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Grand Committee

Volume 716: debated on Tuesday 19 January 2010

Grand Committee

Tuesday, 19 January 2010.

Arrangement of Business


My Lords, if there is a Division in the Chamber while we are sitting, this Committee will adjourn as soon as the Division Bells are rung and will resume after 10 minutes.

Child Poverty Bill

Committee (1st Day)

Amendment 1

Moved by

1: Before Clause 1, insert the following new Clause—

“2010 child poverty target

(1) The Secretary of State must, before the end of the period of three months beginning with the day on which this Act is passed, publish and lay before Parliament a report setting out an assessment of progress made towards meeting the 2010 target.

(2) The 2010 target is that in the financial year beginning with 1 April 2010, fewer than 1.7 million children live in households that fall within the relevant income group as defined by section 2(2).”

My Lords, the amendment gives us the opportunity to investigate thoroughly the issues surrounding the target in real time, so to speak. It is a genuine mystery why we are likely to fail to reach the 2010-11 target. There was a mysterious turnaround in performance in approaching the child poverty targets in 2004, despite a remarkable boom. The figures show that when this Government came into office in 1997—I am using 1997-98 as the base year—there were, depending on whether you are considering the before housing costs or the after housing costs, either 3.4 million or 4.2 million children in households below the poverty line, which is defined as below 60 per cent of the median income.

In the turnaround year of 2004-05, which was the best year of performance, the figures had fallen to 2.7 million or 3.6 million, depending on whether you are considering the before or after housing costs. I know that there are estimates for what may or may not have happened subsequently, which clearly we can discuss, but the actual figures for 2007-08 show that the number had risen again to 2.9 million on the before housing costs and 4 million on the after housing costs. In the discrepancy between the before and after, you can see the strain caused by the housing boom in that period, because the increase in child poverty since the low point—the good point—of 2004 is roughly double on the after housing cost basis what it is on the before housing cost basis.

None of the explanations that I have heard so far—we rehearsed some of them at Second Reading—are satisfactory, especially as we are not talking about a relative phenomenon or a move relative to the median. This is not a statistical quirk. If we hold the definition of poverty steady—in other words, if we use the absolute definition of poverty, not the relative one—we see that the number of children in poor households grew by 200,000 after housing costs since that good year of 2004. At best, it only held flat on the before housing cost figure. Indeed, when you look at the before housing cost figure, you see that the numbers below 50 per cent of the median went up by 100,000, which means that the very poorest have done considerably worse since the turning point. It is not surprising that the Rowntree trust warned in its report Monitoring Poverty and Social Exclusion 2009:

“At this rate of progress, it would take until the 2050s to halve child poverty”.

That is a worrying statement, given that we had a fantastic boom in the last decade. It is vital for the sake of this Bill that we understand these trends properly. As the Spanish poet George Santayana famously said:

“Those who cannot learn from history are doomed to repeat it”.

In another place, Stephen Timms admitted that the Government had got only two-thirds of the way towards their target. This was said in Committee, before other policy initiatives were announced. I should add, to reinforce the importance of this, that he went on to say:

“The arrangement that the Bill sets out is significantly more demanding for the coming decade than arrangements that have been in place over the past 10 years”.—[Official Report, Commons, Child Poverty Bill Committee, 20/10/09; col. 8.]

The target was ambitious, but the Government badly failed to meet it in a good economic climate.

Some major questions need answering when you start to look at the statistics. There was a reduction in relative poverty among children in workless households but not in working households. How much of the poverty has been caused by income transfers as opposed to tackling the causes of poverty? For instance, we do not have a full assessment of the effect of the removal of the 10p tax rate and the measures to compensate the people who were affected by it. It would be immensely valuable to have a proper report of this period.

This would also give us a dry run in assessing the significance of statutory targets in this context. In particular, it would give us a genuine check on what such a measure as Clause 15 in this Bill really stands for. Clause 15 says that the Secretary of State must take into account the,

“fiscal circumstances and in particular the likely impact of any measure on taxation, public spending and public borrowing”.

The clause is immensely significant, given the history of statutory targets. Let me take the example of the fuel poverty target in the Warm Homes and Energy Conservation Act 2000. When that was taken to court in a process of judicial review, the Government were able to plead successfully that resources were not available. Clause 15 seems to have the same effect, allowing the Government of the day to argue that the money was not available. Indeed, Stephen Timms explicitly told the Committee that,

“in the current environment, Government spending is very tightly constrained. That, in particular, is what has limited what has been possible over the last couple of years”.—[Official Report, Commons, Child Poverty Bill Committee, 20/10/09; col. 9.]

It is not very encouraging, then, that he forecast that there would be a further decade of what he delicately called “consolidation”, which was a reference to the progress of the economy. He also confirmed that there would not be a carve-out of the obligations under this Bill from those of the Fiscal Responsibility Bill. Let us find out soon whether we have a Bill that means something or is purely declamatory.

The risk being run is that this Bill is interpreted as being either a diversionary tactic or a poisoned pill. It could be argued that it is diversionary in that this Government have failed to succeed in the benign conditions that have prevailed in the past decade and have therefore stopped looking at that and have lifted their eyes and our eyes to the distant horizon. The Bill can be accused of being a poisoned pill because it provides an opportunity for whoever is the Opposition to lambast whatever Government are in power for not making further progress in very difficult conditions while avoiding taking responsibility for the current Government’s time in power. I am not accusing the Government of these unworthy sentiments; I am warning that opposition to this amendment will make them seem that they are being manipulative in this way.

Therefore, the proposal is that we use a formal report as a tool to understand what the real challenge is, we avoid the accusation that this Government are unworthily using diversionary tactics and we understand what a statutory target really means in the real world. If this Bill fails to stand up in the real world, which I fear it might as it is currently drafted, at least the next Government will know that they will need to tackle the problem in another way. I beg to move.

My Lords, I shall be brief. We support this amendment to mandate the Secretary of State to make a report setting out an assessment of progress towards meeting the 2010 target. Such a report should focus minds on the scale of the task towards meeting the 2020 goal. As the noble Lord, Lord Freud, has said, for most of the past 10 years the economy has been healthy, but we are still a very long way from meeting the halfway target on child poverty and this will get even harder in the next five years or so when belts will have to be tightened.

Although it is not strictly relevant to this amendment, I particularly welcome the government amendment that we shall reach next week and which was announced in the Pre-Budget Report. It proposes an extension of the entitlement to free school lunches and milk for primary school children whose parents are on working tax credits and an increase in child benefit this year over and above indexation.

My Lords, I seek reassurance from the Minister on a point that the noble Lord, Lord Freud, raised with regard to a concern that we might be promoting income transfers as opposed to tackling the roots of poverty. One questions, for instance, whether one might be diverting money towards supporting families on benefits, as important as that is, which could be spent on ensuring that there are more and better-quality social workers. We could spend the money on ensuring that there are more foster carers, because the number that we have and retaining them are so dependent on the fact that they have good social workers to support them. Alternatively, we could spend the money on our teachers and ensure that there is better sex and relationship education in schools, thereby reducing the rates of teenage pregnancy and ensuring that families prosper and children are taken out of poverty in that way. I am sure that we will come back to this debate. However, I would be grateful if the Minister would offer reassurance that other important objectives will not be lost in the narrow pursuit of the important targets that we are discussing today.

My Lords, perhaps I may raise a further, possibly technical question in the discussion on the amendment. It concerns the incorporation in the proposed legislation of the Assembly of Northern Ireland and the Scottish Parliament. My question—raised also by the noble Lord, Lord Freud—concerns the definition of the target that will be set. Will the Minister assure me that, in the process of reaching the target and assessing whether the United Kingdom as a whole has reached the target, due attention will be paid to a uniform definition of how the devolved authorities in the two areas that I mentioned provide information that will go towards the UK target as a whole?

I raise this because in Northern Ireland, as many noble Lords know, there are sensitive political issues surrounding the definition of poverty that is used from time to time. For example, the issue of free meals is politically sensitive. Any noble Lords who know Northern Ireland will realise that this is a sensitive issue. I would not like a Bill that I certainly support to suffer in its implementation because of a lack of clarity on how the various definitions were arrived at to measure the reaching or not reaching of the overall United Kingdom target. I hope that my question is relevant.

My Lords, perhaps I may add that, particularly in areas with dense immigration and population, the level of poverty is such that there is always a tendency to divert resources from one good provision to another. Therefore, if new provisions are made—and I very much hope that they will be—existing provisions must not be threatened by trying to move the same money around various provisions.

My Lords, this is a good way to start our deliberations. The aim of the Bill is to drive the long-term sustainable eradication of child poverty, ensuring that tackling child poverty is a priority for everyone. This requires us to make continued progress in tackling child poverty. We are, and will continue to be, held to account on the goal of halving child poverty to 1.7 million children by 2010, but the Bill is predominantly about ensuring that we do not lose sight of the long-term goal. It increases the accountability of the Government for their child poverty goals. It sets out a rigorous process of reporting and accountability that will hold the Government to account. In addition, the Child Poverty Commission will provide valuable expertise and advice to feed into the reports and the strategies on progress. The Bill does not weaken our commitment to tackling child poverty; it strengthens it.

The amendment would require the Secretary of State to publish a report within three months of Royal Assent on progress towards the 2010 child poverty target of fewer than 1.7 million children in qualifying households living below the 60 per cent median income threshold. I will explain why the amendment is unnecessary and in fact problematic. First, a report published this year would not provide the definitive statement that noble Lords are looking for on whether the 2010 target will be met, because the data for assessing this will not be available until the HBAI statistics are published in 2012. A report published within three months of Royal Assent would not capture, for example, the impact of the raft of measures introduced since the 2007 Budget that we expect will lift around a further 550,000 children out of poverty.

The report would also fail to take into account any measures that may be taken later this year in, for example, a forthcoming Budget or, although we do not anticipate this, an early Budget after the general election. As such, the report demanded by noble Lords would fail to provide an accurate assessment of progress towards the 2010 target and I do not see any particular value in it. However, I would like to reassure noble Lords that the latest child poverty data, for 2008-09, will be made available through the annual publication of the HBAI dataset. Progress against the 2010 target will be evident from that publication, although, as I have just said, this statement will be for 2008-09 and so will not take into account the measures that we put in place in the most recent Budget and the Pre-Budget Report.

Finally, there is a practical problem in requiring that a report be published within three months of Royal Assent, as this could fall in the period during a general election, when, obviously, we will be away from the scene for a month.

However, I support the noble Lord’s desire to boost transparency in reporting on progress against child poverty targets. Indeed, these are two cornerstones of the Bill. Clause 8 requires the Secretary of State to publish a strategy setting out the measures that will be taken to meet the four child poverty targets in Clauses 2 to 5. To ensure that the Secretary of State reports on the progress in tackling child poverty, Clause 13 requires the Secretary of State to produce and lay before Parliament an annual progress report setting out the progress that has been made in tackling child poverty. Subsection (1)(a) of the clause requires that annual reports report progress against each of the targets, which is exactly what noble Lords are seeking. That will come, with full information and all the appropriate data, but it cannot be delivered within three months of Royal Assent. The first strategy must be laid within 12 months of Royal Assent and the final report within a year of the anniversary of the publication of the strategy.

Perhaps I may pick up on some of the additional points that noble Lords have made. The noble Lord, Lord Freud, suggested that the Bill is either a diversionary tactic or a poison pill, although I am not sure why we would want to poison ourselves. However, I assure the noble Lord and others that this is nothing to do with diversionary tactics. This is building on the progress that the Government have made to date in tackling child poverty and setting out a means of moving forward so that we can meet the targets set out in the Bill by 2020.

The noble Lord suggested that a mysterious turnaround or cataclysmic event took place in 2004 which changed the progress that we had been making. He spoke of mysterious trends and said that it was vital to understand them. To understand the trends and what is happening, we need to unpick and analyse the data. There is nothing mysterious about that, because there are a number of components.

For example, the Institute for Fiscal Studies report Poverty and Inequality in the UK, published in 2009, points out that some of the changes were not statistically significant. It states in respect of the decomposition of the change in child poverty from 2004-05 to 2007-08 that it can help to tell us why child poverty has risen, but it should be pointed out that the overall rise in child poverty before housing costs was not statistically different from zero. The report unpicks various components and states that the rise in child poverty is due to incidence effects: an increased risk of poverty for particular family types, with changes in the composition of families, a decline in worklessness among lone parents and increases in the number of couples in full-time work acting by themselves to reduce poverty.

However, other factors need to be taken into account. We need to look at the increase in benefits in relation to the dynamics of inflation and we need to take into account the fact that, over a part of this period, employment levels stayed relatively even. For part of the period, real earnings growth was below inflation. It was also a period when price increases obtained, particularly in food, fuel and energy. To say that somehow we cannot understand what is happening is some way from reality, but we need to unpick the position.

This is not just about income transfer, to deal with the point made by the noble Earl, Lord Listowel. Of course income transfers and income are part of tackling poverty, but they are just part of the equation. The key part of the Bill is the requirement to bring forward strategies to address the causes of poverty, better to understand what is happening and the dynamics. A key part of that is not only the engagement of local authorities, which is covered in Part 2, but drilling down on delivery across a whole range of building blocks. That is crucial to our making further progress.

The noble and right reverend Lord, Lord Eames, asked about Northern Ireland and the devolved Administrations. The targets will be set in the Bill, with the exception of the persistent poverty target, which is subject to regulation in due course because of the survey arrangements, and they apply to England, Scotland, Wales and Northern Ireland. The devolved Administrations are required to have strategies setting out how they will contribute to the UK targets. How free meals are dealt with is an issue about how income is defined in the surveys. That definition will be common right across the UK. I hope that that has helped the noble and right reverend Lord.

At Second Reading, an issue about some of the survey information was raised by the noble Baroness, Lady Blood. There are issues about sample sizes and being able to particularise some components to areas, regions and countries, but the targets will be set in the Bill and will be common throughout the UK. The surveys from which the data are derived will have common definitions of things such as income. I hope that that deals with that point.

I think that what I have set down about what would flow from the Bill in terms of reporting requirements should meet what the noble Baroness, Lady Thomas, seeks. I urge noble Lords not to focus on something that would be rammed through in three months’ time, because I do not believe that that would genuinely provide the information and analysis that are appropriate for noble Lords.

I conclude by responding further to the noble Lord, Lord Freud, especially on his question of whether this is a diversionary tactic. We know that it will be challenging to meet the 2010 target. The current economic situation—although we now look to be on the mend—has implications that we perhaps do not yet fully understand. I do not know whether the report in Financial Times today is correct, but it suggested that the noble Lord’s party would seek to bring forward a manifesto that effectively watered down the Government’s commitment to ending child poverty by having a whole array of targets, so that it would be hard to identify or measure any progress. If that is the noble Lord’s intent, I would be very interested to hear from him. I would certainly be interested to hear any denial that he may wish to make on that, because that is the backdrop to our discussion of the Bill. If we are trying to undermine and pick away at the bases of the targets, that is the context in which we will debate these matters, although I do not think that that would be the best and most productive use of this opportunity.

