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Session 2008 - 09
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Child Poverty Bill

Child Poverty Bill

The Committee consisted of the following Members:

Chairmen: Mr. Martin Caton, Robert Key
Baron, Mr. John (Billericay) (Con)
Barrett, John (Edinburgh, West) (LD)
Blackman, Liz (Erewash) (Lab)
Buck, Ms Karen (Regent's Park and Kensington, North) (Lab)
Gauke, Mr. David (South-West Hertfordshire) (Con)
Goodman, Helen (Parliamentary Under-Secretary of State for Work and Pensions)
Howell, John (Henley) (Con)
Keeble, Ms Sally (Northampton, North) (Lab)
Mallaber, Judy (Amber Valley) (Lab)
Morgan, Julie (Cardiff, North) (Lab)
Mudie, Mr. George (Leeds, East) (Lab)
Reed, Mr. Jamie (Copeland) (Lab)
Selous, Andrew (South-West Bedfordshire) (Con)
Stuart, Mr. Graham (Beverley and Holderness) (Con)
Timms, Mr. Stephen (Financial Secretary to the Treasury)
Webb, Steve (Northavon) (LD)
Chris Stanton, Sarah Davies, Committee Clerks
† attended the Committee


Dr. Tess Ridge, Senior Lecturer, Department of Social and Policy Sciences, University of Bath
Donald Hirsch, Academic Researcher at the Centre for Research in Social Policy, Loughborough University
Mike Brewer, Director of the Direct Tax and Welfare research programme, the Institute for Fiscal Studies
Neil O’Brien, Director, Policy Exchange

Public Bill Committee

Thursday 22 October 2009


[Mr. Martin Caton in the Chair]

