My Lords, the Social Metrics Commission was formed three years ago with the sole and express aim of delivering new poverty metrics for the UK. The need for an independent commission to do this was clear. When I was in government, there were two failed attempts to develop new measures in the lead-up to the Welfare Reform and Work Act 2016. It was obvious to me that whoever was going to be held accountable—the Government—could not in reality develop the measure by which they were going to be held to account. So we brought together top thinkers from left and right to create new measures. That is one reason why I am so grateful to noble Lords from the Labour, Liberal Democrat, Bishops’ and Cross Benches. Their participation, alongside Conservative Peers, reflects the make-up of the commission and the broad support for the proposed new measures.
Why was it so important to create new, agreed measures of poverty? The lack of an agreed measure has meant that Governments of any party have been left unaccountable for their policy actions to reduce poverty. One of the most concerning findings in the report is that, since 2001, and under successive Governments—Labour, coalition of Conservative and Liberal Democrat, and Conservative—although the composition of who is poor may have changed, the number of people in poverty has remained consistent. We cannot allow this to be the reality of our generation and we need an agreed measure to drive accountability, because what gets measured gets done.
The lack of an agreed measure also affects government behaviour. It was my observation of how Governments behave in Budgets and spending reviews that led me to create the Social Metrics Commission in the first place. When it came to the big economic decisions, it was quite obvious that the OBR and the IFS played a significant role in driving the accountability of Treasury decisions. However, there was no such equivalent for social policy decision-making. The events of the last 20 years have also shown that it is not enough just to have a measure of poverty. It is also crucial that it is an agreed measure and that it rewards decision-making that improves people’s lives. We need to move from a debate about measurement to one that drives better outcomes for people. It is too easy for those in this Chamber and in the other place to debate the 200,000 people who moved from one side of the poverty line to the other rather than develop a strategy to deliver improved outcomes for the 7.7 million who are in persistent poverty.
If it is important that we have this new measure, how does it actually improve on what we have had historically? There are many aspects of the commission’s approach to measuring poverty which are a significant improvement on what was previously used—too many to go into in detail in this short debate. However, the changes lead to two key positive impacts: they better identify who is living in poverty, and they provide a greater insight into the nature of that poverty and wider life experiences. The old measure was purely of income. Commissioners felt that this did not adequately capture the nature of poverty. They wanted to identify both the wider resources that families have available to them and the range of different needs that those resources must meet. It is, in effect, a balance-sheet model of available resources versus inescapable needs and costs.
For example, we include in the measure the available assets and the obligated debt of a household. Historically, you could be on an income just above the poverty line but in significant debt, and you would not have been considered poor, even if your debt repayments meant that you could not meet your needs. Alternatively, you could have been on a low income below the poverty line and have significant liquid assets, but you would have been considered poor. This seems potentially counterintuitive. Noble Lords may have known that assets and debts were not included in previous measures of poverty, but I can remember being seriously surprised a few years ago when I first came across this fact.
We also wanted to offset those resources against inescapable family-specific costs that had not previously been taken into account, such as the costs of disability and childcare. It is clear that disability benefits are given to people who are disabled to cover the extra costs of disability, but in the old measure they are credited purely as income and not offset against the corresponding extra costs of disability. This gives a distorted view of the available resources for a family coping with disability. The costs of childcare are typically unavoidable and related to working, but we all know that in any household they are offset against income. Having income as our sole measure of poverty does not acknowledge the inescapable and very real costs of working. Does my noble friend agree that understanding the inescapable costs of childcare and disability contributes to our understanding of the measurement of poverty?
The proposed measures also provide a greater insight into the nature of poverty and the wider life experiences of those who are in it. Poverty measures are created from the data housed in the big government datasets. We wanted to understand the depth, persistence and lived experience of those in poverty. Much of the debate in this House is about the number of those who show up in a snapshot of data captured at a single point in the year. While this is important, as it clearly shows vulnerability, we in the commission were even more concerned about those who show up in these surveys year after year, and about how far below the poverty line families actually are. So we created a measure that will assess the depth of poverty, to understand how far below the poverty line a particular family is; and a measure that captures the persistence of poverty, to show how long people have been in poverty.
We also wanted to capture the lived experience of those in poverty: the resilience gap between those who are in poverty and those who are not. So we developed a set of lived experience indicators that look at a range of issues, from mental and physical health, to work, community engagement and family structure, which may impact on the likelihood of people being in poverty, their experience of it and their chances of moving out of it in future. As well as improving our understanding, each of these measures provides clear levers for policymakers to target policy on reducing the number of people living in poverty, and improving the outcomes of those families who do experience hardship. This is one reason why this new measure has developed real consensus. Any genuine and sustained effort by Governments of any persuasion will be rewarded in the metric.
