Child Poverty

Jim Shannon Excerpts

Tuesday 15th September 2015 Westminster Hall

[Jim Shannon (Strangford) (DUP)]

I congratulate the hon. Member for East Renfrewshire (Kirsten Oswald) on bringing the subject to Westminster Hall for consideration. It is a pleasure to speak and to add my thoughts from a Northern Ireland perspective. I am happy to be involved. I will outline the case in Northern Ireland and how we are being affected. I will probably reflect the point of view of the two others who have spoken, the hon. Members for Lanark and Hamilton East (Angela Crawley) and for Inverness, Nairn, Badenoch and Strathspey (Drew Hendry).

The issue is clearly important. When we hear about poverty, as we do every day, and in particular child poverty, our minds instinctively conjure up images of children living in parts of Africa, or in war-torn countries such as Syria. Given the media attention and the charities involved in trying to end poverty throughout the world, that is unsurprising. In no way do I intend to lessen the horrendous difficulties to which children living in those countries are subject. Unimaginably, they have no clean water, little food and little clothing; unfortunately that is the reality for many.

Poverty, however, means more than that. It is perhaps shocking to learn that here in the United Kingdom of Great Britain and Northern Ireland poverty is a reality for many families. The most recent projections from the Institute for Fiscal Studies, produced before the 2015 summer Budget, suggested that by 2021, in the United Kingdom, 3 million children would be in relative poverty, not taking account of housing costs, and some 4.3 million taking account of housing costs.

Low income affects direct measures of children’s wellbeing and development, including cognitive ability, achievement and engagement in school, anxiety levels and behaviour. Life is difficult enough, but as the years go on, I become more convinced that, certainly in some ways, times are getting harder for our children—clearly, they are. It seems commonplace to see pressures thrust on children and young people from a young age. Getting good results, going to university and getting the best jobs are admirable objectives, but they are much harder for children to achieve when they face increased anxiety and feel less engaged with school.

The hon. Member for Inverness, Nairn, Badenoch and Strathspey mentioned low income, and I will, too. This debate is timely, particularly because the tax credit changes are being discussed today—we will shortly have a chance to vote on them. My party will certainly oppose the changes. The cuts will have a substantial impact on child poverty. The IFS examined the impact of different cuts to benefits in its February 2015 “Green Budget” and estimated that the £5.1 billion of proposed cuts to child tax credit would increase child poverty by 300,000. My goodness! If we are not shocked by those figures, we should be—and embarrassed. The Treasury estimates the impact to be even greater. As well as increasing child poverty, the changes will significantly weaken incentives to work, because the impact of the cuts will fall disproportionately on low-income working families. That is obviously the reverse effect from the one that we want. Our aim in government is, or should be, to assist more people into work—it must be more financially beneficial to go to work than to remain on benefits. There is also pride in having a job and going to work every day, and it brings someone a routine.

We must ensure that wages reflect the cost of living, which is the problem in Northern Ireland. It is estimated that back home in Northern Ireland one in four children will be living in poverty by 2020, and more than half of children growing up in poverty live in working households. That is the main problem in Northern Ireland, much as the hon. Gentleman said it was in his constituency. We are not alone in that, as the issues stretch right across the whole United Kingdom. The Government’s January 2014 “Evidence review of the drivers of child poverty” found that the most important factors standing in the way of children exiting poverty were those contributing to a lack of sufficient income from parental employment—not only worklessness, but low income from work. That is what the hon. Member for Inverness, Nairn, Badenoch and Strathspey said—I had to write down his constituency name beforehand, which makes for a long sentence—and I thank him for his contribution, because he made exactly the point that I wanted to hit on.

A Save the Children report published last May claimed that youngsters had paid the highest price in the recession. Their plight is exacerbated in Northern Ireland because wages lag behind the rest of the United Kingdom, while the cost of necessities, such as food, fuel and childcare, is higher than in other regions. I am sure I am not alone among Members in saying that the increase in families coming to my constituency office to ask for food bank vouchers is truly heartbreaking. I am a big supporter of the food banks; I recognise their good work and that they have a part to play in our society.

Many families tell me that several nights each week they have to decide whether to feed their family or heat their home. The reality, however, is that people make the decision to feed their family, because they have to fill their children’s stomachs, even though they have to be sent to bed with an extra jumper or coat on and do not get into their jammies. That is what happens. If a decision is to be made between feeding and heating, feeding always wins, and heating falls by the wayside.

