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19 Jan 2010 : Column GC119

19 Jan 2010 : Column GC119

Grand Committee

Tuesday, 19 January 2010.

Arrangement of Business


3.30 pm

The Deputy Chairman of Committees (Viscount Ullswater): My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Child Poverty Bill

Bill Main Page
Copy of the Bill
Explanatory Notes

Committee (1st Day)

3.31 pm

Amendment 1

Moved by Lord Freud

1: Before Clause 1, insert the following new Clause-

"2010 child poverty target

(1) The Secretary of State must, before the end of the period of three months beginning with the day on which this Act is passed, publish and lay before Parliament a report setting out an assessment of progress made towards meeting the 2010 target.

(2) The 2010 target is that in the financial year beginning with 1 April 2010, fewer than 1.7 million children live in households that fall within the relevant income group as defined by section 2(2)."

Lord Freud: My Lords, the amendment gives us the opportunity to investigate thoroughly the issues surrounding the target in real time, so to speak. It is a genuine mystery why we are likely to fail to reach the 2010-11 target. There was a mysterious turnaround in performance in approaching the child poverty targets in 2004, despite a remarkable boom. The figures show that when this Government came into office in 1997-I am using 1997-98 as the base year-there were, depending on whether you are considering the before housing costs or the after housing costs, either 3.4 million or 4.2 million children in households below the poverty line, which is defined as below 60 per cent of the median income.

In the turnaround year of 2004-05, which was the best year of performance, the figures had fallen to 2.7 million or 3.6 million, depending on whether you are considering the before or after housing costs. I know that there are estimates for what may or may not have happened subsequently, which clearly we can discuss, but the actual figures for 2007-08 show that the number had risen again to 2.9 million on the before housing costs and 4 million on the after housing costs. In the discrepancy between the before and after, you can see the strain caused by the housing boom in that period, because the increase in child poverty since the low point-the good point-of 2004 is roughly double on the after housing cost basis what it is on the before housing cost basis.

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None of the explanations that I have heard so far-we rehearsed some of them at Second Reading-are satisfactory, especially as we are not talking about a relative phenomenon or a move relative to the median. This is not a statistical quirk. If we hold the definition of poverty steady-in other words, if we use the absolute definition of poverty, not the relative one-we see that the number of children in poor households grew by 200,000 after housing costs since that good year of 2004. At best, it only held flat on the before housing cost figure. Indeed, when you look at the before housing cost figure, you see that the numbers below 50 per cent of the median went up by 100,000, which means that the very poorest have done considerably worse since the turning point. It is not surprising that the Rowntree trust warned in its report Monitoring Poverty and Social Exclusion 2009:

"At this rate of progress, it would take until the 2050s to halve child poverty".

That is a worrying statement, given that we had a fantastic boom in the last decade. It is vital for the sake of this Bill that we understand these trends properly. As the Spanish poet George Santayana famously said:

"Those who cannot learn from history are doomed to repeat it".

In another place, Stephen Timms admitted that the Government had got only two-thirds of the way towards their target. This was said in Committee, before other policy initiatives were announced. I should add, to reinforce the importance of this, that he went on to say:

"The arrangement that the Bill sets out is significantly more demanding for the coming decade than arrangements that have been in place over the past 10 years".-[Official Report, Commons, Child Poverty Bill Committee, 20/10/09; col. 8.]

The target was ambitious, but the Government badly failed to meet it in a good economic climate.

Some major questions need answering when you start to look at the statistics. There was a reduction in relative poverty among children in workless households but not in working households. How much of the poverty has been caused by income transfers as opposed to tackling the causes of poverty? For instance, we do not have a full assessment of the effect of the removal of the 10p tax rate and the measures to compensate the people who were affected by it. It would be immensely valuable to have a proper report of this period.

This would also give us a dry run in assessing the significance of statutory targets in this context. In particular, it would give us a genuine check on what such a measure as Clause 15 in this Bill really stands for. Clause 15 says that the Secretary of State must take into account the,

The clause is immensely significant, given the history of statutory targets. Let me take the example of the fuel poverty target in the Warm Homes and Energy Conservation Act 2000. When that was taken to court in a process of judicial review, the Government were able to plead successfully that resources were not available. Clause 15 seems to have the same effect,

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allowing the Government of the day to argue that the money was not available. Indeed, Stephen Timms explicitly told the Committee that,

It is not very encouraging, then, that he forecast that there would be a further decade of what he delicately called "consolidation", which was a reference to the progress of the economy. He also confirmed that there would not be a carve-out of the obligations under this Bill from those of the Fiscal Responsibility Bill. Let us find out soon whether we have a Bill that means something or is purely declamatory.

