haskell, that they should recognise that educational failure begins at an early age. Teaching reading using synthetic phonics in the past helped all children to read more quickly and helped those from poorer backgrounds most of all—closing the attainment gap.

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But that method has largely disappeared. Teaching should encompass standards, literacy, reading, mathematics and, above all, discipline. Here, government diktat means that teachers are trying to operate in handcuffs. This must stop.

I think that the Government approve of new academies but are a little blinkered on them. Academies ought to be financed and run not only by philanthropists and teachers, but by educational charities, companies, even trade unions and parents—and they should be open to all within the system. The academies should be targeted at the poorest pupils through a pupil premium. That is done in schools like Millfield, so why should it not be done in the state sector?

Even the pupil most unconnected with education has a small spark of interest in something—it may be games, computers, racing cars or even my favourite subject, bridge. I do not know and it does not matter. Education should bring such interests to the fore, otherwise teachers are just trying unsuccessfully to cram facts into children, which I like to call “inducation”.

Why not make sure that prisoners are better educated? I do not know the figures, but a lot of people in prison are illiterate and know no simple maths. Why not make the Prison Service responsible for reducing the rate of prisoners’ reoffending? Why not bring the two stages of prison and probation closer together? Should not the market in offender management be available to many more organisations outside the state sector? At the end of the day, however, people need money to survive, and state money should be a temporary leg-up, not a long-term support service—except, of course, for the severely disabled.

We need to tackle the high cost of credit in the doorstep lending sector. One way of doing that would be by teaching financial literacy to all 11 to 18 year-olds. As the Financial Services Authority has found, the average person could gain up to £700 a year by making better financial decisions. It goes without saying that this would have a disproportionate effect on the poorest in society.

I have a dream, which I hope can be fulfilled in my lifetime. Every time a salesman says, “Of course you can afford it, it is only 5 per cent”, the automatic response is, “Yes, but what is the APR?”, and the person who asks that question understands the answer. I should also like to see credit card companies giving much clearer information to the public about the cost of credit card debt.

We all know that bad health and poverty go together. The Minister should talk to his noble friend Lord Darzi about his proposal for super-sized GPs’ surgeries. Does this not mean fewer surgeries overall, and how will that help?

I conclude that, although there is much more to tackling poverty than the world of work, the noble Lord, Lord Bilston, has done the House a great service by raising the subject this afternoon.

4.10 pm
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