This is an important Bill, because it is about being clear about a range of targets, each of which has to be met, but it also recognises that it is not only about income and that a whole raft of things impact on poverty. The development of the strategies and the monitoring that will underpin them going forward represent the way in which we as a country can make real progress. On that basis, I hope that the noble Lord will not seek to press his amendment.

Earlier in the discourse we heard about data being produced on child poverty. Are those simply household income data? Is the Minister suggesting that household income is the same thing as child poverty?

Issues around the definition of poverty, hardship and material deprivation are interesting points and doubtless we will cover them during our deliberations. Four targets are set down in the Bill, three of which are entirely income-related. There is the persistent poverty target, which looks at a collection of periods during which, on an income measure, people are treated as being in poverty. Then there are the absolute low-income target and the relative low-income target, but there is also the combined low-income and material deprivation target, which looks at wider factors.

I stress, though, that that is only the issue of measurement and targets, which has to sit alongside the requirements under the Bill to bring forward strategies to tackle socio-economic disadvantage for every child in the UK. That is a core part of the Bill, involving local authorities. If it were only about targets and nothing else, it would not be the right way to proceed—I am sure that we would have agreement on that. It is more fundamental than that, though; we will come on to this in subsequent deliberations, but it is about issues around the family, worklessness, health and educational opportunities as well.

My question is whether the data that will be published in three years’ time will include information about all the other things that the Minister has spoken about, on which I entirely agree with him.

My Lords, the data specifically referred to in the Bill will be the income-related targets plus material deprivation. Those are built on the household below average income data, which are issued as a national-statistics-type routine publication. That includes a lot of data other than just the specific targets that will be included in the Bill. Alongside that, a whole raft of measurement goes on routinely across the Government at the moment. We have a whole raft of PSA targets touching on education, homelessness, worklessness and many other issues. That is a routine part of government. Those data are all in the public domain and will help to inform the strategies. There has to be a report on progress against those strategies and, when the data are brought forward, we will build on and use them. They are not just income-related data; they are much broader than that across government. The targets that are to be met are those four specific, mainly income-related targets, but including the crucial one of material deprivation.

My Lords, I am grateful to the Minister for his reply to my specific questions. I look forward to our debates on Clauses 8 and 13. To follow up on the point made by my noble friend Lady Afshar, although I think that the Minister was more or less answering it in what he said to me, it is a matter of concern that the many good projects working in communities, to which good people are recruited, find themselves on two-year or three-year contracts and unfortunately are told, “We don’t know whether you will be working next year. You’ve shown huge commitment and built relationships with vulnerable adults and young people, but we don’t know whether we can employ you”. Is there any way that the Government will be able to monitor, as this is being implemented, whether funds are being diverted to financial income objectives to the detriment of important interventions of that kind? Perhaps that would be difficult. I am sure that we will hear more about this.

I am grateful to the noble Earl for prompting me and I give my apologies to the noble Baroness for not dealing with this point earlier. I could not give an assurance in those terms; I do not think that any Minister could. It depends on the next comprehensive spending assessment and on how we move forward with the Fiscal Responsibility Bill, which is not inconsistent with the provisions of this Bill.

Three-year funding for local authorities has been a positive development under this Government. Previously, it was very much more hand to mouth, year by year. However, I recognise the point made by the noble Earl. What is increasingly happening at local authority level is the removal of ring-fenced funding—the Supporting People programme is one example. Removing ring-fencing provides local authorities with greater discretion and the opportunity to innovate on how they deploy their funds. There are interesting pilots called Total Place, which are trying to get to grips with the multiplicity of funding streams going to individual locations to see what better use can be made of those funds. There is one project in my own patch in Luton, so I am close to that. Those opportunities will help to address the concerns of the noble Baroness, which the noble Earl reiterated. However, there is no way that one could guarantee that current levels of funding, in all respects on every programme, would continue as at present.

Perhaps I may use this opportunity to pick up on the point raised by the noble Lord, Lord Freud, about Clause 15. To be clear, the duty to meet the targets is absolute and is not affected by that clause, which simply requires the strategy to meet the 2020 target to take into account the broader economic context. It is about ensuring that the Government meet the targets in a sustainable way that delivers value for money. That can only be sensible and it is the responsible thing to do.

Perhaps I may respond to the Minister’s speech, because he misses the point. Although I would not have worded it in this way, and I am not thirled to a three-month timetable, the amendment’s value is that it provides an opportunity to reflect on the policy experience of the past 10 years. The noble Lord, Lord Freud, raised some interesting policy questions, which deserve examination. The obvious answer as to why there was a dip in momentum in this whole policy area after 2004-05 was that the Government stopped spending money on it. There was a vast improvement after child tax credits were introduced and the whole tax credit initiative was undertaken. You can argue for a long time over whether or not that was effective or organised, but there was a major boost over what went previously.

My question, which may be slightly different from that of the noble Lord, Lord Freud, is why that momentum did not continue. There was a big step up and people such as Donald Hirsch would say that you could see the difference that it made. Why did the Government then turn away from deploying what appeared to be an effective set of policies? I do not know the answer, but it is hard to argue that the resources were not available. That is another important point that the noble Lord, Lord Freud, is making. What we are all facing—Lisa Harker said this in her report—is that the next 10 years will be even harder, because we do not have the resources that we have had for the past 10 years.

Someone needs to sit down and think carefully about the active labour markets and where the policy fits in of work for those who can and security for those who cannot. What did it do? What did it not do? What could have been done better? They should examine the uprating policy. In the other place, every Select Committee inquiry on this area—I was responsible for two or three of them—found that, if you uprate on the basis of the retail prices index while the rest of the world is organised on the basis of an increase in earnings, year on year people will inexorably slip further and further behind. That will happen for the next 10 years, starting from where we are right now, unless something is done about it.

The point of the amendment is that someone needs to assess the Bill soon after it is passed—as I said, it might take more than three months. I do not know whether the Bill is a diversionary tactic, but it is a process Bill. There is nothing in it that by itself will make anyone any richer. That is a frustration that I think the Committee will find. We all want to get our jackets off and get stuck in to what will actually make a difference. All that the Bill gives us is a process. It is viable as far as it goes, but there is nothing new in it, except extending the responsibility to local authorities and to the constituent nations of the United Kingdom, which is valuable, although they may think that it is a graveyard pass, because they will get sucked into responsibility for not meeting the targets so that the blame can be shared. That is how they see it; they may be wrong, but that is how they see it.

The amendment has value. The Child Poverty Commission is not the right body to do this job. If we are to give proper consideration to everything that has gone on heretofore to learn lessons to hand on to the Child Poverty Commission, what is proposed in the amendment is an excellent way to do that. For the Government to hide behind the fact that the figures will not be available is to miss the point. The amendment calls for a radical look at how things have been done—successes as well as failures—so that that can inform the process.

I have two other points to make. First, the noble and right reverend Lord, Lord Eames, made an important point. We will come to it later, but, in passing, the four nations group, the importance of which the Government have recognised, should be in the Bill for the reasons that the noble and right reverend Lord mentioned. There should be some recognition of the four nations group, because if it is to hold the ring and be successful—I hope that it will be, although there will be problems and it will not happen by accident—this needs to be carefully thought through. Although I think that the Government understand its importance from my discussions with them, I share the concern of the noble and right reverend Lord, Lord Eames. There should be formal recognition of the group in the Bill. Perhaps we can find some way to do that in the course of our proceedings.

There is an enormous spatial dimension to this whole question. The analyses of the figures and the measures that we are contriving in the Bill are mainly snapshots. The Family Resources Survey considers the snapshots, although there is a longitudinal element in the General Household Survey. Looking just at what is happening at a particular time in families does not take account of persistence. We will come to that later—we have tabled amendments on it. The cities report in the press yesterday is very important, because it captures the fact that different cities and different communities in this country are in an entirely different place when it comes to child poverty. Places such as Springburn in Glasgow are very different from Northampton or Reading; you cannot ignore that. The figures have to be handled with very great care. We will come to amendments tabled by the noble Lord, Lord Freud, concerning the equivalence ratios and the Gini coefficients. You have to be careful how you use all those, because they are only rough measures and can be treated only relatively. We cannot invest all the importance of the policy dimension in future in those measures alone. However, we cannot forget the huge spatial dimension.

I am sure that the noble Lord, Lord Northbourne, will come to this in his inimitable way in the course of our proceedings, but, finally, there are not just these figures but a wider hinterland of factors that determine whether low-income families are in trouble or not and whether or not we reach the target in 10 years’ time. I am sure that it was not deliberate, but I think that the Minister missed the point of the amendment. It is an attempt to be positive and to capture lessons that we should sensibly learn to take the policy forward.

If I may say so, it is the noble Lord who has missed the point. Nobody is saying that we should not look to learn lessons from what has happened to date—from what has worked and what has not. That is the whole purpose of how we are seeking to move forward on this. The noble Lord will know from the Peers’ information pack that a strategic direction paper will be published in the spring. The Child Poverty Unit is working on this.

Looking at how we go forward is, in part, based on understanding where we have got to now and where we have not got to—perhaps where we were hoping to have made greater progress. A process is under way through the development of the strategy and the strategic direction paper to do what the noble Lord wants. The key objection to the amendment is that it forces a particular process over a three-month period when we will not have key data that would make analysis of progress towards reaching a particular target better and more meaningful. Certainly we have to look at progress and analyse that. That is what the strategic direction paper and the strategies that flow from it will entail.

The noble Lord also said that this was all to do with moving away from investing in benefits. Income transfers are part of the solution, but what we have also learnt recently is that they are only part of the solution. There are other issues such as promoting work as the best means out of poverty, supporting family relationships and family life, early interventions, excellence in delivery, sustainability and affordability. All are part of a package to make progress.

I also say to the noble Lord that three months is premature to look at the 2010 target because we have had provisions post the 2007 Budget. Many of them relate to income transfers and benefits and are designed to improve the position. They have not flowed through into the data yet. We need to see how that works in practice. Therefore we are not apart in recognising the need to understand the lessons of the past in building for the future; the issue is the mechanism by which, and timeframe within which, we do it.

I thank the Minister for giving me the opportunity to respond on the point about today’s Financial Times story. I start by emphasising the importance that the Conservative Party places on child poverty and sorting it out. I was going to use the word “eradicate”, but I realise that we will probably have a lot of debate about what that means, so I have used “sorting it out” instead. There is a difference between the Government and my party in this area. We are concerned that the efforts that we put into child poverty are directed at getting to the sources and causes of poverty, not to the measurement of it and to financial manipulation. In some amendments that we have tabled and will debate, we are trying to shift the emphasis of the Bill from targets that are essentially financial measures to some of the causes. I will not go into detail now, because we will spend a lot of time discussing this later, but that is the difference.

Is the noble Lord saying that, should the Bill achieve Royal Assent broadly on its current basis with those targets in it, given the opportunity—I do not think it fruitful to debate here whether it will get that opportunity—his party would change the measures of poverty and the targets? Or is he saying that he would accept them and would want some others as well?

Yes, we are trying to amend the Bill by the addition of some targets. Measurement is clearly important, but the risk is that the measures, being purely financial, drive state intervention in a particular direction. As we all know, targets tend to drive bureaucracies—they get bedded in. We want a better balance of targets. We want to see targets that look to the causes of poverty, not only to the measures of poverty.

We have not completely written off the dialogue of the process of Committee and Report, where we may be able to discuss these matters and get to some agreement. It is rather premature to think about further progress after the Bill; a politician would not hand over defeat at this stage. Let us see how we go through this process.

It is important that we get some clarity on this issue. Whatever else appears in the Bill, if the four existing targets as described end up in the legislation, and should there be a change of Government and should it fall to the noble Lord and his colleagues to implement this—though I do not concede that for a moment—would they feel bound by those targets, whatever else they were bound by?

I will not shelter behind hypotheticals. I will not just say “if” and “if” and “if”, which the Minister’s question does. Clearly one needs to measure performance. The Government have four targets in the Bill. We are not absolutely happy with the financial measures and we have tabled a lot of amendments to probe them. We accept that there need to be financial measures, but whether we need to look at improving the financial targets depends on the extent to which the Government respond to some of the concerns about the shape of them. I am not in a position at this stage to say whether we would change anything that comes through this process. I am trying to give the Minister an honest direction of travel without sheltering behind easy excuses.

On the financial targets in particular, we have put down an amendment that tries to get at the absolute levels of persistent poverty, which we do not think are satisfactorily covered in the four measures in the Bill. There are some real improvements that we would like to put in regarding how one measures poverty. We have put them in at this stage as an extra, but when we come to discuss them we may decide that they could be a substitute.

I go back to Amendment 1. I want to talk about what has been happening with regard to poverty. I am grateful to the noble Lord, Lord Kirkwood, for pulling us back to the core issue. Something odd has gone on with child poverty in what should have been an easy period. I am grateful for the noble Lord’s reference to the excellent IFS report on this. The report explained why the improvement in child poverty rates did not continue, but it did not explain why it came to a full stop. I should like to make a counter point by referring to the Rowntree report Monitoring Poverty and Social Exclusion, which takes a series of data on home repossessions. It states:

“One example is home repossessions which at an annual rate are back at the 1993 level but which, more importantly here, is yet another series that reached its low point back in 2004, since when it has climbed again … The extent to which 2004 marks a turning point in quite a lot of the statistics presented here is worthy of attention in its own right”.

The IFS report, excellent as it is, deals with the financial aspects and not with a series of measurements that all reflect a deterioration in or at least a flattening out of the improvements for the poor.

The final point that I want to make, and again I am grateful to the noble Lord, Lord Kirkwood, for reinforcing it, is that it is not entirely satisfactory for the Government to shelter behind the technical point of three months and whether data will be available. If the exact timing is a genuine issue, clearly it is something to look at. We will come back to the issue at a later stage, but for the time being I beg leave to withdraw the amendment.

Amendment 1 withdrawn.

Clause 1 : Duty of Secretary of State to ensure that targets are met

Amendment 2

Moved by

2: Clause 1, page 1, line 10, at end insert “, and

( ) the relative low income after housing costs target in section (Relative low income after housing costs target)”

My Lords, in moving Amendment 2, I shall speak also to all the other amendments in the group, as they are consequential. At Second Reading, I went into some detail about why we believe that the figures after housing costs, as set out in the households below average income surveys, should be added as a fifth target. What I did not say explicitly was that the difference between the number of children living in poverty according to the figures taken before housing costs and those taken after housing costs is huge.

According to the latest figures, on the before housing costs measure some 2.9 million children are living in poverty, but on the after housing costs measure the figure is 4 million. Is this why the Government are so keen on the before housing costs figure? I noted, as did the Minister, that in the Second Reading debate the noble Lords, Lord Freud and Lord Sheikh, both used the after housing costs measure when talking about the number of children in poverty. Was that because 4 million sounds more dramatic than 2.9 million or was it because the after housing costs figure is the one that all groups such as Gingerbread and Save the Children use on an everyday basis?

The Equality and Human Rights Commission states clearly that not taking housing costs into consideration can mask the poverty of certain groups. There can be no question that housing is a very large part of most people’s budget and therefore a big determinant of their living standards. Looking at a person’s standard of living without taking housing costs into account is to miss a significant part of the picture.

