[Mr. Eric Martlew in the Chair] — Child Poverty

Motion made, and Question proposed, That the sitting be now adjourned.—[Mr. Heppell.]

9:30 am
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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I am very honoured and in a way flattered by this opportunity; it is the first time I have participated in a Westminster Hall debate in the lead role—even if it is in Committee Room 10. A small but perfectly formed group of interested colleagues are taking part, and I welcome them to what I think is an important debate.

Why have I chosen this debate for my first time out in this Chamber? In years gone by, before I was elected, I was a regional organiser for the Child Poverty Action Group in the north-west, and the issue is one of long-standing interest to me, and to my party. Eradicating child poverty by 2020 is simply the civilised thing to do. The classic, if not hackneyed, answer to the question of how a society feels about itself is about how it looks after its young and old, and child poverty fits fairly and squarely into that.

The Government have already highlighted the issue, and I shall return to that point. It is topical, because other bodies have renewed their interest in it. For example, there is a coalition of outside interests on the subject, and I am sure that hon. Members will be familiar with many of the things that I am about to set out. The Fabian Commission on life chances and child poverty recently produced its report "Narrowing the Gap"; a similar research report is due to be published this month by the Joseph Rowntree Foundation; and the Institute for Public Policy Research and the Institute for Fiscal Studies have also commented recently on this important topic.

I shall not do a textual analysis of what those bodies have said, but an important point from the Fabian Commission serves as another reason for holding this debate now: among some worrying findings was the public's general reaction to the idea of poverty eradication and, specifically, child poverty eradication. The commission found, in conjunction with MORI, that the idea was not culturally understood and that there was not automatic acceptance of such issues among the broad public. That is a worry if there is to be a coalition to fight child poverty by 2020. As is almost self-evident, with such a cross-cutting agenda, it is vital to take the public with us; but MORI found that the public did not understand why we are taking the action that we are taking.

As worrying as low awareness was the denial of the existence of income poverty. I suppose that it is easy for people to look at themselves and their families, without realising what happens elsewhere. The report noted comments, such as that income poverty for children was due to bad parenting. There was a general lack of empathy. If we are to make progress towards 2020, general awareness must be raised and the public brought to accept that the goal is a good thing in itself. There are good, self-interested reasons for seeing things that way. It is good for the individual, raises educational attainment and keeps people out of trouble and away from drugs. It also gives a future back to what might otherwise be disorganised or dysfunctional families.

What do we mean when we talk about the eradication of child poverty? I shall principally talk about income poverty; there are other forms of deprivation, but that is the key to unlock the conundrum. How we deal with income poverty is the kernel of the debate. What is income poverty? According to the classic definition, it means a child living in a household with income below 60 per cent. of the median household income, either before or after taking housing cost into account. I shall not detain hon. Members with the question of which it should be: if pressed I should probably err on the side of "before", but whatever definition one takes, the general picture is broadly the same.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

I do not want to pre-empt the hon. Gentleman, but does not the question of whether the definition is arrived at before or after considering housing costs go to the heart of child poverty and the Government's record? Housing costs should be included in the definition of poverty, which would probably show that more children are living in poverty than were before 1997, because housing costs have increased so dramatically.

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I do not accept what the hon. Lady says. If we want to bandy figures, I can do so but I do not think that the figures show what she claims. It would be unhelpful to go down that road, which is a way of avoiding the issue.

The Child Poverty Action Group recently calculated that the poverty line stood at £268 per week—an annual income of just under £14,000 for a couple with two children aged 5 and 11. However, for a lone parent in a similar situation it calculated that poverty-line income would be just under £10,000. Lone parents are, for that very reason, one of the target groups that I expect my hon. Friend the Minister to mention. Their access to income is different from that of a couple.

What is being done? In 1999, the Government, through the Prime Minister, gave a three-fold commitment. The first part was to reduce child poverty by a quarter by 2005, the second to reduce it by half by 2010, and the third to eradicate child poverty by 2020; hence the title of the debate. In some ways the first commitment is historical, because we have passed that point. We are approaching the 2010 target, but if we miss it, 2020 will be very difficult.

Sadly, despite a range of initiatives, the 2005 target was in fact missed by 200,000 children. Those children would not have remained in poverty had that target been hit. Between 2003-04 and 2004-05, about 100,000 children were taken out of relative poverty. If we do some simple maths, we see that, at a rate of 100,000 a year for the remaining years, we will miss the 2020 target. We have to do better than the 100,000 that we achieved between 2003-04 and 2004-05.

Which measures were relevant to, and current at the time of, the first target in 2005? The working families tax credit was introduced in 2001 and has since become the working tax credit and the child tax credit. One significant reason why the Government did as well as they did is that child benefit for the first child has risen by 25 per cent. in real terms since 1997. That offers major assistance to single parents and, classically, the mother in a couple.

By October 2006, the poorest fifth—in real terms—of families with children will be an average of £3,400 a year better off, and that is significant. As I said, relative poverty is defined as having an income of below 60 per cent. of median income. That poverty line resides within the poorest 20 per cent., so they are the key target for action on child poverty.

The proportion of children living in workless households has come down from nearly 20 per cent. in 1997 to just under 16 per cent. in 2005. Worklessness was, and is, a key to explaining why families live in relative poverty.

Where does that leave us? Mike Brewer of the Institute for Fiscal Studies said that although the Government would be disappointed at missing their targets, they must be congratulated on taking on the issue and on removing about 800,000 children from poverty by the dates that I mentioned. Those sentiments have been echoed by Kate Green, the chief executive of the Child Poverty Action Group, and one can well understand the CPAG's reaction.