Child Poverty Bill

1 pm
The Committee deliberated in private.
1.4 pm
On resuming—
The Chairman: May I remind Members and witnesses that we are bound by the deadline agreed to on Tuesday? That means that this afternoon’s evidence session must end at 2.30 pm. I hope that I do not have to interrupt Members or witnesses in the middle of their sentences, but if that time arrives, I am afraid that I will have to do so.
We will now hear evidence from Dr. Tess Ridge, Donald Hirsch, Mike Brewer and Neil O’Brien. Welcome to our meeting. Would each of you like very briefly to introduce yourselves and your organisation, starting with Dr. Ridge?
Dr. Ridge: I am Dr. Tess Ridge. I am a senior lecturer in social policy at the university of Bath. I imagine that I am here because I have a considerable amount of experience in carrying out research with low-income children and their families.
Donald Hirsch: I am Donald Hirsch. I am head of income studies at the centre for research in social policy at Loughborough university. I have done a lot of work for the Joseph Rowntree Foundation, initially in calculating what it would take to meet some of the child poverty targets and, latterly, looking at the cost of child poverty and at what a longer term strategy might entail.
Mike Brewer: I am Mike Brewer from the Institute for Fiscal Studies. I have done research on tax credits, on welfare to work policies for lone parents and on trends in child poverty.
Neil O'Brien: I am Neil O’Brien. I am director of Policy Exchange, which is an educational charity looking at a wide range of public policy issues.
Q198John Barrett (Edinburgh, West) (LD): I would like to ask each of you to what extent you think that the Bill is going to be an effective means of tackling what is a very complex issue. A number of witnesses have gone over a range of issues that the Bill does not tackle. I think that all members of the Committee appreciate how complex the issue is; passing legislation is clearly not going to deliver the end result on its own. Could you say how effective it will be and how much support you think that the legislation might have?
The Chairman: Can we stick to the same batting order for answering questions?
Dr. Ridge: Okay. May I start by saying that I very much welcome the Bill? I think that it is a very important mechanism for keeping children’s needs and concerns central in the policy process. They very easily drift out to the margins—that has certainly happened in the past—which is to their disadvantage. I agree with you completely, John, that poverty—and family poverty—is an exceedingly multifaceted issue, and tackling it needs many different approaches. The Bill in itself is an important part of that, in the sense that it has a strategy of focus, annual reports and a framework to keep children’s needs central in policy as we go through time, so I think that that is very important. There are aspects of the Bill that I would like to see strengthened, and it cannot exist on its own, of course. There have to be very important, very well thought-through strategies right across the board to get some real developments in the area.
Donald Hirsch: I agree with all that and I certainly agree that while having the Child Poverty Bill is helpful, because of the signals that that sends out, it can do very little on its own. Perhaps the most important thing in the Bill and the way that it is followed through is the requirement to have a specific broad strategy. Of course, everything will be on what that strategy is—how specific and how tough it is, and how much leverage it has.
There are several things that really have not been planned for in a coherent strategic way over the past decade, in terms of what is going to contribute to reducing child poverty. One of those regards the whole benefits and tax credit system. There is no systematic way to ensure that the amounts being received by families with children on low incomes even keeps up with rising incomes generally—when they do rise—let alone makes progress towards narrowing the gap, which is what would be required.
A second big one is about the types of jobs that people move into and the ways in which you can reduce in-work child poverty without an excessive burden on in-work tax credits. The third—on which, to be fair, there have been strategies but they have not proved adequate—is on child care and how genuinely adequate that is, in terms of making opportunities available to families.
I mentioned all those because they are three things in which something pretty big needs to happen. I would judge the effectiveness of a strategy by how tough it is on things like that in really planning forward to create a significant change, rather than just small changes at the margin.
Mike Brewer: I can’t really see what the Bill would achieve that Government action could not do. The Government missed their target in 2004, and it looks like they will miss their target in 2010. I think they would have missed it even if they had had this Bill 12 years ago. The Government publish indicators at the moment, in the “Opportunity for all” report—others are proposed in the Bill—but still they missed their targets in 2004 and 2010. The reason why they will miss their targets in 2010 is because of a lack of money. The child tax credit is not high enough. The Government have not yet found the political will to raise taxes and increase spending on tax credits, and I cannot see what the Bill will change, compared with the current arrangements.
Q 199John Barrett: Do you think that it is effectively hot air? It sounds like something is being done, but not a lot is being done. Is that what you are saying?
Mike Brewer: I welcome the individual things in the Bill, but I question whether you need all 650 MPs to sit round and talk about it for something to come about. Why do you need an Act of Parliament to do it? Why can’t the Government just say, as they do at the moment, “We’re going to have an annual report on poverty and we’re going to measure progress by these indicators”? Ultimately, what counts is the strategy of the Government, or future Governments. This Government said that they were serious about child poverty. They had high-profile targets and an annual report, but still missed the target. I do not see why an Act of Parliament would change that.
Neil O'Brien: The good thing about your question was your point about the problem being complex. The good thing in the Bill is the broad-based strategy to deal with that. The bad thing in the Bill, from my point of view, is the narrowness of the legally binding targets. What you have is not a child poverty target; it is an income inequality target. That strongly drives you relentlessly towards downstream intervention to give people income, rather than upstream intervention to tackle the causes.
For example, the IFS points out that you could spend £4 billion and hit the target by giving people more through the tax credit system. But would that be the best use of £4 billion for tackling long-term child poverty? That is less clear. The strategy recognises that, but the targets do not. It would be better to have a set of targets, or a set of indicators, that are more broadly based on opportunities for jobless households, low educational attainment, substandard housing, infant mortality, teenage smoking, teenage pregnancy and children in care who do not get adopted. The Government have recognised that there is a tension there. Yvette Cooper said that the child poverty targets had never just been about poverty, but had always been about narrowing unfair inequalities. That might be a good thing, but there is a trade-off between tackling inequalities and tackling child poverty.
The other problem with rather narrow, income-based targets is that they do not tell you too much about the depth of poverty. Because incomes cluster just above the line—you know all this stuff—it is possible to bring about big changes in the headline rate by giving people just enough money to get over the line. In a sense, it is an arbitrary line. If you look at a measure based on 50 per cent. of median income, you would have the same number of people in poverty as in 1997. If you look at 40 per cent. of median income after household costs, it looks like there is more poverty. I am not saying that there is overall more poverty, I am just saying that it is, in a sense, an ambiguous and arbitrary measure. You might be better off tying your targets to your broader strategy and using those concrete measures instead.
Q200Steve Webb (Northavon) (LD): Obviously, we are in a recession, but most of the statistics that we have got so far are pre-recession. I wonder if I could ask—initially to get the IFS perspective, although others might want to comment—how you think that the recession will impact on the level of child poverty on these measures.
Mike Brewer: Colleagues of mine carried out research to look at what happened to poverty as measured by the Government in previous recessions. It shows that there is a tendency for relative poverty to go down in a recession because Mr. and Mrs. Median, if you like, are more likely to be affected by the recession than people who are living around the poverty line. The median household gets more of its income from the labour market, so when unemployment goes up, that tends to affect them more than it affects families around the poverty line who get an awful lot of money from the state. We do not see any reason why this recession should be different from previous ones. I suspect that relative poverty will fall in 2008-09.
Q201Steve Webb: Looking ahead to 2020, if we are going to “eradicate” or get down to 10 per cent, and if we have tax credits and benefit levels below 60 per cent. of median income, can you see any way in which we can achieve the goal? Presumably, there will always be 10 per cent. of children at any one point in time on benefits. Is it credible to think that any party will ever achieve those goals?
Mike Brewer: That is a question about politics rather than economics. We set out in our report earlier this year that it would be possible to get child poverty in the UK down to 10 per cent. by 2020 if benefits were raised high enough, but that would be at some considerable cost and would probably lead to a set of incentives in the benefit system that would be undesirable. I would not say it is impossible to imagine. You are getting at saying that if you know the poverty line, is it not straightforward to eradicate child poverty by just setting benefit rates high enough? I agree with that; it is as simple as that. Again, that leads me to question why we need a Child Poverty Bill to bring that about.
Donald Hirsch: The slight retreat from “eradication” literally to 10 per cent. might slightly change the answer to that question. It has recently gone up, but I believe that the number of children in workless households went down to about 16 per cent. The number in workless families would be a bit below that, so it is conceivable that we could actually work to get that number down to about 10 per cent. That is important because it illustrates how adopting the 10 per cent. target could, in a sense, make a fundamental difference to the ambition. When it was as close to zero as technically possible, we could not get away from the fact that there would always be a certain number of people who, for good reasons, were not working. The concept of trying to get benefits above the 60 per cent. median level is no longer quite so important, which might be a bit troubling to people who thought that that was being promised.
On the recession point, Mike and I collaborated on modelling work under a year ago to look at initial and projected effects of the recession. Whether or not it was a net decrease or stayed the same, the important thing was that one group of people would be shifting slightly above the poverty line as a result of the poverty line being fairly static, while the income of people in work on low incomes was going up because tax credits were going up. However, that was a bit of a statistical thing and their incomes were not changing very much.
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Prepared 23 October 2009