(14 years, 6 months ago)
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Lord Kirkwood of Kirkhope
To ask Her Majesty’s Government what are their proposals for tackling poverty.
Lord Kirkwood of Kirkhope
My Lords, it is a pleasure to sponsor this Question for Short Debate in your Lordships’ House. I start by declaring a non-remunerative, non-operational, non-executive directorship of the Wise Group in Glasgow, which promotes intermediate labour-market jobs for people on benefits. An important reason for having this short debate at this time is to try to get an early indication of how the Government are putting together their strategy for the longer term in terms of the new coalition Government’s programme.
I want to skim across four or five big issues. If the Minister runs out of time, as he did last week, I hope that he will resort to answering some of the questions that arise by correspondence. My first is a short-term issue, but it is signally important. At the moment there is a lot of concern in the poverty lobby about the short-term impact of the upcoming financial cuts and how that might impact on households with low incomes. I seek an assurance from the Minister that those who are most at risk will not bear the brunt of the upcoming cuts. Obviously, there have to be financial constraints. The Government and the country face a serious situation. The rhetoric being used by Ministers about “progressive cuts”, which seems a worrying oxymoron when you think about it, is important.
As I say, we need reassurance that those who are already poor will get some protection from the worst excesses of the austerity confronting the country, not just for the three-year period of the next Comprehensive Spending Review, but for a lot longer than that. In that regard, it is worth recalling that it is crystal clear that levels of household debt, as recorded in the Government’s own State of the Nation Report: Poverty, Worklessness and Welfare Dependency in the UK, are at an historic high. A lot of households out there, even those that are not poor, are carrying high burdens of debt that must be weighed in the balance. We know that the Social Fund was being considered for reform under the previous Government, and a consultation began in March. That the Social Fund is able to make short-term loans to financially stressed households is extremely important. Money advice is also important, and I know that plans were put in place by the previous Government that are essential to trying to get people out of some of this debt. I think that the Government should seriously embrace the prospect of restricting APR loan charges that are sometimes charged by loan sharks in this country at usurious rates to low-income households that have nowhere else to turn for short-term cash. Can we have reassurance that those most at risk will be given special consideration in the upcoming cuts?
I turn to my second issue. Although I think I know the answer even before I ask the question, can we have an assurance that the department will be robust in seeking from the Treasury investment resources for welfare reform? This is a longer-term point—I am talking about the next five to 10 years—that relates to some quite radical plans that Her Majesty’s former Opposition put together in documents such as Dynamic Benefits and others. They are indeed radical and certainly worthy of scrutiny and examination, but it is not reasonable to expect radical reform of that kind to be done at nil cost. People will get hurt and there will be a lot of losers if they try. I would like to think that a case is being made to the Treasury for the resources necessary to facilitate that reform.
Something that has always been a bit of a puzzle to me relates to my suggestion for finding money when money is scarce. The departmental report of the Government Actuary regarding the last benefit uprating statement states at paragraph 1.5 that:
“The balance in the”—
national insurance—
“fund at 31 March 2011 is estimated at £50.2 billion, or 63.8% of the estimated benefit payments (including redundancy payments) of £78.7 billion in the year 2010-11”.
That looks forward over the next 12-month period. As colleagues will know, the recommended balance in the National Insurance Fund is one-sixth of annual benefit expenditure. The figure of 63.8 per cent is not a sixth, so the Government have stored away a huge amount of national insurance contributions. The question is this: why do they not use this money in the short term to get some of us, particularly low-income households, through the immediate period we are facing? I hope that the Minister will go back to the department and ask that question robustly.
In addition, I suggest that the Minister looks at fraud and error for savings, as well as at administration costs. Between them those items cost £10 billion, which is a lot of money, so savings can be made. I want also to ask him about the longer-term plan for the department. I have mentioned the report Dynamic Benefits. What public service agreements can we expect for the upcoming three-year period starting in 2011? Do the new Government expect to bring forward any policy papers on this issue in the immediate future? Are there any Bills in prospect? What will the new Cabinet committee be doing? I am in favour of the new committee, although it is astonishing that it has not been set up before. What are its terms of reference, what will it do and what difference will it make?
Finally, who is doing what? I am a great fan of Mr Frank Field. I have known him for a long while and he is a very interesting character, but what on earth has he been asked to do? When will he tell us what he wants done, and what will we do with his advice when we get it? I ask that because the last time he tried, he did not get very far. It would be good to get an idea about the longer-term departmental strategy in this direction.
On child poverty, it is essential to know whether the framework in the Child Poverty Act 2010 will be continued, sustained and consolidated. We spent a lot of time in this House improving the Bill. It will provide a serious foundation between now and 2020 and I hope that its targets will not be interfered with by Mr Frank Field or anyone else. Can the Minister confirm that the statutory requirement is for the Government to set out their plans by March 2011? Can he give the House an idea of when the commission created by the 2010 Act will be set up and an idea of its terms of reference?
As to the working age strategy, there is some concern about the work programme and the kind of consolidated programmes it will bring. The cancellation of the existing New Deal programmes makes some sense but it took me by surprise that, as I understand it from a ministerial Written Answer last week, the Flexible New Deal phase 1 contracts that were set in place last October are also to be cancelled. So a whole raft of contract cancellation charges and costs could suddenly be visited on the providing community. How is that to be folded into the consolidated work programme in the future? I certainly expected phase 2 to be cancelled but the Flexible New Deal phase 1 cancellation is a surprise.
