Child Poverty: London

Karen Buck Excerpts

Thursday 22nd February 2018 Westminster Hall

[Ms Karen Buck (Westminster North) (Lab)]

It is a pleasure to serve under your chairmanship, Sir Henry. I congratulate my hon. Friend the Member for Mitcham and Morden (Siobhain McDonagh) on introducing the debate so powerfully.

There is more than enough challenge to go around without us having to worry too much about the pressures between inner London and the suburbs, which we have already heard enough about. There are real and growing challenges in suburban London, but child poverty remains acute in inner London, and it is worsening. If London has something of a reputational challenge as a wealthy city, I assure hon. Members that the City of Westminster has an acute reputational challenge. The borough, which contains Mayfair and Knightsbridge, is one of the poorest in the country. It has the sixth highest level of child poverty in the country after housing costs are taken into account, and my constituency has the 15th highest; well over half the children in wards such as Church Street live in poverty.

As Londoners, we must rise to that challenge and recognise that people in other parts of the country struggle to understand that a city with such extraordinary wealth—a city that contains the City of London and the iconic tourist attractions that are so familiar to everyone—is also the region with the highest poverty. It has more children in poverty than Scotland and Wales combined. As Members of Parliament, we have to try to explain that and help people understand it. We must ensure that the specific drivers of poverty in London are understood, and that we get our fair share of resources.

Let me add to the comments by my right hon. Friend the Member for Enfield North (Joan Ryan). Poverty is not an act of God, but is brought about by a failure by the Government and by market forces to ensure that incomes are sufficiently high to lift children out of poverty, that housing is available at a reasonable cost, and that there are adequate services to support intervention for low-income families and children. I, too, am extremely proud that a Labour Government, although they were not perfect—no Government are—were able, though a mixture of the tax credit system, benefit changes and service delivery, to lift 1 million children out of poverty. That has gone into reverse: according to households below average income statistics, an extra 400,000 children have fallen into poverty since 2010. That was an absolutely foreseeable and deliberate consequence of Government policies, including the freezing and cutting of benefits, the two-child policy, benefit caps and the rents policy, which I shall come on to.

I am also proud of the children’s centres—500 have closed as a result of Government cuts to early intervention and local government funding—and national childcare strategy that a Labour Government set up. Under the previous Labour Mayor, Ken Livingstone, there was a London childcare affordability programme, which did so much to make childcare accessible to lower-income working families. So many of those measures have gone into reverse in the past few years.

As all Opposition Members have generally stressed, housing costs lie at the heart of poverty in the capital. It is housing costs that eat so much of people’s income, and it is housing costs that are driving a crisis of homelessness and housing insecurity. The interface between low-paid work, particularly when that work is insecure, the freeze and in some cases cuts in social security—particularly housing support—and high housing costs is a particular stress point.

Two important reports were published today, including another very important one by Citizens Advice, which found that one in 10 adults in this country has an income that varies from month to month. Someone who lives on a variable income, particularly when that income is low, but has high fixed costs—particularly high housing costs—is likely to find themselves in difficulty. That in turn feeds the epidemic of evictions, which we have heard are happening particularly in outer London, and high debt. That feeds the crisis of mental ill health—anxiety and depression—which is a real challenge for families who are struggling to get by on low incomes and in so many cases see their homes at risk. The pressures of housing and poverty are literally making people sick in their tens, if not hundreds, of thousands. That often drives people to seek advice and help, which are less available than they have been for a great many years.

It has already been said that the most vulnerable and most acutely disadvantaged families in the capital are those who are either in the homelessness system or at risk of homelessness. After many years of decline, the number of families in homelessness accommodation has risen significantly. Some 45,000 children in the capital now live in temporary accommodation, up from 28,000 when the Conservatives came into government in 2010. Those families often live in deeply substandard accommodation—unfortunately, temporary accommodation offers some of the worst conditions any of us have seen—yet they pay excessive rents. As a deliberate consequence of Government policy, those families also find themselves subject to rent restrictions and a benefits cap, even though no family that is accepted as homeless has any say whatsoever in the accommodation they receive, or the price they pay for it.

[Joan Ryan]

I wonder whether my hon. Friend has the same experience in her surgeries as I have in mine. Constituents come to see me who pay extortionate rents in the private sector for disgraceful property that is below habitable standards—it is damp, perhaps does not have hot water or heating, or has an out-of-date boiler—yet when I complain and try to get enforcement, they get what is called a revenge eviction and find themselves out on the streets. They have to go into temporary accommodation, they might be moved out of London, and their children might have to change schools. They continually suffer massive disruption to their lives.

[Ms Buck]

I totally agree. The Government will have to rise to the challenge of revenge evictions. That is well overdue. As was said, particularly by my hon. Friend the Member for Mitcham and Morden, that challenge is in part down to the fact that the face of poverty in London is increasingly in the private rented sector. We have seen a shift of low-income households from social rented accommodation into private rented accommodation, where rents are higher, insecurity is a constant problem and, because people on low incomes have so little choice in accommodation, people find themselves in the worst conditions.

