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We appreciate the importance of having a range of targets that provide a comprehensive definition of success in eradicating child poverty and the need to measure progress and drive action against the many facets of poverty. That is why we have included four

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complementary poverty targets in the Bill, including a persistent poverty target and a material deprivation target. However, we believe that including further targets would run the risk of a lack of focus. In addition, I can say that we are not aware of any evidence to suggest that the proposed measure would add significantly to the comprehensive definition of poverty created by the four targets. Decile units aside, the target level proposed in the amendment essentially renders the new target unnecessary. The Bill already places a duty on the Secretary of State that requires fewer than 5 per cent of children to be in poverty according to the combined material deprivation and low income measure by 2020, and therefore it is extremely unlikely that this target could be met without meeting the proposed new target as well. So for the 5 per cent target to be met and the 10 per cent target not met would require the poverty rate on this measure to fall from 10 per cent or above to 5 per cent in the single year prior to 2020 and, even less likely, that all the children lifted out of poverty in that single year to have been poor on this measure for the previous three years. This would allow for the 10 per cent of children who have been poor during three of the previous four years, even though only 5 per cent were poor in 2020, the fact that the 5 per cent material deprivation target essentially requires that the proposed new target is met means that the amendment would add unnecessarily to the Bill.

There is also a technical reason why the amendment could not be accepted in its current form, but obviously these things can be sorted out. Any measure of persistent material poverty would have to relate to calendar years rather than financial years, as stated in the amendment, because the only longitudinal survey available to measure income and material deprivation produces estimates for the calendar year. The noble Lord, Lord Kirkwood, asked whether it is feasible. The answer is yes, but other components would need to be added to the present longitudinal study in order for it to pick up material deprivation because you would be tracking the same families over the period; at the moment, material deprivation does not do that.

Someone said that it has been recognised that child poverty cannot be understood merely through the measurement of income. Poverty is also the result of being deprived of those things in life that it would be assumed to be necessary in order to be a full member of contemporary society. These items are not just material objects but include social activities. They change over time as we experience technological development and social change, and any measure of material deprivation must recognise this. In addition, it needs to be recognised that parents and children will have different needs, and therefore an understanding of child poverty requires a measurement of both parental and child material deprivation.

Let me also say that the persistent poverty measure in Clause 5 is not intended to be a measure of persistent material deprivation, rather it is a measure of persistent low income and has been included because evidence shows that being in a low-income household for a continuous period of time can, not surprisingly, adversely affect children's outcomes. We know that children who live in persistent poverty are more likely than those

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who experience temporary poverty to be at risk of poor outcomes, such as being suspended or expelled from school or living in bad housing. We acknowledge that some children who experience persistent material deprivation will not be captured by the persistent low income measure in Clause 5. However, they will be captured by the material deprivation measure in Clause 3. The target for this measure is less than 5 per cent, revealing our commitment to tackling the material effects of poverty and low income.

Unlike low income, material deprivation is unlikely to be a short-term situation. Material deprivation is measured according to which items from a selection of basic goods and services a household cannot afford. These goods and services tend to be accumulated over a number of years. Therefore, we would expect to see less distinction between persistent and temporary material deprivation than between persistent and temporary low income. This is one reason why we did not use material deprivation to define our persistent poverty measure. We have established methods of measuring material deprivation that show that it is an aspect of poverty that does not change rapidly. This is to be expected, as material deprivation will lag behind income falls, and moving out of material deprivation will lag behind income rises. We know of no evidence to suggest that the proposed measure would add significantly to the definition of poverty encapsulated by the four targets.

The noble Lord, Lord Freud, referred to the IFS report. We will be quoting extensively throughout our proceedings from the substantial work that the IFS does. We recognise in particular that the surveys do not necessarily pick up self-employed income to the full. It is frequently the case that those at the bottom end of the distribution scale are shown not to be in hardship. There are issues here. The measure for relative low income has been fixed at 60 per cent of the median partly because it takes us above those problem areas. That said, I hope the noble Lord will accept that we are on the same page in trying to address the issues. However, this proposal would not add anything of significance to the Bill.

Lord Freud: I thank the Minister for that response. I also thank the noble Lord, Lord Kirkwood, and the noble Earl, Lord Listowel, for their contributions. I will hone in on the concern. When you have targets, there is always an instinct to nudge the figures just above the targets and go for easy results. There are signs, which we discussed elsewhere, that there has been a bit of that. There has been a sharp rise in the figure for underperforming children in the under-40 per cent of the median category-a much sharper rise than that for children in the under-60 per cent category.