Related to that, the scale of the new providers for the new consolidated work programme will need to be much bigger than previously. They will need to have very deep pockets and be very big organisations to carry the weight of these programmes until they start producing surpluses in the long term. That is a matter of some concern. As to the terms of the work programme more generally, I hope that the viable work carried out by Professor Paul Gregg in setting up a personalised conditionality rating, which I absolutely support, will not be lost in the course of the rollout of the work programme in the longer term.
Finally—sometimes we all miss this important point; it is very easily missed—we need a society-wide response to poverty now. We suffer too much from the red tops taking a swipe at any family they think are pulling the wool over people’s eyes and swinging the lead—no doubt there will be some who do that—and they are castigated as scroungers and caricatured as no-hope people who hold the country back. We need a new paradigm for that debate. I hope that the new Government will look at all these issues and start building some more positive attitudes towards poverty reduction measures in the future. Unless we do so, we will not have a positive enough atmosphere to secure the kind of reform that we all want to see for our low-income households in future.
The Lord Bishop of Blackburn
My Lords, a photograph was displayed in my cathedral church at Blackburn; it was a picture of poverty but it illustrated very much more. It showed a young man sitting in a doorway, head down, his hands wrapped around his knees. You could see his face; he had lost his identity. His vision was limited to his immediate prospects of life on the street. The door behind him was closed, symbolising his exclusion. His poverty was costing him everything, including his hopes for the future.
Blackburn is a town highlighted as one of the most deprived areas of Britain. It also has one of the highest percentages of young people in the country as a proportion of population and, with a large number of single-parent young mothers, it is essential that we sustain Sure Start. I hope that in addressing these particular issues of poverty and trying to bring new hope to communities, Her Majesty’s Government will think seriously about a real partnership with the third sector and faith communities.
County statistics for Lancashire show both the depth of poverty and its dehumanising range. Taking income alone, we see that Lancashire earns 8 per cent less than the national average. Blackpool, for all its image of showbiz glitz and glamour, takes home only 75 per cent of the average pay packet. We have heard of successful new deals for communities in other areas with low-wage economies. Can these be extended? Will government plans emerge to foster grassroots leadership so that people are empowered to address the needs of their poor communities? Again, can we look to a partnership with the faith communities and the third sector in doing this?
One of our greatest concerns in Lancashire is that one-quarter of all children are living in families which are below the poverty line, on 60 per cent or less of average income. They are often in households struggling on benefits or the meagre proceeds of part-time or low-paid work.
We still hear talk of the deserving and undeserving poor, which cannot be helpful. Surely there can be no question of any child deserving to be poor. The Children's Society’s Good Childhood inquiry listened to what children themselves had to say about their lives. It was striking how many children expressed deep concern about the impact of poverty on other children—the lost opportunities, risks to health and shattered expectations. It seems clear that our children have their priorities right. Can we find the courage to make their concern to tackle poverty our political and policy priority?
The experience of my own region shows that some of our communities are on a knife-edge. The risk of a double-dip recession, while it may be avoided nationally, is not inconceivable in some regions where the resources are just not there for recovery to emerge after the withdrawal of public spending. Poverty is the question that we are addressing today, but we will not tackle poverty until we tackle the real inequality between regions and communities.
In front of that cathedral photograph that I mentioned earlier is an image of new life, focused on the sort of young person who could be helped off the streets, away from a culture of ASBOs and exclusion. It is the Youth Zone project within Blackburn’s Cathedral Quarter. It will provide, for 52 weeks of the year, a range of activities and enterprise programmes, in a safe environment, for those aged between eight and 21. It is expected to cater for 3,000 young people a week when it opens next year. The admission cost will be just 50p, and development costs have been supported by £6 million of central and local government funding.
We all know that to reduce poverty is costly, demanding private initiatives supported by public funds. In this coming new age of austerity, let us not walk away from our deprived communities—nor should we let our attention be diverted by domestic deprivation from those places in the international community where poverty is frequently a death sentence.
Lord Adebowale
I start by apologising to the noble Lord, Lord Kirkwood, for my tardiness in being a few minutes late and missing his opening remarks. I was delayed by my need to do my day job. This is a most timely debate, and a most welcome one. My interests in this subject go back many years. I am currently chief executive of an organisation called Turning Point that provides services to many of the poorest in our community, covering employment, mental health, learning disabilities and substance misuse. I want to address the challenges of helping those with complex needs and make a few asks of the current Conservative-Lib Dem Government.
Many of the people that Turning Point sees and many of those at the sharp end of the inverse care law—which states that those who need care most tend to get it least—suffer from complex needs. It is hard to separate those with complex needs from those in poverty. Poverty can contribute to those needs and challenges and hold someone in a life of poverty if those needs are not addressed. Not far from this building, we can see the effects on individuals; they can be seen on our streets and in our communities. The differences in life expectancy and health inequalities are stark. A woman in Liverpool can expect to live 78.3 years, whereas a contemporary in Kensington and Chelsea can expect to live for 87.2 years. Those are the stark realities of poverty in Britain. It is the 60,000 households who were newly homeless in 2009 and the 253,000 people in April still claiming jobseeker’s allowance who are at the forefront of my mind.
In explaining poverty, there is a temptation to see personal character as the main cause. I hope that we do not head in that direction. People living in poverty should just try harder—that becomes the subtext of much of the debate. We know that that approach is simplistic; it focuses on the faults of the individual, rather than considering the systemic weaknesses in society that contribute to social injustice. Social standing, as many of us in this House know only too well, is a result of complex interactions of a number of factors. It is the result of privilege of birth and educational attainment—which can also be related to the privileges of birth—social contacts and personal relationships. Strength of character is only one factor. Social justice can only hope to be achieved if this factor is acknowledged.