At this point, I must repeat what I said at Second Reading. We are not advocating the replacement of the before housing costs target with the after housing costs target; we just suggest that the after housing costs target should be added. Would it cost more to add a fifth target? No, it would not, because the households below average income surveys collect both sets of data. There is an explanation in their dataset under the heading “Methodology”, which states that there are arguments both ways and that the two sets of data are set out,

“principally to take into account variations in housing costs that themselves do not correspond to comparable variations in the quality of housing”.

If the Government themselves believe that it is important to collect both sets of data, why are they not both in the Bill, given the dramatic difference in the numbers of children in each survey?

One of the most powerful arguments, which I also advanced at Second Reading, is that housing benefit is included in the measure of income before housing costs, so a large family who receive housing benefit will appear to have a relatively high income unless that figure is discounted. This distorts the figures not only in London, where housing costs are high relative to income, but in poor rural areas, where housing costs might also be high relative to income. It must also be remembered that in many rural areas there is no social housing to speak of, so all or most rented property is in the most expensive private sector.

The Government have two arguments against my amendment. The first argument is that they can make international comparisons only with the before housing costs measure. I think that this is a particularly feeble argument, as the Minister knows. He will have the before housing costs figure for comparisons anyway, so this is a non-argument. The second argument is that housing figures are collected in the material deprivation target, but this does not address housing costs as such. The 21 questions include only two about housing: one is about keeping a house adequately decorated, while the other is about having enough bedrooms for every child of 10 or over so that they can share their bedrooms with a sibling of the same sex. The Minister said at Second Reading that measures of housing quality are included in the list, but those are the only questions that I can find that are about housing.

It may be argued that people can choose whether to live in a higher-quality house, but this is not borne out by the experience of many of the groups that advise us. Many people are constrained by factors such as proximity to schools and to work and transport links and they simply cannot choose to live in good-quality housing in a nice area.

Perhaps the last word should go to the Joseph Rowntree Foundation’s reports on what is needed to end child poverty in 2020. All its reports use the after housing costs. It says that this measure is widely reported in the literature and is arguably more informative, especially when considering the economic well-being of individuals at the lower end of income distribution. It also points out that the Government themselves used the after housing costs for the 2004-05 target, so why the change? One is led to the inevitable conclusion that it must be because the before housing costs target looked much better. Rather than argue further for one or the other, what is the barrier to putting both before housing costs and after housing costs in the Bill? I beg to move.

Has the noble Baroness considered that housing costs and transport costs are, to a considerable extent, interactive? You can get cheaper housing out in Hertfordshire, but then the costs are greater getting into London. This should somehow be factored into the equation. It is also a fair question to ask the Minister. If the Government intend to exclude housing costs from the figures, are they saying that the child benefits from the higher housing costs? What I am trying to say is that the after housing costs may relate to the child, but the child does not actually benefit from what the household costs, so that the overall cost of the household, which reflects the amount that goes to the child and which affects child poverty, ought to include the housing cost.

I have three points to make in support of my noble friend’s important amendment. First, the last report by the House of Commons Work and Pensions Committee in the 2007-08 Session—its second report—was called The Best Start in Life? Alleviating Deprivation, Improving Social Mobility and Eradicating Child Poverty. Its conclusion in Recommendation 2 was that abandoning the use of the after housing cost measure,

“may mask the true extent of child poverty”.

It went on to argue, after taking evidence from a wide range of sources, that the DWP should use the after housing costs measure as a basis for the PSA target. We have moved on since then—that was the 2007-08 report.

My second point is that anybody who looks at this—perhaps I am not the best person to make this argument—will see that London is the epicentre of poverty in the United Kingdom, for a variety of reasons. People might be surprised about that. If you look at the extent to which poverty arises in London, it is clear that the Government will not reach any of their targets unless something dramatic is done to improve the circumstances that apply in London. There is a combination of the worst contra-indicating factors of ethnicity, disability, shortage of part-time work and large families. Noble Lords all know what predisposes low-income household families to suffer. The conditions are all in existence in London—in spades. If that is true of the generality of these factors, housing is the biggest issue of all. When you see the housing benefit system struggle to cope in London, you realise how important the issue is. It is not just regional. The Government will not succeed in what they are trying to do by 2020 unless they address the situation in London.

Finally, I will make a point as a watcher of these things. The statistics on below average income households are very dense. The people who generate the reports issue press releases that make them intelligible to ordinary people. My fear is that, if after housing costs are not treated with the same significance by the Government, the people who write the reports will not emphasise them. The May 2009 figures for households below average income were very clear, when they were explained by the people who produced them, about the significance of the after housing costs measure. If the Government abandon after housing costs in the way that has been suggested in the Bill, my fear is that that the measure will slip off their agenda and it will be much harder for ordinary people trying to make sense of what is going on and to find the trends to mine the raw data for themselves if they do not get explanations from the officials who produce the reports.

My Lords, I have a great deal of sympathy with the points raised by the noble Baroness. She is quite right to seek to make these financial targets as accurate a measure as possible for assessing the well-being of children living in the relevant households. I have already spoken about the danger of relying on purely financial measures of child poverty. We will talk in more depth about that. The issue here is the extent to which housing is a freely chosen good for people in the community and to what extent it is effectively imposed on them as forced spending.

The housing boom over the past decade has undoubtedly led to a situation in some areas of the country where high housing costs are not, as the Government insist, a matter of choice for families. This might be true if ample affordable housing was available, but we all know that such accommodation is in critically short supply in many areas of the country. The noble Lord, Lord Kirkwood, mentioned London. He is quite right that London has a terrible problem with supplying affordable housing. It is almost laughable to claim that before housing cost income is a comparable indicator of lifestyle across the country.

I am not convinced that this amendment on its own will calm my concerns about the financial targets. The dangers of relying solely on financial targets will not be avoided completely, no matter how carefully we define the measurement of those targets. After housing costs might indeed be more indicative of disposable incomes, especially in some parts of the country, but the noble Baroness identifies in a later amendment another cost that many would argue is non-discretionary. I can think of many more areas that could be excepted. For example, why is money spent on food basics still to be considered discretionary? Transport costs, as the noble Lord, Lord Kirkwood, mentioned, are also unavoidable in many cases. A dramatic example is childcare, which is often a necessary cost of working. Then there are school uniforms, heating costs and so on.

These amendments are right to try to match the targets that the Bill sets more closely to the deprivation that a child actually feels. I am sceptical about the possibility of defining household income with sufficient precision to make it a direct proxy for child well-being in all cases, but this amendment represents an improvement over what is currently in the Bill—I say that at the risk of being accused again of trying to water down the Bill for our own nefarious purposes. I will be interested to hear the Minister explain why the Government continue to reject such a measure and indeed seek in practice to prevent a future Government from using after housing costs, should that Government wish to do so.

My Lords, I would like to add some more choices that are unavoidable. For many minority households, the only choice is to stay with a relative, leading to unsatisfactory conditions and overcrowding in many houses that minorities live in. I do not want to get into a competition over whether West Yorkshire is poorer or worse, but those of us who visit these households find that, although they do not often have childcare problems because everyone looks after everyone’s children, the conditions and the lack of privacy drive children out almost as soon as they can leave. This is a serious matter, which needs to be considered.

My Lords, at the risk of prolonging a discussion that at times does not seem to have exact relevance to the wording of the amendment, let me say that from my own experience the whole question of how we define poverty and deprivation in relation to children covers such a vast area of concerns that this discussion is becoming almost ethereal.

A few minutes ago, the noble Lord, Lord Kirkwood, rightly referred to the fact that there is disparity between geographical areas of the United Kingdom—what would apply in County Antrim would not apply in the streets of Glasgow, and so on. It is equally true—and I feel that this will fast become the real problem in this entire discussion, even when we are looking at future amendments in this Committee—that unless we have a clearer notion of what contributes to the basics in a child’s life, irrespective of where that child lives, we are going to get into all sorts of difficulties, which will find their way into the discussion of legislation. Speaking again from my experience of over 43 years of dealing with the pastoral needs of families in my home country, I assure the Committee that we are just scratching the surface of the problem.

I have listened carefully to what your Lordships have said today. If I may say so, my concern deepens with each speech that I have listened to. What I believe the Government are attempting to do in this Bill has my wholehearted support. However, I do not see the difficulty as lying in the niceties of words or the niceties of various attempts to avoid issues. The real difficulty that we face is in determining what constitutes the human rights of a child and what constitutes a penalty in the life of a child. Therefore, I make a plea at this stage, if I may presume to do so, that we should be careful that we do not get our thoughts hung on one attempt to define the poverty of children. So much contributes to it. The Minister sensed this in his introduction and covered it, but we lost sight of it when we heard various details that subsequently came up. I hope that I am not wrong in that. The longer our debate goes on, particularly in another place, there will be added confusion due to the simple fact that we have failed to understand that there is no simple, solitary, unitary approach to what constitutes the penalty in the life of a child.

My Lords, I hope that the Committee will forgive me, as this is the first time that I have spoken in Committee in this House. If I stray from the conventions, I hope that noble Lords will put me right. My noble friend Lord Kirkwood mentioned my former constituency of Glasgow North East—it used to be known as Springburn—where I have lived since I was 14 years of age. Even within that part of Glasgow there are many differences between communities. The poverty can be different from one part to another.

I am very sympathetic to the idea that we must put housing into the equation as often as we can. I remember that a friend of mine, a previous Prime Minister, said, “Education, education, education”. I always used to say to him, “No, it is housing, housing, housing”. When I first became an MP, the local authority had in good faith built non-traditional housing. It did not do that on its own; central government told it that unless it built non-traditional housing it would not get grants to rehouse people out of the slums—the slums where I lived in the 1950s. In the 1950s there was a lot of heavy drinking, particularly among the men. They went out drinking because there was no room in their kitchens as families had five or six children. I am not saying that those men acted rightly, but they often used to say that they went to the pub to get a bit of peace and quiet. Many of them stopped drinking when they got a decent house with a garden and separate rooms for their sons and daughters and for the mother and father. They did not have that in the old tenements.

In these non-traditional houses, water used to run down the walls. It is one thing to talk about poverty, taking the rent into consideration, but someone living in a traditional house could heat the house easily. People living in a non-traditional house with water running down the walls had to get extra heating, particularly given the climate in the west of Scotland. You could have cold evenings even without the snow that we have had recently. Sometimes the only thing that they could turn to was paraffin heating, which created more condensation and bigger problems than they had to start with. No one can tell me that that did not lead to problems for children. We are saying that a child living in poverty is unhappy. Therefore, a child living in bad housing is unhappy. I told the previous Prime Minister that there is no point in a clever child coming home from school to do his or her homework if they are living in a very cold house.

At times, I really despair about the media. During the recent by-election in my old constituency, the media churned out statistics on how people in the east end of Glasgow can die earlier than people in India. However, they did not mention the good points. You should look at all the good that is in our communities. I recently counted about 14 community-based housing associations. They involved men and women, with help from central government—I give the Government credit—and the great help of the local authority. The local authority says: “There is no use in us being one big social landlord and we will give the work to the community”. Not only did these community-based housing associations become landlords, which was their first job, but as a spin-off they created community halls where the child in poverty could get a decent night’s entertainment, whether that be a club, a dance or a disco. It should be remembered that, where there is bad housing, people tend to leave and facilities shut down. That means that the youngster in poverty has to pay bus fares if there is a bus transportation system to get them to a place of entertainment in the city centre, whereas, in more affluent areas, such facilities can be around the corner.

I could go on and on. In one of the poorest parts of my old constituency, which I still keep in touch with, is a district called Possilpark. I am very fond of it, because that is where I served my apprenticeship and met my wife Mary. I cannot complain about it. However, a lot of people say: “Possilpark? A terrible place”. The poverty was such that people could not afford a community-based housing association in the normal sense. They had to make representations to the Scottish Office and now the devolved Government to get a community-based housing co-operative, which meant that all the funds went back into the association. It is marvellous because, in an area where there are serious problems with drugs and break-ins, elderly people live very safely, because the co-operative has provided not only decent housing but a sense of community spirit, which means that the old folks are well looked after.

I learn more about the ideas of the Bill when I listen to the Minister. However, all that I can say is that it is hard to define child poverty. One family can have X income, while another family can receive exactly the same but the child is deprived because of serious problems in that family—it could be alcohol, drugs or even buying luxuries rather than food to put on the table. Many things go on in families for which it is difficult to legislate, create a Bill and say, “We have eradicated the problem”.

I say this as someone who came from the old tenements in Glasgow, which, by the way, were terrible slums. They were a disgrace, but the community was absolutely marvellous. I could count some 24 relatives in three different tenement closes. There was a sense of security and belonging, which was fantastic. At the same time, there are many problems that we must look at. When we put housing into the equation, if a child lives in a decent home, if the rent is not high and the parents are relaxed, the child is happier. If the mother and father are worrying about where the next shilling is coming from because they have to pay a big mortgage, the child will be unhappy. We are tackling child poverty because we want children to be happy. Housing must always be in the equation. Thank you.

My Lords, I am prompted by what all speakers have said to support the amendment and I ask that it be at least given very careful consideration. The noble Baroness, Lady Afshar, pointed to overcrowding and the noble Lord, Lord Martin, spoke eloquently of his experience in Glasgow. I have followed this issue over the years and I must say—I declare an interest as a landlord—that we have singularly failed to provide adequate housing for many of our people, which is a great national dishonour. Unfortunately, the pressures are there for that to carry on. We have not built as many homes as we intended to. It is important to be a home owner now, which makes it difficult to develop new areas because everyone is understandably afraid of the impact that that might have on the value of their property. This is just one factor.

As my noble and right reverend friend Lord Eames said, we should see the child as a whole and not overemphasise any particular one of their needs. However, perhaps we need this particular indicator to ensure that we do not continue to fail families as we clearly have done, although I pay tribute to the Government for reducing the numbers of families living in temporary accommodation, which I think is below 100,000 now, and for their heavy investment in social housing.

My Lords, I thank the noble Baroness, Lady Thomas of Winchester, for her amendment, which has given us a chance to have a quite moving discussion on a very important issue. I will deal with the detail in a moment.

The noble Lord, Lord Martin, made the case far more eloquently than I could for decent and affordable housing and talked about the wider impact on the family and on poverty if that is not available. As he explained, it can have a rather perverse impact on communities; in his experience, the worse the housing the greater the common cause for people to get together to build their own community. He talked about access to work and social behaviour and gave the example of people going down the pub because the house was too uncomfortable to stay in, with all that that leads to. This is an absolutely crucial issue.

Clause 8, which we will come on to, deals with the UK strategies that must be brought forward. It particularises the building blocks—the fundamental causes—of poverty, although not necessarily all of them. The strategies must address those. Clause 8(5)(d) deals with,

“housing, the built or natural environment, and the promotion of social inclusion”.

That is absolutely key. This is probably not the time to debate the history of council house building, but I will say that I cut my political teeth in a council; we used to debate Parker Morris standards and we built council housing in those days.

The noble and right reverend Lord, Lord Eames, made the hugely important point that there is a risk that, if we unpick all these issues, we will miss the totality. However, we recognise that child poverty is multifaceted and complex. We must address it by looking at the building blocks and seeing them in the context of the whole. That is what, we hope, the strategy will drive.

