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The Earl of Listowel: My Lords, I am grateful to the Minister for his reply to my specific questions. I look forward to our debates on Clauses 8 and 13. To follow up on the point made by my noble friend Lady Afshar, although I think that the Minister was more or less answering it in what he said to me, it is a matter of concern that the many good projects working in communities, to which good people are recruited, find themselves on two-year or three-year contracts and unfortunately are told, "We don't know whether you will be working next year. You've shown huge commitment and built relationships with vulnerable adults and young people, but we don't know whether we can employ you". Is there any way that the Government

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will be able to monitor, as this is being implemented, whether funds are being diverted to financial income objectives to the detriment of important interventions of that kind? Perhaps that would be difficult. I am sure that we will hear more about this.

Lord McKenzie of Luton: I am grateful to the noble Earl for prompting me and I give my apologies to the noble Baroness for not dealing with this point earlier. I could not give an assurance in those terms; I do not think that any Minister could. It depends on the next comprehensive spending assessment and on how we move forward with the Fiscal Responsibility Bill, which is not inconsistent with the provisions of this Bill.

Three-year funding for local authorities has been a positive development under this Government. Previously, it was very much more hand to mouth, year by year. However, I recognise the point made by the noble Earl. What is increasingly happening at local authority level is the removal of ring-fenced funding-the Supporting People programme is one example. Removing ring-fencing provides local authorities with greater discretion and the opportunity to innovate on how they deploy their funds. There are interesting pilots called Total Place, which are trying to get to grips with the multiplicity of funding streams going to individual locations to see what better use can be made of those funds. There is one project in my own patch in Luton, so I am close to that. Those opportunities will help to address the concerns of the noble Baroness, which the noble Earl reiterated. However, there is no way that one could guarantee that current levels of funding, in all respects on every programme, would continue as at present.

Perhaps I may use this opportunity to pick up on the point raised by the noble Lord, Lord Freud, about Clause 15. To be clear, the duty to meet the targets is absolute and is not affected by that clause, which simply requires the strategy to meet the 2020 target to take into account the broader economic context. It is about ensuring that the Government meet the targets in a sustainable way that delivers value for money. That can only be sensible and it is the responsible thing to do.

Lord Kirkwood of Kirkhope: Perhaps I may respond to the Minister's speech, because he misses the point. Although I would not have worded it in this way, and I am not thirled to a three-month timetable, the amendment's value is that it provides an opportunity to reflect on the policy experience of the past 10 years. The noble Lord, Lord Freud, raised some interesting policy questions, which deserve examination. The obvious answer as to why there was a dip in momentum in this whole policy area after 2004-05 was that the Government stopped spending money on it. There was a vast improvement after child tax credits were introduced and the whole tax credit initiative was undertaken. You can argue for a long time over whether or not that was effective or organised, but there was a major boost over what went previously.

My question, which may be slightly different from that of the noble Lord, Lord Freud, is why that momentum did not continue. There was a big step up and people such as Donald Hirsch would say that you

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could see the difference that it made. Why did the Government then turn away from deploying what appeared to be an effective set of policies? I do not know the answer, but it is hard to argue that the resources were not available. That is another important point that the noble Lord, Lord Freud, is making. What we are all facing-Lisa Harker said this in her report-is that the next 10 years will be even harder, because we do not have the resources that we have had for the past 10 years.

Someone needs to sit down and think carefully about the active labour markets and where the policy fits in of work for those who can and security for those who cannot. What did it do? What did it not do? What could have been done better? They should examine the uprating policy. In the other place, every Select Committee inquiry on this area-I was responsible for two or three of them-found that, if you uprate on the basis of the retail prices index while the rest of the world is organised on the basis of an increase in earnings, year on year people will inexorably slip further and further behind. That will happen for the next 10 years, starting from where we are right now, unless something is done about it.

The point of the amendment is that someone needs to assess the Bill soon after it is passed-as I said, it might take more than three months. I do not know whether the Bill is a diversionary tactic, but it is a process Bill. There is nothing in it that by itself will make anyone any richer. That is a frustration that I think the Committee will find. We all want to get our jackets off and get stuck in to what will actually make a difference. All that the Bill gives us is a process. It is viable as far as it goes, but there is nothing new in it, except extending the responsibility to local authorities and to the constituent nations of the United Kingdom, which is valuable, although they may think that it is a graveyard pass, because they will get sucked into responsibility for not meeting the targets so that the blame can be shared. That is how they see it; they may be wrong, but that is how they see it.