Of course, we cannot shield ourselves from the realities of the current economic climate. We have a budget deficit of staggering proportions and we have been told that we can expect to pay £70 billion on interest payments on that debt alone, a figure greater than the amount we spend on schools, climate change and transport combined. These facts, and the statements of the Prime Minister and the Chief Secretary to the Treasury, have caused a great deal of fear from those whose livelihood is at risk—fear of the legacy of debt we are leaving our children and fear of what our public services are going to look like five years from now. The low-hanging fruit have already been picked, with the announcement of £6 billion of cuts. However, I am greatly concerned that attempts to rein in the deficit will create further pain for the most disadvantaged in society.
At the moment, our limited knowledge of future plans for the welfare system shows that reform will be based on promoting the value of work by ensuring that it pays to be in employment rather than living off benefit. People will have to work their way out of poverty. The benefits of engaging in meaningful work are clear: it helps to promote resilience, in terms of mental health and well-being, while increasing social networks. However, I am concerned that if we have a one-size-fits-all approach we assume that people are not in employment because of the generosity of the welfare system, and that by tapering the loss of benefits when employment is found, there is a greater incentive to return to work.
Underlying that, though, is the notion of the deserving and undeserving poor, as mentioned by the right reverend Prelate the Bishop of Blackburn. Once work has been incentivised, those who do not or cannot work are deemed to be irresponsible. If you want to know how to create an underclass, the recipe is very clear: create unemployment and remove the support necessary for those who want to work to move towards work. We know that much.
Unemployment is currently high. We cannot expect people to walk into jobs. This approach is alarming, and cuts to public spending are set to increase redundancies. The TUC has recently reported that 45.9 per cent of women in the north-east work in the public sector. There is no point blaming the public sector for that; it is a fact. Unemployment is set to increase in the area, affecting the whole community. The Chartered Institute of Personnel and Development suggests that cuts to jobs in the public sector will increase unemployment to 2.95 million, accounting for one out of every eight jobs in the public sector. Personal responsibility does not come into this equation. Unemployment is out of the control of the individual, and we know that every month that someone stays unemployed, their mental health deteriorates—the two are interconnected.
Those in poverty are trapped in a cycle of deprivation, often incurring greater levels of debt. The exclusion from financial services and the difficulty of getting credit, with the high interest rates that can be obtained, mean that those in poverty pay over £1,000 more a year on life’s essentials than they need to.
There is no guarantee that those who work are protected from poverty. Statistics from Barnardo’s suggest that a couple with two children and one parent working for the minimum wage would have to work 60 hours a week to earn the 60 per cent of median income that takes them out of poverty.
I have to be honest—rather than “we’re all in this together”, I am concerned that those communities most disadvantaged are being left on the sidelines. We have seen this before; in the 1980s and early 1990s, long-term unemployment scarred communities and it still does. The effects of unemployment go far deeper than just the individual. It also affects families and community cohesion, often resulting in higher levels of crime, further deprivation and further increased expenditure. We have had a failure to invest in preventive actions to act against the social problems connected to long-term unemployment, adverse effects on mental health and drug misuse. Permitting this degradation of society to occur again is both morally questionable and economically illogical.
We must make sure that the long-term unemployed are given access to support that addresses the obstructions preventing them from entering employment. Communities with high levels of unskilled workers have been disproportionally affected by the high levels of unemployment. We cannot perceive long-term unemployment as being a product of laziness; rather, it is an indication of unmet need in the community.
Those most in need of support are the least likely to receive it. This is for a number of reasons. Staff not recognising the full extent of the problem or believing it is the responsibility of other services—a lack of joining up on the ground, a lack of connectedness in service provision, which is both bespoke and personalised—a lack of confidence and knowledge about the availability of support and a distrust of services can all combine to ensure that those with complex needs do not get the help that they deserve.
Efficiencies can be made by increasing the effectiveness of services. Effective services are designed according to the needs of the communities they serve. We cannot assume that all communities are the same. Rather, people should be given a voice to say what they need from the services, and they should be given the opportunity to design and indeed deliver those services where possible. We must ensure that performance measures are based on the outcomes they achieve for individuals and the wider community.
My own organisation has been working on models that engage communities in designing and delivering services, and auditing the effectiveness of those services in their communities. We have shown that such an approach can give far better access to hard-to-reach groups, and we have found that integrated services offer the best opportunity to improve access to services.
Integration can be through joint commissioning across health and social care as well as whole-system redesign. My view is that the whole system needs redesigning. Slash-and-burn not only will not deliver the savings that we are looking for, but will simply drive more cost into the system for future dates. We can avoid duplication of delivery, which means savings; and many of these services can be made sustainable through a strong partnership with the community.
We have seen the effects of not taking action in the aftermath of a recession—inaction born from the belief that people should be able to resolve their own problems. Instead, we need to recognise that the way that services are currently designed prevents people helping themselves, leading to costly inefficiencies along the way. We need to resolve these obstacles if we are to reduce poverty and achieve social justice.
I end by asking my first two questions of this Government. First, are the Government prepared to report regularly on the impact of the impending spending cuts in public services on our poorest people and communities? Too little is said of the impacts of the economy on our poorest. While I appreciate that Frank Field will be working on measures of poverty, I think that we are in danger of letting the excellent get in the way of the good enough. If you cannot afford to feed your kids, a debate about how to measure poverty will be meaningless to you. I want a “good enough” measure; I am not interested in the perfection of the science. Will the Government report regularly to both Houses, and to the country, on the impact of the budget cuts on the poorest areas and people? Secondly, we have set up an Office for Budget Responsibility. Can we also have an office of social responsibility?
