Mr.
Timms: I am grateful to my hon. Friend for making some
important points. The hon. Member for South-West Hertfordshire made the
point that, on the whole, there has been a constructive tone to these
debates. He is right, and I am glad that that has been the general tone
of the Committee. The arguments presented have not been
overstated—there has been the odd exception, but on the whole
that has been true. I welcome such an approach.
As we have
heard, the new clause would require the Secretary of State to publish a
report on progress towards reducing child poverty by half by 2010. I
suggest to the hon. Gentleman that the aim of such a report is, in
fact, already covered in the Bill, because clause 8 will require the
Secretary of State to publish a strategy that sets out the measures
that will be taken to meet the child poverty targets in clauses 2 to 5.
To ensure that the Secretary of State reports on the progress on
tackling child poverty, clause 13 will require the Secretary of State
to produce and lay before Parliament an annual progress
report.
Through that
combination, what the hon. Gentleman is endeavouring to secure with the
new clause will be delivered, although it is true that it will happen a
little later—I suppose that three months after the Bill’s
Royal Assent is likely roughly to take us up to summer next year. The
process that I am describing will take a little bit longer. He said
that his aim is to keep feet to the fire regarding the 2010 target, but
he does not need to worry too much on that score. Feet will be kept to
the fire on that, as we have seen and, no doubt, will continue to
see. The
hon. Member for Northavon suggested that, according to one
interpretation, we would actually hit the 2010 target. His former
colleagues in the Institute for Fiscal Studies have suggested that, on
the basis of the measures that have been announced, child poverty is
likely to reduce by 1.1 million by the end of the financial year
2010-11. On the calculations that the hon. Gentleman set out, that
would be halfway towards eradication as defined in the Bill—it
is kind of the Liberal Democrat party to laud the Government’s
success.
The other
way that we could look at the matter is in relation to the absolute
poverty target, which has already been halved. We could say that we hit
the target on that basis, but many people would accuse us of shifting
the goalposts rather radically if we did so. I think that it has always
been understood that the 2010 target meant a
reduction to 1.7 million from 3.4 million, or that it related to the
number living below the relative poverty
line. Nevertheless,
I suggest to the hon. Member for South-West Hertfordshire that, in
effect, what he wants to happen will happen in due course under the
arrangements already in the Bill. Having an extra report next summer is
not really going to help. I therefore hope that the hon. Gentleman will
withdraw the motion.
Mr.
Gauke: I am grateful to the Financial Secretary for his
comments. However, the strategy and reports contained in the Bill
relate specifically to the 2010 target. On that basis, new clause 1
would add something to the Bill. I shall therefore press for a
Division.
Question
put, That the clause be read a Second
time. The
Committee divided: Ayes 7, Noes
7.
Division
No.
11]
The
Chairman: In accordance with the practice of the House, I
give my vote to the Ayes to allow an opportunity for further
discussion. Question
accordingly agreed to.
New
clause 1 read a Second
time. Question
put, That the clause be added to the
Bill. The
Committee divided: Ayes 7, Noes
7.
Division
No.
12]
The
Chairman: In accordance with precedent, I give my vote to
the Noes, to preserve the Bill as read a Second
time. Question
accordingly negatived.
New
Clause
2Benefit
levels ‘The Secretary of
State shall ensure that a household wholly dependent on tax credits or
social security benefits has an income at, or above, the relative low
income target in section 2 (the relative low income
target).’.—(Steve
Webb.) Brought
up, and read the First time.
Steve
Webb: I beg to move, That the clause be read a Second
time.
The
Chairman: With this it will be convenient to discuss new
clause 4— Minimum income
standards— ‘(1) In the
exercise of his duties, the Secretary of State shall have regard to
minimum income standards. (2)
It shall be the duty of the Secretary of State to commission research
into the minimum levels of household incomes necessary to sustain a
healthy diet, other necessities, safety and wellbeing for children (in
this Act referred to as “Minimum Income
Standards”).’.
Steve
Webb: I think that everyone was baffled by those
decisions, Mr. Key, but I am sure that you know what you
were doing.
We have now
reached the final group of new clauses, which touch on a fundamental
point about the Bill—whether it is possible to achieve the 2020
child poverty target with benefit rates that are not themselves above
the poverty line. Under new clause 2, someone who is wholly dependent
upon benefits or tax credits would have an income of at least 60 per
cent. of the median poverty line. New clause 4 was tabled by the hon.
Member for Beverley and Holderness, and I have added my name to it. I
know that the Committee appreciated hearing the evidence of Rev. Paul
Nicholson and the Zacchaeus 2000 Trust, who suggested amendments along
these lines. I shall return to new clause 4 in a moment.