The noble Baroness, Lady Afshar, talked about overcrowding and its impact in causing children to leave home. Again, that is something that I recognise. I could take noble Lords to places in Luton where housing associations were set up by mothers who had lost their kids to London because they had fallen out after a row and there was no other safe haven. These issues are hugely important.

The amendment would include in the Bill a target for relative low income measured after housing costs. The other amendments are consequential and would ensure that the target was referred to alongside the existing targets as and where appropriate throughout the Bill. The new target imposed by Amendment 6 would be in addition to the relative low-income before housing costs target in Clause 2 and the other targets in Clauses 3 to 5.

The questions of whether poverty should be measured before or after housing costs, and the impact of housing quality on children’s outcomes, were debated at length in the other place. These are issues that a number of noble Lords feel very strongly about, as we have heard, particularly the noble Baroness. Let me make it clear that the Government recognise the importance of ensuring that children live in suitable, good-quality housing that is affordable and of the impact of housing conditions on children’s health and educational development.

For this reason the Government have placed, and will continue to place, significant focus on the availability of affordable homes. For example, the latest investment of £290 million at the end of November, delivering almost 5,500 more affordable homes across 149 local authority areas, brought the total government help for housebuilding since June to £1.8 billion. As the noble Earl, Lord Listowel, said, there is still a gap between housing need and the housing that is available. I have referred to recent investment and, at Second Reading, I referred to the decent homes standard. Since 1997, more than £23 billion of public and private money has been invested in improving social housing. By the end of 2010, we expect that 95 per cent of social homes will meet the decent homes standard.

There has been a substantial net reduction of 1.4 million families in non-decent homes among the poorest households since 1997. Our further ambition is to build an additional 3 million homes by 2020. Over the next three years, a further £3.4 billion will be provided to support decent homes delivery, along with a further £1.9 billion of PFI credits. We are aware of the challenge and we have made progress, but there is more to do.

Clause 8(5)(d) states that, in preparing the UK child poverty strategy, the Secretary of State must consider what measures ought to be taken with regard to housing. As with each of the areas listed in Clause 8(5), work is under way to analyse the impact of housing on child poverty and to inform the first child poverty strategy. This analysis will determine the key priorities for this policy area and, subsequently, appropriate monitoring arrangements.

The duties in Part 2 will drive local authorities and their delivery partners to address housing issues where these arise in local areas. This picks up on a point that a number of noble Lords made about disparities between and within regions. The engagement of local authorities and their needs assessments will be a key driver for making sure that these matters are addressed in the strategy. As I said, the duties in Part 2 will drive local authorities and their delivery partners to address housing issues where these arise in their local areas. For example, we expect the needs assessment process to identify the quality of housing experienced by families with children living in poverty in the local area.

The Government recognise the importance of housing costs to families’ disposable incomes and the impact of those costs on their overall living standards. However, there are a number of reasons why the Government have chosen to use before housing costs measures of poverty in the Bill. First, measures of housing quality, specifically the number of bedrooms relative to the number of children and whether families can keep their homes in a decent state of decoration, are currently included in the list of items used for the combined low-income and material deprivation measure in Clause 3, as the noble Baroness recognised when she moved her amendment. So if a child is experiencing poor housing, that will be reflected in the material deprivation score.

More important is the fact that the material deprivation measure will also pick up whether families cannot afford other items on the list. That could be because they have expenses such as high housing costs that take up a large proportion of their income, which means that they have less disposable income available to spend on other goods and services. The position does not rest only on those two particular items; it depends on the rest of the items set out in the material deprivation list as well. We will come on to talk about the costs incurred by disabled people shortly, but we would expect those extra costs to impact on the deprivation score over other items.

This is illustrated by looking at the child poverty statistics as set out in the HBAI series by region. For example, as the noble Lord, Lord Kirkwood, said, it can clearly be seen in London that using the combined relative low-income and material deprivation measure shows a far higher average risk of poverty than using the relative low-income measure for this region would suggest. This highlights in particular the high housing costs of living in London and the impact of those costs on remaining available income.

Secondly, it is important to note the drawbacks associated with an after housing costs measure. Measuring income after housing costs can understate the relative standard of living that some individuals may have by paying more for better-quality accommodation. The noble Lord, Lord Freud, raised the interesting issue of the element of choice that people currently have in what is a difficult market situation, but clearly some people still exercise that choice. Conversely, income measures that do not deduct housing costs may overstate the living standards of those whose housing costs are high relative to the quality of their accommodation. It is for this reason that the combined low-income and material deprivation measure is an important improvement because it takes into consideration both income and living standards.

We should also bear in mind the argument that has been made by my noble friend Lady Hollis—it was reiterated by the noble Lord, Lord Northbourne—about high housing costs potentially running alongside cheap transport, whereas cheaper housing usually comes with higher transport costs. The challenge of going down this path was outlined by the noble Lord, Lord Freud: where do we draw the line on this process? The noble Baroness pointed out that a measure of poverty that deducts housing costs should therefore potentially also deduct transport costs and that we do not have the data available to do this accurately. In addition, because the cost of many other items varies between and within regions, adjusting our income measure to take account of them all would be extremely difficult, if not impossible, to achieve and would result in an overly complicated measure. Given the drawbacks associated with an after-housing-costs measure, we consider that the material deprivation indicator is a better way of capturing the impact that housing costs have on living standards.

I acknowledge that the amendment would not change the current approach to measuring child poverty. Instead, it would add a further target to the Bill that we do not consider would be beneficial. We appreciate the importance of having a range of targets to enable us effectively to capture the different facets of poverty, which is why we have included four comprehensive targets covering different measures of financial poverty. However, for the reasons that I have set out, we consider that having a relative low-income indicator for housing costs in conjunction with a combined low-income and material deprivation indicator ensures that we are effectively capturing the particular issue of affordability of housing in the targets and through consideration of the issue in the national strategy and by local authorities undertaking their duties under Part 2 of the Bill.

The noble Baroness said that the Government used to include both before housing costs and after housing costs and asked why there was a change. The original child poverty PSA was to quarter child poverty by 2004-05 on both BHC and AHC measures. It is true that after this the Government changed to focus on before housing costs. This was before the extensive Measuring Child Poverty consultation in 2003-04, which arrived at the long-term measure of child poverty. It was decided to focus on before housing costs, only because of the inclusion of the combined low-income and material—

It was an extensive consultation. Somewhere in my pile I have a copy of the government response to it. There was an interim and then a final response. That included those whom we would regard as the usual suspects in all this. More widely it included academics and specialists; I am getting a nod from the Box. I should be happy to share that information more extensively with the noble Baroness.

It was because of the low-income and material deprivation measure that we decided to move and focus on before housing costs. Later we will perhaps delve more deeply into material deprivation measures, so I shall not speak more extensively on that at the moment. The noble Baroness explained what they are meant to capture.

The noble Baroness asked why housing benefit is included as income in the before-housing-costs measure of poverty. We believe that it is right that housing benefit is included in the before-housing-costs income calculation. Households in receipt of housing benefit pay their housing costs using their total income, including housing benefits. Households that do not receive housing benefit will need to pay their housing costs through their total income. Including housing benefit enables like-for-like comparisons between the incomes with which households pay housing costs and meet their other needs. To deduct housing benefit from those that receive it would underestimate the total income with which they could meet their housing costs and other needs.

The noble Lord, Lord Freud, and the noble Earl, Lord Listowel, talked about the lack of affordable housing. For decades, there has been a mismatch between supply and demand for new homes, with housing supply failing to keep up with our aspiring and ageing population. This has led to significant problems of affordability, particularly for those seeking to buy their first home. Addressing affordability and tackling poor housing are a key priority of the Government. We have made substantial progress over the past years, but, as I said, there is more to do. Over the years 2009-11, we will invest around £7.5 billion in affordable housing. With this investment, we are expecting to deliver 112,000 affordable homes. The Government’s ambition is to deliver 240,000 additional homes per year by 2012. In 2007-08 the number of housing completions was at its highest level for about 30 years, although, obviously, current market conditions have made that somewhat difficult to repeat immediately.

As for the additional costs potentially associated with after housing costs targets, in the impact assessment to the Bill the Institute for Fiscal Studies estimated that eradicating child poverty could cost up to £19 billion in 2020 on a before housing costs basis, if this were achieved solely through increased tax credits and benefits. Obviously, this is not the approach supported by the Bill. The Bill is specifically designed to ensure that the Government use a wide range of interventions via public services, with financial support being only one of those interventions. This will be a more cost-effective, sustainable and efficient approach. However, there is uncertainty in quantifying these costs. Because there is a significantly greater number of children—more than 1 million would need to be lifted out of poverty on an after housing cost basis—we can be confident that, if achieved solely through tax credits and benefits, the costs would be significantly greater than £19 billion.

Currently, the level of relative poverty after housing costs is 31 per cent, or 4 million children. Meeting the target would require a reduction to less than 1.3 million. As was noted at Second Reading by several noble Lords, the existing targets in the Bill are already extremely ambitious. The Pre-Budget Report sets out the five principles of our child poverty strategy: that work is the most sustainable route out of poverty; that families and family life should be supported; that early intervention is necessary to break the cycle—

I thank the Minister for giving way. My question concerns his assumption, when he compared costs before and after including housing, that they would have to use the same parameters in each case—60 per cent of the median, reduction to 10 per cent, and so on. As I understand the amendment tabled by the noble Baroness, it considers costs both before and after housing. Clearly, if the Government were to use exactly the same parameters, they would be superseding the easier target with a more difficult one. However, that may not be the intention. It may be that both should be measured but against different financial criteria. I invite the Minister to respond on whether every target has to be measured against exactly the same financial criteria.

If the financial criteria question is about the percentage of children and the percentage of mean household income, those are not common across the four measures in the Bill. Two of the measures have a 5 per cent threshold; one of them does not have a threshold at all at the moment, because it depends on the longitudinal study that is being developed about persistent poverty; and the other has a threshold of 10 per cent. They are not consistent, so here I am responding to the amendment, which adopts the same 10 per cent criterion and 60 per cent of median income, which applies to the before housing costs target. Obviously, if the amendment were different, we would have to consider that, but the fundamental issue is how we best cater for and represent issues of housing cost in the data and targets that we consider. Our point is that by considering a low-income figure and a material deprivation figure—looking at income and, effectively, costs through material deprivation—we have the best route to get the best measure.

I thank the Minister for giving way. It is possible to view the amendment as rather cynical, just replacing an easier target with a tougher target—the 2.9 million with the 4 million—but it is also possible to look at it in a more qualitative way. It is an attempt to consider another dimension: housing deprivation. If I am straying slightly from the specific words of the amendment, I hope that noble Lords will forgive me. My point is that, if housing deprivation is desperately important, which it is, and this is of value as a measure, it would be possible to devise such a measure with a different threshold or median percentage, so that we are looking not at an inconsistent target—the £19 billion would not necessarily change—but at ensuring that the children whom we are capturing are the more appropriate ones, so that we are capturing something valuable. Whether or not that point is within the letter of the amendment, I would be interested in the Minister’s thoughts and response.

My Lords, it is perfectly feasible to advance an amendment that has a different figure from 10 per cent of the number of children in relevant households and a percentage of median income other than 60. I am not sure whether that addresses the concerns. Let me make it clear that we do not see this as a cynical amendment. The case is genuinely and strongly felt and was argued extensively in the other place. We are continuing with that debate here. As the noble Baroness, Lady Thomas, stressed, the amendment sets an additional target rather than replacing one.

I am about to conclude my response. I have not strayed into the argument raised by the noble Baroness when she introduced her amendment about making international comparisons on the basis of before housing costs. For the record, I will say that we do.

Finally, as noble Lords are aware, the HBAI series contains child poverty figures both before and after housing costs. We are committed to ensuring that both figures will continue to be published, to ensure that it will always be possible to monitor child poverty trends on an after housing costs basis, as well as to keep under review the impact of housing costs on families’ living standards. I understand the point made by the noble Lord, Lord Kirkwood, that after housing costs figures could drift if they do not have equal status for these targets, but I do not see that that follows. There are plenty of people, including the noble Baroness and the noble Lord, who will make sure that the Government remain focused on that statistic. I apologise that I have been speaking for a while and ask the noble Baroness not to press her amendment.

My Lords, I apologise for detaining the Committee and the Minister further. Looking back at the answers that he has given, could he say a little more—or perhaps write to me—about social housing and the steps that have been taken since 1997 to invest in it? What he said about decent homes probably covers that to a large degree. Is the fund for social housing being replenished? It causes a lot of dissatisfaction and unrest in some areas when outsiders are perceived as coming in and taking social housing that is in short supply. In some areas it gives rise to a lot of tension. It would be comforting to know what the Government are doing about that.

My Lords, I am happy to write to the noble Earl with much more detail than I can bring to mind on my feet. There has been a significant amount of investment in low-cost housing to enable people to buy as well as to rent. Particularly in recent times, there has been the opportunity for local authorities, after some while, to build new council homes for rent. I might be wrong on this statistic, but something like 70,000 affordable homes will be built this year and next. I will write to the noble Earl with much more detail. This is not only to deal with the decent homes standard and to make sure that existing housing is brought up to a decent standard. There is an extensive new-build programme, with particular focus on affordable housing both for purchase and for rent. In the current economic climate, it has been particularly difficult to move forward on that, which is why the Government have promoted shared equity schemes as well as another scheme whose name escapes me. I will write to the noble Earl on that.

My Lords, I am most grateful to all noble Lords who have spoken in this debate. The noble and right reverend Lord, Lord Eames, who is not in his place at the moment, said that he thought that the discussion was ethereal. I think that this debate has been slightly surreal in some ways. I thought that this would be a rather dry subject, because it involved just the figures to be captured, but it has turned out to be a much wider debate about housing. The noble Lord, Lord Martin, made a very good Grand Committee maiden speech. He told us all about housing in Glasgow and about the men who went to the pub to get away from the overcrowding and stopped drinking so much when they got a house of their own. That was a very interesting aspect of life in Glasgow.

I wish that we had been able to talk more about housing in general, but we had better stick to the topic of the amendment or we will be here all night. Surely leaving housing to the material deprivation score is rather a convoluted way of arriving at a family’s disposable income. I would have thought that collecting the after housing costs was much simpler. Even if HBAI is still going to collect them, I am still not quite sure why the Government do not give in and say, “Okay, we will collect both, and then we will be happy and you will be happy”. I was interested to hear the Minister say that the consultation showed that people wanted the before housing costs, because all the groups and the academic researchers seemed to prefer the after housing costs. That is why we tabled the amendment, because the method that it proposes seemed to be the one that everyone used, as it is much simpler. I wonder whether HBAI will continue to collect after housing costs after the Bill has been enacted. I hope that it does, because it tells us something.

I must also talk about transport. I certainly do not disagree with the point about transport, particularly in London. Everyone knows that if you have a low-paid job, on the whole you live out of London and come in because the transport is relatively good, but in some rural areas it may be more expensive to live near a transport hub. This is why we need both figures. London is a particular example, but there are many other areas of the country that we should not ignore.

I will not speak any further about this, although I am afraid that the Minister has not told me anything that I did not know already. I am tempted to table this amendment again on Report and call for a Division, but I will leave that to another day. In the mean time, I beg leave to withdraw the amendment.