Lord Roberts of Llandudno
My Lords, whenever there is a time of hardship and deprivation, Wales will suffer as much if not more than any other part. The noble Lord, Lord Rowlands, was of course MP for Merthyr Tydfil for many years; his book, Something Must Be Done, showed the terrible time of hardship in the 1930s in the South Wales valleys. Our hope will now be that if there is a time of austerity, at least the Welsh Assembly Government, working with Westminster, will be able to avoid any similar situation or hardship in this era.
We have to have co-operation between the Government, the devolved Administrations, local councils and voluntary organisations if we are to tackle this problem which is looming at present—we are really in the middle of it. Much of my concern has been with the poverty and deprivation suffered by incomers to the United Kingdom. We could alleviate that situation quite quickly in many respects, because certain Acts could be amended or implemented that would bring about a change in the situation of what I might call the suffering of those particular communities. When migrants from the European Union travel here, some might expect to find that the pavements of London are paved with gold. We have to get into those communities in Poland or Lithuania, or wherever they are, before the people travel here and give them packs of information so that they are aware of the situation ahead of them before they venture here. There is no gold paving the streets of London; there is often hardship and great sadness.
If only we could, as a Government, devise packs of information that would help people to say, “Yes, I am going to venture” or, “No, I am not going to try at this time”. I hope the Minister will consider this seriously. Some will come—of course they will. Young people must venture and be able to see what life is like in other countries. However, we need—possibly with the churches and other voluntary organisations—to establish a national telephone helpline. If people are in great difficulties or circumstances that make their lives a misery sometimes, at least they will know that there is one way to connect with those who might be able to help them.
A while ago I was in the Warsaw Parliament, talking about the possibility of having a benefits system in Europe whereby if a person has contributed in, let us say, Poland to a benefits or national insurance system, that benefit could be drawn upon in any other country in the European Union. This would be a portable benefits system, whereby the contributions in one country could be drawn on in another country within the European Union. I am delighted that in a Written Answer to me a week or so ago, the Department for Work and Pensions said that such a scheme is possible. I ask the Ministers and others who are responsible for this to confirm that such a system exists and that they are ready to publicise it so that those in such circumstances could, instead of finding themselves penniless and on the streets, at least know that there is funding available, which they have paid into in their original country. That, I suggest, is something that we could do to alleviate tremendous hardship.
Failed asylum seekers can come here and become totally penniless, without any support whatever. I have had a message from the director of homelessness services at the Salvation Army. It is a message of despair. So many failed asylum seekers are in total destitution. The letter says that,
“on average these people get £7.50 a week from handouts from churches and charities”.
Can we live, or even breathe, on £7.50 a week? Another report, Underground Lives by Diane Taylor, about destitute asylum seekers in Leeds, was published last year. Somebody in this situation says:
“I wake up hungry and go to bed hungry. I am sleeping on my friend’s kitchen floor. It is very hard and cold but he has given me a blanket”.
That is one existence but there are worse examples which I have no time to mention today.
Section 9 of the Asylum and Immigration (Treatment of Claimants, etc.) Act 2004 withdraws all support from failed asylum seekers, leaving them totally bereft of any support whatever. There were two or three pilot areas where the provisions of this Act were implemented. I should like to know what happened in the pilot areas. More importantly still, what happened to the failed asylum seekers in these areas? We can do something to remove an element of poverty. We can do something to remove destitution.
Finally, I know that the 32 London boroughs, in their own way, try to meet these needs, but they act independently and so do not share their facilities and accommodation with those outside their own areas. We urgently need a pan-London approach to homelessness and rough sleeping. I should be grateful if the Minister could tell me what proposals the Government have to help to bring this about.
Baroness Howe of Idlicote
My Lords, I too thank the noble Lord, Lord Kirkwood of Kirkhope, for his bright idea of initiating this one and a half hour debate. I shall not take up too much of your Lordships' time, but it is too tempting an opportunity to miss the chance to suggest a number of one’s pet priority areas, which I hope the Government may consider adopting in their important battle against poverty.
I am particularly glad that the coalition Government are to continue with the previous Government’s target to eliminate child poverty by 2020. We all know that targets can be overdone but this one is clearly sensible. The same applies to the commitment to continue with Sure Start as originally conceived. The right reverend Prelate mentioned that; it has done considerable invaluable work. I am a total fan of it. However, a major area I urge the Government to consider is further action to prioritise tackling what Keith Joseph 37 years ago called the cycle of deprivation. I wish to emphasise two specific ways in which that could be done.
The first is to ensure that children with special needs are identified early in their lives, so that the relevant extra support they need can be provided to help them fully develop their potential talents and skills for the benefit of themselves and their whole community. It would be even more beneficial if the Government could extend this form of assessment so that all children are assessed before they start their schooling. This, too, could save both money and misery in the long run. Incidentally, it is an area which many of us—particularly the noble Lord, Lord Elton, who is sadly not in his place—tried to get adopted in a recent education Bill.
