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The Minister's arguments against our original amendment were based, as far as I can assess, entirely on the issue of timing. According to him, the household below average income data would not have been available for the original three-month deadline. It would not capture the impact of recent measures or that of Budget measures to come for this year. The Minister argued that the electoral cycle would create practical publication problems. He argued that annual reports on progress towards targets are anyway required from the Secretary of State to Parliament. However, this is not the same as a report on the specific target of halving child poverty in 2010. I will summarise the underlying arguments for why such a report would be valuable. I will aim to move quickly over ground already covered.

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Odd things have been happening in the battle against child poverty since 2004, when the improvements that we had seen ground to a halt and, on some measures, deteriorated. We debated at some length in Committee what the reasons for that might be. My overwhelming sense is that we are looking at a period in which real earnings growth was very disappointing, but we do not need to rerun those discussions in depth. However, we need a report at the appropriate time to put the various economic factors into context for this reason. The post-war periods in which child poverty has fallen have been rather rare-five or six years in the last 30, for instance. They are the exception rather than the rule. Some other major questions need answering. There was a reduction in relative poverty among children in workless households, but not in working households. How much has been caused by income transfers, rather than by tackling the causes of poverty? This is an area of particular interest to us, since our approach to the problem will be oriented towards tackling the causes of child poverty.

This amendment would also give the Government the chance to accept measurements of performance against targets during its last 13 years in power. The Government have been accused of using diversionary tactics in this Bill by encouraging voters not to look at this performance and switching attention to the far horizon of 2020. They have also been accused of creating a poisoned pill for future Governments-they can ignore their own likely failure to achieve modest targets in benign conditions while lambasting the Government of the day for failing to achieve more difficult targets in a more difficult economy. Stephen Timms in another place acknowledged both the tougher nature of the 2020 targets and the more difficult economic environment that we face. I emphasise that I am not making these accusations; I am suggesting that the Government may find it convenient to tackle them head on by accepting responsibility for their own targets. I beg to move.

Baroness Thomas of Winchester: My Lords, in Grand Committee I felt as though much of the time we were all dancing a bit of a quadrille round the fact that, as time goes on, a general election is looming ever closer. The unspoken question is not only the complexion of the Government who will have to pick up the baton on this Bill but whether that new Government will want to be confronted in the very near future with this amendment if it should become part of the Bill.

It is little wonder that the Minister delicately and hypothetically asked the noble Lord, Lord Freud, about this in Grand Committee. Quite understandably, the noble Lord, Lord Freud, refused to be pinned down. He has now tabled a similar amendment on Report. However, the three-month reporting period, which was in the Committee amendment, has gone and a more realistic timetable has been set out-at least I hope so; I have not examined in great detail the new amendment, which was tabled only yesterday, but I think that it has that timetable in it.

Having this amendment in the Bill would mean that a new Government, of whatever complexion, would have to consider almost straightaway what has been

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done in the past to try to reduce child poverty, what is being done right now and what should be done in the future given the economic circumstances of the country. The assessment of progress will be invaluable, particularly to the new Child Poverty Commission as it starts its work. There is little doubt that the 2010 target does not have a chance of being met-apart from anything else, because of the recession. We all know that unemployment is likely to rise, with the loss of many jobs in the public sector, and that, although the Government are trying to give lone parents help in getting to work when their child is ever younger, there are often not the part-time jobs or, yet, enough suitable wrap-around childcare available throughout the country.

Any report on progress towards meeting the 2010 target is not likely to be very optimistic but it should be able to point the way to how the 2020 target of "eradicating" child poverty might be met. For this reason, we support the amendment.

Baroness Hollis of Heigham: I, too, support this amendment because I want to see my Government or an alternative Government after the general election continuing to commit to the eradication of child poverty. That is what this amendment seeks to do. That commitment should be made whether this is the right format or whether my noble friend might suggest that there is some other way of approaching it.