Perhaps I can just give a little plug for the CPAG, an organisation with which I grew up. It was set up under the Harold Wilson Government in 1965, and I understand, although I am slightly too young quite to remember this, that that was quite a shock to them, because poverty eradication was one of their key polices. They were quite shocked that such an organisation would form itself and was thought necessary.

The CPAG was formed because the system was not reaching a group of people in society, and, in some ways, we are still talking about that same group. Sadly, we may now be talking not only about the same group—the poorest 20 cent. and certainly the poorest 10 per cent.—but about the relatives of those then in it, because, unfortunately, the problem can be generational. Poverty of aspiration, poverty of opportunity and poverty of housing can all be passed down, literally, from father to son and from mother to daughter. As well as increasing income, we need to break that cycle of deprivation.

What is the problem that remains? Which is the hardest group to tackle? The target group is made up of four broad subgroups, and I have touched on some of them. One, for the reasons that I have indicated, is lone parents. Commonly, nine out of 10 lone parents will be female.

Another group is large families. Income poverty will hit large families, and, rather paradoxically, one can have in-work poverty. There must therefore be a way of helping not just the first and second children, but the third, fourth and fifth.

Another group is families with a disabled parent, which will also suffer income poverty because of unemployment. Unfortunately, not enough of our disabled constituents have the opportunity to work if they want to. The Minister may say more about that in due course; indeed, I believe that things may be said, or may have been said, about that today. That is an important part of the matrix, but it has been missing so far.

London also has its own problems, simply because of the cost of living. Although your constituency and mine, Mr. Martlew, are not a million miles from London, they might as well be culturally. Many people might say that that is a good thing—many of my constituents certainly would—because life pressures are different in London.

Let me just try to unpick those four areas a little further. On paid work, 75 per cent. of children in households with no adult in work are income poor. Some 12 per cent. of children are in households with all adults in employment. A key measure would be to get one parent and, if possible, both parents working.

Ethnicity, which I meant to mention before, is another area of concern. The CPAG has calculated that there are different risks of child poverty for different ethnic groups, and that 57 per cent. of Pakistani and Bangladeshi children, 44 per cent. of Chinese children or children from other ethnic groups, and 43 per cent. of black or black British children are categorised as being in poor families in the way that I have described. I have not resolved this issue in my own mind, but there is a suggestion that the Gini coefficient—the relationship between those at the bottom of the heap and those at the top—might be significant. I do not know whether it is, but others say that it might be. Despite the fact that 800,000 children have been raised out of poverty, the poorest tenth of the population still receives only 1.7 per cent. of the income received by the population as a whole, whilst the richest nearly 30 per cent. receives 17 times as much. CPAG calculates that despite the efforts that have been made, the Gini coefficient of proportional inequality, whether it be absolute or relative inequality, remains unchanged. Some would argue—I am not arguing this point because I have not decided whether it is a factor—that that relativity needs to be adjusted if we are going to crack this particular nut.

I come to the crux of the debate: where things are going. Clearly, child trust funds will bring benefits down the line and will be part of the mix towards 2020, although that policy is not universally adopted or respected across the Floors of the two Houses. That is a matter for debate.

Tax credits have been criticised, but I reject those criticisms, not because it is a party political issue, but because of my constituency experience. Having been a constituency MP for nearly 10 years, I have come to trust the evidence I get from people who come through my surgery door, or who telephone, fax or e-mail me, to show me where things are going. That has worked for many other issues, and I have absolutely no doubt that it is as true, or at least as likely to be true, for this issue as for any other.

Nearly 7,000 families in my constituency benefit from child tax credit and working tax credit. In the time that tax credits have been in operation—is it about two years?

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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

Just over three.

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I am grateful. In those three years, I have received about 50 complaints. While any complaint is regrettable, and I urge the Government to redouble their efforts to make the system work as we all want it to, that is 50 complaints out of 7,000.

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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

Does the hon. Gentleman acknowledge that his experience may not be typical? In my constituency in the past two years, I guess that I have seen somewhere between 300 and 400 people with serious problems with tax credits. If one took the number of overpayments and spread them across constituencies, there would be many thousands in every constituency in the country.

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I do not doubt for one second that the hon. Gentleman is absolutely accurate about his constituency. I accept that and respect it, but I trust my own figures and what I have found. I cannot really comment on other people's experiences. I would find it extraordinary if my constituency were blessed on this issue for some reason. You will know from your postbag, Mr. Martlew, that when you pick up these things, it is very unusual not to pick up what your colleagues are picking up to some extent. Therefore, I am quite prepared to use my constituency work as a basis for assessing where tax credits are going.

When the new Secretary of State came into office, virtually the first thing that he said, which I very much welcomed, was that his No. 1 priority was to tackle child poverty. Given that, technically, the target was missed—that is admitted, and I have tried to deal with it in context—I suppose that he was saying that the effort was valiant, welcome and civilised, but the target was ultimately missed, so how do we get back on track? He said that the Government would redouble and renew their efforts, which I very much encourage. From my perspective, it was absolutely the right thing for the Department for Work and Pensions to focus on. In such a Department, many issues could be focused on and be the subject of debate. I am sure that we all have issues in mind that are dealt with by that Department and that we could debate, but they are not the subject of today's debate.

The Government have taken things on the chin by acknowledging that we have the worst rate of child poverty in Europe. That is not a pretty thing to say, but they acknowledge it. Over the years, Governments have denied, fudged and not dealt with the idea that income poverty is the issue. I began by saying that, and I maintain that position. The question is how we continue the process and make the system better so that it can deal with income poverty. In some ways, I have two different targets to consider: the shorter-term target of 2010 and that which is the subject of the debate—the 2020 target.