The risk being run is that this Bill is interpreted as being either a diversionary tactic or a poisoned pill. It could be argued that it is diversionary in that this Government have failed to succeed in the benign conditions that have prevailed in the past decade and have therefore stopped looking at that and have lifted their eyes and our eyes to the distant horizon. The Bill can be accused of being a poisoned pill because it provides an opportunity for whoever is the Opposition to lambast whatever Government are in power for not making further progress in very difficult conditions while avoiding taking responsibility for the current Government's time in power. I am not accusing the Government of these unworthy sentiments; I am warning that opposition to this amendment will make them seem that they are being manipulative in this way.

Therefore, the proposal is that we use a formal report as a tool to understand what the real challenge is, we avoid the accusation that this Government are unworthily using diversionary tactics and we understand what a statutory target really means in the real world. If this Bill fails to stand up in the real world, which I fear it might as it is currently drafted, at least the next Government will know that they will need to tackle the problem in another way. I beg to move.

Baroness Thomas of Winchester: My Lords, I shall be brief. We support this amendment to mandate the Secretary of State to make a report setting out an assessment of progress towards meeting the 2010 target. Such a report should focus minds on the scale of the task towards meeting the 2020 goal. As the noble Lord, Lord Freud, has said, for most of the past 10 years the economy has been healthy, but we are still a very long way from meeting the halfway target on child poverty and this will get even harder in the next five years or so when belts will have to be tightened.

Although it is not strictly relevant to this amendment, I particularly welcome the government amendment that we shall reach next week and which was announced in the Pre-Budget Report. It proposes an extension of the entitlement to free school lunches and milk for primary school children whose parents are on working tax credits and an increase in child benefit this year over and above indexation.

The Earl of Listowel: My Lords, I seek reassurance from the Minister on a point that the noble Lord, Lord Freud, raised with regard to a concern that we

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might be promoting income transfers as opposed to tackling the roots of poverty. One questions, for instance, whether one might be diverting money towards supporting families on benefits, as important as that is, which could be spent on ensuring that there are more and better-quality social workers. We could spend the money on ensuring that there are more foster carers, because the number that we have and retaining them are so dependent on the fact that they have good social workers to support them. Alternatively, we could spend the money on our teachers and ensure that there is better sex and relationship education in schools, thereby reducing the rates of teenage pregnancy and ensuring that families prosper and children are taken out of poverty in that way. I am sure that we will come back to this debate. However, I would be grateful if the Minister would offer reassurance that other important objectives will not be lost in the narrow pursuit of the important targets that we are discussing today.

3.45 pm

Lord Eames: My Lords, perhaps I may raise a further, possibly technical question in the discussion on the amendment. It concerns the incorporation in the proposed legislation of the Assembly of Northern Ireland and the Scottish Parliament. My question-raised also by the noble Lord, Lord Freud-concerns the definition of the target that will be set. Will the Minister assure me that, in the process of reaching the target and assessing whether the United Kingdom as a whole has reached the target, due attention will be paid to a uniform definition of how the devolved authorities in the two areas that I mentioned provide information that will go towards the UK target as a whole?

I raise this because in Northern Ireland, as many noble Lords know, there are sensitive political issues surrounding the definition of poverty that is used from time to time. For example, the issue of free meals is politically sensitive. Any noble Lords who know Northern Ireland will realise that this is a sensitive issue. I would not like a Bill that I certainly support to suffer in its implementation because of a lack of clarity on how the various definitions were arrived at to measure the reaching or not reaching of the overall United Kingdom target. I hope that my question is relevant.

Baroness Afshar: My Lords, perhaps I may add that, particularly in areas with dense immigration and population, the level of poverty is such that there is always a tendency to divert resources from one good provision to another. Therefore, if new provisions are made-and I very much hope that they will be-existing provisions must not be threatened by trying to move the same money around various provisions.