My second point is more directly related to the important cycle of deprivation. The Government could undertake—I wish they would do so—an early assessment of potentially delinquent or deprived families with problems. To help identify such families, the Government's plan for more locally based midwives and health visitors will certainly help identify the back-up that may well be needed. Sadly, if prevention is not achieved, offending follows all too often and long-term costs go up considerably—very considerably indeed if a continual pattern of offending is established. Many of these young people who end up in prison have families with a history—often a long history—of parents, grandparents and generations even further back having criminal records. Of course, prison must be the answer for some heinous crimes, but increasingly we are realising that prison does not work for many offenders. Thousands of pounds are wasted each year by sending young offenders repeatedly to prison when they could, with sensible community sentences combined with professional and third-sector mentoring, be reclaimed for a civilised and worthwhile life. Thankfully, if one is to believe anything one reads in the paper, this appears also to be the view of the Justice Secretary, Kenneth Clarke, so perhaps we will see some action in that regard. I hope that the Government will seriously consider a complete rethink. We looked at this in a small committee of Cross-Benchers on penal policy on which I sit, and we all said that it was time to have another royal commission to rethink the whole of penal policy. That might be a thought.
I want to mention another poverty issue affecting us all that I hope the Government will also put on their priority list. A sensible aim of this Government, like their predecessor, is to ensure that welfare benefits go only to those who really need them, but equally it will be essential to give adequate help and retraining to those returning to work after long gaps. If that does not happen, it is obvious that greater poverty will resume. I hope that the Government can reassure your Lordships that sufficient support of this kind will be provided in these difficult times.
Another area of poverty which is unequally shared, yet could produce additional national and individual wealth, if readjusted, is the earnings of men and women. Much of this inequality is due to the assumed and actual caring roles of women, and despite equal opportunities legislation that gap still persists. Will the Government please consider making the right to request flexible working available equally to men and women? Perhaps more challenging would be the right to work either full-time or part-time on a flexible basis. We live in a global economy and work on a 24-hour international basis. Through internet technologies, we can all be constantly in touch with different parts of the world. All of us know that if we ring a company to make a complaint, the phone may well be answered by an employee living in India because it is cheaper for that company to employ—rightly or wrongly—someone living there.
However, if both sexes had such rights, there would be flexible benefits for companies struggling to survive in these harsh economic times, and that would give both sexes the time needed to care for their children, aged parents, disabled family members or friends. They could take a part-time course and stay in employment. There would be other benefits for women— often those who are most in poverty in retirement—because they would be more likely to stay in employment, to be available for selection for more senior posts, and, I hope, to retire on a better pension.
I hope that the Government will give those few thoughts—I am slightly under time—serious consideration.
Lord Sheikh
My Lords, I thank the noble Lord, Lord Kirkwood of Kirkhope, for securing this important debate. Previous Governments have tried to tackle this issue with the best of intentions. However, the complexity and scope of this problem have often meant that past strategies have not been successful in addressing this matter. I intend to focus my contribution primarily on poverty among children and the present condition of adult poverty. I care about issues relating to poverty, and the charity which I chair and totally fund provides help and assistance wherever it can.
I welcome the Government’s pledge to maintain the goal of ending child poverty in the UK by 2020, as stated in the coalition agreement. It is widely believed that children often inherit poverty from their parents. Therefore, adult poverty and its causes are of equal importance in successfully addressing child poverty. At present, 5 million adults are illiterate and 17 million struggle with basic literacy. A significant number are parents to some of the poorest children in our communities. Children and young people who live in households where adults do not engage in any form of employment are not only the most deprived in our society but are most likely to follow the same path once they leave full-time compulsory education. The generational cycle of unemployment is a key factor in the rising levels of welfare dependency and poverty in our communities. A significant number of these parents who are in employment are typically in receipt of low incomes. The incomes of the poorest 20 per cent of families have consistently fallen every year since 2004. This situation has contributed to the rising level of deprivation in our society and, most unfortunately, it has removed the incentive for those on low incomes to remain in employment.
Poverty is a complex issue. A multifaceted approach to tackling this problem is necessary, as divergent components add to this injustice. I welcome the Government’s increased emphasis on how the merits of localism can bring about the change that is so desperately needed in our communities. Local authorities, agencies and community groups have the potential to play a vital role in ensuring that individuals and the most vulnerable members of society receive the support that they need. It is only fair that such initiatives should have access to adequate training and resources to enable them to continue to fulfil these duties.
Greater emphasis is required on tackling poverty among the ethnic minority communities. For example, levels of child poverty are higher among the black and Asian communities, at 31 per cent and 42 per cent respectively, compared with their white counterparts, among whom the level stands at 20 per cent.
There is a link between family breakdown and child poverty. Research suggests that children from separated families are 75 per cent more likely to fail academically, 70 per cent more likely to engage in drug abuse and 35 per cent more likely to experience long-term unemployment and to become reliant on state benefits. Does the Minister agree that recognising this pattern may result in reducing the number of children who live in poverty?
Research has proved that child poverty is less likely to be a factor in households where one or both parents engage in some sort of paid employment. It is therefore in the best interests of our young people for the Government to create an effective strategy to support families with children and to identify those who are at risk of losing their jobs. The State of the Nation Report reveals that 1.4 million people have been in receipt of out-of-work benefits for the overwhelming majority of the past 10 years. These figures are compounded by research from the Office for National Statistics that shows a rise in the number of unemployed people by 53,000. That suggests that the number of jobless people is at its highest since 1994.
I strongly welcome plans for the welfare reform Bill as announced in Her Majesty’s gracious Speech, with the intention of simplifying the benefits system in order to improve incentives to work. As an employer, I support proposals to provide work incentives and to get 5 million-plus people into work and out of poverty. Poverty among individuals of working age now stands at its highest level since 1961. I also await the findings of the independent review on poverty in the United Kingdom, which are scheduled for release before the end of this year.
It is worth touching briefly on some of the challenges that face our ageing population. Pensioner poverty is most prevalent among female pensioners. I welcome the 30-year rule relating to the qualifying period for the full state pension, which now applies to both genders. This will help to alleviate poverty among women, who generally live longer than men.