New clause 2
is fundamental. We talked earlier about levers and what local and
central Government can do. New clause 2 is about what central
Government can do and the rate of social security benefits and
tax credits. If we do not accept new clause 2, there is a logical
inconsistency in the Government’s position. To quote the Bill,
they want to “eradicate” child poverty, but they are not
prepared to set the rates of benefits and tax credits at levels that
lift people clear of the poverty
line. 5.45
pm Government
rhetoric at moments such as this is, “Yes, but we do not want
people on benefits. We want them in work.” Unless we are going
to have full employment, nobody out of work and nobody at home looking
after their children, there will always be somebody on benefits and tax
credits. The question is whether it is acceptable to have a Bill about
eradicating child poverty and an explicit lever of Government policy
that puts people into child poverty. It is that fundamental
inconsistency that we are seeking to raise through new clause
2.
In the
spirit of inquiry, I asked the House of Commons Library staff to do
some sums for me, which they are always pleased to do. I asked them to
compare the poverty line in the Bill—60 per cent. of
median—with what somebody wholly dependent on benefits and tax
credits would have to live on. They came up with some very interesting
figures. They calculated that a lone parent on benefits and tax
credits—getting average amounts of housing benefit I
assume—is already clear of the poverty line. That does not mean
that there are no lone parents living in poverty. The House of Commons
Library figures show that taking the Government’s tax benefit
model tables and assuming full take-up with people getting everything
to which they are entitled,
including, I think, an average amount of housing benefit, a lone parent
would already be clear of the 60 per cent. median poverty line.
However, the figures also show us that many lone parents are not clear
of the 60 per cent. median poverty line. That raises an issue of why
not, to which we shall come back. Couples,
interestingly, are not clear of the poverty line. On average, a couple
with one child, getting all the benefits and tax credits to which they
are entitled, based on the tax benefit model tables, is 7 per cent.
below the poverty line and a couple with two children is 11 per cent.
below the poverty line. On the basis of those figures, the Government
are paying couples with children a benefit and tax credit rate below
the poverty line while trying to pass legislation to eradicate child
poverty.
Mr.
Gauke: Has the hon. Gentleman just identified or described
what is sometimes called the couples
penalty?
Steve
Webb: No, for reasons that I will explain. There is a fair
point about rates of benefits and tax credits to couples relative to
their poverty line, which is different from that of lone parents. There
are relativities in the system. Why do lone parents get more money? It
is not necessarily pro rata to their needs but because they are, on
average, more deprived in other ways. The amount they are paid in
benefits and tax credits is trying to do something else, as well as
meet needs.
Ms
Keeble: I asked the Library to produce similar
figures—though not for the same purpose—at the time of
the 10p tax issue or disaster, whatever one wants to call it. It was
particularly marked that in two-parent households with children, income
and poverty levels were entirely dependent on quite small changes to
the number of hours worked. If both parents worked a few hours or one
of them worked full time, the relative changes in the income level were
marked. Could the hon. Gentleman say how the figures he has would look
if one person did part-time work or if one worked full time, so that
their entitlements
changed?
Steve
Webb: To be clear about the figures I am using, the
question I asked was, “What would be the income of a couple with
children wholly dependent on benefits?” In other words, the bit
of their income that the state controls. That is not to do with wages.
If they are earning, as the hon. Lady rightly says, there can be quite
big jumps as soon as they do 16 hours or whatever it happens to be. My
point is that there will always be families with children, couples and
lone parents wholly dependent on benefits and tax credits. It would be
odd of the Government to set benefit and tax credit payments below
their own poverty line, when they are passing legislation to eradicate
child poverty. I do not see how those measures can sit together. That
is linked to the minimum income standard argument that we will
discuss
later. I
have discussed a theoretical situation with a hypothetical lone parent
and couple. The actual situation is much worse. Half of the children in
poverty are in non-working households; 30 per cent. have non-working
lone parents and 19 per cent. are in non-working two-parent households.
That means that almost 1.5 million of the 2.9 million children in
poverty are wholly dependent on benefits or
tax credits. Even if we could deal with the 1.5 million children from
working households who are in poverty by providing better child care,
education, training and jobs, we would be left with more than
1.2 million children below the Government’s poverty line and
would fail to meet our 2020
target. No
Governments have set benefit and tax credit rates high enough to lift
people clear of poverty. I have moved from the hypothetical to the
real: 30 per cent. of children in poverty have lone parents. There is
no reason why they are in poverty other than the level of benefits and
tax
credits.
Mr.
Stuart: The hon. Gentleman’s logic is impeccable.
What assessment has he made of the effect on incentives to work if
benefits were raised to remove those families from poverty? Even if
poverty is technically eradicated under our relative definition, will
not the culture of worklessness and other problems persist if families
do not gain the benefit of being in the
workplace?
Steve
Webb: The hon. Gentleman is right. There are many
trade-offs in these matters, and he highlights
one. My
point is that we can do one of two things. We could say that we are
legislating to stop people living in poverty, which we define as being
below a certain level. If we are aiming to eradicate poverty, another
arm of Government cannot leave people in poverty. The other option is
to say that it is a specific aim of Government policy to pay people
below the poverty line so that they are driven into work. Under that
world view, driving people into work is more important than people
having a standard of living above the poverty line. We cannot do both
things at the same time, but the Bill tries to do
that.
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