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Household Incomes

Volume 459: debated on Monday 23 April 2007

3. What assessment he has made of trends noted in the latest “Households Below Average Income” statistics; and if he will make a statement. (132664)

The “Households Below Average Income” statistics continue to demonstrate an overall improvement to child and pensioner poverty since 1997. The Government have achieved this through their welfare to work policies—in particular, the new deal for lone parents—and increased financial support for children and pensioners through the introduction of pension credit and the child and working tax credits, in addition to substantially increased levels of benefits for children.

Is the Secretary of State concerned that under our system the poorest effectively pay the highest tax? According to the Office for National Statistics, the poorest fifth of households pay 36.4 per cent. of their gross income in direct and indirect tax, compared with 35.6 per cent. for the richest fifth and 35.3 per cent. for households on average incomes. Instead of forcing poor people through an impenetrable maze of means-tested benefits and overpaid tax credits that have to be paid back, is not the more moral and economically efficient way to use the proceeds of growth to raise tax thresholds so that increasing numbers of poor people do not pay tax at all?

I am grateful to the hon. Gentleman. For us, the issue is very clear. We want to provide further support for low-income households, and that is precisely what we are doing. In relation to tax credits, my understanding is that his Front Benchers support the tax credit system. He may not, but then there is now probably very little that his Front Benchers propose that he feels in any way comfortable with. I am relieved to be able to say to him that matters of taxation are the responsibility of my right hon. Friend the Chancellor of the Exchequer.

A large swathe of households below average income has significant difficulty in accessing welfare benefits and entitlement. To what extent does the Secretary of State believe that the Freud report has addressed those specific problems? Will he encourage hon. Members to attend a valuable Public and Commercial Services Union seminar on Wednesday at 5 pm in Committee Room 16, where all will be revealed?

I do not know what will be revealed in the meeting. However, I am convinced that David Freud’s report has identified some important issues for the Department and for the way in which Jobcentre Plus should increasingly individualise and tailor the support that it provides for people who are out of work, through a range of new services to help them get back into work. I suspect that my hon. Friend is worried about the role of the voluntary and private sectors. To put the record straight, it is worth reminding ourselves that those sectors deliver virtually all the flagship success policies that we have pursued through the new deals for lone parents and for disabled people. They do an outstanding job.

Does the Secretary of State accept the Government’s figures, which show that, according to the overall measure of inequality in the UK—the so-called Gini coefficient—the position has deteriorated since 1997?

It is usually a good idea for Secretaries of State to accept Government figures—

No buts. Through our reforms, such as the national minimum wage, and the tax credits which the hon. Gentleman opposed, we have been able to provide significant additional financial help, which has increased the income of the poorest in our society. The hon. Gentleman might also like to consider the fact that the income of the poorest two fifths has increased in the past 10 years at a faster rate than that of the top two fifths.

The Secretary of State knows that the revised figures that he announced in his written statement this morning show that poverty among adults of working age has increased by 100,000. Does he have any explanation of that?

As the hon. Gentleman knows, he refers to a relative poverty measure. Some people suggest that the overall income of poor households is falling—it is not; it is rising significantly. Obviously, we need to reflect on and tackle some matters and we will do that.

Fighting poverty is a priority for all politicians but in March, the Government’s figures showed that the number of our fellow citizens in severe poverty had increased by 600,000 in the past 10 years. It is said that, in the past year, the total number of individuals in poverty—with less than 60 per cent. of median income before housing costs—rose from 10 million to 10.4 million, and that poverty among working age adults rose from 5 million to 5.4 million. The Secretary of State’s figures show that poverty is getting worse. Why?

I wish it were true that tackling poverty was an issue for all politicians. That is not what the history books tell us about the Conservative Government’s record. Child poverty doubled under the Conservative Government and it is now falling significantly for the first time in a generation because of our measures. If the hon. Gentleman had a record about which he could boast, I would seriously take something from it. He has no such record.