Child Poverty Act 2010 (Persistent Poverty Target) Regulations 2014

Baroness Lister of Burtersett Excerpts

Tuesday 25th November 2014 Grand Committee

In summary, this target is a declaration of this Government’s commitment to tackling this most harmful aspect of child poverty; it reflects the efforts that we are already putting into addressing the issue; and it will ensure that there is continued and relentless focus on it in coming years by both the Government and the wide range of others who have a part to play. On that basis, today I present a persistent child poverty target of less than 7% before the House and ask for its approval. I commend the regulations to the Committee.

[Baroness Lister of Burtersett (Lab)]

My Lords, I endorse what the Minister has said about the damaging effects of long-term persistent poverty. However, I am sure that he did not expect me to come here to agree with him, so I will now make a few critical points. The Secondary Legislation Scrutiny Committee was critical of the lack of clarity in the explanatory material with these regulations, which, as it points out, is not for the first time. It asked about the definition of qualifying households. Just for the record, will the Minister clarify which children are excluded? The scrutiny committee referred to children in state institutions. Am I right in thinking that it also excludes the children of asylum seekers and Travellers? Are there any other groups? It would be helpful for noble Lords to know that.

A perhaps rather techie but significant point, which was not raised by the committee, is the use of before housing costs to measure child poverty. According to the Social Mobility and Child Poverty Commission’s State of the Nation report—I did not realise that the Government’s response was published today; I am not a clairvoyant and I have not read it—if you use the after-housing-costs measure rather than the before-housing-costs measure, which is preferred by the Government, it adds an additional 1.4 million children to the numbers in relative poverty. Therefore, 27% of all children rather than 17% of children are in poverty. As I say, that may seem a rather techie point but it makes a huge difference. As recent research by the Joseph Rowntree Foundation has underlined, housing costs are an increasingly important driver of poverty among people of working age and their children. When I questioned the Minister about this in Oral Questions yesterday, he did not answer my question, and it is a rare opportunity to be able to come back the next day. I will not re-ask the question, which concerned what the Government are doing about high housing costs, but I noted that, instead of answering the question, he talked about how they are making really good progress in tackling poverty. Of course any reduction in the figures is welcome, but it is interesting that every time the Government get up and say, “We’re reducing poverty”, they use a measure that in other contexts they tend to rubbish. Anyway, I will put that to one side.

If we take the figures after housing costs, they are rather less favourable. Indeed, the child poverty figures increased in 2012-13 over the previous year, whereas if you look at before housing costs, they are flat. That is just to underline the importance of these different measures and how they are used.

The scrutiny committee also queried, as the Minister acknowledged, why the target figure in the regulations is not lower. I absolutely accept that zero is not realistic, but the committee pointed out in particular that the majority of consultation responses argued for 5% or less. In fact, 31 out of 39 written responses were against the below 7% target, with only six arguing for it, and 23 were in favour of a below 5% target. One example was the Child Poverty Action Group—I declare an interest as honorary president—which made the point that:

“In setting the persistent child poverty target, the government should consider past historical performance in the UK, and the performance of other comparable countries in tackling persistent poverty. This is suggestive of a range of 3 to 5 per cent”.

It was also critical of the lack of ambition of a 7% target.

I cannot help wondering why the Government bothered to consult in the first place. When they reject a clear consensus of pretty expert opinion, I fear that that feeds cynicism around consultation exercises, despite the warm words in the Written Ministerial Statement, which the noble Lord repeated, that the Government “carefully considered all representations”.

The scrutiny committee also said that it remained unclear as to how the Government intend to implement their policy. The Minister talked about that today with regard to the child poverty strategy, which, as I am sure noble Lords are aware, was published earlier this year. I could say plenty about that, but I will not say what I think about it; I will simply quote—at a bit of length, because it is worth putting on the record—what the Social Mobility and Child Poverty Commission said in response to the draft child poverty strategy, and the final strategy was not that different regarding the overall strategic approach. The commission said:

“The new strategy is the Government’s opportunity to revise its plans for tackling child poverty to get back on track towards meeting its legal obligation to end child poverty by 2020 … Our key conclusion is that this opportunity has not been taken. While there have been improvements in the Government’s strategic approach and in some policy areas, overall the strategy falls far short of what is needed”.

The Minister talked about reducing worklessness being at the heart of the strategy, but the commission points out that its research shows that,

“ending poverty mainly through the labour market does not look remotely realistic by 2020”.

It goes on to say:

“We acknowledge that there are some good things in the draft strategy”—

as do I—but continues:

“However, overall it falls far short of what is needed. Key problems include: the lack of any clear measures, with the Government continuing to distance itself from the statutory measures in the Child Poverty Act 2010 without suggesting any additions or alternatives. This is not acceptable—a strategy which cannot be measured is meaningless. In the absence of further measures and in line with our statutory duty, the Commission will continue to monitor progress”.