Studies by the Leonard Cheshire Disability charity reveal that disabled people are twice as likely to live in poverty as able-bodied individuals. I am confident that noble Lords will all agree that this is a shocking revelation. We have a moral duty to ensure that disabled people have access to a decent standard of living. I should be grateful if the Minister could tell your Lordships what steps the Government will take to address this unacceptable trend.
We are one of the wealthiest and most powerful nations in the world. We can boast membership of the G7 and G8, and also a seat on the United Nations Security Council. Despite these accolades, too many of our citizens are living in poverty. Successfully ending poverty in all areas of society is one of the biggest challenges facing us today. I am particularly concerned about lifting children out of poverty, as the future success of this country is in their hands. Young people who are poor often have low self-esteem, which can lead to a number of undesirable outcomes, including alcohol and narcotic abuse. We cannot afford to waste the potential of our young people. The poorest children are at a competitive disadvantage, especially in education. We need to adopt a bold approach in addressing this inequality. We have both a civic and an economic duty to deal with the prevalence of poverty in our society, and the Government’s proposals to address this matter effectively are indeed encouraging.
Lord Northbourne
My Lords, I apologise to the House and to the noble Lord, Lord Kirkwood, for being a little late at the beginning of this debate, having missed the ending of the previous one. In compensation for that, I shall not speak for very long, which may be of some comfort to the House.
I am grateful to the noble Lord, Lord Kirkwood, for raising this issue but, unfortunately, I cannot agree with him about the Child Poverty Act, on which we both worked so hard in the previous Session of Parliament. I am afraid that I consider it to be a bad Act and I ask whether the Government will either repeal or amend it. I ask that not because I am in any way opposed to resolving the problems of child poverty or promoting the well-being of children but because that is not what the Act does with any degree of effectiveness.
First, the Child Poverty Act is about family income rather than child poverty. Secondly, it is about inequality rather than poverty. I think that we should decide whether in that legislation we are talking about inequality or poverty, as they may or may not both be evils. Poverty is certainly an evil and I think that there are circumstances in which inequality may be an evil. Thirdly, I do not think that we shall really ever achieve an answer to the problem of child poverty until we effectively take parents into partnership with us. It is not an issue on which parents have the right to do as much they would like, and then the state has to step in and do all the rest. Somehow we seem to have failed to engage the less committed parents in our society. We have failed to help them to understand the obligations of parenthood and to co-operate in looking after their children. The noble Lord, Lord Adebowale, who is no longer in his place, and others have mentioned that the most disadvantaged and the poorest children come from broken and chaotic households.
I mention in passing that a number of noble Lords— including the right reverend Prelate and the noble Lord, Lord Sheikh—brought before the House some very interesting statistics, implying that they are perhaps causal, one for the other. One has to be extremely careful about using that argument. Perhaps the House would forgive me if I mention a birthday card I received on my last birthday. It said, “Birthdays are good for you: the more you have, the longer you live”. That is a perfectly convincing fact. We should be looking at child poverty, at the impact on children and on children’s well-being and saying to ourselves, “Can we evolve a better society and a better form of legislation through which to commit ourselves to improving the lot of children in the context of poverty?”.
Baroness Thornton
My Lords, I realise that I am a mere stand-in for my noble friend Lord McKenzie, who I know would bring his usual incisive, knowledgeable and charming ways to the Dispatch Box, but he is unable to be in the House today, so I will do my best. I thank the noble Lord, Lord Kirkwood, for initiating the debate.
Many of the questions that I would like to ask have been put by other noble Lords. During the Queen’s Speech debate, I predicted that the noble Lord, Lord Kirkwood, would hold his Government's feet to the fire on the issues that are dear to his heart and about which he is an acknowledged expert, but I did not appreciate that the first foray would be quite so soon. I feel a little sympathy for the Minister as, during the debate, a large number of very important questions have been addressed to him. The Minister might take some comfort from the fact that this will be the first of many debates on these kinds of issues, so he might be forgiven for not having all the answers immediately—perhaps that is no comfort at all.
Yesterday, Dr John Philpott, chief economic adviser at the Chartered Institute of Personnel and Development, predicted that the coalition Government's deficit reduction measures will stall any recovery in the UK jobs market this year, resulting in a post-recession peak in unemployment close to 3 million, and slowing any subsequent return to low unemployment. He went on to say:
“Given what we know historically about the way in which the social burden of unemployment and stagnant average income growth is shared across individuals and communities, the prospects for those already suffering the most disadvantage seem particularly bleak”.
I turn to two issues to which reference has been made in the debate. I commend the noble Lord, Lord Sheikh, for his loyalty, but I thought I would add a few statistics of my own to his. Today there are 353,000 fewer people on inactive working-age benefits than there were in 1997. The number of people on incapacity benefit almost tripled under the Tories from 800,000 in 1979 to 2.5 million in 1997. At 5 per cent the claimant count is half the level it was in the 1980s and 1990s. The proportion of workless households is still lower now than in 1997, despite the recession and a big increase in the number of students. As a result of Labour’s welfare reforms, investment in childcare and family-friendly working policies, 365,000 more lone parents are in work than in 1997. Why have the Government announced that they intend to save £320 million by cutting some unemployment programmes, including the future jobs fund? How many jobs will not be funded through that and what will be the impact of the Government’s proposals?
I remind the House that under the previous Tory Government, child poverty doubled and the UK had the worst level of child poverty in Europe. Since 1999, we have made progress in tackling child poverty, halting and then reversing the upward trend. So I join other noble Lords—for example, the noble Lord, Lord Northbourne—in expressing my anxiety about the suggestion that the Government might drop our target for cutting child poverty. I join the right reverend Prelate the Bishop of Blackburn in his concern about the future of Sure Start.
