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I accept that great efforts are made to ensure that the survey data are as accurate as possible. Nevertheless, there are still major discrepancies. The Institute for Fiscal Studies, in its report to the DWP The Living Standards of Families with Children Reporting Low Incomes, laid out some of the issues, particularly those surrounding the much higher standard of living of the self-employed than the survey data would suggest. Its observation, which I quoted in Grand Committee, is worth referring to again:

"A substantial number of families manage to remain out of hardship even during prolonged periods of poverty. Indeed the length of poverty is not strongly related to the likelihood of hardship, which is contrary to the view that households can generally maintain their living standards for a short period of time after entering poverty".

Work on the informal economy is a somewhat arcane field. One of the leaders in it is Professor Friedrich Schneider, at the Johannes Kepler University. He estimates that the informal economy's share of gross domestic product is likely to be 10.9 per cent in the UK in this year alone. That is a massive amount of undeclared activity-in the region of £140 billion. Clearly it covers a multitude of activity, from underdeclared earnings, or tax evasion, to illegal activity such as drug dealing, to welfare fraud. Nevertheless, some of it will inevitably be distorting the data on which the child poverty strategy are based. The risk is that we worry about children who are living in families

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that are actually comfortably off but are careful to disguise the sources of their wealth. Strategies to help those children would, therefore, effectively be steering resources away from children who were living in households in genuine need.

This amendment is designed to reinforce the importance of the work of the Office for National Statistics in this area. To judge by its 2005 report Identifying Sources on Entrepreneurship and the Informal Economy, it is already getting to grips with the issue in assessing the relevant data sets. In the years to come, this amendment should encourage significantly further advances.

The second aspect that this amendment is designed to encourage is the valuation of support that may be in kind rather than in cash. I am indebted to a briefing from the Minister's team for informing me how the survey data already put a value on many passported and in-kind benefits, such as free school meals. My concern arises from a series of recommendations in the 2009 OECD report Doing Better for Children, which concluded that support for some of the hardest-to-help families can be better delivered in kind than in cash. I pick out the key issue in a quotation from the report:

"Children at greater risk may benefit more from in-kind services because their parents may not be capable of functioning as agents acting in the best interests of their children with income transfers".

If this is true, we need a child poverty measurement basis that does not discriminate against in-kind services and where such services would do a better job because they would not count in the battle against child poverty. The amendment would make sure that valuable interventions such as these were not ruled out purely for reasons of measurement. I beg to move.

The Earl of Listowel: I support the amendment. I am thinking of families where there is substance misuse. An agency called, I think, the substance misuse advisory group identified a large number of children growing up in such families. I am not suggesting that those families should be particularly targeted, but if at the birth of the child one were to offer the parents either a generous package of clothing, footwear and general requisites for an infant during the first 12 months of life or a sum of money worth a lot less than the package, perhaps some of the families would choose the package. One might find that the infants were better clothed, with the right footwear and sufficient changes of nappy, which they might not have had if the measure being proposed by the noble Lord, Lord Freud, was not in place because we had inadvertently prejudiced ourselves against in-kind benefits.

Lord McKenzie of Luton: I thank the noble Lord, Lord Freud, for the amendment. We read the wording of the amendment to try to determine what it meant because it is not entirely clear. However, the noble Lord has explained it. We had assumed that its purpose was to ensure that any measure of income within this context should focus only on those items that have a clear and direct impact on the child, and indeed there is some merit in that argument.

As I have explained before, the four targets in the Bill have been chosen on the basis of extensive consultation, including the consultation on measuring

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child poverty in 2003. In establishing four targets, we have recognised the need for a comprehensive definition of success which captures the many facets of poverty. Long-term poverty and the material deprivation that results can reinforce the negative impact of low income on childhood well-being and life chances, so the 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. We strongly believe that together, these targets reflect the reality that income, the length of time experienced on low income, and the lived experience of poverty matter. So while I welcome the contribution of the noble Lord and acknowledge, as I have done previously, that a range of difficulties are involved in accurately measuring income, it remains difficult to determine what additional benefits would arise from the suggested addition to Clause 6.