[Siobhain McDonagh]

My hon. Friend is making her erudite, detailed knowledge obvious to everyone. Does she know that the Trust for London identified that the average family in poverty 10 years ago lived in inner London on welfare benefits in social housing, and today the average family in poverty in London live in outer London, are in work, and live in the private rented sector?

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[Ms Buck]

That is absolutely right. That paints a picture of change, which, as a deliberate policy, has been into the private rented sector. The private rented sector is shifting further out, to outer London, and as has been said, the changing face of poverty is a working face: the number of families in poverty in work has risen sharply in the last decade. We all recognise that work is integral to getting out of poverty and to people’s sense of purpose and wellbeing in life, but work is not sufficient to lift people out of poverty. Above all, it is not sufficient for people faced with high housing costs.

Now, 43% of poor children in the capital are in private rented accommodation; that has increased from a third 10 years ago. The shift into the private rented sector is happening in large part because the social rented sector is in decline and no longer available for people to live in. People are being diverted into the private rented sector, even though their needs for security and affordability would be addressed far better in the social rented sector.

It gets worse: there has also been a deliberate policy of raising social rents above inflation, and shifting properties that were once attached to a social rent to a higher, “affordable” rent. In recent years, we have seen 100,000 properties converted from social rents to this Orwellian concept of an affordable rent, which traps even families who live in social rented accommodation into paying a much higher proportion of their income as rent than they were. That in itself is a reason why even in the social rented sector an additional 40,000 children now live in poverty.

A second report was launched today by Shout, the campaign for social housing, written for it by Capital Economics. It found that the policy of raising social rents is bad economics, as well as being bad for low-income families, because it reduces people’s ability to earn, and even families in homes for social rent are finding themselves unable to cover their housing costs. They will also increasingly be subject to the caps that flow out of the £25 billion taken out of social security expenditure by the Government.

We know, from the lived experience of British poverty in the last few years, that measures cutting social security, raising housing costs, reducing the availability of social rented housing and cutting vital support services do not work. We know that because poverty is going up, and it is predicted by the Institute for Fiscal Studies to rise sharply by 2021. As a consequence of those policies, we anticipate the first sustained increase in inequality in this country since the 1980s. We know from experience abroad that a policy that drives low-income families into high-rent accommodation does not work; it is bad for work incentives, and bad for those families.

The answer to all that—apart from unfreezing benefits, tackling the structural problems with universal credit, and dealing with issues such as the million children who, under universal credit, will lose entitlement to free school dinners—is to tackle the rent burden on families. That is best done by ensuring that low-income people have the opportunity to live in the social rented sector.

This was uttered today by the Conservative chair of the Local Government Association, in endorsing the Capital Economics report on the problem of high social rent:

“We have to let the state build and dispel the myth that state intervention is subsidy. It’s not. It’s investment in an asset”.

I do not often agree with leading Conservatives, but I firmly concur with that statement. As a famous song from New York City a few years ago stated, “The rent is too damn high”. Until we can tackle this problem, I am afraid we will be struggling with the problem of rising poverty in London.

[Several hon. Members rose—]

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[The Parliamentary Under-Secretary of State for Work and Pensions (Kit Malthouse)]

It is a great pleasure to appear before you, Sir Henry. I begin by congratulating the hon. Member for Mitcham and Morden (Siobhain McDonagh) on securing this important and very relevant debate, not least because I spent 16 years as a representative in central London, both as a councillor and as a London Assembly member—where I shared a constituency with the hon. Members for Westminster North (Ms Buck) and for Hammersmith (Andy Slaughter)—so I am well acquainted with some of the problems. Indeed, I started my career as a councillor as deputy chairman of the housing committee on Westminster City Council, dealing with the heavy investment that we made in the Mozart estate in Queen’s Park at the end of the 1990s, as the hon. Member for Westminster North may remember. This issue has been of importance to me in the past and remains so.

I emphasise from the outset that the Government are committed—the hon. Member for Mitcham and Morden referred to this—to building a country that works for everyone, where no one and no community are left behind. I completely agree that we must continue to provide appropriate support for the least well-off and the disadvantaged in our society, so that we can make a meaningful and lasting difference to their lives and outcomes and those of their children.

However, I was disappointed to hear the hon. Lady say, as I think she did on the record, that work is no longer the route out of poverty. The Government believe that work offers families the best opportunity to get out of poverty and become self-reliant. That is why we are undertaking the most ambitious reform to the welfare system in decades—so that it supports people to find and stay in work.

The evidence about the impact of worklessness on children’s outcomes, in both the short and the long term, is clear. In 2014-15, 75% of children in workless families failed to reach the expected standard at GCSE, compared with 39% for all working families and 52% for low-income working families.

[Ms Buck]

Will the Minister give way?

[Kit Malthouse]

No, I am short of time. As adults, children who grow up in workless families are more likely to be workless themselves, compared with children who grow up with working parents, which creates an intergenerational cycle of disadvantage. It is therefore vital that we continue with our policies to encourage work and to address the often complex employment barriers faced by many disadvantaged families.