In Northern Ireland 110,000 children are affected by poverty, going without essentials or living in homes that are cold or damp. Save the Children’s report claims that the 2014 so-called “poverty premium”, which represents how much more low-income families pay for goods and services than middle-income families, now stands at £1,639 per year in Northern Ireland. That poverty premium includes, for example, the extra money needed to pay for items, such as a cooker or house insurance, in instalments rather than all at once. All that comes at a high cost to the children involved. They are always the ones at the end of the line who seems to suffer. Poverty robs children of the childhood that they deserve. They often miss out on events that most of us took for granted when we were children and at school, such as going on school trips or going out with friends.

What I am saying only scrapes the surface of the issues. Children in poverty are more likely to live in bad housing, more likely to die at birth or in infancy, and more likely to suffer chronic illness in childhood, or to have a disability. Those are the facts, the statistics. Poverty damages children’s life chances. Children from poor backgrounds lag behind at all stages of education. By the age of three, poorer children are estimated to be, on average, nine months behind children from more wealthy backgrounds. That is a terrible statistic that we need to address. By the end of primary school, pupils receiving free school meals are estimated to be almost three terms behind their more affluent peers—a gap that grows to over five terms by the age of 14 and leads them to achieve the equivalent of 1.7 grades lower on average at GCSE. The figures show a real trend; children from low-income families are really affected.

In addition, families on low incomes are less likely to be able to afford organic and free-range foods, or even fresh foods. Often their only choice is to buy convenience foods, which often have a high fat and salt content. We cannot ignore that. During the previous Parliament, the Minister was very interested in sport and often talked about diet and sport. I hope that today he will make similar comments. Unsurprisingly, in 2011, the poorest households had more than twice as many obese children as those from wealthier backgrounds.

I am conscious of the time, and will bring my remarks to an end. The statistics are startling and worrying. The sad reality is that hundreds of families live below the poverty line in the United Kingdom. It is vital that we raise awareness of that. The rise in the use of food banks across the UK is a stark indicator of the problem. According to the Trussell Trust, almost 500,000 people were given three days’ worth of food in the first six months of the 2014-2015 financial year, an increase of 38% on the same period in the previous year. Just as Save the Children and End Child Poverty have firmly pointed the finger at low incomes and changes to welfare, so too has the Trussell Trust. All that being the case, more must be done to eradicate child poverty.

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[Kate Green (Stretford and Urmston) (Lab)]

It is a great pleasure, Mr Howarth, to respond to this debate and to serve under your chairmanship. I congratulate the hon. Member for East Renfrewshire (Kirsten Oswald) on introducing it this afternoon.

As the debate has proceeded, we have understood the complexity and multi-layering that is intrinsic in child poverty, but we should also recognise that we know what works to tackle it. Looking at the track record and progress that was made under Labour Governments between 1997 and 2010, I am proud that we saw huge progress with more than 1 million children in the UK lifted out of poverty.

We know what led to that massive reduction in child poverty. As the hon. Member for East Renfrewshire acknowledged, it was in no small measure due to the effectiveness of tax credits, and to the rise in employment, particularly the employment of lone parents, which increased from 44% in the mid-1990s to approaching 60% when we entered this decade.

None the less and despite that progress, today, as we have heard, 3.7 million children in this country live in relative poverty. Perhaps even more depressing, since 2011-12, progress to reduce that number further has stalled. There was no progress whatever under the coalition Government after 2011-12, and the prediction is that under this Parliament, we will start to see a substantial rise in child poverty. None of us can be satisfied or complacent about that.

We have, rightly, heard a lot about the importance of measuring child poverty and having meaningful targets for tracking and tackling progress. At one time, there was cross-party consensus on the importance of measuring relative income poverty and targets for its reduction, but that consensus has broken down between the parties. It seems to have broken down in the Prime Minister’s mind—we have heard him say that he is in favour of targets and measuring and addressing relative poverty, and that he is not and believes that that is irrelevant. We have heard that the Government intend in the Welfare Reform and Work Bill, which is now being debated in Committee, to remove the targets altogether and no longer to set that hard ambition for us to improve our performance. I cannot help feeling—the hon. Member for Airdrie and Shotts (Neil Gray) hinted at this—that that is motivated by fear that the targets will not be met, fear that the position will worsen and fear that the Government will be held to account, as they should be.

We know the importance of having targets and an agreed definition of poverty. Targets drive action. They drive progress and they allow for comparisons that show the direction of travel and the trends, and enable us to compare ourselves with our international peers. No one would pretend that child poverty in this country is like child poverty in some of the poorest economies of the world, but the measures in the Child Poverty Act 2010 have presented a very useful picture that has enabled us to compare performance here with the best performing countries in Europe. Indeed, that was the ambition. It was not to eliminate child poverty to zero, because we all recognise the existence of frictional poverty, but to be at the level of the best in Europe. Until the arrival of the coalition Government, we were on track to achieve that.