The amendment has value. The Child Poverty Commission is not the right body to do this job. If we are to give proper consideration to everything that has gone on heretofore to learn lessons to hand on to the Child Poverty Commission, what is proposed in the amendment is an excellent way to do that. For the Government to hide behind the fact that the figures will not be available is to miss the point. The amendment calls for a radical look at how things have been done-successes as well as failures-so that that can inform the process.

I have two other points to make. First, the noble and right reverend Lord, Lord Eames, made an important point. We will come to it later, but, in passing, the four nations group, the importance of which the Government have recognised, should be in the Bill for the reasons that the noble and right reverend Lord mentioned. There should be some recognition of the four nations group, because if it is to hold the ring and be successful-I hope that it will be, although there will be problems and it will not happen by accident-this needs to be carefully thought through. Although I think that the Government understand its importance from my

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discussions with them, I share the concern of the noble and right reverend Lord, Lord Eames. There should be formal recognition of the group in the Bill. Perhaps we can find some way to do that in the course of our proceedings.

There is an enormous spatial dimension to this whole question. The analyses of the figures and the measures that we are contriving in the Bill are mainly snapshots. The Family Resources Survey considers the snapshots, although there is a longitudinal element in the General Household Survey. Looking just at what is happening at a particular time in families does not take account of persistence. We will come to that later-we have tabled amendments on it. The cities report in the press yesterday is very important, because it captures the fact that different cities and different communities in this country are in an entirely different place when it comes to child poverty. Places such as Springburn in Glasgow are very different from Northampton or Reading; you cannot ignore that. The figures have to be handled with very great care. We will come to amendments tabled by the noble Lord, Lord Freud, concerning the equivalence ratios and the Gini coefficients. You have to be careful how you use all those, because they are only rough measures and can be treated only relatively. We cannot invest all the importance of the policy dimension in future in those measures alone. However, we cannot forget the huge spatial dimension.

I am sure that the noble Lord, Lord Northbourne, will come to this in his inimitable way in the course of our proceedings, but, finally, there are not just these figures but a wider hinterland of factors that determine whether low-income families are in trouble or not and whether or not we reach the target in 10 years' time. I am sure that it was not deliberate, but I think that the Minister missed the point of the amendment. It is an attempt to be positive and to capture lessons that we should sensibly learn to take the policy forward.

4.15 pm

Lord McKenzie of Luton: If I may say so, it is the noble Lord who has missed the point. Nobody is saying that we should not look to learn lessons from what has happened to date-from what has worked and what has not. That is the whole purpose of how we are seeking to move forward on this. The noble Lord will know from the Peers' information pack that a strategic direction paper will be published in the spring. The Child Poverty Unit is working on this.

Lord Kirkwood of Kirkhope: It is going forward.

Lord McKenzie of Luton: Looking at how we go forward is, in part, based on understanding where we have got to now and where we have not got to-perhaps where we were hoping to have made greater progress. A process is under way through the development of the strategy and the strategic direction paper to do what the noble Lord wants. The key objection to the amendment is that it forces a particular process over a three-month period when we will not have key data that would make analysis of progress towards reaching

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a particular target better and more meaningful. Certainly we have to look at progress and analyse that. That is what the strategic direction paper and the strategies that flow from it will entail.

The noble Lord also said that this was all to do with moving away from investing in benefits. Income transfers are part of the solution, but what we have also learnt recently is that they are only part of the solution. There are other issues such as promoting work as the best means out of poverty, supporting family relationships and family life, early interventions, excellence in delivery, sustainability and affordability. All are part of a package to make progress.

I also say to the noble Lord that three months is premature to look at the 2010 target because we have had provisions post the 2007 Budget. Many of them relate to income transfers and benefits and are designed to improve the position. They have not flowed through into the data yet. We need to see how that works in practice. Therefore we are not apart in recognising the need to understand the lessons of the past in building for the future; the issue is the mechanism by which, and timeframe within which, we do it.

