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Income Statistics

Volume 453: debated on Monday 27 November 2006

2. What change there has been since 1997 in the number of people recorded in the Department’s survey data as having income below 40 per cent. of median income. (102897)

As a result of the measures taken by this Government, the rise in severe poverty which occurred under the previous Administration has been halted. Taking 1997-98 as a baseline, there has been no increase in the number of people having below 40 per cent. of median relative income. The number of children in such households has fallen by 100,000. By the internationally recognised measure of poverty, we have lifted 1.9 million individuals, including 700,000 children, out of poverty over the same period.

I thank the Secretary of State for his reply, but I urge him to consult his own figures, which he has disclosed to me through the Library. They show that despite record spending on social security benefits, a buoyant economy and nine and a half years of new Labour, there are 750,000 more people in severe poverty than there were a decade ago, 600,000 of whom have been put there under this Government. Will the Secretary of State now commit his Government to reducing the number of people caught in severe poverty?

We have reduced the number, as I have said. We are happy to be judged on the basis of the measures that we have taken, but we will certainly not be judged on the basis of the measures that the previous Government took. If the hon. Gentleman was being straight and honest with the House, as he always is, he would have referred to the fact that the figures that he just quoted cover the period from 1993 onwards. I do not think that he is either Toynbee or Churchill; I think this is just twaddle.

Does my right hon. Friend agree that dealing with absolute poverty, not relative poverty, is the major priority, and that it does not matter which newspaper column one reads, what really matters is having the political guts and ideology to put policies and resources in place to address this most pressing issue?

I am grateful to my hon. Friend. I agree with him, although I would add that we must deal with absolute and relative poverty. That is what we are trying to do. The proof of the pudding always comes down to one simple thing: it is all well and good to talk the talk, but one must will the ends as well as the means. For the Conservatives, including the hon. Member for Bury St. Edmunds (Mr. Ruffley), who is one of the shadow spokespeople, and the hon. Member for Tunbridge Wells (Greg Clark), who I understand is now the Tory Trot from Tunbridge Wells—

I think it worked pretty well. What does not make economic or political sense is coming to this place proposing various measures to tackle poverty while writing pamphlets calling for £50 billion-worth of tax cuts.

Since the Secretary of State seems to accept 40 per cent. of relative median income as a definition of severe poverty, will he accept that the Government should regularly measure the number of children in severe poverty, as so defined, and report on it as part of their strategy for tackling child poverty?

I would prefer to use the internationally recognised figure, which is 60 per cent. of median income. It is true that the Department publishes figures on households having below 40 per cent. of median income, but it is best to stick to the international basis so that we can get a proper comparison.

The Government have been extremely successful in making progress in tackling both relative and absolute poverty in many areas of the country, but sadly that has not been the case in London. As a consequence, one of the wards in my constituency has a staggering 83 per cent. of children growing up in workless households. In order to make further progress on the national perspective, as well as in London, will my right hon. Friend urgently review the effectiveness of measures such as tax credits, child care delivery and dealing with housing costs?

I agree with my hon. Friend. There is poverty of place, with which we are all familiar, but there is also poverty of race, which is a particular problem in many parts of inner London. We must address those issues, and I assure my hon. Friend, and all my hon. Friends, that we are considering them as a matter of urgency. The city strategy in east London and west London will help to improve delivery and focus on meeting these challenging targets. When we are ready, we will come back to the House with further measures.

Today’s report from the think-tank, Reform, indicates that the poverty trap in Britain is greater than in any other Organisation for Economic Co-operation and Development nation—a point made a year ago by the right hon. Member for Darlington (Mr. Milburn)—and that 2 million people on low incomes face effective tax rates of up to 50 per cent. when they try to go back into employment. Does the Secretary of State accept that criticism of Government policy, and what does he intend to do about it?

We have made it our policy from the beginning to ensure that work pays. Tax credits, the new deal and other measures have allowed us to take nearly 900,000 people off benefits who would otherwise have been looking for work. That has been progress in the right direction. We naturally keep all such matters under review. I know that the Lib Dems are trying to get closer to the Tories—good luck to them on that one—but I suggest to the hon. Gentleman that he does not rely too much on the data in that Reform pamphlet, as most of it is economically illiterate, as well.

Would it be right to draw from the Secretary of State’s speeches over the past few months that while there is much for Labour Members to be proud of, there is still much to do? As a Government, we have seen the creation of an additional 2 million jobs, and we have spent an additional £60 billion on welfare reform, yet the number of working-age claimants during our stewardship has only fallen from 5.6 million to 5.4 million. May I therefore encourage him to continue the debate that he has begun and to make it central to the renewal of this Government?

I agree with my right hon. Friend in this regard: the work on all these issues will never be done. What is important is to set a course, and I think that we have set the right one. We have matched rights with responsibilities, and we have been prepared to invest more in an active welfare state to help more people who want to work to have the opportunity to do so. If he is asking me whether the work is done, I say clearly not. We have not yet eliminated poverty. We need to redouble our efforts if we are to succeed in doing that, and I hope that he and others will support us when we do.