The risk is that we do not properly isolate those children who are the most vulnerable in the country. The data are hazy. Peter Saunders of Policy Exchange, in his Poverty of Ambition piece, draws out how poor some of the data are. He states:

"Astonishingly, for those in the bottom 5% of the income distribution, deprivation scores get worse as income rises. Children with equivalised incomes below 40% of the median income are less deprived than those with incomes between 40% and 60%. Children in the bottom 2% of incomes are less deprived than those whose incomes are well above the poverty line".

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All kinds of odd things are happening in the data. If the Government take a relatively undifferentiated approach, they are likely to miss out the children who really need support.

I am very appreciative of the general support of the noble Lord, Lord Kirkwood, but he was concerned that the amendment would produce a rather small figure. It would, but it would be an immensely valuable group of people to isolate because they are probably the most needy people in the country. On the point made by the noble Earl, Lord Listowel, we would consider the children in, or likely to be in, the circumstances of the group and start honing early interventions for that group. That is the purpose here.

The noble Lord, Lord Kirkwood, also talked rather flatteringly about the DEL/AME switch. One of the most interesting parts of the huge amount of research in the area comes from the Child Poverty Action Group in its recent report. It states, bluntly, that the approach now being adopted towards welfare is the approach that we should adopt towards poverty. In other words, we should go to the people who have the problem and provide individualised support on a holistic basis.

I used this quotation at Second Reading, but it bears repeating. In the same way that it is increasingly recognised that,

so a similar approach needs to be applied to poverty. I cite the Child Poverty Action Group.

Picking up on the point made by the noble Lord, Lord Kirkwood, about DEL/AME, the cost of the worst-off children is enormous for society. We know that it will cost, quite literally in many cases, millions of pounds per child. If we can isolate them and start to consider the costs we will incur and make the DEL/AME switches, as we do for welfare, we will start to prevent those costs. That has nothing to do with being a do-gooder, it is a cold assessment of the interests of the country to invest in preventing huge future costs. One does not have to be a bleeding heart to see the logic of that. If we are to do it, we must isolate the children and get very sophisticated about assessing where the investment should go.

The purpose of the amendment is to start the process, so that we can begin tiering it up and thinking about the different amounts of money that we can put to different levels of need, and consider value for money.

6.15 pm

Lord McKenzie of Luton: On a point of clarity, the Government would agree with much of what the noble Lord has just said. The point at issue is whether the measure that he has proposed for measuring another target is a meaningful one. In a sense, that is related to the policies that flow from the strategy, but that is the particular issue before us. We have common cause on issues around support and investing to challenge poverty; when we get into the detail of the strategies at local level as well as nationally, some differences in policy arise, but when it comes to seeking to achieve that, we

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agree. The Government's point is that the measure that the noble Lord seeks to have in the Bill does not add anything that aids that process.

Lord Northbourne: Surely the Minister would agree that, if you have four things that are obligatory and something else that is merely quite a good idea, that last thing will not get the same amount of attention. Having heard what the noble Lord, Lord Freud, has said about the personalised approach-the Minister and I sat in this Room for hours arguing about that on the Welfare Reform Bill and I greatly supported what he did on that Bill-I think that there is a serious case for getting something into this Bill that will have that effect.

Lord McKenzie of Luton: The amendment does not particularly say or do anything about a personalised or a non-personalised approach; it is simply about an alternative target. The purpose of the suite of targets is to try to ensure that we identify the level of poverty that there is and that we are able to track progress against those targets so that we can see that we are addressing the issue and making a real difference to the lives of young people. The sole point here is that the proposed additional measure does not help that process. What is in the Bill already covers the situations of those people who are in persistent poverty.

Lord Freud: I thank the Minister for making that point. I shall come back to it, though. There are enough discrepancies in the data, as we can see from the IFS report among others, to suggest that when you want a hard, irreducible measure of the income and deprivation of people in real hardship, if they are measured over a reasonable period such as three years, you know that you are capturing them. The data on shorter periods seem much more volatile, including on deprivation. If you want to start to tier the children at risk, therefore, this group-three years plus three years, in each-would seem to be an enormously valuable place to start. My reading of the data suggests that the one-year material deprivation does not capture those children reliably. I accept that this is clearly an issue of data interpretation, as the Minister has said. I will commit to go and brood on the data and we may even discuss them in the interim before deciding whether this is to be assumed.

Lord McKenzie of Luton: I am happy to have a discussion between now and when we next get to Committee, perhaps with officials, so that we can do some number-crunching to see if we can reach a joint understanding of the issues around data.