Lord Freud: I thank the Minister for giving me the opportunity to respond on the point about today's Financial Times story. I start by emphasising the importance that the Conservative Party places on child poverty and sorting it out. I was going to use the word "eradicate", but I realise that we will probably have a lot of debate about what that means, so I have used "sorting it out" instead. There is a difference between the Government and my party in this area. We are concerned that the efforts that we put into child poverty are directed at getting to the sources and causes of poverty, not to the measurement of it and to financial manipulation. In some amendments that we have tabled and will debate, we are trying to shift the emphasis of the Bill from targets that are essentially financial measures to some of the causes. I will not go into detail now, because we will spend a lot of time discussing this later, but that is the difference.

Lord McKenzie of Luton: Is the noble Lord saying that, should the Bill achieve Royal Assent broadly on its current basis with those targets in it, given the opportunity-I do not think it fruitful to debate here whether it will get that opportunity-his party would change the measures of poverty and the targets? Or is he saying that he would accept them and would want some others as well?

Lord Freud: Yes, we are trying to amend the Bill by the addition of some targets. Measurement is clearly important, but the risk is that the measures, being purely financial, drive state intervention in a particular direction. As we all know, targets tend to drive bureaucracies-they get bedded in. We want a better balance of targets. We want to see targets that look to the causes of poverty, not only to the measures of poverty.

We have not completely written off the dialogue of the process of Committee and Report, where we may be able to discuss these matters and get to some

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agreement. It is rather premature to think about further progress after the Bill; a politician would not hand over defeat at this stage. Let us see how we go through this process.

Lord McKenzie of Luton: It is important that we get some clarity on this issue. Whatever else appears in the Bill, if the four existing targets as described end up in the legislation, and should there be a change of Government and should it fall to the noble Lord and his colleagues to implement this-though I do not concede that for a moment-would they feel bound by those targets, whatever else they were bound by?

Lord Freud: I will not shelter behind hypotheticals. I will not just say "if" and "if" and "if", which the Minister's question does. Clearly one needs to measure performance. The Government have four targets in the Bill. We are not absolutely happy with the financial measures and we have tabled a lot of amendments to probe them. We accept that there need to be financial measures, but whether we need to look at improving the financial targets depends on the extent to which the Government respond to some of the concerns about the shape of them. I am not in a position at this stage to say whether we would change anything that comes through this process. I am trying to give the Minister an honest direction of travel without sheltering behind easy excuses.

On the financial targets in particular, we have put down an amendment that tries to get at the absolute levels of persistent poverty, which we do not think are satisfactorily covered in the four measures in the Bill. There are some real improvements that we would like to put in regarding how one measures poverty. We have put them in at this stage as an extra, but when we come to discuss them we may decide that they could be a substitute.

I go back to Amendment 1. I want to talk about what has been happening with regard to poverty. I am grateful to the noble Lord, Lord Kirkwood, for pulling us back to the core issue. Something odd has gone on with child poverty in what should have been an easy period. I am grateful for the noble Lord's reference to the excellent IFS report on this. The report explained why the improvement in child poverty rates did not continue, but it did not explain why it came to a full stop. I should like to make a counter point by referring to the Rowntree report Monitoring Poverty and Social Exclusion, which takes a series of data on home repossessions. It states:

"One example is home repossessions which at an annual rate are back at the 1993 level but which, more importantly here, is yet another series that reached its low point back in 2004, since when it has climbed again ... The extent to which 2004 marks a turning point in quite a lot of the statistics presented here is worthy of attention in its own right".

The IFS report, excellent as it is, deals with the financial aspects and not with a series of measurements that all reflect a deterioration in or at least a flattening out of the improvements for the poor.

The final point that I want to make, and again I am grateful to the noble Lord, Lord Kirkwood, for reinforcing it, is that it is not entirely satisfactory for the Government to shelter behind the technical point

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of three months and whether data will be available. If the exact timing is a genuine issue, clearly it is something to look at. We will come back to the issue at a later stage, but for the time being I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 1 : Duty of Secretary of State to ensure that targets are met

Amendment 2

Moved by Baroness Thomas of Winchester

2: Clause 1, page 1, line 10, at end insert ", and

( ) the relative low income after housing costs target in section (Relative low income after housing costs target)"

Baroness Thomas of Winchester: My Lords, in moving Amendment 2, I shall speak also to all the other amendments in the group, as they are consequential. At Second Reading, I went into some detail about why we believe that the figures after housing costs, as set out in the households below average income surveys, should be added as a fifth target. What I did not say explicitly was that the difference between the number of children living in poverty according to the figures taken before housing costs and those taken after housing costs is huge.