We all know why it is difficult, particularly since 2004. Most of the tests of child poverty are relative; most of the children who are poor are on benefits; benefits increase by prices; and the wealth of the country increases by wages. The only way in which you can reduce that gap over time and ensure that more children are above the poverty line is to see benefits rise not only in line with earnings but faster than earnings. However, that then brings the dilemma over how attractive work is for those who are unskilled, in large families and low paid. That is part of the juggling act that any member of a Government has always to seek to respond to.

Any way of lifting children on benefits above the poverty line has implications for the effectiveness of encouraging people into the labour market if they are very poorly paid. The only way in which you can address that is to increase tax credits to make their pay worth more, whereupon you raise the standard of average median earnings and more children come below the line. It is almost like a spiral. It is very difficult to resolve, as I think we all understand. That is why I was pleased that the noble Lord, Lord Freud, did not attribute it to any negligence of government but rather to a reflection-I am afraid-of the economic prosperity that we have enjoyed, in which we have seen wages soar ahead of cost/price-linked benefits.

Even if this amendment cannot address and resolve that problem-it is one of those where you are continually keeping these three considerations juggled in the air-it would at least focus the mind of any Government, any civil servant and the commission on seeking to drive forward to meet that target. In so far as the noble Lord's amendment would help this Government, or any Government, to progress that, I hope that my noble friend will support it.

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The Parliamentary Under-Secretary of State, Department for Communities and Local Government & Department for Work and Pensions (Lord McKenzie of Luton): My Lords, I speak to Amendment 1A, moved by the noble Lord, Lord Freud. 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. We will continue to be held to account on the 2010 target, but this Bill is focused on ensuring that we do not lose sight of the long-term goal.

The Bill increases the accountability of the Government with regard to their child poverty goal. It sets out a rigorous process of reporting and accountability that will hold the Government to account. It also creates the Child Poverty Commission, which 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 as soon as is reasonably practicable after the end of the 2010 target year and no later than 30 June 2012, setting out an assessment of progress towards the 2010 child poverty target as defined in public service agreement 9-fewer than 1.7 million children in qualifying households living below the 60 per cent median income threshold.

As I explained in Committee, 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 him 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 Clause 13 requires that the annual reports report progress against each of the targets.

The first strategy must be laid within 12 months of Royal Assent and the first report must be laid within a year of the anniversary of the strategy being published. This will report on progress against our relative poverty target, from which it will be clear what the progress is on the 2010 target. In addition to this, the HBAI data on the relative low income target are published every year, so progress can be tracked in that way.

As the noble Lord, Lord Freud, said, this is not the time to revisit all the arguments and analysis about what has happened since 2004 and the reasons why there are challenges in meeting the child poverty targets. Government action and investment over the past decade have stopped and reversed the upward trend in child poverty. Whereas the number of children in poverty more than doubled between 1979 and 1997, 500,000 children have been lifted out of child poverty since 1998-9. There were 2.9 million children living in relative poverty in 2007-08. Absolute poverty has been halved. We expect the measures introduced in and since Budget 2007 to lift around a further 550,000 children out of poverty. Although this is still some way from the 2010 target, it represents real and significant progress since 1997.

This amendment does not add any value. The Government are happy to be held to account for our record on child poverty. Indeed, we cannot possibly avoid being held to account for it. The 2010 target is tough, as it should be, and we need to bear in mind

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that we started from a base where child poverty had risen for some 20 years. However, as noble Lords would like to see progress against the 2010 target reported clearly-a view that I share-I do not propose to resist the amendment.

Lord Freud: My Lords, I thank the Minister for that. We are pleased to have that concession.

Amendment 1A agreed.

3.30 pm

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

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

Baroness Thomas of Winchester: My Lords, I make no apology for introducing this amendment again on Report. All the other amendments in the group are consequential on the first one. Amendment 2 would add the after housing costs as a fifth target in Clause 1 to the measure of child poverty. The relative low income in a household would be calculated by capturing both the before and after housing costs. This would give a much truer picture throughout the country of the disposable income of a qualifying family.