Amendment 2 withdrawn.

My Lords, this may be a convenient moment for the Committee to break during pleasure for 15 minutes.

Sitting suspended.

Amendment 3

Moved by

3: Clause 1, page 1, line 10, at end insert “, and

( ) the persistent material deprivation target in section (Persistent material deprivation target)”

My Lords, I referred to this general area when the Minister asked me whether our view on financial targeting would change. This amendment effectively introduces an additional financial target. Its aim is to set out as reliable a figure as possible, given the state of the data, for the kind of really persistent poverty which concerns the electorate. It is designed to be a rock-bottom measure of long-term poverty combined with long-term deprivation.

One central issue of concern with the financial targets set out in the Bill is the lack of reliability of the data. The income data on which we rely come in the main from the Government’s Family Resources Survey. Each year it questions around 25,000 households. There is of course an issue about the reliability of the responses. That is a point we shall pick up on in another amendment. By definition, a survey only records an individual’s income at a certain point. For instance, if I am in between jobs, I can record nil income and be counted as poor. Not surprisingly, people move rapidly in and out of these deciles. Peter Saunders at Policy Exchange, in his fascinating paper Poverty of Ambition, points out that more than half of the poorest 10 per cent of households move out of the bottom income decile within 12 months. He informs us that of the 18 per cent of households with incomes below the poverty line in 1991, only 2 per cent were persistently poor in every one of the subsequent 10 years. Temporary drops into income poverty are not what the general public understand to be poverty.

Long-term or persistent poverty is covered in Clause 1(1)(d). The trouble is that the measure of income alone seems pretty dubious if you read the IFS report, written for the DWP by a team led by Mike Brewer, entitled The Living Standards of Families with Children Reporting Low Incomes. We have already looked at another report from the IFS today. This report finds a particular problem with self-employed families that have higher living standards than employed families on similar incomes. Additionally, households with children on the lowest incomes do not have the lowest average living standards. The IFS closely examined the number of children in hardship, in particular long-term hardship, using the Families and Children Study and the British Household Panel Survey, known respectively as the FACS and the BHPS in common shorthand. It found that the proportion of children in long-term hardship—that is, three consecutive years—was greater than the proportion in long-term poverty; that is, three years of income poverty. Interestingly, however, the document stated that about one-third of children in poverty for three years never experienced daily living deprivation according to the Families and Children Study; almost one-third never experienced consumer durables deprivation; and much higher proportions were never in hardship according to the other measures. Therefore, a combination of the two measures over a persistent period would allow us to capture that group of children who are at the heart of disadvantage in this country. Once they are clearly targeted, we can focus on how best to help them. I beg to move.

My Lords, I commend the noble Lord, Lord Freud, for bringing this amendment forward. Persistent material deprivation has always exercised me more than anything else. As I said earlier, I share his view that looking at statistical metrical data is not sufficient to deal with the problem. However, I wonder how easy it would be to collect the data in the way that he suggested. I genuinely do not know whether it would be easy to do so. It is obviously easier for statisticians. We all accept these surveys a little too casually. For the reasons that he has given, it is not safe to rely on them exclusively, because they are subject to statistical problems and contain lacunae. I agree with him that in the area of self-employment, the figures are notoriously difficult to rely on. He has highlighted something that we need to look at. People who have lived in poverty for three out of four years are a key group who should be targeted and given special assistance. If he can devise other methods that are fair across the board and easily administered, I would be very willing to look at them and would encourage the department to study the suggestions.

The one note that worried me in the excellent introduction to the amendment given by the noble Lord, Lord Freud, was the fact that he seemed to suggest that people are not as poor as they are made out to be. That is not my experience. If I was left entirely to my own devices, I would use minimum income standards when dealing with material and persistent deprivation, as other European nations do. Material deprivation gets worse as it goes on, and if people are stuck in the trough of material deprivation for three out of four years, they should be entitled to take advantage of the unique gift to the nation suggested by the noble Lord, Lord Freud; namely, the changing of the DEL/AME rules. If I was the head of a family and I could demonstrate that I had been in material deprivation persistently for three out of four years, I should be able to go to Jobcentre Plus and say, “I want to do something to get me out of this”. It might take £5,000, £10,000 or £15,000 to get me qualified as a healthcare assistant or a plumber. It would make absolute sense if you could demonstrate that the conditions applied; namely, material deprivation for three out of four years. People should get a hand—I mean a serious hand—in the form of the bursary or grant that they need, with the childcare to match. If people act in good faith, they deserve special treatment of that kind. That is a bit of a fantasy, because it is a very difficult thing to organise. However, it would motivate people and would not have any of the perverse disincentives to work involved in simply giving people extra money.

We as a society have to do something to deal with family households in material and persistent deprivation. My experience is that it is not just that they trade themselves out, as the Policy Exchange work that I have studied suggests. The worst thing that happens to them is that they fall into and out of work. For children, that is even worse, because they do not know where they are at any given moment. Being locked into a cycle for three or four years in which you are in low-paid work, then receive benefits and then go back into low-paid work destroys any ability to give a real advantage to young children. It is very difficult for families to deal with the key formative moments of their children’s lives.

The amendment goes a long way towards meeting my concerns in principle. I do not know about its operational effectiveness or feasibility, and if I rightly detected that the noble Lord, Lord Freud, thinks that there are not as many people at this level of poverty as I think there are, I distance myself from him to that extent. Otherwise, it is a perfectly good idea in principle, and I look forward to hearing what the department has to say about it, because it is worth thinking about.

Perhaps the Minister can help me to understand this better. I, too, am grateful to the noble Lord, Lord Freud, for his amendment. On the one hand I see that, if we want to make a difference, it is important to target the neediest, because they will often be missed, and it is they who need the most dedicated help to improve their lives. On the other hand, I think about the experience on the continent with children in care: more children are taken into care, but there is also more outreach to families, more support and more early intervention.

My thought in responding to the amendment is that it may be a good approach to detect families before they fall into persistent poverty, but that supporting families when they are in this state of persistent poverty is also very important. I am torn. I suppose that one wants to try to do both: to intervene early to prevent them from entering into persistent poverty, and then to make damned sure that families in persistent poverty get the intervention that they need to get out of it before all the terrible consequences have an impact on their children.

My Lords, I thank the noble Lord, Lord Freud, for his amendment, which deals with an interesting and relevant issue.

I agree with the noble Earl, Lord Listowel, that early intervention and support for children in care and for families is important. I am sure that we will discuss this at greater length in due course in Committee, particularly as our Green Paper is due out soon. I think that the noble Lord’s party also produced a possibly equivalent publication yesterday. That approach is a key part of building the strategies and is not inconsistent with needing to address the issue of people who are persistently in poverty. The two must both be addressed.

The amendment proposes that a second persistent poverty target is included in the Bill, and would introduce a corresponding duty on the Secretary of State to meet it. It would also require the progress against the new measure to be reported in the annual progress report. The proposed target measures the persistence of combined material deprivation and low income. The existing target measures the persistence of low income and is set out in Clause 5.

We recognise the importance of including in the Bill a measure of persistent poverty. The length of time that a child is in poverty can have a significant detrimental impact on their experiences and life chances, so it is necessary to ensure that moves out of poverty are sustained and that children do not experience the negative consequences of persistent low income.

We also believe that it is crucial for the targets to capture material deprivation, and the combined low income and material deprivation target will ensure a focus on those families that are experiencing the material effects of living in poverty. It recognises that some families face unusually high unavoidable costs, which mean that their living standards are poor even though their income does not fall under the relative low income poverty threshold. The material deprivation measure in Clause 3 complements the persistent poverty measure in Clause 5 because material deprivation is more likely to affect households which have been poor for a number of years than those households experiencing temporary low income, the point that the noble Lord, Lord Freud, effectively made.

We appreciate the importance of having a range of targets that provide a comprehensive definition of success in eradicating child poverty and the need to measure progress and drive action against the many facets of poverty. That is why we have included four complementary poverty targets in the Bill, including a persistent poverty target and a material deprivation target. However, we believe that including further targets would run the risk of a lack of focus. In addition, I can say that we are not aware of any evidence to suggest that the proposed measure would add significantly to the comprehensive definition of poverty created by the four targets. Decile units aside, the target level proposed in the amendment essentially renders the new target unnecessary. The Bill already places a duty on the Secretary of State that requires fewer than 5 per cent of children to be in poverty according to the combined material deprivation and low income measure by 2020, and therefore it is extremely unlikely that this target could be met without meeting the proposed new target as well. So for the 5 per cent target to be met and the 10 per cent target not met would require the poverty rate on this measure to fall from 10 per cent or above to 5 per cent in the single year prior to 2020 and, even less likely, that all the children lifted out of poverty in that single year to have been poor on this measure for the previous three years. This would allow for the 10 per cent of children who have been poor during three of the previous four years, even though only 5 per cent were poor in 2020, the fact that the 5 per cent material deprivation target essentially requires that the proposed new target is met means that the amendment would add unnecessarily to the Bill.

There is also a technical reason why the amendment could not be accepted in its current form, but obviously these things can be sorted out. Any measure of persistent material poverty would have to relate to calendar years rather than financial years, as stated in the amendment, because the only longitudinal survey available to measure income and material deprivation produces estimates for the calendar year. The noble Lord, Lord Kirkwood, asked whether it is feasible. The answer is yes, but other components would need to be added to the present longitudinal study in order for it to pick up material deprivation because you would be tracking the same families over the period; at the moment, material deprivation does not do that.

Someone said that it has been recognised that child poverty cannot be understood merely through the measurement of income. Poverty is also the result of being deprived of those things in life that it would be assumed to be necessary in order to be a full member of contemporary society. These items are not just material objects but include social activities. They change over time as we experience technological development and social change, and any measure of material deprivation must recognise this. In addition, it needs to be recognised that parents and children will have different needs, and therefore an understanding of child poverty requires a measurement of both parental and child material deprivation.

Let me also say that the persistent poverty measure in Clause 5 is not intended to be a measure of persistent material deprivation, rather it is a measure of persistent low income and has been included because evidence shows that being in a low-income household for a continuous period of time can, not surprisingly, adversely affect children’s outcomes. We know that children who live in persistent poverty are more likely than those who experience temporary poverty to be at risk of poor outcomes, such as being suspended or expelled from school or living in bad housing. We acknowledge that some children who experience persistent material deprivation will not be captured by the persistent low income measure in Clause 5. However, they will be captured by the material deprivation measure in Clause 3. The target for this measure is less than 5 per cent, revealing our commitment to tackling the material effects of poverty and low income.

Unlike low income, material deprivation is unlikely to be a short-term situation. Material deprivation is measured according to which items from a selection of basic goods and services a household cannot afford. These goods and services tend to be accumulated over a number of years. Therefore, we would expect to see less distinction between persistent and temporary material deprivation than between persistent and temporary low income. This is one reason why we did not use material deprivation to define our persistent poverty measure. We have established methods of measuring material deprivation that show that it is an aspect of poverty that does not change rapidly. This is to be expected, as material deprivation will lag behind income falls, and moving out of material deprivation will lag behind income rises. We know of no evidence to suggest that the proposed measure would add significantly to the definition of poverty encapsulated by the four targets.

The noble Lord, Lord Freud, referred to the IFS report. We will be quoting extensively throughout our proceedings from the substantial work that the IFS does. We recognise in particular that the surveys do not necessarily pick up self-employed income to the full. It is frequently the case that those at the bottom end of the distribution scale are shown not to be in hardship. There are issues here. The measure for relative low income has been fixed at 60 per cent of the median partly because it takes us above those problem areas. That said, I hope the noble Lord will accept that we are on the same page in trying to address the issues. However, this proposal would not add anything of significance to the Bill.

I thank the Minister for that response. I also thank the noble Lord, Lord Kirkwood, and the noble Earl, Lord Listowel, for their contributions. I will hone in on the concern. When you have targets, there is always an instinct to nudge the figures just above the targets and go for easy results. There are signs, which we discussed elsewhere, that there has been a bit of that. There has been a sharp rise in the figure for underperforming children in the under-40 per cent of the median category—a much sharper rise than that for children in the under-60 per cent category.

The risk is that we do not properly isolate those children who are the most vulnerable in the country. The data are hazy. Peter Saunders of Policy Exchange, in his Poverty of Ambition piece, draws out how poor some of the data are. He states:

“Astonishingly, for those in the bottom 5% of the income distribution, deprivation scores get worse as income rises. Children with equivalised incomes below 40% of the median income are less deprived than those with incomes between 40% and 60%. Children in the bottom 2% of incomes are less deprived than those whose incomes are well above the poverty line”.

All kinds of odd things are happening in the data. If the Government take a relatively undifferentiated approach, they are likely to miss out the children who really need support.

I am very appreciative of the general support of the noble Lord, Lord Kirkwood, but he was concerned that the amendment would produce a rather small figure. It would, but it would be an immensely valuable group of people to isolate because they are probably the most needy people in the country. On the point made by the noble Earl, Lord Listowel, we would consider the children in, or likely to be in, the circumstances of the group and start honing early interventions for that group. That is the purpose here.

The noble Lord, Lord Kirkwood, also talked rather flatteringly about the DEL/AME switch. One of the most interesting parts of the huge amount of research in the area comes from the Child Poverty Action Group in its recent report. It states, bluntly, that the approach now being adopted towards welfare is the approach that we should adopt towards poverty. In other words, we should go to the people who have the problem and provide individualised support on a holistic basis.

I used this quotation at Second Reading, but it bears repeating. In the same way that it is increasingly recognised that,

“a personalised, multifaceted service is required to assist jobseekers successfully into employment”,

so a similar approach needs to be applied to poverty. I cite the Child Poverty Action Group.

Picking up on the point made by the noble Lord, Lord Kirkwood, about DEL/AME, the cost of the worst-off children is enormous for society. We know that it will cost, quite literally in many cases, millions of pounds per child. If we can isolate them and start to consider the costs we will incur and make the DEL/AME switches, as we do for welfare, we will start to prevent those costs. That has nothing to do with being a do-gooder, it is a cold assessment of the interests of the country to invest in preventing huge future costs. One does not have to be a bleeding heart to see the logic of that. If we are to do it, we must isolate the children and get very sophisticated about assessing where the investment should go.

The purpose of the amendment is to start the process, so that we can begin tiering it up and thinking about the different amounts of money that we can put to different levels of need, and consider value for money.

On a point of clarity, the Government would agree with much of what the noble Lord has just said. The point at issue is whether the measure that he has proposed for measuring another target is a meaningful one. In a sense, that is related to the policies that flow from the strategy, but that is the particular issue before us. We have common cause on issues around support and investing to challenge poverty; when we get into the detail of the strategies at local level as well as nationally, some differences in policy arise, but when it comes to seeking to achieve that, we agree. The Government’s point is that the measure that the noble Lord seeks to have in the Bill does not add anything that aids that process.

Surely the Minister would agree that, if you have four things that are obligatory and something else that is merely quite a good idea, that last thing will not get the same amount of attention. Having heard what the noble Lord, Lord Freud, has said about the personalised approach—the Minister and I sat in this Room for hours arguing about that on the Welfare Reform Bill and I greatly supported what he did on that Bill—I think that there is a serious case for getting something into this Bill that will have that effect.