According to the latest figures, on the before housing costs measure some 2.9 million children are living in poverty, but on the after housing costs measure the figure is 4 million. Is this why the Government are so keen on the before housing costs figure? I noted, as did the Minister, that in the Second Reading debate the noble Lords, Lord Freud and Lord Sheikh, both used the after housing costs measure when talking about the number of children in poverty. Was that because 4 million sounds more dramatic than 2.9 million or was it because the after housing costs figure is the one that all groups such as Gingerbread and Save the Children use on an everyday basis?

The Equality and Human Rights Commission states clearly that not taking housing costs into consideration can mask the poverty of certain groups. There can be no question that housing is a very large part of most people's budget and therefore a big determinant of their living standards. Looking at a person's standard of living without taking housing costs into account is to miss a significant part of the picture.

At this point, I must repeat what I said at Second Reading. We are not advocating the replacement of the before housing costs target with the after housing costs target; we just suggest that the after housing costs target should be added. Would it cost more to add a fifth target? No, it would not, because the households below average income surveys collect both sets of data. There is an explanation in their dataset under the heading "Methodology", which states that there are arguments both ways and that the two sets of data are set out,

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If the Government themselves believe that it is important to collect both sets of data, why are they not both in the Bill, given the dramatic difference in the numbers of children in each survey?

4.30 pm

One of the most powerful arguments, which I also advanced at Second Reading, is that housing benefit is included in the measure of income before housing costs, so a large family who receive housing benefit will appear to have a relatively high income unless that figure is discounted. This distorts the figures not only in London, where housing costs are high relative to income, but in poor rural areas, where housing costs might also be high relative to income. It must also be remembered that in many rural areas there is no social housing to speak of, so all or most rented property is in the most expensive private sector.

The Government have two arguments against my amendment. The first argument is that they can make international comparisons only with the before housing costs measure. I think that this is a particularly feeble argument, as the Minister knows. He will have the before housing costs figure for comparisons anyway, so this is a non-argument. The second argument is that housing figures are collected in the material deprivation target, but this does not address housing costs as such. The 21 questions include only two about housing: one is about keeping a house adequately decorated, while the other is about having enough bedrooms for every child of 10 or over so that they can share their bedrooms with a sibling of the same sex. The Minister said at Second Reading that measures of housing quality are included in the list, but those are the only questions that I can find that are about housing.

It may be argued that people can choose whether to live in a higher-quality house, but this is not borne out by the experience of many of the groups that advise us. Many people are constrained by factors such as proximity to schools and to work and transport links and they simply cannot choose to live in good-quality housing in a nice area.

Perhaps the last word should go to the Joseph Rowntree Foundation's reports on what is needed to end child poverty in 2020. All its reports use the after housing costs. It says that this measure is widely reported in the literature and is arguably more informative, especially when considering the economic well-being of individuals at the lower end of income distribution. It also points out that the Government themselves used the after housing costs for the 2004-05 target, so why the change? One is led to the inevitable conclusion that it must be because the before housing costs target looked much better. Rather than argue further for one or the other, what is the barrier to putting both before housing costs and after housing costs in the Bill? I beg to move.

Lord Northbourne: Has the noble Baroness considered that housing costs and transport costs are, to a considerable extent, interactive? You can get cheaper housing out in Hertfordshire, but then the costs are greater getting into London. This should somehow be

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factored into the equation. It is also a fair question to ask the Minister. If the Government intend to exclude housing costs from the figures, are they saying that the child benefits from the higher housing costs? What I am trying to say is that the after housing costs may relate to the child, but the child does not actually benefit from what the household costs, so that the overall cost of the household, which reflects the amount that goes to the child and which affects child poverty, ought to include the housing cost.

Lord Kirkwood of Kirkhope: I have three points to make in support of my noble friend's important amendment. First, the last report by the House of Commons Work and Pensions Committee in the 2007-08 Session-its second report-was called The Best Start in Life?AlleviatingDeprivation, ImprovingSocial Mobility andEradicating ChildPoverty. Its conclusion in Recommendation 2 was that abandoning the use of the after housing cost measure,

It went on to argue, after taking evidence from a wide range of sources, that the DWP should use the after housing costs measure as a basis for the PSA target. We have moved on since then-that was the 2007-08 report.

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