As I have said before, both these sets of figures are collected by the households below average income surveys. The amendment does not mean that extra statistics will have to be collected. Our contention is that using the before housing costs figure masks a lot of child poverty; a much more accurate picture is achieved by using the after housing costs figure. This is illustrated by the number of children recorded as living in poverty: 2.9 million in the before housing costs figure, rising to 4 million in the after housing costs figure.

We had a long debate in Committee encompassing housing itself, how poor housing can impact on child poverty, the problem of overcrowding and what is being done to provide more affordable homes. These are all important matters which affect child poverty. Although each is worthy of debate, I do not intend to go down any of those roads today. I will concentrate on why it is important that after housing costs should be added to the targets in the Bill.

In his reply to my similar amendment in Committee, the Minister said that,

He went on to say that,

were captured in the UK strategy in Clause 8, so would be reflected in the material deprivations score. Yet where that house happens to be is an important

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factor-not just its state of dilapidation or size. It is one thing if it is in an urban area, well away from the south-east, where there is quite a lot of social housing. It is a variation if it is in an outer suburb of London but with good transport links. In both cases, rents-including private sector rents-may be pretty reasonable. It is another matter if the house is in a rural area where there is little if any social housing, such as areas of rural Herefordshire where all that is available is private sector rented housing. Housing is likely to take up a far larger proportion of a family's disposable income. If it is in London, where rents are sky-high, that is another matter altogether. It is no coincidence that London is where child poverty is worst of all. The London Evening Standard has been doing a good job of highlighting child poverty in its reports on the dispossessed. It quotes Fergus Drake of Save the Children UK, who said:

"We are outraged that one in five children in London still live in severe poverty, often going without hot meals, the clothes they need or without proper heating at home. We are losing hundreds of thousands of children to poverty, which is killing their childhoods".

We often try not to use London as an example of where our policy should be specially considered, because we who live here sometimes bend over backwards not to sound London-centric. However, on this occasion we should not duck the issue. Because of the huge variations in the cost of housing throughout the country, both before housing costs and after housing costs must be included in the targets, otherwise we are in danger of missing those families whose poverty is not addressed in the before housing cost figures.

I repeat what I said at Second Reading: housing benefit is not discounted in the before housing cost figures, so a relatively large family may look as though it has a sizeable disposable income. Of course, it has nothing of the sort, because the housing benefit chunk of that income is its rent. The Minister countered that argument by saying that a householder uses his or her total income, not just housing benefit, to pay housing costs, and might choose to live in a nice house and a nice area. However, that is unrealistic. Most people who receive housing benefit use that sum to pay the rent because that is all they have for rent.

In Grand Committee, the Minister was keen to quote the recent report of the Institute of Fiscal Studies, entitled Poverty and Inequality in the UK: 2009. It says:

"When deciding whether or not to measure living standards on an AHC basis as well as BHC, the main issues are whether people face genuine choices over their housing and whether housing cost differentials accurately reflect differences in housing quality. It is often argued that some individuals do not have much choice over the type or cost of housing services that they consume, whereas they have considerably more choice over the purchase of other consumption goods (such as food or clothing). For these individuals, it could be argued that an AHC measure is a more suitable measure of their well-being".

The Joseph Rowntree Foundation, which uses the AHC measure, says:

"Lack of choice over housing costs and quality is particularly important in the social rented sector, where individuals tend to have little choice over their housing and where rents have often been set with little reference to housing quality or the prevailing market rents".

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The Equality and Human Rights Commission also endorses AHC, pointing out that using material deprivation is an indirect method of taking into account the various costs that qualifying households face. It says:

"We are not convinced that the combined low income and material deprivation target will provide a full solution to this issue. Although we strongly support the inclusion of the material deprivation target, we do not agree that it suitably addresses the issue of differing housing costs in the way that using an AHC measure would".

Crucially, it goes on to say:

"Material deprivation is not a suitable means of attributing the cause of the deprivation (for example, whether it is due to housing costs, living in a rural area, a member of the family having a disability etc.) and it will therefore be difficult to implement the correct policy response".