The amendment does not particularly say or do anything about a personalised or a non-personalised approach; it is simply about an alternative target. The purpose of the suite of targets is to try to ensure that we identify the level of poverty that there is and that we are able to track progress against those targets so that we can see that we are addressing the issue and making a real difference to the lives of young people. The sole point here is that the proposed additional measure does not help that process. What is in the Bill already covers the situations of those people who are in persistent poverty.

I thank the Minister for making that point. I shall come back to it, though. There are enough discrepancies in the data, as we can see from the IFS report among others, to suggest that when you want a hard, irreducible measure of the income and deprivation of people in real hardship, if they are measured over a reasonable period such as three years, you know that you are capturing them. The data on shorter periods seem much more volatile, including on deprivation. If you want to start to tier the children at risk, therefore, this group—three years plus three years, in each—would seem to be an enormously valuable place to start. My reading of the data suggests that the one-year material deprivation does not capture those children reliably. I accept that this is clearly an issue of data interpretation, as the Minister has said. I will commit to go and brood on the data and we may even discuss them in the interim before deciding whether this is to be assumed.

I am happy to have a discussion between now and when we next get to Committee, perhaps with officials, so that we can do some number-crunching to see if we can reach a joint understanding of the issues around data.

I very much appreciate the Minister’s offer. If we sat down with officials and the data for a hard look at this, we would reach an agreement based on those data. I suspect that we would then produce a joint agreement, if we could agree that something needed to change. On that basis, knowing that the noble Lord is such a generous Minister, I beg leave to withdraw the amendment.

Amendment 3 withdrawn.

Clause 1 agreed.

Clause 2 : The relative low income target

Amendment 4

Moved by

4: Clause 2, page 1, line 13, leave out “10%” and insert “9.85%”

My Lords, I did not table this amendment just to amuse you. It replaces the target figure of 10 per cent with a no less arbitrary, but rather less comfortably round, figure of 9.85 per cent. This is, of course, a probing amendment, and I hope to give the Minister and the Committee more generally the chance to discuss the value of setting a target at the particular threshold stated in the Bill, of 10 per cent of children.

Everyone would find decreasing the percentage of children brought up in relative poverty to a much lower figure, such as 10 per cent, a praiseworthy aim. If a future Government meet the target, they will have made enormous strides in improving the welfare and opportunities of children in the UK. However, 10 per cent does not represent the eradication of child poverty, as some colleagues of the Minister still insist on claiming. They may express it as: “That’s the nearest we can get, given the lack of reliable data”.

The whole objective of this Bill is to ensure that child poverty remains at the top of political priorities for the next decade. I actually see this as a reduction from the original intention, which is to make the UK among the best countries in Europe for a child to live and be brought up in. I am asking: is this percentage the right figure to be aiming at in the context of the data we have? An arbitrary target such as 10 per cent could become unhelpful. You would not, for instance, reject a measure just because it reduced the level of child poverty to 11 per cent. You would not stop focusing on the area just because you had already reduced it to 9 per cent.

I shall address the issue of the reliability of the data. Some organisations with perfectly honourable and good intentions have lobbied to replace the figure with a target of 5 per cent. That target has been reached, albeit for rather short periods, by a few countries, which have tended to be small and enjoying an economic boom when they achieved it.

I agree with the Government that 5 per cent is not a realistic figure, given the limitations on the data and the way that poverty is a transient phenomenon, as I have already discussed. I have much more sympathy with the Government’s aim that the target, once reached, should be maintained for three years so that any improvement in children’s lives is genuinely long term and represents a permanent change, not a one-off surge for the target year with a collapse afterwards.

It is clear that we shall spend a lot of time discussing the strategies for how to tackle child poverty, but before we have that discussion I want to be comfortable that the figure of 10 per cent, which is so prominent in the Bill—it is placed early and in a prominent position—does not hinder steps that the Secretary of State should be taking and is a helpful and appropriate measure of success. With this amendment, I want to give the Minister the opportunity to provide a full explanation of why the 10 per cent threshold has been chosen.

My Lords, could I ask the noble Lord, Lord Freud, whether this is the amendment under which he wants to discuss the methodology behind how the figures are collected and weighted or is he going to do that on another amendment?

I have several amendments on the figures, but this is about the threshold. Another amendment looks at how the figure of 60 per cent is derived and why, so this amendment asks about the sensible threshold to aim for and why this particular threshold has been selected. I should have said, “I beg to move”, and I apologise for the oversight.

My Lords, I think that the noble Lord, Lord Freud, is asking what will keep us heading for the target. However, I have not quite caught what he was trying to say. Nevertheless it reminds me that whatever we have in legislation, we need to be motivated to achieve improvements for these families. A great deal of legislation passes through this House. We had the Children Act 1989, which was a wonderful piece of legislation that enshrined in law all sorts of protections for families. Later the noble Lord, Lord Laming, said during the course of the Children Act 2004 that if we had only implemented the 1989 Act, we would not need a new Bill. So this is an important Bill and these are important targets.

The noble Lord, Lord Freud, implied what figures such as 10 per cent, 11 per cent and 9 per cent really mean. We want to eradicate child poverty as far as possible. That is what we are here for. Putting a figure on it could be unhelpful in some ways because it might suggest that once poverty is down to 10 per cent, we can stop trying. That is not right. We have to keep going because we do not want any child to grow up in poverty. That may be beyond our means, but we are going to try as hard as we can not to let that happen.

I am sorry to take some time on this, but will the Minister and his colleagues think about institutionalising other means to tackle the problem? The noble Lord, Lord Martin, spoke eloquently about his personal experience of the poverty experienced by many families in Glasgow, and I have spoken to MPs who have had extremely powerful experiences when accompanying health visitors and seeing the poverty in which some families are living. If industry can set up the Industry and Parliament Trust, a mechanism by which Members of the House of Lords can easily visit a business and shadow an engineer over a period and get to know and build relationships with people in industry so that they understand and give the right priority to the concerns of industry, why should there not be a programme through which parliamentarians can accompany health visitors visiting families living in poverty and perhaps build a relationship with a health visitor or a family over a number of years and by that means be motivated to enact this legislation and make it happen?

I recently read a biography of the first Earl Attlee, who had an upper middle class background, and went to live in the east London settlement of Toynbee Hall. He was so moved by that experience and his earlier experience of seeing how people in deprived areas lived that he achieved what he did when he led the Labour Party. I apologise for taking your Lordships’ time when we are running rather slowly, but I wanted to flag this up as something that the Minister might like to consider with his colleagues. I should be interested to hear his thoughts on it.

My Lords, I thank the noble Lord, Lord Freud, for giving me the opportunity to explain government policy on this issue, but first I wish to pick up the comments of the noble Earl, Lord Listowel. He made a fascinating suggestion. On too many occasions we get wrapped up in the Westminster bubble. We have connections with the outside world but we can become remote from what is happening at the sharp end. Although there are lots of influences at play when we develop legislation, including consultation and engagement with stakeholders and the people on the front line, I readily accept that the more that we who have the privilege of sitting here and in the other place understand the experiences of suffering people who live in poverty and whose interests we should be looking after, the better it will be.

The noble Earl also mentioned industry. This issue is not limited to parliamentarians and benefits from the engagement of business. Indeed, a lot of good work goes on in that regard. On the issue of strategies, engagement at local level looking at needs assessment on the part of local strategic partnerships and partners is another way to ensure fuller engagement. One could argue that you do not have to be poor to want to eliminate poverty, but understanding its ramifications and seeing that up close is hugely important. I thank the noble Earl for his suggestion in that regard.

I say to the noble Earl that once we reach the target, Schedule 2 to the Bill makes it clear that the level, or no less than that, has to be maintained beyond 2010. I remind noble Lords that the relative low income target refers to,

“less than 10% of children”,

so it is not a case of reaching the 10 per cent or just under the 10 per cent. That is no excuse for stopping there. However, as I shall go on to explain, reaching that target is a challenge.

As we have discussed, the Bill contains four child poverty targets to be met by 2020. The relative low income target is only one of the targets and progress has to be made against all of them. HBAI is key dataset for the analysis of income poverty and is treated as such by both researchers and the Government. The noble Lord, Lord Freud, has on several occasions implicitly challenged the data and their robustness. We shall have a debate on that on a subsequent amendment. Any data based on surveys have their qualifications, but questioning the nature and robustness of the data on which these targets are built is not an excuse to cast them aside, even though there are issues that need to be understood around them.

The importance of HBAI comes from the fact that the household income data it contains have been extensively reviewed and processed to ensure that they are properly comparable between households. The survey used to calculate these statistics, the Family Resources Survey, is the most comprehensive survey of incomes and income sources in the UK, with an extensive suite of validation procedures to ensure that the data are of high quality. The data play a vital role in the analysis of patterns of benefit receipt, and are used for policy evaluation and benefit forecasting.

Every year around 25,000 households across the country are surveyed—an annual sample larger than almost any other UK social survey. However, the Government’s low-income statistics are based on a survey and, as with anything based on a survey, are subject to a degree of uncertainty. It is for that reason that it is necessary to round the statistics to the nearest 100,000 children or percentage point. In practice, a change in the target level from 10 per cent to 9.85 per cent of children would not be measurable to that degree of accuracy. We need a whole-number target, which is why we have chosen less than 10 per cent—I accept that this was a probing amendment to establish why we chose that figure. To measure levels of low income to an accuracy of more than the nearest percentage point would involve a significant boost of the sample size and, obviously, of the costs of the survey.

There will always be criticism that households whose income is just over the percentage of median income set in the target will not benefit from the legislation, and that this is arbitrary. However, the Bill contains four child poverty targets to be met by 2020, and these have been chosen on the basis of extensive consultation. In establishing the targets, we are recognising the need for a comprehensive definition of success that captures the many facets of poverty, long-term poverty and material deprivation that can reinforce the negative impact of low income on childhood well-being and life chances. Targets ensure that policy will have to tackle poor living standards and persistent poverty, as well as raising incomes at a given point in time. Together, the targets reflect the reality that the length of time experiencing low income, and the lived experience of poverty, matter.

A relative child poverty level of below 10 per cent would be the lowest in this country since at least 1961. It would more than reverse the doubling of relative child poverty between 1979 and 1998-99. As I said, by setting a range of targets in the legislation, we are confident that achieving all the targets will make a real and lasting difference to the children of the UK. Reducing child poverty rates to those consistent with other modern European economies with historically low levels of child poverty, such as Finland, Sweden and Denmark, would be a major achievement. The best child poverty rate that has ever been achieved in Europe is 5 per cent, but the figure has not been sustained. Using data from 2007, the best in Europe would equate to a level of 10 per cent. We propose to reduce the rate to less than 10 per cent, alongside extremely challenging targets to reduce the number of children in households suffering from persistent poverty, low income, material deprivation and absolute low income.

The Government believe that it would not be possible to define eradication as zero children in relative income poverty. However, a rate of less than 10 per cent is an ambitious but technically feasible goal for the sustained eradication of child poverty that would put the UK’s child poverty rate firmly among the best in Europe. There were technical issues with the survey used to measure poverty that meant that some children in families with short-term low income, or whose incomes were not recorded accurately in the survey—the noble Lord has referred to that—will be classed as in poverty even though they do not have low-income standards.

I hope that that has explained the 10 per cent figure. If achieved, it would put us in line with the best in Europe, and to focus on it along with the other three would enable us to make a real difference to children who are in poverty today.

I thank the Minister for taking the opportunity of the probing amendment to answer so fully. His main explanation concerned data quality, and that is correct: when you look at some of the data collected, you see that there are grounds for serious concerns about their quality, so I accept what he is saying.

One of the big problems when you do a survey is that the responses to it are apparently fairly confused, with people not knowing what they should be reporting and what they should not. Some people report nil because they do not consider benefits as part of their income. That is part of the concern. The other part is deliberate underreporting. In support of the amendment on the black economy, I have quite a lot of data to introduce to the Committee about what various academics estimate that economy to be, and where it might be.

This is a genuinely difficult issue. I imagine that if a surveyor came into noble Lords’ rooms and asked them to tot up their incomes, everyone in this Room would find it pretty difficult to do that on a consistent basis. That is what some of the researchers who have questions in this area say. We will have other opportunities to discuss this.

I did a few sums on the back of a dirty piece of paper on the cost of my 0.15 per cent reduction from 10 per cent. If we were to take the IFS figure of £19 billion and calculate purely on income transfers, the cost of the reduction would be in the order of £200 million. I do not feel that I should put that kind of cost in a probing amendment, so I take pleasure in begging leave to withdraw it.

Amendment 4 withdrawn.

Amendment 5

Moved by

5: Clause 2, page 1, line 18, leave out “60%” and insert “60.15%”

My Lords, this is pretty obviously another probing amendment. It raises the issue of why the Bill fixes on a figure of 60 per cent of median income as the target that defines the limit of poverty. I quote from the Policy Exchange document, Poverty of Ambition:

“So why choose 60% of median income as the cut-off? The answer is that there is no scientific reason, except that most academics and policy experts are happy to accept such a definition. They appear to have settled on 60% because it produces the sorts of poverty numbers they regard as plausible”.

It would therefore not be acceptable for the Minister to respond to this amendment by saying that many academics think that 60 per cent is the right answer. I am very concerned that the figure has been developed as a classic example of groupthink, which has caused more tragedies in history than virtually anything else—from the Trojans thinking it smart to take wooden horses left by Greeks into their city, to people around No. 10 deciding that Saddam Hussein must have weapons of mass destruction.

I might point out that the 60 per cent figure is also suspiciously round. I have been a banker for many years, and when someone comes up to me with a round figure of 60 per cent, I look at it with great suspicion. If it had some kind of scientific basis, it would inevitably come with a decimal point attached. Does it really make a difference to a family to move them, for instance, from 58 per cent of median income to 60 or 61 per cent of median income, especially when the target process will encourage exactly that kind of manipulation? We may have seen such manipulation in recent years.

We will discuss the iron triangle later, because I have tabled another amendment. However, I will warm everyone up to the topic by arguing that we should not set the 60 per cent figure in isolation. The amount that we pay people in income transfers has an obvious impact on their incentive to work, depending on the marginal withdrawal rates that we establish. If we have withdrawal rates that motivate people back into economic activity, we have to worry about the cut-off point at which people start contributing to the Exchequer, and about the support level.

This Government have not yet done the work of linking the three elements of the iron triangle. They may discover that when they do—I have a feeling that they will look at this pretty deeply—there is some serious modelling involved, and that the 60 per cent figure may not be the optimal one. In other words, if they fixed a higher or lower figure, it might encourage more people into the workplace, and overall poverty rates would be lower—even at the arbitrary 60 per cent figure, which is not based on anything scientific or on minimum income standards. Jonathan Bradshaw, at the University of York, did us all a service in his paper that showed how arbitrary the figures that we are talking about have been.

I would welcome hearing from the Minister either why this is the best possible figure, or why the Government may have to do more work to establish that. I beg to move.

