Welfare Reform and Work Bill

Earl of Listowel Excerpts

Monday 25th January 2016 Lords Chamber

[The Lord Bishop of Durham]

My Lords, I start, as I began my speech in Committee, by recognising that everyone in this House has a shared commitment to tackling child poverty in this country. We all want to see the end of child poverty; I am sure that no one in this House would want deliberately to keep children in a state of poverty. This debate is, therefore, not about the ends but about how we monitor progress towards that goal. Previously, I expressed my agreement with the Government that to maintain that income poverty alone is an adequate way to measure child poverty is no longer sustainable. I agree that there are other root causes, such as lack of work, low skills, poor housing, family instability and addictions, which must be recognised and tackled. But then we must also remember that many children in poverty are in families where a parent is in work; these children are currently trapped in poverty. I, along with the many organisations that work in this area, remain convinced that financial poverty is a crucial matter that must be recognised and reported on adequately.

It is, of course, possible to overstate the importance of material well-being alone. Many other things matter in children’s lives, including loving parents, good schools and safe neighbourhoods. They are all needed for children to thrive and achieve their potential. But it is also possible to understate the importance of income, or the lack of it—especially among those of us who have plenty, and perhaps take such things for granted. According to the latest deprivation statistics, 1.7 million children live in families that cannot afford to heat their homes properly, 1.3 million children lack the funds to take part in at least one organised activity each week, and 1.1 million children cannot afford to have their friends around for tea or a snack once a fortnight.

We know that money matters, because this is the experience of people in poverty, and of the many organisations and charities that work with them daily. There is also a wealth of academic evidence pointing to the damaging effects that income poverty has on children’s well-being, including their health, education and future employment prospects. We know, for example, that low income impacts on children’s cognitive ability, educational attainment, conduct problems and mental health, with serious implications for their future life chances.

Does the Minister accept that low income is an important influence on children’s outcomes and life chances, as his own department’s review of the evidence concluded in 2014? Can he explain why the Government are studiously ignoring the views of nearly everyone who responded to the consultation on child poverty measurement in 2013? According to a recent analysis by the London School of Economics, 202 out of 203 respondents to that consultation believed that income should be included in the poverty measures.

If I have heard the Minister correctly, the Government’s concern about the current child poverty measures is that they have encouraged an overdependence on income transfers, diverting attention from policies that tackle the root causes of poverty. However, the amendment does not seek to reassert the primacy of the existing child poverty measures: it simply requires that income-based measures of poverty be reported on alongside, and on a level footing with, other life chance indicators, such as worklessness and educational attainment, in order to acknowledge the significance of family income for children’s well-being and future prospects.

Furthermore, the amendment is about indicators for monitoring progress, not about targets or deadlines, so there is not the same risk that it could drive policy in an unhelpful direction. And with all due respect, the temptation to place too much emphasis on income transfers as a means of reducing child poverty is not one that the current Chancellor appears to struggle with. I agree that it is important to tackle the underlying drivers of poverty, but that can be done without abandoning all the existing income-based measures of poverty. The real issue is committing to, and resourcing, an effective long-term strategy to reduce child poverty, rather than finding alternative ways to measure it.

No economic or social indicators are perfect. Let us take the employment statistics. I note that recent trends in employment are encouraging, but those statistics do not allow for the quality of employment, and hide substantial levels of underemployment. Similarly, GDP statistics give equal weight to desirable and undesirable economic activities, and take no account of many priceless commodities. It is no surprise that existing poverty measures have flaws too.

The relative income measure, in particular, has been criticised for showing a decline in poverty during the recent recession. But that is precisely why there are three other measures of poverty in the Child Poverty Act. The absolute poverty measure is not affected by annual variations in median income in the same way. The deprivation measure, which focuses on the affordability of basic necessities, has the added benefit that it captures people’s living standards more directly than low-income measures. Nor can it be manipulated—if that is the right word—by targeted government transfers to low-income households. I therefore encourage the Minister to consider seriously the adoption of a deprivation-based measure of poverty as a way of recognising the importance of material poverty within the proposed set of life chance indicators.

The biggest gap in the proposed set of life chance indicators is that the existence of in-work poverty is completely ignored, even though nearly two-thirds of children in poverty have at least one parent in paid employment. We all agree that work is usually the best route out of poverty for those who are able to work but at present, sadly, it is not sufficient for many parents in low-paid or insecure employment. It seems inconsistent that, while introducing a national living wage and in-work conditionality to encourage people to look for better-paid jobs, any reference to in-work poverty in the indicators is omitted from them, and they will be used to monitor progress. This is why I also support the amendment in the name of the noble Baroness, Lady Lister, to introduce an indicator of in-work poverty alongside the worklessness indicators.

I anticipate that the Minister will respond by saying that the existing poverty measures will continue to be published and will be available for everyone to scrutinise each year. However, without a statutory reporting requirement, there will be nothing to stop a future Government or the Office for National Statistics, if it is its decision, from ceasing the annual production of the HBAI statistics at some later date. Dropping these measures also sends a clear message that income-based poverty does not matter to this Government, which, unless I am mistaken, is not their view or the Minister’s view.