I would ask the noble Lord to consider the practical implications of the approach that seems to be implicit in his amendment, that it would seek to specify in regulations particular items or sources of income which are or seem to be child-focused. We know that income sources are distributed in different ways in different households, and that people living in poverty often sacrifice their own well-being to reduce the impact that low income has on their children. Furthermore, accurately following income from source to expenditure would be difficult, and perhaps impossible. However, I am not sure if that proposition flows from what the noble Lord is seeking.

The noble Lord referred to the major lacuna in the data, and indeed we discussed that at some length in Committee, largely as a result of his probing. He referred again today to the informal economy. It is absolutely right that we need to make sure that the data are as robust and secure as possible. Dealing with the informal economy is not easy. It has to be tackled in a number of ways. The noble Lord will acknowledge that the Government were seeking to tackle fraud over declaration of income and tax evasion. I am tempted to say that I am not sure how a non-dom would fill in the questionnaire for these purposes, but perhaps one should not be unkind enough to stray in that direction.

5.30 pm

The noble Lord made reference to income or resources being made available in kind rather than cash if that were beneficial-we are thinking here about free school meals and those sorts of issues-and was suggesting that somehow the measurements would run counter to that. The noble Lord will recall a discussion we had after Committee; we said that if these things did develop, we would expect the surveys to be built with such provisions in mind so that they would be counted as income. In Committee we ran through the principle and the basis on which so-called benefits in kind could and should be included in the statistics.

In terms of the robustness of the data, the noble Lord referred to the IFS judgment. We have heard some criticisms from the IFS on the data, but it nevertheless considers the data robust enough to use as the basis for much of the evidence that it produces-for example, in the following recent studies. The IFS tax benefits model, TAXBEN, was based on the FRS and used for Analysis of Tax and Benefit Changes affecting

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Families with Children. In More Unequal-but Why? the IFS analysed the change in inequality, commenting that the FRS offers a substantially larger sample than the previous survey used. This work has contributed to the large study undertaken by the National Equality Panel. The annual IFS report, Poverty and Inequality in the UK, presents the most recent HBAI data it helped to validate. The data have also been used by a variety of other respected research organisations, including the London School of Economics, the National Policy Institute, the University of Cambridge, the Fawcett Society and the University of Oxford. We have common cause with the noble Lord in wanting the data to be as robust as possible and we believe that significant efforts have been undertaken. We shared with the noble Lord some of the background-questionnaires and the approaches taken to the survey-which led to the production of the data. There is, of course, a constant desire to make sure that we keep that as up to date as possible.

The income statistics we will use to measure progress against the targets in the Bill provide the best available proxy for child poverty. The statistics used in the Households Below Average Income publication comply with best practice on measuring household income. The survey underpinning HBAI exploits the best available methodologies to capture household income. A huge amount of time and effort is invested in ensuring that our estimates are robust and the Family Resources Survey is widely recognised as a world-class instrument for poverty measurement. In addition, HBAI is produced to national statistics standards. Among other things, this means it meets agreed standards for integrity and quality.

More generally, the range of targets included in the Bill means that we will make a robust assessment of the levels of child poverty. The combined low income and material deprivation measure will ensure that we capture the essence of what this amendment is seeking to address. If income is not being spent to the benefit of the child, then this will be seen by the fact that the child is more likely to be materially deprived. Indeed, even those basic items associated with the adult or adults in the household are likely to be negatively affected if income is not being appropriately or effectively used.

I consider this amendment to be unnecessary. We have in place appropriate measures to capture material deprivation, and any additional flexibility in measuring income that may have been intended from this amendment will not add value. The noble Lord may wish to note that HBAI is already subject to reviews which ensure that the statistics will benefit from any developments in income measurement-for example, along the lines suggested by the noble Lord-so that we make sure that best practice is always applied. I hope, on that basis, that the noble Lord will withdraw his amendment.

Lord Freud: My Lords, I thank the Minister for that reply. Maybe I should apologise for it not being completely clear what this amendment was driving at. Interestingly-it may have caught him little by surprise-he seemed to agree with the main thrust of this amendment on both of the aspects that we have discussed. This amendment is clearly aiming to put a forcing mechanism behind both of those aspects.