It may be that recognition of the importance of targets is why in 2013, when the Government consulted on changing or abolishing the targets, 97% of those who responded said there was no need for any change, so it is highly regrettable that there are proposals from Ministers today to do something that has been roundly rubbished by all the respondents to that consultation. I am shocked by the lack of notice that the Government have taken.

We also heard today, rightly, about the importance and centrality of income in defining, measuring and tackling child poverty. Indeed, Kitty Stewart of the London School of Economics has shown that income is the single most significant factor and indicator of poor outcomes for children across a whole range of measures, including educational attainment and poor health. We also know that poverty has a cost to society as a whole. Estimates by the Child Poverty Action Group suggest that the cost to society of failing to tackle child poverty is £29 billion a year.

In recognition of the intrinsic link between low income and poor outcomes for children, the Child Poverty Act 2010, which received cross-party consensus, covered not just income poverty and did not require measures only on income poverty, but also required strategies on, for example, education, health, parental employment, debt and parenting. All those are associated with high levels of child poverty, but they are not the same as child poverty and it is important not to confuse the two.

None the less, one of my regrets about the abolition of much of the 2010 Act is that we will lose the requirement to produce those strategies. This morning, we heard in the Standing Committee considering the Welfare Reform and Work Bill—the hon. Member for East Renfrewshire may have repeated this this afternoon—that the intention in Scotland is to continue to produce that strategy and I understand from this morning’s evidence session with witnesses that that is also the case in Wales. However, there is no expectation that that will happen in England. Ministers will not expect local authorities to produce comprehensive strategies to address child poverty. If I am wrong about that, I shall be very pleased to hear it and I hope that the Minister will be able to contradict my assertion this afternoon.

We know that the Government know that income is important. Their own evidence review in 2014 showed that it was the most important factor, and not just, as we have heard today, that low income arises because families are out of work, but when there is insufficient income from earnings. It was right for hon. Members to point out this afternoon the absolute inadequacy and insufficiency of measuring only worklessness when two thirds of children in poverty are growing up in working households. We know the reasons for that. They are not laziness on the part of those parents, but poorly paid jobs, lack of access to flexible jobs that can be combined with family responsibilities, high child care costs, high housing costs and ill health. The need to care for a family member suffering ill health or their own ill health curtails employment chances.

[Jim Shannon]

I mentioned during my contribution the effect on those on low incomes of buying cheaply because it is better financially for their pocket, but that affects their diet and health. Does the hon. Lady believe that we should also address that issue?

[Kate Green]

The hon. Gentleman made a useful contribution on the poverty premium: that the poor pay more for the basics. He now adds another important dimension: that lack of income means that the poorest in our society are unable to afford to have the quality of life that protects health, wellbeing and social participation.

The critique of measures on which the Government are relying to underpin their rejection of the Child Poverty Act 2010 is simply wrong. Let us remember that it is not that the income measure in the Act does not capture the full picture of poverty. There is not one income poverty measure, but four to give us a rounded view. It is important to continue to measure relative income poverty, which we expect to rise. None the less, Ministers should be grateful for the four measures in the 2010 Act because it is possible that at the same time as seeing a rise in relative income poverty, we may see a fall in absolute poverty in the next few years. If median wages rise, but benefits are frozen or rise only with prices, we will see a rise in relative poverty. Conversely, absolute poverty could fall if benefits rise in line with the consumer prices index. It is important for Ministers to recognise that we have a good mix of measures in the 2010 Act, which would enable them to point to the complexity of the picture, rather than rejecting the Act on the misleading grounds that it measures relative poverty alone.

We have no analysis yet of the impact on child poverty of the measures in either the Welfare Reform and Work Bill or the others announced in the summer Budget, some of which we are debating this afternoon. However, we know that the impact of those measures will not be felt in the same way across all family types and structures. Lone parents, couples with several children and those with high housing costs will be hit particularly hard.

As we have heard this afternoon, it is important also to understand that the effect of the so-called national living wage will not wholly compensate for the cuts that are being made. Indeed, the cuts are particularly perverse when we consider that many of them are to in-work benefits, increasing, not reducing work disincentives. I am quite at a loss to understand why Ministers think that is a sensible way to proceed.