The Government need courage and ability to take this matter forward, and I know that that is their intention. My hon. Friend the Minister recently announced the welcome appointment of a so-called child poverty tsar. No doubt he can tell us more about that and about how the office will work from a cross-cutting position, with the appointee having feelers across a range of Departments. I wish it success because this is a cross-cutting issue.

Let us consider income poverty, which moves us from the general and cross-cutting to the specific. The Institute for Public Policy Research calculated that to get back on track to meet the 2010-11 targets the Government would have to inject a further £2 billion into the tax and benefits system, which is a frightening figure if it is at all true. Whether or not the figure is cast iron is perhaps not the issue; the issue is that there is an income gap for the poorest 20 per cent. If that gap is not addressed, no matter what kind of exhortation and other measures are put in place—even though they will be good things in themselves—the likelihood is that the 2010-11 target will not be hit and the eradication of child poverty by 2020 will not be achieved, which cannot be contemplated and should not be countenanced. That is not necessarily agreed on all sides, however, and there may be more to be said on the matter.

On the appointment of Lisa Harker, who has a relevant background in that she was the chair of the Daycare Trust, I wish her well. Will the Minister tell us more about what she might be expected to do and will do? That is important in terms of additionality: what more will we do that we did not do before 2005? What extra is being put into the pot?

I want to pick up on a few things that others have said. The "Narrowing the Gap" report by the Fabian Commission on Life Chances and Child Poverty made a number of recommendations. I shall not go through them all but shall pick up on some. They may be of exhortatory significance in putting a bit of steel into the resolve that I know the Minister has to ensure that these targets and others are met. The report says that the issue must be identified as a key "central national priority". That returns to my opening comments and the MORI review in respect of the public's understanding. Eradicating child poverty should be a key national priority, and I hope that there will be cross-party support to make it a central issue, target or whatever one wants to call it.

The report suggests that

"a regular annual Life Chances Audit"

should be instituted. So, there we are; I ask the Minister to get on with it.

While much has been done on maternity support, not least with maternity leave and increasing maternity pay, disadvantage is still inflicted on families, particularly the poorest, when pregnancy comes around. We have talked about trying to have two parents earning, and that is key when more children are involved. Rather like illness or unemployment, that kind of interruption can be the difference; it can knock somebody out of the cycle or knock them back down to where they came from. There should be redoubled effort on maternity support.

A key recommendation, which I understand does not fall outside the Government's direction of travel, is a system of what the report terms "universal high quality childcare". I know that child care places have been increased by about 100,000 over the past two or three years, but such provision needs to be bedded down everywhere. I do not know but guess that it is not universal. Although it may be good in certain areas, there will still be pockets of hard-to-reach families, so universal high-quality child care is key and must be available.

The report suggests that

"benefit rates for children should increase".

I have already talked about the 25 per cent. real terms increase in child benefit. That might be part of what the IPPR calls the £2 billion injection gap. Among other things, the Fabians would want the question of whether those increases can be in line with earnings to be considered. The minimum wage also needs to be maintained and supported. Finally, the Fabians suggest setting

"a target to reduce income and wealth inequalities".

That comes back to the idea of the Gini coefficient. As I said, I am undecided on that, although I see the argument behind the report's suggestion.

The final outside body that I shall cite for today's purposes is the Child Poverty Action Group. It suggests a 10-point plan, but I shall not go through all of it. I cannot apologise for this and am not trying to make things party political as I am just reading from the list, but at the top it states:

"all parties...to commit to eradicate child poverty."

It is saying that that should not be a vague aspiration or notion, but must be a hard and firm commitment to tackling what I have indicated is the crux of the issue—income inequality.

The CPAG says that there should be "poverty proof policies"—no doubt, Lisa Harker might be part of that in respect of the cross-cutting overview—making each policy consistent with eradicating child poverty. We need to avoid the silo idea and to ensure that one Department is not doing something that damages or acts against others' interests.

I have exhorted the Minister to do all he can to eradicate what I would term the "glitches" in the tax credits and benefits system—others might put that differently. I support the tax credits system, as does the CPAG, but I ask the Government to examine take-up, because it is classically known in welfare work that it is possible to have a perfect system of benefit for something, yet people do not take it up or access it. The latest Government figures that I have seen showed that in 2004, 79 per cent. of those eligible for child tax credits were accessing them. If we could up that figure, income inequality would be addressed, almost by definition.

In general terms, but not in terms of income inequality, we should ensure that all children have access to decent education, school meals, uniforms, physical activity and jobs that are, as the CPAG said, not just jobs, but better jobs.

My constituency has one of the largest council estates in the country, and the mums that we have been able to encourage back to work have benefited on two fronts. First, they gained confidence because they had never worked, or had not worked for such a long time that they did not have the confidence to go back to the world of work and had become convinced that they could not. Secondly, they gained upskilling and training around those issues and obtained national vocational qualifications in various subjects, such as maths, English and IT skills, which enabled them to work. It is important to ensure that training opportunities are available.

The Government set out in the right direction and should be congratulated on having the courage to take on the issue. One of the groups that I have referred to said that no one underestimates the scale of the task. It is not easy and could have been ducked. The Government did not duck it, but we are not quite there and we may miss the target, so I ask them to redouble their efforts.

10:12 am
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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I congratulate Stephen Hesford on raising such an important issue today and for an extremely thoughtful and non-partisan speech covering an extensive subject.