The arguments are not rocket science. Nearly all commentators recognise that the further down the income scale one looks, the more important are the after housing costs, because housing tends to make up a greater proportion of income at the bottom of the income scale. If one looks at incomes over the whole spectrum, before housing costs may be more reasonable, but the Bill is concerned solely with child poverty and therefore with families at the lower end of the income scale.

In many low-income areas, such as the most rural areas of the country, there is very little social housing and many families simply do not have a choice whether or not to live in a nice house or an expensive area. They have to live in the private rented sector, perhaps to be within reach of schools, jobs and transport.

As for the argument that many families in qualifying households live in cheaper housing but near good transport links, particularly around London, I found some comments made by Doreen Kenny from the Greater London Authority to be illuminating. Giving evidence to the Work and Pensions Committee in another place, she said:

"People are reluctant to travel for the length of time it takes to commute into where the part-time jobs are, which is mainly in inner London. Coupled with that is the low pay for most part-time jobs. Half the part-time jobs in London pay less than £7 an hour, so it is just not worth working part-time unless they are very local and it fits in with the school and childcare responsibilities, or they are very well paid and flexible."

If the before housing targets were thought to give the truest picture of poverty throughout the country, why do all the think tanks, academic institutions and pressure groups that I have come across prefer to use the after housing costs for those at the lower end of the income scale? Why, come to that, will the Government continue to collect the after housing costs if they are not to be relevant to this Bill? To what will they be relevant? After all, we are not saying that the Government should remove the before housing costs from the Bill, just that they should add the after housing costs target too. It will not cost them a penny more because they are collected in the household surveys anyway.

I hope that the Minister and I can continue our understanding not to mention international comparisons. I still believe that there is an unanswerable case for the after housing costs target to be in the Bill. I beg to move.

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Baroness Hollis of Heigham: My Lords, I have reservations about this amendment. I understand the intent, which I think is decent, but I would like to explain my reservations, which we discussed in Committee. The first is to make a distinction between information and target. As the noble Baroness rightly said, the information is already there in the major document which will steer any commission working through the statistics. For a house with below average income, on the left-hand page are the statistics on before housing, on the right-hand page should be the statistics on after housing income. The statistics are publicly available, and will inform the considerations of the commission to the extent which is appropriate. They are there as information, and nothing that the noble Baroness has said today will take that away.

Why should the information therefore not go one step further and be a target? My problem here is, as the noble Baroness confesses, that it is London-centric. House prices and rents are much higher in London, but the offset, particularly if you are looking for a part-time job, is infinitely cheaper transport costs. For example, housing costs in East Anglia are between a half to two-thirds of those of London, but transport costs can be three times higher. People can spend £50 or £70 a week catching trains between Yarmouth and Norwich every day, even for part-time jobs. If we are going to have households' after housing costs included, then in all fairness, you have to include transport costs because rents are high where transport costs are low and rents are low where transport costs are high. There is almost a perfect connection between the two.

If we take account, as a target, of households' after housing costs, we should simultaneously abate that by the other real expenditure which offsets the housing costs. In rural areas which do not have the Tube-glory be, that would be wonderful-or sometimes even buses but perhaps the occasional train, people are more likely to have to rely on an old banger, with all the costs of insurance, so those transport costs would need to be taken into account. If my noble friend was willing to go down the route suggested by the noble Baroness to have this as a target as opposed to having information, I hope that, in all fairness, transport costs would be included. Once you start doing that, we are on a slippery slope to widening the reach of yet another target in this Bill.

3.45 pm

Lord Best: My Lords, I have been somewhat of a bystander during the successful progress of the Bill, but it might be worth my making a technical contribution in support of this group of amendments from my familiarity with the issue when responsible for the work of the Joseph Rowntree Foundation.

Joseph Rowntree and his son, Seebohm Rowntree, pioneered the task of measuring poverty more than 100 years ago, and the Joseph Rowntree Foundation has had to grapple for years with the question of which measurement-before housing costs or after housing costs-is the most sensible. We concluded that the after housing costs measure was better. Let me explain why.

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