The Parliamentary Under-Secretary of State, Department for Communities and Local Government & Department for Work and Pensions (Lord McKenzie of Luton): My Lords, this is a good way to start our deliberations. The aim of the Bill is to drive the long-term sustainable eradication of child poverty, ensuring that tackling child poverty is a priority for everyone. This requires us to make continued progress

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in tackling child poverty. We are, and will continue to be, held to account on the goal of halving child poverty to 1.7 million children by 2010, but the Bill is predominantly about ensuring that we do not lose sight of the long-term goal. It increases the accountability of the Government for their child poverty goals. It sets out a rigorous process of reporting and accountability that will hold the Government to account. In addition, the Child Poverty Commission will provide valuable expertise and advice to feed into the reports and the strategies on progress. The Bill does not weaken our commitment to tackling child poverty; it strengthens it.

The amendment would require the Secretary of State to publish a report within three months of Royal Assent on progress towards the 2010 child poverty target of fewer than 1.7 million children in qualifying households living below the 60 per cent median income threshold. I will explain why the amendment is unnecessary and in fact problematic. First, a report published this year would not provide the definitive statement that noble Lords are looking for on whether the 2010 target will be met, because the data for assessing this will not be available until the HBAI statistics are published in 2012. A report published within three months of Royal Assent would not capture, for example, the impact of the raft of measures introduced since the 2007 Budget that we expect will lift around a further 550,000 children out of poverty.

The report would also fail to take into account any measures that may be taken later this year in, for example, a forthcoming Budget or, although we do not anticipate this, an early Budget after the general election. As such, the report demanded by noble Lords would fail to provide an accurate assessment of progress towards the 2010 target and I do not see any particular value in it. However, I would like to reassure noble Lords that the latest child poverty data, for 2008-09, will be made available through the annual publication of the HBAI dataset. Progress against the 2010 target will be evident from that publication, although, as I have just said, this statement will be for 2008-09 and so will not take into account the measures that we put in place in the most recent Budget and the Pre-Budget Report.

Finally, there is a practical problem in requiring that a report be published within three months of Royal Assent, as this could fall in the period during a general election, when, obviously, we will be away from the scene for a month.

However, I support the noble Lord's desire to boost transparency in reporting on progress against child poverty targets. Indeed, these are two cornerstones of the Bill. Clause 8 requires the Secretary of State to publish a strategy setting out the measures that will be taken to meet the four child poverty targets in Clauses 2 to 5. To ensure that the Secretary of State reports on the progress in tackling child poverty, Clause 13 requires the Secretary of State to produce and lay before Parliament an annual progress report setting out the progress that has been made in tackling child poverty. Subsection (1)(a) of the clause requires that annual reports report progress against each of the targets, which is exactly what noble Lords are seeking. That will come, with full information and all the appropriate data, but it

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cannot be delivered within three months of Royal Assent. The first strategy must be laid within 12 months of Royal Assent and the final report within a year of the anniversary of the publication of the strategy.

Perhaps I may pick up on some of the additional points that noble Lords have made. The noble Lord, Lord Freud, suggested that the Bill is either a diversionary tactic or a poison pill, although I am not sure why we would want to poison ourselves. However, I assure the noble Lord and others that this is nothing to do with diversionary tactics. This is building on the progress that the Government have made to date in tackling child poverty and setting out a means of moving forward so that we can meet the targets set out in the Bill by 2020.

The noble Lord suggested that a mysterious turnaround or cataclysmic event took place in 2004 which changed the progress that we had been making. He spoke of mysterious trends and said that it was vital to understand them. To understand the trends and what is happening, we need to unpick and analyse the data. There is nothing mysterious about that, because there are a number of components.

For example, the Institute for Fiscal Studies report Poverty and Inequality in the UK, published in 2009, points out that some of the changes were not statistically significant. It states in respect of the decomposition of the change in child poverty from 2004-05 to 2007-08 that it can help to tell us why child poverty has risen, but it should be pointed out that the overall rise in child poverty before housing costs was not statistically different from zero. The report unpicks various components and states that the rise in child poverty is due to incidence effects: an increased risk of poverty for particular family types, with changes in the composition of families, a decline in worklessness among lone parents and increases in the number of couples in full-time work acting by themselves to reduce poverty.

However, other factors need to be taken into account. We need to look at the increase in benefits in relation to the dynamics of inflation and we need to take into account the fact that, over a part of this period, employment levels stayed relatively even. For part of the period, real earnings growth was below inflation. It was also a period when price increases obtained, particularly in food, fuel and energy. To say that somehow we cannot understand what is happening is some way from reality, but we need to unpick the position.