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First, there should be a forcing mechanism to get better data on what the informal economy really represents in this area. Although I agree that the HBAI statistics are highly respected and widely used, one can make the argument that if they are the main instrument, of course they will be used. The IFS made it clear that the figures below the 40 per cent median are utterly unreliable. I think that is a reasonable interpretation of what it said. That is exactly the point. It shows that the informal economy is having a real impact at that level, as one would suspect.

Secondly, on in-kind versus cash, I am grateful for the little briefing that the Minister's team provided me with a couple of weeks ago. Clearly, the HBAI survey includes much of the in-kind provision. However, I refer to the point made by the noble Earl, Lord Listowel-and I thank him for his valuable contribution. If this research comes out as saying that for many families in-kind is a far superior form of support than cash, instead of the Minister's response that we will be able to take in-kind payments into account in the survey, what is so difficult about taking them into account at this stage of a Bill which is meant to deal with these issues? Rather than an assurance, albeit on the Floor of this House, that the survey will take in-kind payments into account, why not have it in the Bill as an obligation?

I thank the Minister for his response. I do not think there is a huge difference between us. I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

Amendment 9 had been withdrawn from the Marshalled List.

Schedule 1 : The Child Poverty Commission

Amendment 10

Moved by Baroness Walmsley

10: Schedule 1, page 18, line 18, leave out from beginning to "appoint" and insert "The Commission may"

Baroness Walmsley: Amendment 10 is in my name and, I am pleased to say, in the name of the Minister as well. For that reason I think I can promise your Lordships a very short debate. Schedule 1 sets up the arrangements for the appointment, payment, functions, governance, and so on, of the Child Poverty Commission. It was my intention when I raised these matters in Committee to try to ensure that the commission is as independent as possible of Government, but your Lordships will see from page 18 of the Bill that the Secretary of State appoints all its members apart from those who are appointed by the devolved Administrations.

I am slightly reassured by what I was told in Grand Committee about the public appointments arrangements-that the best person for the job will emerge from the process for appointment to the chair-and by paragraph 1(2) of Schedule 1 which states that the Secretary of State must consult the chair and the devolved Ministers when appointing the rest of the members. However, I feel that we could give the commission a little more independence if we allowed

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it to select its own deputy chair, and that is what my amendment seeks to do. I am pleased to say that the Minister agrees with the idea. I beg to move.

Lord Martin of Springburn: My Lords, I have no objection to the amendment but I should like to take this opportunity to talk about the commission and its make-up. I hope this legislation will encourage recruitment from communities where there is deprivation and where there are men and women who have experienced the terrible poverty that exists throughout our country. In the poorer areas of the city of Glasgow a person is lucky if they become a justice of the peace; it is in the west end of Glasgow that you will see appointments to commissions. I do not mean to be disrespectful, but that is where the academics live. They also live in certain parts of Edinburgh, and noble Lords will know of other areas where good, clever people live.

However, the commission will need not only good, clever people but men and women of good will who have experienced the terrible poverty of deprived communities. I am sick and tired of the media talking about areas of multiple deprivation as though everyone in such communities is helpless-they are not. If you were to visit Glasgow, I could take you to see men and women who have set up disablement groups. There would be a lot of lonely disabled people if it was not for one woman, in particular, who created an organisation which now delivers meals to disabled and housebound people; it has a meeting place where people can come together and talk about their problems, enjoy themselves and arrange holidays. These are the achievements of people who live in these so-called areas of multiple deprivation.

However, when appointments are made to what we used to call quangos-I do not know whether they are still called that-people from areas where the problems are being experienced are passed by. The Bill will be a failure unless we appoint people to the commission who can say, "That problem will not be resolved if you handle it in that way". To give a comparison, it was written into the legislation on the Electoral Commission-about which I have some experience-that no one who was involved politically could be a member of the Electoral Commission. This meant that former Labour, Liberal and Conservative Party agents could not be on the commission and lend the years of experience they had gained from hands-on work in the communities such as delivering leaflets and arranging to get people to the polls. We wrote into the legislation that we could not use these people, who had a lifetime of experience, and so what did we get? We got former returning officers from local government who did not know what it was to go into a housing estate to deliver a leaflet and meet a Doberman standing in the garden which would not let you do so; and if you got past the Doberman you had to look out for the Rottweiler on the other side of the door.