The coalition agreement, which I draw to the right reverend Prelate’s attention, states:
“We will take Sure Start back to its original purpose of early intervention, increase its focus on the neediest families and better involve organisations with a track record of supporting families. We will investigate ways of ensuring that providers are paid in part by the results they achieve”.
How will they know, as Sure Start is intended to be a long-term investment in the future of those children, so the results of the success of a Sure Start programme are known not within a year, two years, or three years, but after 10 years, 15 years or 20 years? We know that from the experience of the United States. I also ask the Minister about the intention not to fund free school meals. Again, that is a direct investment in the health and welfare of our children.
Clearly, it is important that we take care to disentangle the causes and consequences of poverty, and some of what I have heard from those on the Government Benches during the Queen's Speech debate and last week during a debate on these issues in another place suggests not a little confusion on that front. As my honourable friend Kate Green MP—a new and very knowledgeable addition to the Opposition Benches in another place—said:
“It is certainly true that lone parents face an exceptionally high risk of poverty, but it is also the case that poverty and the stress of trying to make ends meet can contribute to family and relationship breakdown. It is important that we help to sustain relationships and keep families together, and ensure that they have adequate resources to remove that stress and concern”.—[Official Report, Commons, 10/6/10; col. 544.]
The Government must demonstrate that they have taken account, for example, of those who face a particular risk of poverty and why they do so—disabled people and people from black and minority ethnic backgrounds, with their unequal access to the labour market and unequal experience within it. Those are the structural drivers of poverty and it is important that public policy addresses them.
My concern is that both my honourable friend Frank Field, for whom I have the utmost respect, and the Minister, Mr Iain Duncan Smith, sometimes give the impression that they have a view of the “deserving” poor and the “not so deserving” poor, as already mentioned by the right reverend Prelate, which sometimes does not take account of the fact that life for those out of work and on benefits is not a life of luxury. I challenge the House to consider how any of us would manage on a disposable income of £65.45 a week. I suggest that when the axis of the noble Lord, Lord Freud, Frank Field and Iain Duncan Smith are creating their policy they learn from what has and has not worked in the past. I am sure that they will want to do that.
As I said, during the 1980s and 1990s, child poverty doubled, but since 1999, the number of children in poverty has been reduced by 500,000. That is not by accident. Child poverty reduced in the years in which the Government invested in family incomes through benefits and tax credits, and increased in the years in which Governments have not. The Labour Government's policy of seeking to reduce poverty through increases in tax credits and benefits is not a failed policy.
I therefore caution Ministers carefully to consider what the evidence tells them and to take careful account of the significant expertise that exists outside the House and on the Benches in this House. I refer to the noble Lords, Lord Kirkwood and Lord Adebowale, and my noble friend Lord McKenzie. I was pleased by the almost entirely cross-party support that the Child Poverty Bill secured during its passage through the previous Parliament. The Child Poverty Act 2010, as it became, put in place a recognition of the need to sustain the poverty reduction targets, confirmed the importance of the relative income poverty target and set it once more at the 60 per cent median line.
What are the Government going to do to redefine poverty? Will they, for example, be taking the definition of the Prime Minister when he said that he was concerned about a definition of poverty as,
“people with less than 40 per cent of average household income”,
or “severe poverty”? That definition excludes 2.5 million children from targets of child poverty. The independent Institute for Fiscal Studies has said that such a definition is “not particularly accurate” because some people might have low incomes but enough wealth to have a purchasing power well above the poverty line. Indeed, the Child Poverty Action Group called the statistic “dodgy” and pointed out that under that definition poverty increased by nearly 500 per cent under the previous Conservative Government.
The coalition Government appear set to water down our commitment to end child poverty by 2020 by changing the current definition of poverty. It is clear to us that this will be a disaster for low-income families who need help and support so that they are not left behind and will condemn some children to falling further and further behind their peers. The Government have already announced the abolition of child trust funds and have hinted that they may cut tax credits and other benefits further than was promised in their manifesto. Will the Minister comment on whether that is the case?
Everyone in this House is very concerned about the effect of the Government’s proposals on the most needy and vulnerable in our society so, along with many noble Lords around the House, I suspect we will be watching carefully and will be returning to this vital issue.
The Parliamentary Under-Secretary of State, Department for Work and Pensions (Lord Freud)
My Lords, I thank noble Lords who made such excellent contributions and, in particular, I thank the noble Lord, Lord Kirkwood, who brought up this important topic for debate in this House. I welcome the opportunity to set out this Administration’s approach to poverty.
The recently published State of the Nation Report sets out in stark terms the challenge that this Government face in combating poverty. It shows that the UK is a country where worklessness and welfare dependency are much too prevalent. A higher proportion of children live in households where no one works than in any other EU country. In total, more than one in four adults of working age are out of work. That fact underpins the concern expressed by my noble friend Lord Sheikh. Furthermore, around 1.4 million people have been on out-of-work benefit for nine or more of the past 10 years and at least 12 million working-age households receive financial support from the Government each week. This costs no less than £85 billion a year.
I bring noble Lords’ attention to the National Equality Panel’s report that was published in January and found that in England the median total household wealth in the most deprived tenth of areas is £34,000, while in the least deprived tenth of areas it is £481,000. Those statistics emphasise the concern that the right reverend Prelate the Bishop of Blackburn expressed about inequality.