There is also a massive amount of ignorance about the purpose of different policy instruments to tackle poverty. Everybody welcomes higher minimum pay. Of course it is right that people should be paid properly for the work that they do, and of course it is right that the taxpayer should not subsidise low-pay economies, although we should recognise that achieving a minimum income standard for some families from earnings alone would simply drive businesses out of business. We have heard the projections that even a national living wage may lead to the loss of some tens of thousands of jobs. That is why, in addition to measures to tackle low pay, it is important to invest in tax credits, because many low-paid people who will benefit from the increase in the national living wage may not live in poor households. Conversely, many of those who are going to receive the national living wage will not be lifted out of poverty by that alone, because of their family and household structure and size. Therefore, it is important that we proceed on both fronts, and we cannot expect, at the lower end of the labour market, for wages alone to lift all families out of poverty.

Income poverty is crucial, and the Government’s analysis of the limitations of the Child Poverty Act and the limited approach that they will take to address rising family poverty, frankly, are simply wrong. It is regrettable that, with so much evidence before us and such a long history of having seen what works and what does not, Ministers are so uninterested in looking at the facts and the evidence, and instead insist on pursuing an ideology that will cause hardship for many, and, for the most vulnerable, destitution, the likes of which we have not seen for two decades.

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[Justin Tomlinson]

I thank the shadow Minister, but I am afraid we disagree on that, and I am setting out why I think that is not going to be the case.

Despite a huge increase in spending, by 2010, the number of households where no member ever worked nearly doubled, in-work poverty rose and the Labour Government missed their own 2010 child poverty target by 600,000 children. Compare that with our record. During the previous Parliament, we turned around Labour’s legacy of worklessness. There are now 2 million more people in work. To put that in context, it is more than the figure for the whole of Europe put together. We have the fastest growing major economy.

[Jim Shannon]

I have to follow on from what the shadow Minister said. The changes in tax credits will, according to Barnardo’s and other charities, push another 180,000 children into poverty in Northern Ireland alone. Those facts are coming from charities as well.

[Justin Tomlinson]

I thank the hon. Gentleman for his intervention, but again I plead with hon. Members to be patient; I am coming to those points.

There are now 800,000 fewer people in relative poverty, including 300,000 children. Compared with the second quarter of 2014, there are 50,000 fewer households where no one has ever worked. And importantly, the number of children living in workless households has fallen by 390,000 since 2010 and is now at a record low.

On the specific point about in-work poverty—that theme was followed in the majority of speeches and is important—the figure for relative low income in work is now 200,000 lower than the peak in 2008-09. However, we all recognise that more needs to be done. Wages are rising faster than inflation. That is on the back of having a strong economy. Everything that we do must be underlined by a strong economy. We talk about austerity, but without taking the difficult decisions, we would not now have a strong economy. We have only to look at our neighbours in Europe to see the consequences of not having a strong economy.

We have increased income tax thresholds year on year. We have now taken the lowest 3.8 million earners out of paying any income tax at all. We have set a commitment to raise the allowance to £12,500, and once we reach that point, we will link that to wages going forward, so the lowest earners will never be dragged back into paying income tax. We have set out our ambitious plans for the national living wage. That will make a huge difference. People are forgetting that the impact will not be just on those who get an immediate pay rise, which I think is about 2.6 million people. There will be a ripple effect that could impact on more than 6 million, according to some predictions. Also, the introduction of universal credit will remove the barriers preventing people from increasing their hours. As I mentioned, the biggest improvement is for those people who go from part time to full time. The benefits system was putting in artificial barriers, preventing people from increasing their hours. Universal credit will give people the flexibility steadily to increase their hours where they wish to do so.

We want to build on that progress, which is why we are bringing forward our new life chance measures. The Welfare Reform and Work Bill introduces a new duty to report annually on worklessness and educational attainment in England. We have chosen those measures because the evidence tells us that those factors have the biggest impact on child poverty and children’s life chances, and that is what matters. We want legislation to drive action that makes the biggest difference in the lives of our children. The worklessness measures will identify the proportion of children living in workless households and of children in long-term workless households. The educational attainment measures will focus on GCSE attainment for all pupils and for disadvantaged pupils. We will develop a range of other measures and indicators of root causes of child poverty, including family breakdown, problem debt and addiction, and set those out in our life chances strategy. As my right hon. Friend the Secretary of State has made clear, we will continue to publish low-income statistics annually, as part of the “Households Below Average Income” publication.

We should be focused on those pathways to poverty, not moving people around an arbitrary income line. As the right hon. Member for Birkenhead (Frank Field) put it,

“raising everybody above a set percentage of median income is rather like asking a cat to catch its own tail.”

Focusing on work and education will drive real action, which will make the biggest difference to children’s lives now and in the future.

Education is key to transforming children’s futures. Good English and maths skills are key to improving children’s future life chances. Nearly two thirds of men and three quarters of women with low literacy never receive promotion and are locked into their starting income.