The point I make about this commission, which I wish to put on record, is that if we do not appoint to it people who live in these communities and who have a proven record of helping themselves, their communities and their neighbours-and there are many of them-we will have failed.

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5.45 pm

Baroness Crawley: My Lords, I thank the noble Baroness, Lady Walmsley, for tabling the amendment, which of course we support. Members will recall that in Committee, where a similar amendment was tabled, we listened carefully to the points made by noble Lords and undertook to consider further whether the independence of the commission could be strengthened by permitting it to choose a deputy chair from among its members. In both this House and the other place we have repeatedly made it clear that the value of the commission lies in the quality and independence of its advice. Provisions in the Bill and commitments we have made with regard to the approved appointments process of the Office of the Commissioner for Public Appointments will establish a commission that has the capacity to provide advice which is of high quality and independent. The noble Baroness referred to that process in her opening remarks.

We are persuaded that allowing the commission to select a deputy chair from its appointed membership will boost the capacity for independence and give it scope to regulate its affairs in the most efficient and effective manner. On that basis we are happy to support the amendment.

I thank the noble Lord, Lord Martin, for his valuable contribution and for his collection of undesirable dogs that one might come across. I should say to him that, as was said in Committee, paragraph 1(4) of Schedule 1 requires the Secretary of State to appoint commission members who have a broad range of experience in working in the field of poverty, including working with children and families experiencing poverty. I hope that meets the important point that he has made.

Lord Martin of Springburn: The Minister referred to "working" with poverty. I mean no disrespect, but a social worker goes into an area of poverty and does a job of work; I am talking about people who live in that poverty and do excellent work. There is no point in saying, "Let us pick someone who is poor", put them on the commission and leave it at that. People who live in such areas seven days a week have proven that they are good at helping their communities.

Baroness Walmsley: I thank the Minister for her reply. I hope that when the Secretary of State comes to make these appointments, he or she will read in Hansard the words of the noble Lord, Lord Martin. He has made some very good points.

Amendment 10 agreed.

Amendment 11

Moved by Lord Kirkwood of Kirkhope

11: Schedule 1, page 19, line 27, at end insert-

"Reports on malnutrition

The Commission must, for each calendar year, produce a report which includes-

(a) the number of malnourished children in the United Kingdom; and

(b) an assessment of how the level of child poverty has influenced the number of malnourished children."

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Lord Kirkwood of Kirkhope: I shall speak also to Amendment 23, which has the valuable support of colleagues on all sides of the House.

The provenance of the amendment stems from the important discussions we had in Grand Committee. We are talking about the important subject of child poverty, and the general public appreciate clearly the direct connection between child poverty and malnutrition.

Malnutrition is a subject that I have come to quite recently. It was the noble Lord, Lord Rea, and the noble Baroness, Lady Finlay, and reflecting upon their very powerful speeches in Committee that made me go away and look again at its significance and the direct relationship between malnutrition and child poverty. It is that that promoted the idea that it worth spending a moment or two on Report on the issue.

I do not want to make a long speech, but I now believe, with all the passion I can muster, that babies that are underweight at birth are, by definition, disadvantaged. All the statistics show that they are immediately part of a group that is, almost inevitably, heading for disadvantage in later life. That is an essential part of the intergenerational poverty that the Bill seeks to address. If we do not think carefully about what can be done in the Bill, against that background, we will be missing an opportunity.

I am struck by the recent improvements in nutritional science, which is getting very much better at diagnosing and suggesting remedies and methods of dealing with malnutrition, and the developments that are now available. There is a very clear relationship and link-even as a layperson, I can see it-between diet and underdevelopment; underdevelopment not just in terms of health, but in terms of socio-economic background, well-being in the broadest sense, education and a whole range of other factors. Children learn to be poor by the time they are three or four years of age and therefore, if that is true and if we can determine-as we can very easily-that children who are born underweight are subject and susceptible to being in that position, we are derelict in our duty if we do not do something about that.

My Amendment 11 is easier for the Government to accept than Amendment 23, which also stands in my name. Since the Minister was very generous in accepting a Conservative amendment earlier, I think it is only fair that, in the course of an eight-hour debate, he is equal handed. This may be his moment.

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