Poverty

– in the House of Lords at 2:44 pm on 3rd July 2002.

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Photo of Earl Russell Earl Russell Liberal Democrat 2:44 pm, 3rd July 2002

asked Her Majesty's Government:

What size of income they believe constitutes a subsistence level for (a) a single person, (b) a couple and (c) a couple with two children.

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, we do not believe that it is possible to arrive at such a figure. The measurement of poverty can include not just low income but factors such as how that income is spent, on whom in a family it is spent and for how long that low income persists. That is why we issued a consultation document on measuring child poverty last April. I hope that the noble Earl will feel able to respond to it.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, if it is impossible to arrive at such a figure, how come that 10 other major European countries have done so? Will the Minister attempt to put that ignorance right, or should the House regard it as invincible?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, the noble Earl did not, perhaps, listen with his usual care to my Answer. No one doubts that low income is part of the problem of poverty. I shall give the example of a lone parent who has a child of 10 and is on an income of £100 after housing costs. She is divorced, has her own home and is poor because she is training to be a teacher. Her poverty is short term, and the outcomes for her and her child are good. We should also consider the case of another lone parent with a similar child and a similar income who lives in a run-down council flat, has no qualifications and has lived on benefit for 10 years. Her outcomes are likely to be poor. What matters is the persistence of poverty. The poverty that scars children is the poverty that persists. That is what we must capture in our analysis.

Photo of Lord Marsh Lord Marsh Crossbench

My Lords, given that the Government do not, on the whole, approve of means-tested benefits, how do they arrive at figures for minimum benefits if they have no figure for minimum need?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, we inherit benefit figures, and the benefits are then targeted at those who need them. Since our Government came into office in 1997, we have seen increases well beyond the retail prices index in many benefits. We recognised that the groups that we wished to help needed our support. For example, the income support rate for those with children under 11 was £16.90 in 1997. If that figure had been RPI-ed, it would now be £18.50. In fact, it will be £37 by October. The figure will have doubled. The carers' premium on income support for those caring for people has doubled since 1997. Pensioner couples are, on average, £25 a week better off in real terms since 1997. The Sure Start maternity grant was £100 in 1997 and is now £500.

We inherit a benefits structure, we judge whether it meets the need, as we see it, and then we target our resources. We have a record of which we are proud.

Photo of Lord Morris of Manchester Lord Morris of Manchester Labour

My Lords, I welcome the Government's commitment to the eradication of child and pensioner poverty and congratulate my noble friend on continuing to face all-comers with her customary fortitude, even on occasion perhaps what the good and noble Baroness, Lady Park of Monmouth, calls "the termites of the Treasury". But can she say what the Government believe to be the minimum income, after rent and council tax, necessary to protect expectant mothers from being at risk of giving birth to low-weight and thus highly vulnerable babies?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I do not have a figure for a pregnant woman with or without children. However, in households of below average income, the 60 per cent figure—that is, the relevant poverty line for 2001 for a lone parent with two children under 11—is £147. Benefit levels for 2003–04 will be £147. The family budget unit, to which my noble friend refers, had it been RPI-ed, would be less than what we pay in benefits. That is a decent response to the issue.

Photo of Lord Higgins Lord Higgins Conservative

My Lords, does the Minister recall that, at the general election, the Government appeared to have no problem defining child poverty? Their manifesto said that in the previous Parliament over a million children had been taken out of poverty. Subsequently, official statistics showed that claim to be wrong. Now the Government say that we must change the definitions. Will there be no definition against which to judge the Prime Minister's commitment to take children out of poverty within a generation until the inquiry is finished?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, I wish to make two points in response to the noble Lord. First, as a result of our policies since we came into office in 1997, 1.4 million children—not 1 million—have been taken out of poverty compared with the number that had been in poverty. I see that the noble Lord is shaking his head; I can write to him with the figures. I can assure him that they are correct. Some 1.4 million of those children who were living in poverty in 1997 are no longer living in poverty.

Secondly, we set ourselves another test, one that relates to wages rather than simply looking over and above the baseline figure from 1996–97. The test suggests that child poverty affects those children currently living below 60 per cent of median income. That means that as the wealth of the country increases, if benefits are only inflation-proofed then the gap will grow. We are one-third of the way to meeting our child poverty targets in one-third of the time. We have done very well, but we still have a long way to go. However, I am confident that our new tax credits policies will take us much further along the way.

Photo of Lord Tebbit Lord Tebbit Conservative

My Lords, do the responses of the noble Baroness to the questions put by my noble friend and by the noble Earl, Lord Russell, suggest that one cannot define poverty as a state existing below a certain level of income but that it can be defined only in relation to the incomes of other people? Surely that cannot be poverty. If the noble Lord the Leader of the House were to be given a substantial pay increase next year, that would not make me any the poorer, would it?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, as my noble friend has just pointed out, it may not make the noble Lord any poorer; it may simply make him envious. However, the noble Lord is right. The problem with a relative measure of poverty is that one then measures inequality as much as one measures poverty. That was why, in response to his noble friend, I sought to make a distinction between what might not exactly be termed as "absolute" poverty but the benchmark of when we came into office and what we have done since then compared with relative poverty.

Following the line of the noble Lord, Lord Tebbit, the best way for the Government to meet their child poverty targets would be for the Chancellor of the Exchequer so to mismanage the economy that national wealth reduced. As a result, therefore, the relative figure would rise. However, while that would be jolly good for child poverty targets, it would be jolly bad for child poverty.

Photo of Earl Russell Earl Russell Liberal Democrat

My Lords, without prejudice to the first Answer given by the Minister, does she accept that there can be such a thing as an income too low for subsistence?

Photo of Baroness Hollis of Heigham Baroness Hollis of Heigham Parliamentary Under-Secretary, Department for Work and Pensions, Parliamentary Under-Secretary (Department for Work and Pensions)

My Lords, it is certainly true that, for reasons I do not fully understand, some people are living on incomes below the level of benefit income. They tend often to be self-employed people who are living off their stock. However, the noble Earl will also know that the statistics with regard to people living on very low incomes are not particularly robust—indeed, they are pretty flaky.

The noble Lord, Lord Tebbit, identified a problem. The test of measuring poverty which the Government have set themselves—the test of relative poverty—does not pick up other considerations such as the persistence of poverty. It is that persistence which scars. That is why we are consulting widely on re-measuring child poverty. I have checked that the relevant document is available in the Printed Paper Office. We have produced four ways of measuring it. At a seminar of academics and voluntary groups that I attended last week, several further methods were put forward.

We need to hold the widest possible consultation and achieve the widest possible consensus in order to arrive at a measurement of poverty that is transparent, robust and holds government to account, and, in turn, gives government proper policy levers in order to take action. If the noble Earl, Lord Russell, responds to our document, I hope that he will become a part of that way forward.