However, poverty is not merely about inequality of income or assets. The previous Government spent £28.5 billion on tax credits in 2009-10, yet child poverty has fallen woefully short of the target of halving it since 1997. It therefore seems that simply increasing incomes will not improve the position that this country finds itself in. I can assure the noble Lord, Lord Kirkwood, that we are maintaining the timetable on the child poverty commission, and that it will be set up, as planned, over the summer. It is equally significant that the health gap between those from high and low socio-economic backgrounds is wider now than in the 1970s and that the gap in educational attainment between children from wealthy and deprived backgrounds remains high.
Neglecting the interconnectedness of the causes that drive poverty is a recipe for failure. It is with this in mind that I welcome the Prime Minister’s announcement of an independent review of poverty in the UK to be led by Frank Field. The review will look at how we measure poverty and how the home environment can influence educational achievement. Crucially, it will also stimulate debate on the nature and extent of poverty in the UK and make recommendations on how we reduce poverty and enhance life chances for the least advantaged. Without wishing to second-guess the outcome of that review, I am glad today to play some part in that broader debate.
I want to outline four of the most important causes of poverty and give a flavour of the measures that this Government will take to combat them. At the same time I will address the concerns that were so well expressed by the noble Lord, Lord Northbourne, about a purely income-driven approach.
First, we know that a stable home life can make a huge difference to the health and well-being of our children, which is why this Government will, among other things, bring forward reforms to the current tax credit system, removing the material penalty for claimants who live together. I can assure the right reverend Prelate the Bishop of Blackburn and the noble Baroness, Lady Howe, of the coalition Government’s plans to take Sure Start back to its original purpose of early intervention, to increase its focus on the neediest families and to better involve organisations with a track record of supporting families.
I should also like to take this opportunity to refer to the early involvement issues raised by the noble Baroness, Lady Howe. At this important point of reform, we should take the opportunity to ask fundamental questions about the care system we want for children. We know how important the early years of a child’s life are to their cognitive and social development. We should be committed to meeting the challenge of giving the best possible start in life particularly to those vulnerable children who come into care.
Secondly, it is clear that addiction to drugs and alcohol is one of the most damaging causes of poverty. Estimates suggest that almost 80 per cent of problem drug users are on benefits, often for many years and with no realistic prospect of either recovering or finding employment under the current system. My department will bring forward proposals for a refreshed substance misuse strategy that will move away from focusing solely on heroin and crack cocaine and include all drugs and alcohol. These proposals will more effectively support addicts to sustain a drug-free recovery and employment.
Thirdly, a lack of education and skills traps many people in poverty. Improvements in skills can help to reduce child poverty and crime, and improve health and job satisfaction and the ability to perform non-work-related tasks such as managing household finances.
Fourthly, the Government’s work strategy needs to be aligned with the job outcomes we want. Let me assure the noble Lord, Lord Kirkwood, on the way in which we are accelerating the work programme, which has been welcomed by the industry. The work programme will offer stronger incentives for providers to work with the harder to help. They will be paid out of the benefit payments that will be saved as a result of placing people in sustainable work. It implies that those providers will look for a holistic approach to tackling the problems of those people and they will bring much higher resources to solving some of those problems.
The concern expressed by the noble Lord, Lord Adebowale, who I am pleased to see in his place, is one of the things that I hope we will see addressed in our approach, which will start to address the complex needs of many people who need support in getting back into the workplace.
Disabled people are at a substantially higher risk of poverty than non-disabled people. Nearly one in four families with a disabled member live in poverty, compared with less than one in six families where no one is disabled. We want to make sure that work is the best route out of poverty for disabled people and non-disabled people alike. Our plans will help more disabled people to find sustainable jobs and thus regain their independence.
We must also ensure that people can enjoy dignity and security in their old age. The legacy we have inherited includes 1.8 million pensioners living in poverty today. As a first step, we will restore the earnings link with a basic state pension from April 2011 with a triple guarantee. In other words, pensions will be raised in line with earnings or prices, or by 2.5 per cent, whichever is the higher. In the long term, this legacy can be remedied only by cultivating a savings culture in which people have access to a good workplace pension scheme backed by employer contributions.
Let me turn to the many questions that have been asked. There were at least 30 of them, so while I will not be able to handle them all, I shall do my best. The noble Lord, Lord Kirkwood, urged me to provide information on the shape of the Budget and where the financial cuts, if any, might fall. I regret to have to tell him that I cannot pre-empt the Statement next week and urge him and the lobbies to which he referred to be a little more patient.
On Frank Field’s review and his approach to child poverty and the recommendations he will make, all I can say is that he is due to report in December. We await his recommendations with great interest and will take them very seriously indeed.
The noble Lord, Lord Kirkwood, also pressed me on benefit reforms. This is another area where I would not wish to pre-empt later Statements. We are looking closely at ways to unlock what has been called the “unemployment trap” or the “poverty trap” in order to try to put in place a more coherent system so that we can have what my noble friend Lord Sheikh referred to: incentives to work. We will also look to make the system much more flexible, as the noble Baroness, Lady Howe, urged us to do. She referred particularly to micro-jobs, those stepping-stone jobs that are so difficult for people to take on under the current system. We want to make that much easier.
I turn to another leading question from the noble Lord, Lord Kirkwood. He asked whether any cuts next week, if there are any, will affect the most disadvantaged and whether we will look at fraud and error costs. We are committed to helping the most disadvantaged and I hope that some of the measures that I have just discussed, such as the pensions triple guarantee, have reassured him that we take this issue seriously.
I have to draw my remarks to a conclusion. As I have said, I will write to noble Lords in response to as many of the other questions that have been put to me as possible.