In conclusion, first, I thank the Minister for offering to meet with me. My apologies: I could not make it but my daughter’s graduation trumped him. I note that consistently in response to our previous debates, the Minister has argued that the Bill is but one part of the Government’s programme to move towards a society with more people in work, on higher wages and paying lower taxes. He has noted other measures, such as the national living wage, the increasing thresholds for paying tax, and others, stating that these measures combined will raise the living standards of many. Of course, this is disputed by others. However, my point here is that since the Government are confident that their measures will be successful, they need have no fear of a statutory duty to report these income figures. Indeed, they should welcome it as a clear statement measuring their anticipated success. I commend the amendment and beg to move.

[The Earl of Listowel (CB)]

My Lords, I support the right reverend Prelate and thank him for moving this amendment, to which I have added my name. I will mention two principal reasons for my doing so. One is a concern that I think and hope is shared around the House: the changing nature of a Parliament and the experience of families that grow up in poverty. It is very easy to avoid meeting families in poverty. Many of the leaders of this country will perhaps have been educated privately from a young age, and there may have been few reasons for them to come into contact with families in poverty. They may never have worried about where the next meal will come from or whether they can afford to heat their homes, and they may not mix with people who have those worries. My personal experience of course is that I and my family have never had to worry about whether our home could be heated or whether there would be enough money for the next meal. However, the families we are talking about worry about whether they can feed their children and whether they will have to go without a meal to feed their children.

I recently met with Ms Lorna Sculley, who is a 36 year-old and has three boys: the oldest is 15 and the youngest is fairly new-born. She works for 16 hours a week and lives in poverty, so she is one of the “working poor” that the right reverend Prelate described. During her last pregnancy and maternity leave, there were difficulties with her benefit payments, which meant that she got into debt and had difficulty in meeting her rent. She became increasingly desperate. Fortunately, there was a food bank local to her. With the help of the education welfare officer, she was referred to the people running the food bank and she sought their help. Not only did they provide much-needed food for her and her boys but they gave her advice about how to negotiate with the benefit system and to catch up as much as possible. Unfortunately, I think that it is possible to get only a three-month rebate if one has had these sorts of slips, so she could not gain all the money that she needed. She also told me that, because she is working, her boys are not entitled to free school meals and it can be particularly difficult to get severe hardship payments. Her two older boys had destroyed their mattresses by jumping up and down on them but it was hard to get the money to replace them.

--- Later in debate ---

[Lord Northbourne (CB)]

My Lords, on this kind of issue I am usually very much on the side of those who are sorry for those who have problems. But I think a much stronger case would be made if the amendment could be rephrased so as to take into account the possibility that, at times, the family themselves ought to do more to create the income that they so desperately need. I have not come prepared with any evidence but, being involved in issues around child poverty, I hear a good deal to suggest that a number of families prefer to live on benefits rather than go to work. I do not blame them for doing that, but I think they should share their responsibility in providing that income which, indeed, is so essential.

[The Earl of Listowel]

My Lords, I wonder whether my noble friend is aware that of the children in poverty who we are discussing at the moment, two-thirds have parents who are in work. The majority of the children we are discussing have parents who are in work.

[Baroness Hollis of Heigham (Lab)]

My Lords, very briefly, I support the amendment in the name of the right reverend Prelate the Bishop of Durham.

I am puzzled. When we considered the 2012 Welfare Reform Act, the Minister rightly commanded the respect of the entire Committee and allowed the proceedings to be lengthened from the original 10 or 11 days to 17 days, in the process of which he negotiated, discussed and shared information because he was determined that the introduction of universal credit would be, as far as was possible, evidence-based. That was something that we all responded to: we were not being motivated by the latest piece of journalism or an ideological twist; it was evidence-based.

What puzzles me about the Government’s position is not that they are seeking to get analysis of the impacts of poverty in terms of well-being measures, adult worklessness, child educational attainment at 16, and so on—it is perfectly sensible to have information about that. But this is not an either/or situation. We all know that we need to know about the income going into a family as well as about the impact of that lowered income on the outcomes that affect the family and the children, as the noble Lord, Lord Northbourne, said. This is not an either/or situation. We need both because, above all, government need to know where they can most effectively intervene to ensure that, as far as possible, children and their families have good, strong, decent and well-funded lives. We cannot know that unless we collect the information on both income and on what the Government believe to be the impact. It is not a question of which comes first, which drives one or the other, or which is the gateway. That does not matter—we need both. On the basis of that evidence, we, as a House and as Parliament, can come in behind government to see what levers are most effective in addressing the issues that that evidence has identified.

The Minister is an evidence-based Minister, which is why he has our respect. Therefore, in the light of that and all the work that he did on the 2012 Bill, I urge him not to sabotage it by ignoring crucial evidence of how best the Government should use the resources at their disposal. I hope that he will accept the right reverend Prelate’s amendment.