Other key problems are:

“The absence of a step-by-step plan for meeting the statutory targets, with the strategy presenting a list of policies rather than a detailed plan with impacts clearly delineated. A failure to engage with independent projections that poverty is set to increase substantially … Lack of new action on in-work poverty … Limited action to mobilise society-wide efforts to tackle poverty … Ignoring the impact of additional welfare cuts”.

It points out what that likely impact would be. Then it says:

“To ensure the final strategy is an effective and credible plan for tackling child poverty, the Government needs to … set out clear measures … Develop a step-by-step plan … Engage with independent projections of increases in child poverty over the next few years … Resolve gaps in the strategic approach … by taking action to address the structural as well as the individual-level causes of poverty”.

That is a really important point, because the Government are always going on about how they are concerned about the causes of poverty but do not tend to acknowledge the structural causes as opposed to individual ones. The response also says that the Government need to:

“Ensure the strategy represents a clear plan for mobilisation and leadership of other actors in society … Engage with the challenges posed for the child poverty strategy by continued fiscal consolidation”.

All the projections are very worrying regarding what the impact of other policies will be on the numbers in poverty, including the numbers in persistent poverty. The fear is, obviously, that the 7% is not going to be achieved because of these policies. It sometimes feels a bit unreal that we are designating 7% or 5% when the policies now being implemented suggest that we are going to go the wrong way on levels of child poverty, including persistent child poverty.

--- Later in debate ---

[Lord Freud]

My Lords, I wish that the noble Lord, Lord McAvoy, had not gone rather crudely political on what is a difficult area, especially as the facts that he used are simply not true. There has been an absolute cut in income for the richest 20% and an increase for the lowest, as has been put out by the Government. This is not the forum to have that kind of crude debate and I do not want that.

Some really important points have been made today. This is a difficult area at a difficult time. My noble friend Lord Kirkwood looked at the national debt and blanched, for very good reason. I look down my nose at him because, when looking at the performance of the last Government on poverty, one saw that they achieved the trajectory for people who were out of work, and they were able to do that through income transfers, but for people at the next level who were just in work and at the next level of income, there was very little movement. That is the problem that we are addressing. We are looking at a problem that cannot be solved just by moving money around particular areas. I commend the noble Lord to look through those figures, which are very interesting and illustrate the fact that we have got to the limits of what you can do just by income transfers, which is what the previous Government did.

[Baroness Lister of Burtersett]

I was not part of that Government, but will the noble Lord not accept that part of their child poverty strategy was also to move people into work? Part of the problem with the current situation, as the noble Lord, Lord Kirkwood, said, is that, although it may not be completely new, this is certainly the first time where more people in poverty are in work than out of work. We all agree that work is a good route out of poverty; but it is not necessarily a route out of poverty. Both Governments have faced the same problem of what you do with a labour market which is not providing enough to keep people out of poverty.

[Lord Freud]

I speak here from a somewhat privileged position, in that I advised the last Government in exactly this area and now speak for the current Government on it. So I am in a position—

--- Later in debate ---

Forgive me, the troubled families programme has not been renamed; I may have had a brainstorm on that. From next year it is being expanded to include 400,000 families, so it is supported.

[Baroness Lister of Burtersett]

I am sorry to intervene again. Before the Minister moves on, my understanding was that although the noble Lord, Lord Kirkwood, mentioned the delay because of the survey data, he was asking about what the actual measures are, and that is separate from the survey data. There was a big consultation about a set of measures that I personally did not think were measures of poverty. That is also what most people said in response so, fortunately, that time the Government did take note of the consultation and withdrew it. However, as the commission says, they are still distancing themselves from the measures that they have without coming forward with a more acceptable set of measures to complement them. The question is: what has happened to them? Have they got lost? There have been rumours about the Treasury having had something to do with it. What has happened to those complementary measures?

[Lord Freud]

In the long term, the Government think that we need a revised set of child poverty measures which would better reflect the evidence about poverty’s underlying causes and where we need to target action most—the kind of thing that my noble friend Lord Farmer, in particular, was talking about, but we are not currently in a position to put those new measures forward. As our consultation, which the noble Baroness mentioned, showed, this is a complex area and there are a variety of views. I am afraid that that is all I am in a position to say at this stage.

On the noble Lord’s point about how these measures are made up; clearly, both relative and persistent poverty levels depend in part on how both median income changes and how those with low incomes improve relative to the median. That is just how the Act was made. We spent an awfully long time debating during the passage of the Bill a general level of discomfort with just this mechanistic approach to this kind of measure. That is just how it is, and that is what the Act shows, but the fundamentals are that we need to maintain our focus on helping those on lower incomes, which means helping people into work—or more work, which is what universal credit will do—and in help with living costs.