The hon. Gentleman talked about trying to engage the population at large with child poverty and to make them understand it. That is important. I regret that more hon. Members were not present to listen to his speech on what is a flagship element of Government policy. That may say something about the difficulty of engaging with an extremely large subject that crosses many portfolios. If we have problems engaging hon. Members in the debate, that demonstrates the difficulty of explaining to people in the wider country how extensive child poverty is and making them understand what poverty is in Britain compared with poverty in developing countries, which they understand better, and securing the sort of consensus that the hon. Gentleman and the Government talked about to continue the progress made in recent years.

I was pleased that the Secretary of State recently indicated that child poverty will be the No. 1 priority for his Department and I congratulate the Minister on having responsibility for the issue in the Department. Although I anticipated having less time than is available, this is still an extremely brief debate to cover an important and complex issue. I may be wrong, but I believe that this is the only debate on child poverty that we have had in the House since the general election. That is surprising, and it highlights the difficulty of engaging people with a subject that is the No. 1 departmental priority that we have not had other opportunities to debate it. I hope that the Minister will reflect on that and talk to the Secretary of State about it. Perhaps an opportunity can be found later this year for a more extensive debate to allow the issues to be aired in the main Chamber, in which many more hon. members could participate.

I started by congratulating the hon. Gentleman on raising the subject, and I must also congratulate the Government on making the matter a priority since they were elected in 1997. There was an extraordinary rise in child poverty after 1979 through the 1980s and into the early 1990s. During that period, our child poverty rate went from 14 per cent., which was towards the bottom of the European league table, to the astonishing level of 33 per cent. or one child in three living in relative poverty. The country should be ashamed of that horrific figure, which put us at the top of the European league table. It must be of concern to all of us that such a large proportion of our children were growing up in poverty, and there must be a read-across from poverty to other problem areas such as low skills, which increase people's chances of staying out of the labour market and going into crime, social exclusion and declining social mobility. One concern in recent years has been that the figures seem to indicate that social mobility has been falling over the past few decades instead of rising as would be expected in a wealthier and more meritocratic society.

I congratulate the Government on making the matter a priority. There is a major challenge to make people in the wider country understand the relevance and validity of the concept of child poverty, which a number of recent reports, including the Fabian report, commented on. The hon. Gentleman referred to cross-party issues and the desire for cross-party consensus. I shall not comment on the position of the other Opposition party. All I say is that we are committed to continuing the Government's policy of reducing child poverty and are in the middle of a policy review dealing precisely with that issue. I hope that over the next year we will be able to set out our strategy clearly—I shall say more about that later—and how it compares with that of the Government.

Complex issues are involved in setting the right targets, which is why we have been determined not simply to sign up unthinkingly to whatever targets the Government have lifted off the shelf. We know that there is uncertainty about what their targets mean. The most important measure of poverty is the relative poverty indicator, and the Government have set a target of 2020 for eradicating child poverty according to that indicator. When we found out more about what that means, we found the target had been set to bring child poverty in the United Kingdom down to around the lowest rate in the EU. Perhaps that is the only sensible way of setting a target for child poverty, but it is not eradication and it depends to some extent on what is happening in other European countries. The Government have set a target that they cannot control.

Targets for child poverty must be seen in the context of the rest of the benefits system and poverty for other groups in society. The Government have made good progress in recent years in reducing child poverty and, to some extent, pensioner poverty. However, because those have been the two priorities, the poverty rate for people without children and who are out of work has remained unchanged. What is often forgotten is that children live in families with adults who are in poverty and if the benefits and incomes that those adults are on are anchored to price increases rather than earnings increases, it is more difficult to achieve targets for child poverty. I accept that child poverty has a special resonance and that we come from a position of having a particular problem with it, but the strategy for dealing with it must be seen in a wider context.

I shall comment briefly on three areas on which the Government need to focus in relation to their own policies if they want to help themselves achieve the child poverty targets: tax credits, the Child Support Agency and the regressive council tax. We could discuss tax credits for hours, and I would be more than happy to do so, as the Paymaster General knows. I can only say to the hon. Gentleman that his constituency experience does not match mine. I warn him that the more he talks about some of the problems with tax credits, which he may not do in his constituency, the more the people who come to his advice centres will not be the people who have defrauded the system or not bothered to inform the Inland Revenue of their problem, but those who, through no fault of their own, have ended up with overpayments that have driven them further into poverty.

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

The hon. Gentleman gently chides me, because he finds it difficult to understand why my figures are so low. I assure him it is not because I have run away from the issue, which I have publicised through the local newspapers and my newsletters. Despite that, I am where I am.

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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

I accept that. I remember having this debate with the Paymaster General a couple of years ago when I warned her of the number of cases of overpayment occurring in my constituency. She said that there must be something odd about the south-west or the Yeovil constituency. Then came the figures that confirmed the problems. The parliamentary ombudsman produced a fantastic report on the administrative problems with tax credits a year ago. Sadly, only about four of the 12 recommendations—probably the four least important—have been implemented to date. The most important was about not recovering money until it is confirmed that it is recoverable under the code of practice, and about mechanisms for recovering it and for writing off cases in which an official error has caused the overpayment. The Government have not adopted those recommendations, which would make a tremendous difference to those people whom the tax credit system is precisely designed to help, and who, in many cases, have been driven further into poverty.

The problems of the Child Support Agency are well known; we expect a statement on the matter within the next couple of weeks. Again, we could debate that for hours, but it is worth pointing out that £3.5 billion maintenance arrears have accrued since the CSA was set up by the Conservative Government in 1993. The £3.5 billion that has not got through to families with children would have made an enormous difference in tackling child poverty, and until there is a working CSA, it will be more difficult to tackle the problems of child poverty.