This is not just about income transfer, to deal with the point made by the noble Earl, Lord Listowel. Of course income transfers and income are part of tackling poverty, but they are just part of the equation. The key part of the Bill is the requirement to bring forward strategies to address the causes of poverty, better to understand what is happening and the dynamics. A key part of that is not only the engagement of local authorities, which is covered in Part 2, but drilling down on delivery across a whole range of building blocks. That is crucial to our making further progress.

The noble and right reverend Lord, Lord Eames, asked about Northern Ireland and the devolved Administrations. The targets will be set in the Bill,

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with the exception of the persistent poverty target, which is subject to regulation in due course because of the survey arrangements, and they apply to England, Scotland, Wales and Northern Ireland. The devolved Administrations are required to have strategies setting out how they will contribute to the UK targets. How free meals are dealt with is an issue about how income is defined in the surveys. That definition will be common right across the UK. I hope that that has helped the noble and right reverend Lord.

At Second Reading, an issue about some of the survey information was raised by the noble Baroness, Lady Blood. There are issues about sample sizes and being able to particularise some components to areas, regions and countries, but the targets will be set in the Bill and will be common throughout the UK. The surveys from which the data are derived will have common definitions of things such as income. I hope that that deals with that point.

I think that what I have set down about what would flow from the Bill in terms of reporting requirements should meet what the noble Baroness, Lady Thomas, seeks. I urge noble Lords not to focus on something that would be rammed through in three months' time, because I do not believe that that would genuinely provide the information and analysis that are appropriate for noble Lords.

I conclude by responding further to the noble Lord, Lord Freud, especially on his question of whether this is a diversionary tactic. We know that it will be challenging to meet the 2010 target. The current economic situation-although we now look to be on the mend-has implications that we perhaps do not yet fully understand. I do not know whether the report in Financial Timestoday is correct, but it suggested that the noble Lord's party would seek to bring forward a manifesto that effectively watered down the Government's commitment to ending child poverty by having a whole array of targets, so that it would be hard to identify or measure any progress. If that is the noble Lord's intent, I would be very interested to hear from him. I would certainly be interested to hear any denial that he may wish to make on that, because that is the backdrop to our discussion of the Bill. If we are trying to undermine and pick away at the bases of the targets, that is the context in which we will debate these matters, although I do not think that that would be the best and most productive use of this opportunity.

This is an important Bill, because it is about being clear about a range of targets, each of which has to be met, but it also recognises that it is not only about income and that a whole raft of things impact on poverty. The development of the strategies and the monitoring that will underpin them going forward represent the way in which we as a country can make real progress. On that basis, I hope that the noble Lord will not seek to press his amendment.

4 pm

Lord Northbourne: Earlier in the discourse we heard about data being produced on child poverty. Are those simply household income data? Is the Minister suggesting that household income is the same thing as child poverty?

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Lord McKenzie of Luton: Issues around the definition of poverty, hardship and material deprivation are interesting points and doubtless we will cover them during our deliberations. Four targets are set down in the Bill, three of which are entirely income-related. There is the persistent poverty target, which looks at a collection of periods during which, on an income measure, people are treated as being in poverty. Then there are the absolute low-income target and the relative low-income target, but there is also the combined low-income and material deprivation target, which looks at wider factors.

I stress, though, that that is only the issue of measurement and targets, which has to sit alongside the requirements under the Bill to bring forward strategies to tackle socio-economic disadvantage for every child in the UK. That is a core part of the Bill, involving local authorities. If it were only about targets and nothing else, it would not be the right way to proceed-I am sure that we would have agreement on that. It is more fundamental than that, though; we will come on to this in subsequent deliberations, but it is about issues around the family, worklessness, health and educational opportunities as well.

Lord Northbourne: My question is whether the data that will be published in three years' time will include information about all the other things that the Minister has spoken about, on which I entirely agree with him.

Lord McKenzie of Luton: My Lords, the data specifically referred to in the Bill will be the income-related targets plus material deprivation. Those are built on the household below average income data, which are issued as a national-statistics-type routine publication. That includes a lot of data other than just the specific targets that will be included in the Bill. Alongside that, a whole raft of measurement goes on routinely across the Government at the moment. We have a whole raft of PSA targets touching on education, homelessness, worklessness and many other issues. That is a routine part of government. Those data are all in the public domain and will help to inform the strategies. There has to be a report on progress against those strategies and, when the data are brought forward, we will build on and use them. They are not just income-related data; they are much broader than that across government. The targets that are to be met are those four specific, mainly income-related targets, but including the crucial one of material deprivation.

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