My Lords, Amendment 5 would change the threshold of median income used to determine whether a household is in relative income poverty from 60 per cent to 60.15 per cent. I recognise that this is a probing amendment, as was the amendment that we have just discussed. As I have already stated to the noble Lord, HBAI is the key dataset for the analysis of income poverty. However, we can agree that surveys are subject to a degree of uncertainty. It is for this reason that it is necessary to round the statistics to the nearest 100,000 children or percentage point. The change from a threshold of 60 per cent to 60.15 per cent of median income would not have a noticeable impact on the statistics when rounded to these levels.

The threshold of 60 per cent of median income is in line with international best practice. The National Statistics publication Households Below Average Income contains statistics on the number, proportion and characteristics of children in households with incomes below 50, 60 and 70 per cent of median income both before and after housing costs, as well as in low income and material deprivation. This gives an idea of the sensitivity of trends in the figures to the particular threshold used. As I said before, there will always be criticism that households whose income is just over the percentage of median income set in the target will not benefit from the legislation, and that this is arbitrary. But a level must be set and we believe that this is the right one. Just to reiterate, the Bill contains four challenging child poverty targets that must all be met by 2020. Together, they provide a comprehensive definition of success, and that is why we believe that the figure of 60 per cent is appropriate.

We use a relative measure of poverty because we accept that poverty is a relative concept. Living standards that would have been considered normal 100 years ago, such as not having running water or an inside toilet, are now indicators of unacceptably low living standards. Most academics and experts now agree that poverty in the UK should be measured with a relative measure. Among others, Professor Peter Townsend’s work in the late 1970s contributed to this consensus. Initially, the relative measure used was 50 per cent of mean income. This definition was easy to understand and represented a level of income that experts generally agreed was a reasonable threshold for acceptable living standards. Since then, it has been recognised that using the median rather than the mean provides a better threshold because it is not unduly affected by the incomes of the very rich. However, changing from 50 per cent of mean income to 50 per cent of median income dropped the poverty threshold below the level of income that had been generally agreed to provide acceptable living standards. The measure of 60 per cent was therefore adopted. So using a median income threshold recognises that poverty is a relative concept which changes over time, and is the basis on which we have adopted the target.

It was suggested that using the 60 per cent threshold encourages policy makers to help the easiest to reach. Our goal is to eradicate poverty for all children. The framework that the Bill establishes for achieving the goal, using national child poverty strategies and duties on local government to tackle child poverty, applies to all children in the UK. The Bill contains safeguards to ensure that policy is not focused on the children that it is easiest to help. Indeed. Clause 8(2)(b) states specifically that the strategy must set out measures to ensure,

“as far as possible that children in the United Kingdom do not experience socio-economic disadvantage”.

This provision ensures that the strategy must set out measures to cover all children regardless of whether they are covered by the targets and regardless of target levels.

The noble Lord reverted to his now famous “iron triangle”, and I am sure that we will have a chance to debate it in due course. The issues around making work pay are very important and we have always accepted that. The Government have done a great deal in recent times to make sure that work does pay. Clearly, marginal deduction rates in relation to income transfers and withdrawal of benefits impact on incentives to work. But I would just say to the noble Lord that the number of families facing the highest marginal deduction rates, above 70 per cent, have halved since 1997, and the Government have made significant efforts to reduce the poverty trap by making work pay. Inevitably, given the generosity of the tax credits, more households will see support withdrawn as their income rises, because more people are in receipt of those credits. Again, the 60 per cent figure that has international credibility and that was originally founded on an assessment of what level of median income moved people into hardship or began to do so is the basis on which the 60 per cent is structured. I could not say to noble Lords that 60.5 per cent or 59.5 per cent would not be better measures, but I believe that it is an appropriate measure, and it is one that underpins our approach to the Bill.

I thank the Minister for that answer. I confess that it leaves me disturbed relative to my groupthink case. We have drifted into a generally accepted figure without any scientific basis. One problem with being a leader in this area, in the sense of setting a statutory target based on what is effectively a comparator that has become a useful basis on which to compare countries around the rich world, is that what served perfectly well as a comparator base does not stand up so well when you subject it to a more stringent requirement; namely, a set of targets. Many people involved in this area are concerned at the fact that we have established these standards and equivalence scales without any assessment of minimum income standards, which is the scientific approach. Many amendments later will deal with that, so I will not go on about it.

I want to ensure that it is clearly on the record that we do not accept that the 60 per cent measure is just an issue of groupthink, and that people have collectively stuck to the figure because they could not think of anything different. There is a wealth of evidence that poverty measured by the 60 per cent threshold is strongly related to poor outcomes. That was behind its conception and that is the basis for the figure. The noble Lord said that it is used as a comparator. It is in part, but it is also a driver of domestic policy, as it should be.

I thank the Minister for that clarification. I will make absolutely clear that we on our Benches accept absolutely the need for a relative measure. We do not go down the road of absolute poverty measures. We accept that the relative measure is the right way to go. In practice, the difference between absolute and relative is not as great as it seems, because every now and then one adjusts the absolute figure to reflect the requirements of living in particular societies, which is a much cruder way of using the relative poverty target. Therefore we accept the relative poverty target that the Minister talked about. Our concern is that, despite the fact that quite a few academics insist that it is a reliable figure, other academics and policy researchers have called it arbitrary. I quoted Peter Saunders, but he is not alone.

The other point that I wanted to pick up on is the impact of having a target at a level that means that for a bureaucracy, it is much easier to nudge people over the target than to work on the people farthest away from the target. I reiterate a point I made at Second Reading: both Save the Children and the IFS made the point that the number of children in severe poverty was growing even before the 2004 turning point. That may suggest the impact of targets on the way that the bureaucracy behaved.

I thank the Minister again for his explanation. It is a probing amendment; I do not want to pursue it at a later stage. I think that I have learnt all that I will learn from the Minister. Accordingly, I beg leave to withdraw the amendment.

Amendment 5 withdrawn.

Clause 2 agreed.

Clauses 3 to 5 agreed.

Amendments 6 and 7 not moved.

Amendment 8

Moved by

8: After Clause 5, insert the following new Clause—

“Non-financial targets

The Secretary of State will, following consultation with the Commission (established under section 7), establish a set of non-financial targets relating to the number of children brought up in—

(a) households with parents who are married, in a civil partnership or in a long term relationship,(b) workless households,(c) households where one or more parent is addicted to drugs, alcohol or gambling, and(d) households where a parent lacks level 2 key skills.”

My Lords, this is probably the central, most important amendment that we wish to make to the Bill. There is a real difference in philosophy between the Government and us over the Bill, and that is how best to tackle the problem of child poverty. The Government have traditionally been interested in tackling it through financial means. The agent in control of the child poverty agenda has been the Treasury. Sir Nicholas Macpherson, its permanent secretary, told the Treasury Select Committee in 2007:

“The primary reason that the Treasury has led on Child Poverty is that we control the levers which are critical for meeting the 2010 target, as we set the levels of financial support for families. Employment will have an important impact on achieving our goal of halving child poverty, but financial support is the most important lever”.

I acknowledge that that approach seems to have been modified recently, and I note that the impact assessment to the Bill mentions balancing the approach. It states:

“Rather than just trying to address child poverty through increasing transfers ... the most effective strategies would be to combine action on income with other social policies designed to reduce the disadvantages of growing up in poor families and deprived neighbourhoods”.

It concludes:

“The legislation is specifically designed to ensure that the Government uses a wide range of interventions via public services, with financial support only one of these interventions”.

I apologise if I have taken some of the references that the Minister would have used to respond to the amendment. I am conscious that the Minister responsible for the Bill is the noble Lord, Lord McKenzie, who has just piloted the Welfare Reform Bill through the House, with its emphasis on individualised intervention to help the economically inactive. I therefore certainly know that he will understand and appreciate the important specific interventions to support the most disadvantaged. Indeed, many of those around this Table today discussed exactly these issues in our consideration of the Welfare Reform Bill, and I welcome the fact that we can have an informed debate around the Chamber because of that experience.

The sophisticated report by the Child Poverty Action Group, Coping with Complexity, is entirely in line with this approach. It emphasises the complexity of poverty and calls for policies to tackle a wide set of features of poverty. Let me lay my cards on the table. As noble Lords will know, my party’s policy is centred on tackling the causes of poverty rather than the symptoms. Our concern is that there is an imbalance in the Bill between the two approaches. The Bill lays out a range of financial targets and contains no direct targets to deal with the causes of poverty. It smells of the traditional Treasury approach and not the modern DWP one. The amendment aims to ensure that the Government worry just as much about the fundamental causes of poverty as they do about the score card.

We are far from alone in this concern. Let me again quote the Child Poverty Action Group, which says:

“It would be churlish not to acknowledge the progress made in the official measurement of poverty and wrong to deny a political commitment to tackle the problem”.

We entirely concur with that, and we would never wish to be accused of being churlish, as we discussed a few months ago. The Child Poverty Action Group continues:

“Nevertheless, the measures currently employed fall far short of capturing the multi-dimensional experience of poverty described above”.

I chose the four targets in the amendment because all the current evidence indicates that they are the main drivers of poverty. I have not specified the exact targets because these can be developed by the commission. Indeed, it would be an invaluable service on the part of the commission. Moreover, flexibility may well be desirable in setting the precise levels that will have an impact on solving the problems, and the system should be able to absorb this.

Let me deal with the specific targets individually. The most important target relates to stable relationships. The Child Poverty Action Group found that,

“the effect of separation on a couple (whether married or co-habiting) in terms of increasing risk of poverty was much greater than for any of the other triggers that we were able to investigate, including job loss”.

Yet the underlying trends show big increases. I am indebted to the Centre for Social Justice for its document Breakdown Britain, which opens up this area. It is a little old—it dates from 2006—but it cites the big trends: a decline in the number of couples, down from 70 per cent of households in 1971 to 53 per cent in 2003, and an increase in lone-parent households from 7 per cent to 10 per cent. Couple instability has increased dramatically from 500,000 separations in 1971 to 3.5 million in 2001. At the same time as these trends have become clear, the number of cohabiting couples has increased, up from negligible levels in the 1970s to 2 million in 2003. In other words, by that year, cohabiting couples represented 10 per cent of all households and 16 per cent of all couples.

I do not think we need to take a moral stance about cohabitation compared with marriage, but the sad truth seems to be that relationships involving cohabiting parents are far more likely to break down that those of married parents. According to research undertaken for the Centre for Social Justice, it is estimated that 30,000 children aged under five experience the break-up of their married parents, while 90,000 experience the break-up of their unmarried parents. The CSJ concludes by stating:

“In other words, as the number of divorces affecting young children declines, family breakdown trends are being driven entirely by the increase in unstable cohabiting partnerships”.

Here we have what on the surface looks like a major cause of poverty, and in particular of poverty in young children, but this Government do not even collect the relevant figures. The Minister, Helen Goodman, said:

“Defining the causes of poverty, as the amendments would require, is therefore not possible to achieve at present owing to gaps in the evidence base and limitations in the data available”.—[Official Report, Commons, Child Poverty Bill Committee, 9/12/09; col. 423.].

The irony of this is that the “gaps in the evidence base” and the “limitations in the data available” arise chiefly because the Government created them. They did so first with the Office for National Statistics Neighbourhood Renewal Unit failure to publish a family breakdown index and statistics along with the other seven indices of neighbourhood deprivation after the Social Exclusion Unit had specifically named family breakdown as one of the causes. They did so secondly when Jacqui Smith announced that marital status would be removed from government forms.

To judge from an article in the Sunday Times on 27 December, the Government have become late converts to the importance of stable relationships and marriage. Indeed, a Green Paper is projected for this week outlining measures designed to shore up parental relationships. Ed Balls was quoted as saying:

“I think our policy now is actually about the strength of the adult relationships and that is important for the progress of the children”.

We should welcome this recent conversion, especially as the government spokesman, Helen Goodman, said in Committee that the Government were not wholly convinced that family breakdown was a cause of poverty. Regrettably, the conversion has happened 10 years too late. So the purpose of paragraph (a) in this amendment is to ensure that we monitor and have strategies in place to prevent family break-up, whether the parents are married or cohabiting. The evidence would suggest that the greatest concern should lie with the latter group.

I shall move on to address the issue of workless households. Here it is possible to speak more briefly, not least because I think that we and the Government are in agreement that work is a key route out of poverty. The issue here is less the direct effects of worklessness on income levels—indeed, this strategy on its own will do little for in-work poverty. It is disturbing that a Joseph Rowntree Foundation report has found that in each of the past two years, the number of children in low-income households where at least one adult is in paid work has grown by almost half a million from the low point reached in 2003-04.

More important is the example set by parents regarding the importance of work for their children. If a child lives in a household in which neither parent works, they have no role models leading them to work. Indeed, family members can put strong pressure on their offspring not to engage in such a disruptive activity. This, we argue, is part of the reason why social mobility has been found by researchers to be decreasing rather than increasing.

The Child Poverty Action Group analysis found that,

“changing the status of a household head from employment to unemployment has substantial negative effects on a child’s home life, risky behaviour and educational orientation—effects which, in the symmetrical world of cross-sectional modelling, could be reversed by policies that successfully help unemployed people enter work”.

I should acknowledge that it makes various caveats about exactly who that should apply to, but the central point is made.

Paragraph (c) of the amendment is slightly different. According to Breakdown Britain, there are about 1.5 million children growing up in substance-abusing households, more than 1 million with parents abusing alcohol and 350,000 in households where there is drug-taking. According to the Gambling Commission, about 250,000 adults were defined as “problem gamblers”, although I could not find figures on how many children they were responsible for.

There are two issues here. First, many parents with an addiction of this kind are likely to be unsatisfactory parents—in other words, their addiction is likely to reduce the well-being of their children. Secondly, such addicts deeply undermine the whole approach of the Bill, with its measures of income and material deprivation. A substantial proportion of the income is likely to be diverted from the welfare of the child to feeding the parents’ habit. It is absolutely no good to adopt strategies in these cases based on increasing income. This is where we see the benefits of a child well-being approach, which would capture the evidence of inadequate parenting.

Paragraph (d) of the amendment covers another area where I suspect that there is little difference between ourselves and the Government. To put this in context, this is the area where the UK has the greatest relative disadvantage as an economy. The Leitch review found that 35 per cent of the working-age population do not have the equivalent of a good school-leaving qualification. That is more than double the proportion in countries like Canada, the US and Germany. About 4.6 million have no qualifications at all, according to Leitch, while 5 million working-age people lack functional literacy and 7 million lack functional numeracy. I do not think that the figures have changed materially since 2006.

There is a strong correlation between low skills and unemployment, especially when combined with other disadvantages. Lowly educated parents are more likely to be unemployed and living on benefits. At the same time, poor educational performance by parents is a strong predictor for that of their children. Our high number of NEETs, now running at about 950,000 children and young adults, is therefore both a poor outcome for children and a foreboding situation for their children in turn. This final paragraph aims to ensure that we measure and control education and skills at home. I beg to move.

I am moved to comment on the amendment. I quite accept that we should have a non-financial target—the welfare or well-being of the child. The problem is that, if you try to devise a list of any other targets, you are on very shaky ground. We have to keep in mind what we will do to achieve the targets. The list could well be incomplete for some families. The welfare of the child may be much better achieved by reducing domestic violence in the household. I see that that is not on the noble Lord’s list. It could be better achieved by teaching one or other of the parents how to cook a good meal.