Lord Freud: I very much appreciate the Minister's offer. If we sat down with officials and the data for a hard look at this, we would reach an agreement based on those data. I suspect that we would then produce a joint agreement, if we could agree that something needed to change. On that basis, knowing that the noble Lord is such a generous Minister, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Clause 1 agreed.

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Clause 2 : The relative low income target

Amendment 4

Moved by Lord Freud

4: Clause 2, page 1, line 13, leave out "10%" and insert "9.85%"

Lord Freud: My Lords, I did not table this amendment just to amuse you. It replaces the target figure of 10 per cent with a no less arbitrary, but rather less comfortably round, figure of 9.85 per cent. This is, of course, a probing amendment, and I hope to give the Minister and the Committee more generally the chance to discuss the value of setting a target at the particular threshold stated in the Bill, of 10 per cent of children.

Everyone would find decreasing the percentage of children brought up in relative poverty to a much lower figure, such as 10 per cent, a praiseworthy aim. If a future Government meet the target, they will have made enormous strides in improving the welfare and opportunities of children in the UK. However, 10 per cent does not represent the eradication of child poverty, as some colleagues of the Minister still insist on claiming. They may express it as: "That's the nearest we can get, given the lack of reliable data".

The whole objective of this Bill is to ensure that child poverty remains at the top of political priorities for the next decade. I actually see this as a reduction from the original intention, which is to make the UK among the best countries in Europe for a child to live and be brought up in. I am asking: is this percentage the right figure to be aiming at in the context of the data we have? An arbitrary target such as 10 per cent could become unhelpful. You would not, for instance, reject a measure just because it reduced the level of child poverty to 11 per cent. You would not stop focusing on the area just because you had already reduced it to 9 per cent.

I shall address the issue of the reliability of the data. Some organisations with perfectly honourable and good intentions have lobbied to replace the figure with a target of 5 per cent. That target has been reached, albeit for rather short periods, by a few countries, which have tended to be small and enjoying an economic boom when they achieved it.

I agree with the Government that 5 per cent is not a realistic figure, given the limitations on the data and the way that poverty is a transient phenomenon, as I have already discussed. I have much more sympathy with the Government's aim that the target, once reached, should be maintained for three years so that any improvement in children's lives is genuinely long term and represents a permanent change, not a one-off surge for the target year with a collapse afterwards.

It is clear that we shall spend a lot of time discussing the strategies for how to tackle child poverty, but before we have that discussion I want to be comfortable that the figure of 10 per cent, which is so prominent in the Bill-it is placed early and in a prominent position-does not hinder steps that the Secretary of State should be taking and is a helpful and appropriate

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measure of success. With this amendment, I want to give the Minister the opportunity to provide a full explanation of why the 10 per cent threshold has been chosen.

Baroness Thomas of Winchester: My Lords, could I ask the noble Lord, Lord Freud, whether this is the amendment under which he wants to discuss the methodology behind how the figures are collected and weighted or is he going to do that on another amendment?

Lord Freud: I have several amendments on the figures, but this is about the threshold. Another amendment looks at how the figure of 60 per cent is derived and why, so this amendment asks about the sensible threshold to aim for and why this particular threshold has been selected. I should have said, "I beg to move", and I apologise for the oversight.

The Earl of Listowel: My Lords, I think that the noble Lord, Lord Freud, is asking what will keep us heading for the target. However, I have not quite caught what he was trying to say. Nevertheless it reminds me that whatever we have in legislation, we need to be motivated to achieve improvements for these families. A great deal of legislation passes through this House. We had the Children Act 1989, which was a wonderful piece of legislation that enshrined in law all sorts of protections for families. Later the noble Lord, Lord Laming, said during the course of the Children Act 2004 that if we had only implemented the 1989 Act, we would not need a new Bill. So this is an important Bill and these are important targets.

The noble Lord, Lord Freud, implied what figures such as 10 per cent, 11 per cent and 9 per cent really mean. We want to eradicate child poverty as far as possible. That is what we are here for. Putting a figure on it could be unhelpful in some ways because it might suggest that once poverty is down to 10 per cent, we can stop trying. That is not right. We have to keep going because we do not want any child to grow up in poverty. That may be beyond our means, but we are going to try as hard as we can not to let that happen.

