Poverty and Disadvantage

Lord McKenzie of Luton Excerpts

Thursday 14th December 2017 Lords Chamber

[Lord McKenzie of Luton (Lab)]

My Lords, I welcome this short debate initiated by the noble Lord, Lord Bird, and applaud his persistence in keeping the issues of poverty and disadvantage before this House. As others have said, poverty is a multifaceted issue, disadvantage perhaps more so. We have a wealth of data to help us understand this—perhaps too much for the noble Lord—but, like the noble Lord, Lord Best, we are grateful to the Joseph Rowntree Foundation for its detailed, comprehensive analysis of poverty trends and a glimpse of some of the underlying causes. It makes depressing reading.

I say to the noble Lord, Lord Farmer, that, notwithstanding other issues, we hold to the basic importance of income-based tests in judging these things. The Joseph Rowntree report charts the improvements over 20 years—very significant among some working-age families—but records that poverty rates have started to rise among both pensioners and families with children. The JRF attributes the falls in working-age poverty to two things: sustained government support through the benefit and tax credit system—much maligned by those on the Government Benches—and big rises in employment and reductions in worklessness, supported by rising skill levels, increased wages and the minimum wage.

That these have gone into reverse is because of reductions in support offered through the benefit and tax credit system which were not outweighed for many low-income families by tax cuts and minimum wage rises. Many of the benefits reductions are just coming through the system—the freezing of working-age benefits and the two-child policy being just two examples—so there is worse to come.

The latest news from the ONS is that the number of people in work has fallen in the three months that ended in October. We have always seen that work should be the route out of poverty, but JRF identified 3.8 million workers living in poverty in the UK: 1 million more than a decade ago. It considered 55% of people in poverty to be in working households.

A study by Cardiff University academics found that 60% of people in poverty live in households where someone is in work. They considered that the biggest determinant was the number of workers in the household—that is not surprising. The research pointed to where one adult partner worked in a household but the other looked after the children at home. It was associated with low pay as well, although this did not necessarily drive poverty if there were other workers in the household. The study found that in-work poverty was disproportionately concentrated in households in the private rented sector, hit by rising rents and caps on housing benefit. Of course, low-income households are disproportionately hit by the rise in inflation.

What do we conclude from this? In-work poverty does not have to be accepted. It needs reversal of cuts to tax credits and universal credit, greater provision of affordable childcare and action to tackle high rents in the private rented sector. It needs political will and a national effort—a major change, in the terms of the noble Lord, Lord Bird.