The Government policy that is pushing against their own targets on child poverty is council tax, which is probably the most regressive tax in Britain—it has increased by about 100 per cent. since 1997. There are about 800,000 households with children who are in relatively low-income poverty and not in receipt of the council tax benefits to which they are entitled. In other words, about 50 per cent. of households with children in poverty who are entitled to council tax benefit are not in receipt of it.

The Government's vehicle for dealing with the regressive nature of council tax is very ineffective, so we have a very regressive tax, which is making the Government's job of reducing child poverty much more difficult.

The hon. Member for Wirral, West gave us a number of signposts about future issues. He indicated that without a continued increase in transfer payments from the Government it will be very difficult to meet the ambitious targets that have been set. I agree; getting more money into low-income families is a crucial part of the complex policy challenge of giving those children greater opportunities.

The hon. Gentleman's right hon. Friends have flagged up some major issues, not only in respect of the administration of the tax credit system, but about the balance between means-tested and non-means-tested benefits. The number of people facing very high marginal deduction rates as they go back into employment has risen, as the hon. Gentleman knows, by about 1 million since 1997. Although those facing the highest marginal deduction rates have come down, that figure remains extremely high. Recent reports, including that from the Fabian Society, suggest that there is a debate about the right balance between means-tested and non-means-tested benefits, and in that respect the hon. Gentleman's point about take-up rates is highly relevant. The Government should be engaging in a debate on that matter, and by retaining the child benefit element alongside the child tax credit, they clearly indicate that they think that those two elements need to be part of their child poverty strategy.

The hon. Gentleman mentioned the child trust fund. It is clear that under any Government spending rounds in the next few years will be considerably less generous than those since 1999. Scarce resources will have to be spent where they will make the most difference. Our view is that the child trust fund is not the priority when setting aside £2.25 billion per Parliament as money that will be accessible by an individual only when they reach 18, by which time most of their disadvantages, such as poverty and problems in early years education, will already have been consolidated. We would much rather that that money went in at an early stage and was spent on additional help to low-income families to make a difference to people's opportunities, rather than its coming to them at the age of 18.

I want to touch briefly on two other, vital, issues. Recently, in his speech on child poverty the Secretary of State questioned whether ultimately the strategy of simply increasing benefits and tax credits could ever deliver on the very ambitious targets that have been set, and he was right to do so. One reason why there are such high child poverty rates in this country is the number of children in workless households and in single-parent households, although it is extremely difficult for any Government to do much about the latter.

We need to get more parents into work; that is an issue that relates to single parents and to people on incapacity benefit who have been written off in the past but who could be moved into employment. I hope that they will be important elements in the Bill that has been published today. It is clear that low skills are associated with worklessness, so the skills agenda and early years agenda are vital.

Housing is also vital. About 32 per cent. of the income of low-income families is spent on housing costs, a much greater percentage than in higher-income households. Housing costs have been rising rapidly in recent years, and the housing market is not working. If we are to hope to meet the very ambitious targets, we cannot rely on one policy vehicle alone, we must tackle problems in the housing market and in worklessness, and we must address the skills agenda.

I again congratulate the hon. Gentleman on securing the debate and hope that we will have further opportunities during the rest of the year to debate the issue in greater detail.

10:26 am
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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

I welcome you to the Chair, Mr. Martlew, and say what an honour it is to appear before you. I welcome the debate, and congratulate Stephen Hesford on securing it. He is a brave man, perhaps lacking the political ambition of some of his colleagues who have chosen to stay away from this debate, for a reason that eludes me.

The debate is particularly timely and gives us a welcome opportunity to bring together some of the strands underlining child poverty. At the outset, for the benefit of the House, I ask the Minister for Employment and Welfare Reform whether the Government will confirm their definition of poverty for the purposes of child poverty? The Library briefing note prepared for today's debate states:

"The standard definition of income poverty is living in a household with an equivalised household income that is below 60 per cent. of the median household income. Income is 'equivalised', meaning it is adjusted to take account of variations in household size and composition to make it a better measure of standard of living."

As we know from the Department's press release in March, the target on child poverty was only narrowly missed before housing costs were taken into account, yet on closer examination the gap in missing the target was greater after housing costs were taken into consideration, and there are a number of reasons for that.

Let us consider the geographic spread represented by those present in the debate—the north-west, Scotland, Yorkshire and the south-west. It is interesting to note that the average house in north Yorkshire is the most expensive in the country. It is important that housing costs are taken into consideration in setting child poverty levels. Will the Government confirm that that is their understanding, and that it will remain so?

It fills me with dread when the Government appoint a tsar to a policy area. The hon. Member for Wirral, West alluded to the appointment of Lisa Harker as the tsar for child poverty. The Minister issued a press release at the end of June setting out her remit. The Secretary of State yesterday set before the Select Committee the reasons for the Government's failure—that is perhaps why the hon. Member for Wirral, West, finds himself alone on his Benches today, regrettably—saying that of all the aspects of the Department's work, the hardest is eradicating child poverty. The Secretary of State claims that child poverty rates have been falling because of the introduction of tax credits and the improvement in the employment rate of parents, particularly through the new deal for lone parents.

If there is one thing that the tax credit system and the Child Support Agency share, it is a lamentable failure of their computer systems. Mr. Laws referred to the £3.3 billion not yet collected by the Child Support Agency. I simply add that £2 billion of that is deemed uncollectible. What do we say to the parents with care who are owed that money and who will possibly never get it?

The Secretary of State claimed that the target had not been reached because not enough lone parents had got back into work. The Child Poverty Action Group, to which I pay tribute for its work over the years, commented in a November press release:

"Child poverty cannot be eradicated without significantly raising the safety net of the welfare state, supporting more people into employment, ensuring that work pays and making further improvements to the administration of tax credits".