Some of the targets listed by the noble Lord are slightly dodgy. I accept that the noble Lord has included not just parents who are married but has added the words,

“in a civil partnership or in a long term relationship”,

but when we are thinking about what we are going to do to achieve such a target, whatever figure we put on it, it amounts to social engineering, whatever the evidence is about what happens to children among couples of various kinds with various legal statuses. We must be very careful with targets of that nature. The only one that is fairly straightforward is that in paragraph (d),

“where a parent lacks level 2 key skills”,

but that is dealt with by a different piece of legislation.

I accept the evidence that you are more likely to have poverty in workless households, and neither do you have a role model for a young person growing up, but, again, worklessness is addressed by other pieces of legislation and would certainly be addressed by a sensible set of strategies arising from Clause 8.

The provision that worries me most is paragraph (c). I ask myself what the noble Lord would do to achieve such a target. Does he have in mind reducing benefits just in case they happen to be spent on alcohol, drugs or gambling? What about the children in that household if we are to do something of that nature? If the noble Lord has in mind improving the funding for treatment for drug addicts and people addicted to alcohol and gambling, I would have a great deal more sympathy with that part of his amendment, but it worries me greatly that that may not be what he has in mind.

Although most of us sympathise with the concerns that the noble Lord has expressed, I—and, I suspect, others—resist his wish to add the new clause to the Bill. The Bill is already hugely challenging. It is about something that, to a limited degree, government has some capacity to deliver, which is transfers of income to address income poverty as measured by the four targets.

The noble Lord has produced a list of additional items that, as the noble Baroness rightly said, are extremely hard, first, to measure and, secondly, to deliver. When this was discussed, at the other end of the building, there was a competition among Members of the Committee to add what they called Christmas decorations, or Christmas baubles, to the Christmas tree. Among others was not just domestic violence but housing overcrowding. Why is that not mentioned, because that, too, is a key driver of children’s underperformance at school? Financial incompetence leading to debt is one of the key differences between two people with identical incomes. One is in material deprivation; the other is not. Why? Because one has gone to the pawnbroker, instead of the credit union, for capital goods. What about mental health and mental illness? Why is that not mentioned? All the evidence suggests that that is a more profound driver than all this little lot put together.

Let alone disability, which we will address in subsequent amendments; my noble friend is absolutely right. That, too, is a key driver.

The problem here is that, although no one doubts that the items listed by the noble Lord are part of a holistic background to child welfare, the Bill is intended to deal with a portion of that, which is the contribution to the poverty of child welfare of income poverty. Government strategy is already dealing with issues such as worklessness. The whole strategy of the past 10 years has sought to do that and we collect the evidence for it. The Government already invest in education to bring the next generation of parents up to level 2 and beyond.

I thank the noble Baroness for giving way, but I point out to her that the Bill is very much not saying, “We will do all this through income transfers”; it is actually saying, “We will have strategies to eradicate poverty, or pull it down to 10 per cent”. As I understand it, it is absolutely not saying that the only strategy is income transfers. It is saying that the Secretary of State must have a strategy to reduce poverty, and that strategy presumably includes actions to do some of the things in this amendment.

I disagree with the noble Lord. I think the Bill is about a strategy to reduce child poverty, and the measurement is by the four target indicators in terms of absolute, persistent, and material deprivation and relative poverty. Those are the indicators that will form the targets by which performance will be measured. As I say, I do not think there is any difference between any of us about the desirability of meeting some of the objectives that the noble Lord has included in this amendment. Indeed, the criticism already laid out by the noble Baroness, Lady Walmsley—I add to it—is how minimalist his amendment is if he is trying to look at the well-being of the whole child. My argument is different; namely, that this Bill should not carry such additional items because you cannot measure some of them, and even if you could, government should not interfere with them, and, as regards others, government could not take any action on them even if they could measure them. If government cannot do it, this becomes a wish-list, Christmas cracker sort of amendment which I hope very much the noble Lord will not pursue.

For example, we can measure family relations; the statistics exist. The ONS will give you all the statistics you want about family size. However, the noble Lord cannot utilise a phrase he is very keen on, the difference between causes and symptoms, to ascertain whether people who marry enjoy the stable relationships which persist in cohabitation, and whether people who cohabit would, if they married, have short-lived relationships and experience the trauma of divorce. He cannot untangle that. I cannot untangle that. The statistics cannot untangle that. Therefore, there is not a lot of point in Government seeking to produce targets against which they are supposedly going to encourage parents to go into marriage in order to produce extra stability for the children.

We do not disagree that each of these indicators, and twice as many more as the noble Lord has failed to mention, matter to the well-being of the child, but they are not part of the push of the Bill. They should not overburden it with things that are well intended, aspirational, cannot necessarily be measured and almost certainly cannot be delivered.

As so often happens, the noble Baroness, Lady Hollis, has put her finger on the main aspect of this problem. However, I cannot begin to agree with the conclusions that she draws. I believe that the Bill is wholly unbalanced. It is meant to address child poverty but addresses household income. That is a perfectly respectable thing to do and if it was called the Household Income Bill I would be perfectly happy with it, but it is not. I started to write a speech about this but I have in a sense been shot down. I was going to say, and I believe it is true, that one of the commonest fallacies in the world is to believe that because two things coincide statistically one must be the cause of the other. Perhaps I may waste the time of the Committee for about 30 seconds. I thought of this the other day when I was going through some greetings cards and I found one which said, “Birthdays are good for your health. The more you have of them, the longer you live”. That rather struck home. Undoubtedly, household poverty is extremely important in terms of outcomes for children. How are we going to balance this Bill so that the financial aspects of it do not receive disproportional importance and the non-financial aspects get swept neatly under the table? That is the issue that we are all concerned about. I thank the noble Lord, Lord Freud, for bringing forward these issues, because in this absolutely hopeless amendment, he actually makes a tremendously important point.

We understand exactly why the Official Opposition have tabled the amendment. It was a theme running through the proceedings in another place that we should measure child poverty not just in terms of money, but with a much wider perspective. A child’s well-being is arguably the most important thing of all, even though it is very difficult to measure. We shall be discussing later amendments that address this very matter. It is shameful that this country is ranked 21st out of 25 EU countries, and was actually ranked last in the UNICEF well-being index in 2007, on child well-being.

After all, the phrase “poor but happy” is shorthand used by adults when remembering their childhood—particularly when they are on “Desert Island Discs”. I have a lot of sympathy with the whole notion of non-financial targets, although we must be hard-headed and recognise, as the noble Baroness, Lady Hollis, said, that income transfers must not be relegated to below non-financial targets in the Bill.

It is not entirely clear, as my noble friend Lady Walmsley, said, why these targets have been chosen in the amendment, and any data on them would surely be difficult to collect. The first problem is with proposed new paragraph (a). What constitutes a long-term relationship? How would the figure be collected? If someone is asked, “Are you in a long-term relationship?”, the answer might be, “I hope so”, but for some people that might be only 10 months, while for others it would be 10 years. After all, many long-term relationships last longer than many marriages. We should not forget that more than half of poor children are in two-parent, not one-parent, families.

Then there is proposed new paragraph (c), which, as my noble friend Lady Walmsley said, is very difficult. It talks about households where one or more parent is addicted to drugs, alcohol or gambling. What about addiction to cigarettes, which must make a terrible hole in a family’s budget, or to compulsive shopping? This is quite likely to be the straw that breaks the camel’s back and land a family, already struggling with household bills, in debt. As my noble friend said, there is no mention of domestic violence, but we know that that is very bad for children. We can all think of things to put in this kind of list. Either we should have an exhaustive list or no list at all, and leave it to the commission to come up with some research, if it thinks that would be helpful.

Presumably the purpose of this proposed new clause is to enable strategies to be developed to address each of these targets. We know, for example, of the Official Opposition's plans for a married couple's tax allowance, which we do not happen to agree with. Anyway, how would the noble Lord, Lord Freud, try to persuade couples to get married? Surely he is not suggesting that couples would decide to do that simply because of the tax allowance. What about the rest? If it was discovered that there was even more addiction than previously thought, would a future Government make sure that there were sufficient effective treatment centres around the country to cope with demand? Or would they have another go at trying to make treatment compulsory by sanctioning JSA? When this Government tried to make drug treatment compulsory for those receiving JSA, there was an outcry on the grounds that compulsion does not work, and the Government did not even try to make treatment for alcoholics compulsory.

There are real problems with collecting this kind of data, although I understand why the amendment has been tabled and I welcome the debate.

My Lords, I thank the noble Lord for his amendment. We are against the clock here, because we have to conclude by 7.45 pm, so I shall be as brief as I can. In fact, I am helped in that by the powerful contributions we have heard from my noble friend Lady Hollis, and the noble Baronesses, Lady Thomas and Lady Walmsley. They covered much of the ground that the Government would wish to. I see that the noble Lord, Lord Northbourne, retains his view that this is a wholly unbalanced Bill. I hope that during our proceedings we will convince him otherwise.

I say to the noble Lord, Lord Freud, regarding this assertion that the Government have concentrated on tackling poverty through financial means, of course we see the central importance of income, but we have always had a full strategy across the drivers of child poverty. The Child Poverty Review, 2004 and Ending Child Poverty: Everyone’s Business in 2008 have set up the full range of policy instruments required to tackle child poverty, parental employment, childcare, housing, deprivation, skills, education and the progress that the Government have made on those issues. I want to be clear that the Bill is about tackling income poverty, material deprivation and socio-economic disadvantage, and our aim is that children should not live in poverty in the UK or suffer the effects of wider socio-economic disadvantage.

Ensuring a focus on income and material deprivation is central to that aim, but so is taking action beyond financial poverty. There is overwhelming evidence of the impact that income poverty has on children’s lives in terms of both their experiences now and their chances in the future. Income poverty blights children’s lives. It impacts on their education, their health, their social lives and relationships with their parents—the noble Lord touches upon some of these issues in his amendment; some of them he does not—and it impacts on their future life chances. Having this focus on income targets, however, does not mean that we are not alive to and aware of the drivers of poverty that need to be addressed to meet the ultimate goals of reducing poverty and deprivation. The building blocks stated in the Bill make clear the range of areas that need to be addressed as the drivers of poverty.

It is important that any progressive Government tackle the broad range of issues and policy areas that are related to poverty. Any effective strategy to meet the income targets will need to look at tackling the causes of poverty. During the oral evidence session, Donald Hirsch gave the example of somebody who is currently in school and who might in 10 years’ time be a parent living in poverty if they do not get good enough educational qualifications. We need measures to ensure that that person, who has a disadvantaged upbringing themselves, achieves better at school in order to fulfil the income targets.

Our strategy needs to be multifaceted if we are to break intergenerational cycles of poverty and so truly end child poverty. This multifaceted approach is supported by the provisions in the Bill. The UK strategy will need to meet both the purposes set out in Clause 8(2) and show how the targets will be met. Clause 8(2)(b) requires the strategy to meet the purpose of ensuring as far as possible that children in the UK do not experience socioeconomic disadvantage.

Clause 8(5) requires the strategy to consider what measures, if any, ought to be taken across a range of key policy areas. These building blocks have been determined through the analysis of evidence that shows that they have the potential to make the biggest impact in tackling the causes and consequences of growing up in socio-economic disadvantage. In preparation for the first child poverty strategy, we are carrying out a thorough review of the evidence base to help us understand causal pathways and identify how different sets of policies can contribute to the 2020 target. In doing so, we are considering relevant data and statistics, including information around workless households and parental skill levels, as the amendment suggests.

The amendments proposed by the noble Lord are not necessary or helpful. The Bill requires strategies to set out the specific actions that need to be taken across this full range of areas to meet the targets and ensure that children do not experience socio-economic disadvantage. It is for the annual reports to monitor progress on these actions. The appropriate monitoring tools to assess the impact that they will have on progress will need to be established alongside the strategy development.

I do not wish to imply that the issues raised by the noble Lord are not important. I have already mentioned the importance of educational attainment; in addition, we are clear that looking at families where persistent unemployment or low skills are an issue will need to be part of an effective strategy that ensures that families are in work that pays.

However, we need to be careful not to confuse causation with correlation—a point which the noble Lord, Lord Northbourne, made very effectively. As we said at Second Reading, evidence suggests that although child poverty is associated with family breakdown, there is no clear causal link. The high level of worklessness among lone parents is what increases the risk of poverty for children in lone-parent families. Lone parents in work are at a lower risk of poverty than are many other working families. To paraphrase the speech given by the noble Baroness, Lady Thomas, at Second Reading, the myth that single parenthood leads to child poverty was exploded in the oral evidence sessions in the other place. Why are there more single parents in Denmark, yet lower rates of child poverty? We must be careful about how we use statistics. It is also important to remember that nearly two-thirds of children in relatively low-income households live in families with couples.

Amendment 49 proposes that, to inform their child poverty strategy, the Government collect data on households with parents who are married, in a civil partnership or in a long-term relationship, and households in which one or more parent is addicted to drugs, alcohol or gambling. I understand that the Office for National Statistics collects information on marital status; my noble friend Lady Hollis confirmed that. However, the causal link between this information and child poverty statistics is not clear cut.

I imagine that information on levels of drug, alcohol and gambling addiction would be rather harder to obtain. It is not clear, for example, at what point a habit becomes an addiction, or indeed the extent to which this impacts on household income or on children’s well-being. I therefore question whether the information listed here is necessarily the most useful data on which to draw when preparing a child poverty strategy, and indeed whether it is appropriate to specify in legislation that such data are collected as opposed to other data on the drivers of poverty.

Finally, the role of the commission is to advise on the development of the strategy, and the Government must have regard to its advice. It is important that the accountability for setting targets and monitoring progress remains with Ministers and Parliament rather than with an unelected body. The commission will bring a wealth of experience and knowledge of the area and will be able to advise the Government on areas on which it believes an effective child poverty strategy should focus. Trying to second-guess its work should not be our aim for the Bill.

Having heard that explanation and the powerful contributions from other noble Lords and noble Baronesses, I urge the noble Lord to withdraw his amendment.

I am aware that I have literally two minutes in which to respond. I thank the Minister for his response and all noble Lords and noble Baronesses who have responded, although they were not necessarily desperately supportive.

What I am driving at in this amendment is the difference between a child’s well-being and income poverty. We will come back to this. I clearly failed to understand the criticisms of my amendment. The noble Baroness, Lady Hollis, asked what we do when we find out that particular people are cohabiting. We have an estimated material couple penalty in the tax credits system of about £1,200 a year. Actually, that is an incentive not to be together. The noble Baroness, Lady Walmsley, says that the amendment is social engineering to change that. I can say only that we have reversed social engineering to drive people apart.

As for addiction, if the noble Baroness, Lady Hollis, were to take the Bill purely as an income transfer Bill, what is the point of transferring income to people who inject—in other words, drug addicts?

I am aware that I have to wind up. We will return to this issue, but for now I beg leave to withdraw the amendment.

Amendment 8 withdrawn.

I suggest that this is a convenient moment to adjourn the Committee until 2 pm on Thursday 21 January.

Committee adjourned at 7.46 pm.