A number of hon. Members raised concerns about working families who are in poverty. However, the evidence is clear. Adults in workless families are four times more likely to be in poverty than those in working families. Children living in workless households are five times more likely to be in poverty than those in which all the adults work. Children in lone-parent families are three times less likely to be in poverty if their parent is in full-time work. And the chances of a child being in poverty if one parent works full time and the other part time is one in 20.

We are making good progress. Nationally, there are 954,000 fewer workless households and 608,000 fewer children living in such households now, compared with 2010. In London, there are 197,000 fewer children in workless households than there were seven years ago. By 2016, the number of children in long-term workless households in London was less than half what it was in 2010. The latest data shows that the London employment rate has increased by 7.1 percentage points since 2010. Comparable national figures show a slightly lower increase of 5 percentage points, so London is doing better.

Universal credit is at the heart of the reforms and the positive change that the Government are committed to driving. Through universal credit, the welfare system is, for the first time, providing working people with the opportunity to progress in work and to work more hours so that they can increase their earnings and become financially secure. Once fully rolled out, it will boost employment by about 250,000 and generate £7 billion in economic benefits a year.

We are also committed to tackling poverty by helping people with the cost of living. The national living wage, rising to £7.83 an hour in 2018-19, has given the UK’s lowest earners their fastest pay rise in 20 years. The right hon. Member for Enfield North (Joan Ryan) referred to the London living wage in glowing terms with regard to the current Mayor, but of course that project was started well before he came to office. Indeed, I am pleased to say that the largest expansion of the London living wage came when I was responsible for it at City Hall, between 2012 and 2016. However, that is not the only measure that we have taken. We have cut income tax for more than 30 million people and taken 4 million low earners out of income tax altogether. A typical basic rate taxpayer will now pay £1,000 less in tax compared with 2010.

Universal credit, with its generous childcare offer, has been designed to support parents to work after the birth of a child. Working parents on universal credit can have up to 85% of their childcare costs reimbursed, which is worth up to £1,108 a month for someone with two or more children. That is in addition to their entitlement of up to 30 hours of free childcare a week.

Hon. Members have raised serious concerns about child poverty rates, including the key findings in the End Child Poverty report, which came out a couple of weeks ago. Let me take this opportunity to emphasise that whichever way we look at child poverty rates—relative or absolute, and before or after housing costs—the headline national statistics published by the DWP show that in London all are lower than they were in 2010. Across the country, 600,000 fewer people are in absolute poverty now, compared with 2010—the figure is at a record low—and 200,000 fewer children are in absolute poverty.

Let me turn to the figures used by End Child Poverty. Those are projections based on Her Majesty’s Revenue and Customs data from 2014, and even the academics who produced the analysis have pointed out the limitations in the method. More recent data, published by Her Majesty’s Revenue and Customs since the report, shows that rather than rising, the proportion of children in low-income families in London fell in 2015 to an estimated 19%, compared with 24% in 2014. Indeed, every parliamentary constituency saw falls between 2014 and 2015. That includes some of the areas highlighted by the report. For example, in Bethnal Green and Bow there was a fall of 12 percentage points and in Poplar and Limehouse a fall of 11 percentage points. There was a fall of 6 percentage points in Hackney South and Shoreditch, as there was in Westminster North and in Enfield North. The data and the projection from the data in 2014 were immediately contradicted by the data subsequently published for 2015.

Let me deal quickly with some of the specifics that were raised. The hon. Member for Barnsley Central (Dan Jarvis) raised the issue of child poverty targets. Some hon. Members will remember that there was recognition by the Government in the past that making a long-term difference to the lives of disadvantaged children required an approach that went beyond a focus on the welfare system. That is why the Government repealed the income-related targets set out in the Child Poverty Act 2010 and replaced them with new statutory measures of parental worklessness and, critically, as my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) mentioned, children’s educational attainment. That is vital; all the evidence points to its being critical to long-term welfare and prosperity. Those are the two areas that can make the biggest difference.

A number of hon. Members raised issues about housing. The Government have recognised that there is an issue with the housing market, and a huge amount of work is going on at the newly named Ministry of Housing, Communities and Local Government. On standards, we agree that everyone deserves a decent home. That is why the numbers of homes that have been brought up to standard in both the public and the private sectors have increased very significantly, and the numbers that are below standard now lie at record lows. On housing generally, hon. Members will know that a significant amount of extra money has been put into the Government house building programme. That now stands at £9 billion, and no doubt there will be more initiatives to come from the Ministry of Housing.

We are also supporting, I believe, the Homes (Fitness for Human Habitation and Liability for Housing Standards) Bill, promoted by the hon. Member for Westminster North. It will give tenants the right to take legal action against landlords who do not fulfil their duties.

It was slightly disappointing to hear from the Opposition a fairly stout defence of the previous benefits system. As far as I can tell, that was a fraudulent system, perpetrating a lie upon the poor. It was designed to trap them in poverty. That is why we saw very little change in long-term poverty, which is what we are dedicated to tackling. I can reassure hon. Members that we are not complacent and particularly not in London, and we will be doing our best over the years to come to try to address the problems that have been raised.