That is absolutely vital.

The Secretary of State said that two key areas are focusing more heavily on getting lone parents back into work and improving child support. The National Audit Office last week came out with the most damning indictment of the Child Support Agency. That should be taken together with the damning report by the Work and Pensions Committee, which came out before last year's election, and which went to the heart of the matter. Some very good people work for the Child Support Agency—indeed, the Minister might take this opportunity to thank them for their work, often in difficult circumstances—but the Select Committee said that they lack training and that their skills were not necessarily deployed to best advantage.

We are poised to hear, any day now, a statement by the Secretary of State on the result of the David Henshaw review; obviously, that will give us more time to focus on the issue, but I would like to rehearse the reasons why the Government failed to reach the last target and to say why we believe a course of action can be followed that will eradicate child poverty more quickly.

Will the Minister say why Northern Ireland is not included in the figures? That gives a distorted view of the child poverty picture, because a third of children in Northern Ireland live in poverty. Will he provide a letter, to be placed in the Library for the benefit of all right hon. and hon. Members, giving the data with the figures for Northern Ireland aggregated into the total? Also, will he, on a regular basis, give the target both before and after housing costs are included, and explain which of the definitions the Government will use?

The Government have a quantifiable public service agreement target for child poverty in 2005; levels of child poverty are to be at least a quarter lower than in 1998-99, using the poverty line of 60 per cent. The Government missed their child poverty targets for 2005 and are on track to miss them again in 2010. I have to say that the two biggest problems in my constituency surgeries are overpayment of tax credits—that can have an impact in thrusting a household into poverty, because the Government try to claw back the overpayment in one go—and child support cases.

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

I have already made a point about tax credits but, for the record, I do not think that I said I thought that the Government were on track to miss 2010; I think that I made the point that we ought to put in place measures that help us get there, having accepted that we missed 2005.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

Save the Children questioned Labour's success in tackling child poverty. In a press release last December, it said that

"there has been little or no improvement in the percentage of children living in severe poverty"

in Britain. It went on to say:

"The Government needs to sort out the absurd mess of 11 different departments working on child poverty without a joined-up strategy".

The hon. Member for Wirral, West, did mention tax credits, child support and lone parents, and we can see that already three Departments come into play there. The Government may wish to consider that.

The Government are on track to miss their target in 2010. The principal tool that they are using is tax credits, yet those have had a marginal effect that is diminishing, and that might well be squeezed in the next spending round. As the calculation of child poverty is a relative one that sits near the middle of the curve, a small movement in any direction has the effect of taking large numbers of children into or out of poverty. From our point of view, it is difficult to sign up to a target that the Government are clearly on course to miss.

We are committed, and state that we aspire, to eradicating child poverty by 2020. However, there are a number of issues that we would like to consider today. Does the Minister accept that the tax credits fiasco has probably impacted in such a way as to push more children into poverty? Does he further accept the mess that the Child Support Agency has got into and that the Government have failed to take up the mediation aspect, so strongly pushed by the former Home Secretary, Mr. Blunkett, who, in 1998, promised to commit more resources to mediation so that there would be fewer calls on child support? Those two policies, taken together, have had a negative impact on the child poverty figures.

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David Laws (Shadow Secretary of State for Work and Pensions, Work & Pensions; Yeovil, Liberal Democrat)

The hon. Lady obviously shares our concerns about the administration of the tax credit system, but she implies that child tax credits may have deepened child poverty. I am sure that that was not her intention. The problems may have meant that there was not as much of an improvement as the Government aspired to make, but the hon. Lady would surely agree that child tax credits have reduced the poverty figures.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

The point that I was trying to make—I hope that the hon. Gentleman will accept it—is that there are cases where individual households may be pushed into temporary poverty because of the clawback, through the incompetence of the Government. I do not think that that was the Government's intention, but it has been the practical effect. We may not be talking about many households, but the problem has had quite an impact, certainly in my constituency, which, although it has pockets of deprivation, could not be described as a deprived area.

In addition to tax credits and Child Support Agency failings, there is the issue of the new deal for over-50s. There are insufficient advisers, as I think the Minister will accept, and there is a six-month wait before over-50-year-olds seeking work can get assistance; that is a failing through having an insufficient network of business advisers. The new deal for younger people has not helped as many young people as the Government claim.

The figures show that when the Conservatives left power in 1997, youth unemployment was on a strong downward spiral anyway.

There are two related aspects, and the hon. Member for Wirral, West touched on one. First, there is the impact on child poverty of the disabled parent who is unable to enter the workplace. Secondly, there is mental illness. A recent Joseph Rowntree Foundation paper recognised that aspect, whereby the parent is unable to work or seek work because of mental illness. It is a general problem to which I hope all parties will seek a solution. I shall set out the Conservative party's position. I do not know whether the hon. Gentleman or the Minister know that we have stated that we embrace the principle of active market intervention. It is the best way of achieving a skilled and competitive work force. The new deal might have had a role to play, but the Government have not carried out a sufficient cost-benefit analysis. As with tax credit, child support and other targets, the Government are so obsessed with targets that they have failed to reach the 2005 figures for reducing child poverty and are not on course to reach the 2010 figures.

We invite the private and voluntary sectors to play a positive role in reducing child poverty. We are committed to improving the lot of the most disadvantaged in society. My right hon. Friend Mr. Cameron, the Leader of the Opposition, recently set out in his speech on the family four factors that promise a pathway out of poverty:

"A loving and stable home life; A good education; Economic opportunity; A life free of substance abuse and serious debt."