I am sorry to take some time on this, but will the Minister and his colleagues think about institutionalising other means to tackle the problem? The noble Lord, Lord Martin, spoke eloquently about his personal experience of the poverty experienced by many families in Glasgow, and I have spoken to MPs who have had extremely powerful experiences when accompanying health visitors and seeing the poverty in which some families are living. If industry can set up the Industry and Parliament Trust, a mechanism by which Members of the House of Lords can easily visit a business and shadow an engineer over a period and get to know and build relationships with people in industry so that they understand and give the right priority to the concerns of industry, why should there not be a programme through which parliamentarians can accompany health visitors visiting families living in poverty and perhaps build a relationship with a health visitor or a family over a number of years and by that means be motivated to enact this legislation and make it happen?

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I recently read a biography of the first Earl Attlee, who had an upper middle class background, and went to live in the east London settlement of Toynbee Hall. He was so moved by that experience and his earlier experience of seeing how people in deprived areas lived that he achieved what he did when he led the Labour Party. I apologise for taking your Lordships' time when we are running rather slowly, but I wanted to flag this up as something that the Minister might like to consider with his colleagues. I should be interested to hear his thoughts on it.

6.30 pm

Lord McKenzie of Luton: My Lords, I thank the noble Lord, Lord Freud, for giving me the opportunity to explain government policy on this issue, but first I wish to pick up the comments of the noble Earl, Lord Listowel. He made a fascinating suggestion. On too many occasions we get wrapped up in the Westminster bubble. We have connections with the outside world but we can become remote from what is happening at the sharp end. Although there are lots of influences at play when we develop legislation, including consultation and engagement with stakeholders and the people on the front line, I readily accept that the more that we who have the privilege of sitting here and in the other place understand the experiences of suffering people who live in poverty and whose interests we should be looking after, the better it will be.

The noble Earl also mentioned industry. This issue is not limited to parliamentarians and benefits from the engagement of business. Indeed, a lot of good work goes on in that regard. On the issue of strategies, engagement at local level looking at needs assessment on the part of local strategic partnerships and partners is another way to ensure fuller engagement. One could argue that you do not have to be poor to want to eliminate poverty, but understanding its ramifications and seeing that up close is hugely important. I thank the noble Earl for his suggestion in that regard.

I say to the noble Earl that once we reach the target, Schedule 2 to the Bill makes it clear that the level, or no less than that, has to be maintained beyond 2010. I remind noble Lords that the relative low income target refers to,

so it is not a case of reaching the 10 per cent or just under the 10 per cent. That is no excuse for stopping there. However, as I shall go on to explain, reaching that target is a challenge.

As we have discussed, the Bill contains four child poverty targets to be met by 2020. The relative low income target is only one of the targets and progress has to be made against all of them. HBAI is key dataset for the analysis of income poverty and is treated as such by both researchers and the Government. The noble Lord, Lord Freud, has on several occasions implicitly challenged the data and their robustness. We shall have a debate on that on a subsequent amendment. Any data based on surveys have their qualifications, but questioning the nature and robustness of the data on which these targets are built is not an excuse to cast them aside, even though there are issues that need to be understood around them.

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The importance of HBAI comes from the fact that the household income data it contains have been extensively reviewed and processed to ensure that they are properly comparable between households. The survey used to calculate these statistics, the Family Resources Survey, is the most comprehensive survey of incomes and income sources in the UK, with an extensive suite of validation procedures to ensure that the data are of high quality. The data play a vital role in the analysis of patterns of benefit receipt, and are used for policy evaluation and benefit forecasting.

Every year around 25,000 households across the country are surveyed-an annual sample larger than almost any other UK social survey. However, the Government's low-income statistics are based on a survey and, as with anything based on a survey, are subject to a degree of uncertainty. It is for that reason that it is necessary to round the statistics to the nearest 100,000 children or percentage point. In practice, a change in the target level from 10 per cent to 9.85 per cent of children would not be measurable to that degree of accuracy. We need a whole-number target, which is why we have chosen less than 10 per cent-I accept that this was a probing amendment to establish why we chose that figure. To measure levels of low income to an accuracy of more than the nearest percentage point would involve a significant boost of the sample size and, obviously, of the costs of the survey.

There will always be criticism that households whose income is just over the percentage of median income set in the target will not benefit from the legislation, and that this is arbitrary. However, the Bill contains four child poverty targets to be met by 2020, and these have been chosen on the basis of extensive consultation. In establishing the targets, we are recognising the need for a comprehensive definition of success that captures the many facets of poverty, long-term poverty and material deprivation that can reinforce the negative impact of low income on childhood well-being and life chances. Targets ensure that policy will have to tackle poor living standards and persistent poverty, as well as raising incomes at a given point in time. Together, the targets reflect the reality that the length of time experiencing low income, and the lived experience of poverty, matter.

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