My right hon. Friend the Member for—I cannot remember his constituency—

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Stephen Hesford (PPS (Rt Hon Baroness Amos, President of the Council), Privy Council Office; Wirral West, Labour)

Chingford.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

Indeed. My right hon. Friend Mr. Duncan Smith, who chairs the social justice policy group, will report on those issues and set out a programme. One area that we are considering is transferable tax allowances to help support the institution of marriage and reform the welfare and tax system.

I praise the hon. Member for Wirral, West for drawing our attention to the Government's failings. We join the Government in the aspiration to reduce and eradicate child poverty by 2020. However, I join with the hon. Gentleman, in identifying the reasons why the Government have failed to act. We look forward with great interest to hearing how the Minister is going to get us back on track to eradicate child poverty by 2020.

10:43 am
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Jim Murphy (Minister of State (Employment and Welfare Reform), Department for Work and Pensions; East Renfrewshire, Labour)

I am pleased to have the opportunity to respond in this brief but thought-provoking debate. My hon. Friend Stephen Hesford was particularly thought provoking, and if truth be told, he is the only one of us who volunteered to attend today. All three other speakers are present, first because of our Front-Bench responsibilities and secondly, because of our general interest. I congratulate my hon. Friend on being the only Back Bencher in attendance from any party. I did not know that he had experience of working with the Child Poverty Action Group before he became a Member of Parliament. The detail in his speech displayed the knowledge and experience that he built up over those years.

I apologise to my hon. Friend and others that as there have been myriad comments, questions and suggestions, we may not be able in the 16 minutes available to cover them all. I hope to make a good attempt,

I welcome the points that Mr. Laws made. Although he has specific concerns about the Government's strategy, the tone and reasonable way in which he put his points across improved the quality of our debate. We look forward to hearing and analysing the outcome of the policy commission that is considering the Liberal Democrat attitude to child poverty. He suggested some reasons why they do not share the commitment to the 2010 target of halving child poverty and the 2020 target of eradication. I am sure that we will discuss that in more detail as the commission concludes its deliberations.

I get on very well with Miss McIntosh, except when we have debates. From the tone of her comments, I do not sense that she is a fully paid-up member of the new, modern Conservative party. Rather than pressing on specifics, which is entirely reasonable, she might more appropriately have acknowledged that because of the generational nature of poverty, lack of ambition, the challenge of social mobility, and inequalities in education and public service provision, many of the problems with which we are dealing did not start on 1 May 1997. In many respects, but not all, finding a solution to those generational and long-term problems has been one of our greatest priorities over the past nine years. It would have been more appropriate for her to start with an apology.

The hon. Lady suggested that the Conservatives share our aspiration, but for the Labour party and the Labour Government it is not an aspiration but a determined target to deliver. It is not a wilful aspiration that we might one day aspire to achieve; it is a determined target that we have set out to achieve. Working with others, we will continue to drive public policy to achieve it.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

I am grateful to the Minister for allowing me to clarify our position. As he continues with his prepared speech, he will accept that we support the Government but recognise that they failed to achieve their ambitious target in 2005. They look as though they will also fail to achieve the target in 2010, by which time we aspire to be in government and will have to deal with the situation.

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Jim Murphy (Minister of State (Employment and Welfare Reform), Department for Work and Pensions; East Renfrewshire, Labour)

That is one target that we intend to miss.

In my prepared speech, I was to going to welcome the tone of the hon. Lady's remarks. However, I am doing no such thing, because I thought that her tone was entirely inappropriate. Her suggestion that we are not hitting our target because we are obsessed with hitting our target raised three sets of eyebrows across the Chamber.

My hon. Friend the Member for Wirral, West intervened on the hon. Lady's comments about the experience of Mr. Duncan Smith, the former Conservative leader. I do not doubt the right hon. Gentleman's motivation, based on his visit to a Glasgow housing scheme. However, for many of us who grew up in housing schemes, and certainly for myself, who grew up in a Glasgow housing scheme, it is not a visit to a housing scheme that drives us, but the life experiences of each and every individual with whom we grew up in those communities.

I am delighted about and thank hon. Members for their congratulations on the role that I have been invited to play at the Department for Work and Pensions. The Secretary of State rightly identified tackling child poverty as our No. 1 priority. There is no room for complacency, but child poverty is at a 15-year low. It more than doubled in the previous 20 years, when one in three babies in Britain was born into poverty. There have been policies such as Jobcentre Plus, the new deal, the minimum wage and tax credits. The hon. Lady and others have had their concerns about the latter, but despite the serious administration problems, which we do not seek to belittle, and having again put on record the apologies that other Ministers have made for the administration, I may say tax credits have made a substantial contribution to alleviating poverty in many of the poorest families in every constituency, including the hon. Lady's. Some 6 million families and 10 million children have received support through the tax credit system. Of course, we have to find ways in which to improve the administration. For people in relative poverty, a mistake in administration can have long-term effects on the stability of their income and the way in which they can live their lives.

As I have mentioned, there is a generational challenge, as identified by the statistics on life expectancy. If we compare the life expectancy of a child born in Kensington and Chelsea with that of one born in Wirral, West, there is a five-year gap. If we compare the life expectancy in Wirral, West with that in Calton in my home city of Glasgow, there is an additional 22-year gap. That does not need policies about tax credits, the minimum wage, primary education or getting lone parents into work, but a general approach to target and to focus relentlessly across government, along with business and the voluntary and private sectors, on the ways in which we can drive a sense of social mobility and real change in those families.

One of the interesting points that everyone has made today is the lack of awareness among many people about the nature of child poverty in this country. Of course, that lack of awareness exists not among those who continue to experience child poverty despite all their efforts—there is a real sense of what it means in those families—but in the wider public domain, which may be reflected in the attendance at today's debate, and perhaps among some journalists. I do not criticise them for it at all, but in preparation for some work last week I found myself having to persuade a journalist that child poverty was a continuing and real problem in our country. The hon. Member for Vale of York made the fair point that, for some, child poverty is something in the developing world, about which celebrities campaign vocally for good purpose and to great effect, which we welcome. However, although the nature and scale of child poverty are entirely different here, the challenge remains.

We seek to co-ordinate our work to maximum effect so that policies in education, health, employment and across all Departments are more focused in the way in which they are brought together. I welcome the appointment of my right hon. Friend the Chancellor of the Duchy of Lancaster as Minister for Social Exclusion. She has brought together a Cabinet Sub-Committee, and that means that Ministers from all Departments are working together and trying to support the poorest 5 per cent. in our communities.

Poorer children with a high developmental score as toddlers fall behind by the age of 10 compared with children from higher social economic groups who had a lower developmental score in early childhood. At key stage 3, fewer than half the pupils who receive free school meals reach their expected attainment levels. It is not only an issue of weaker educational outcomes; it goes much wider than that. An ever-increasing body of research attests to the importance of children's early years informing their life chances, which is why this debate is so important in focusing on what more can be done to eradicate child poverty.

The poverty and disadvantage that afflict people, and children above all, are not new phenomena, as we have already heard. They grew grotesquely, out of all sense of proportion and beyond all sense of justification, throughout the '80s and early '90s. The way in which that grotesque level of poverty was allowed to grow embarrassed this country and shamed public life through that period.

I shall now reflect on what more can be done. The Welfare Reform Bill, which we publish today, will be an important step towards improving life chances by no longer writing anyone off and by supporting those with incapacity benefit to give them the chance to build confidence, which is important, rebuild their skills, which is key, and find work, obtain work and stay in work through personal advice and support, which will be crucial. The city strategy, of which we will announce more details later this month, focused on many of our big cities where the problem is even more acute. Two thirds of people on benefit in the United Kingdom live in our big cities, which is the rationale for the city strategy. Today, we shall announce the national roll-out of the pathways programme, again involving the private and voluntary sectors. That is an important part of the overall strategy.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

I am listening with great interest. The Minister accepts that, as I mentioned, there are pockets of rural deprivation across areas such as the Vale of York, but the fact that the cost of housing is significantly higher than anywhere else in the country and the average wage significantly lower has an impact. Can he confirm the definition of poverty, so that we all know what we are talking about? Is it assessed in income terms, and is it assessed before or after housing costs?

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Jim Murphy (Minister of State (Employment and Welfare Reform), Department for Work and Pensions; East Renfrewshire, Labour)

There is an accurate definition in the House of Commons Library note for this debate, which I will confirm to the hon. Lady in writing.

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Anne McIntosh (Shadow Minister, Work & Pensions; Vale of York, Conservative)

And housing costs?

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Jim Murphy (Minister of State (Employment and Welfare Reform), Department for Work and Pensions; East Renfrewshire, Labour)

Both sets of figures, before and after housing costs, will be published, so there will be maximum openness. As I say, our definition of relative poverty does not take into account the hon. Lady's specific point about regional variations in housing costs. Both sets of figures will be published so she will be able to make her observations as she chooses.

The key to our approach to child poverty is the drive on social mobility, which, as the hon. Member for Yeovil said, has stalled, and I have said that in public before. I argue that that is largely the consequence of the fact that the socially-immobile 30-somethings of today were the children of the '80s and a time of substantial mass unemployment. The nature of social mobility is such that there is a generational challenge about how we break the cycle of poverty of aspiration. Early education is key, family support is crucial, and the alleviation of child poverty is absolutely essential.

I was reminded again of that when I was in Liverpool last week, knocking on doors with an organisation called Streets Ahead. In the daytime, there were three generations of one family behind a door in the poorest ward, I think, in Liverpool, all of whom were able through interaction with Streets Ahead to see that there is some opportunity through the new deal and other employment programmes for them to get closer to the labour market. Such projects are absolutely crucial if we are to overcome the generational nature of the lack of social mobility that is so endemic in so many of our larger cities.

Breaking the cycle of disadvantage is not simple. It is not about one specific policy. However, we are seeking to refresh our strategy at the Department for Work and Pensions. We have not appointed a tsar, although the newspapers suggested that we had. We have invited Lisa Harker, who has vast experience of the subject of child poverty through the Child Poverty Action Group, Save the Children, and the Daycare Trust, to advise us on what more we can do to achieve our targets for 2010 and to get us on track to eradicate child poverty by 2020. I want her to challenge us and to see what more we can do, and to challenge our policy approach, our organisational approach, our systems, our prioritisation, the way in which we structure our employment programmes and the interaction between those programmes. However, although my Department is important, we will not simply deliver the alleviation of child poverty on our own. There is a poverty of public services in some communities, and some people's experience of public services is still take it or leave it, and take what you get. Despite recent improvements in extending equality of public services in such communities, we have to go much further in personalising public services in some of our poorer communities.

With that in mind, I thank my hon. Friend the Member for Wirral, West for introducing the debate in such an informed way and for giving the House the opportunity to reflect on what more can be done to alleviate child poverty in the UK by 2010 and to eradicate it by 2020, so that instead of having the highest levels of child poverty, as we did in the 1980s and 1990s, we can head the league table in Europe for the eradication of child poverty, rather than heading the table for its propensity and the grotesque way in which it was allowed to spread in many of our urban and rural communities.