I was delighted on the day of the launch to stand with commissioners from the Joseph Rowntree Foundation, Making Every Adult Matter and the Institute for Fiscal Studies; to have endorsements from the Child Poverty Action Group, the most reverend Primate the Archbishop of Canterbury, and the Centre for Social Justice; and to have academics such as Paul Gregg and Naomi Eisenstadt supporting us.
What does the measure tell us? The good news is that there are fewer pensioners living in poverty than previously thought. This is a tribute to the hard work done to improve the lives of pensioners over the last two decades and shows that concerted policy action can really make a difference. However, there are many other findings that challenge us to sharpen our focus. Some 14.2 million people are in poverty at any one time, but as concerning for me are the 7.7 million people who are in persistent poverty. These people have spent all or most of the last four years in poverty. Perhaps the most concerning finding to come out of the new measure is the link between disability and poverty. In nearly half of all households in poverty there is a disabled adult or child. Disability has been seriously underestimated in historic poverty measurement, and therefore most likely in our strategies.
What happens next? I have been delighted by support from all parties. A few weeks ago we received a letter from the Prime Minister asking us to work with her officials. Last week the chairman of the Work and Pensions Select Committee asked us to work up a draft Bill that could put the measures into legislation. We believe that there is consensus around these new measures, and we and other organisations will start to use them as we make the code public. We urge the Government to seriously consider adopting them as their own, too. I ask my noble friend to commit her department to exploring how the UK’s measurement of poverty could be improved by using the Social Metrics Commission measure and to outline what steps her department is taking to assess whether or not to adopt the measures as official government metrics.
My Lords, I pay tribute to the noble Baroness, Lady Stroud, for her key role in achieving a remarkable consensus on the vexed question of poverty measurement and for her willingness to shift her own previous position. I have three points. First, one of the report’s key principles is a restatement of a relative understanding of poverty,
“related to the extent to which people have the resources to engage adequately in a life regarded as the ‘norm’ in society”.
This stands in contrast to Ministers’ repeated reference to so-called absolute poverty statistics, in denial of the increase in relative poverty as their policies have begun to bite, and despite David Cameron’s promise that,
“the Conservative Party recognises, will measure and will act on relative poverty”.
Secondly, Ministers also tend to use the “before housing costs” stats, even though housing costs contribute to poverty. Where the report is truly innovative is in its measurement of total resources available, including also, as the noble Baroness said, a proxy measure of disability costs. As she said, this indicates that poverty among disabled people is seriously underestimated by conventional measures that take account of disability costs benefits but not of the disability costs these are supposed to meet. Will the Minister tell us the Government’s position on this very important point and also her response to the report’s evidence of even more extensive poverty among working-age families with children than shown in the Government’s own comparable stats?
Thirdly, the report rightly includes a measure of poverty depth—in other words, distance below the poverty line, sometimes called the poverty gap, and clearance above the line. This is really important. The experience of poverty is very different for the more than 4 million people the report estimates as living 50% or more below the poverty line and for the 1.3 million living within 5% of it. Professor Jonathan Bradshaw’s analysis of poverty gaps shows that children, on average, are living further below the poverty line than they did seven years ago. Will the Government undertake to publish regular poverty depth statistics?
In conclusion, I welcome this report and, while we may well continue to need the existing poverty measures for comparative purposes, I hope that the Government will respond positively to its recommendations.
My Lords, I congratulate the noble Baroness, Lady Stroud, on securing this debate and I pay tribute to her for the way she has led the work of the Social Metrics Commission. I declare an interest as chair of the Making Every Adult Matter coalition of charities, whose director served as a commissioner.
In the very short time available, I am tempted simply to say, “What gets measured, gets done” and sit down again, but throughout my professional career and as a member of your Lordships’ House I have been struck by how central the experience of poverty is to so many of the big social issues we debate. The direct impact of poverty is felt by one in five of the population and the indirect impacts ripple further still. Furthermore, the link between poverty and multiple disadvantage is deeply entrenched. This is brought home to me regularly through my work with the Making Every Adult Matter coalition, which focuses on the multiple and complex needs of 60,000 adults experiencing a combination of homelessness, substance misuse, mental health problems and contact with the criminal justice system. For these reasons I have followed the work of the Social Metrics Commission with keen interest.
The goal of the commission was to provide a new consensus around poverty measurement that enables government to take action and improve the lives of people in poverty. In my opinion, the absence of robust and clear measures, particularly the abandonment in 2016 of the child poverty targets, has contributed to the rising tide of poverty. Indeed, the IFS predicts a continuing rise in child poverty up to 2022. The measurement of poverty has for too long been a hot potato, with too much time being given to arguing about how and whether to measure poverty and not enough time devoted to taking action to reduce it. It was therefore vital that the commission was an independent and rigorously non-partisan entity, bringing together people of all political persuasions and none. The fact that the commission has produced a measure that is backed in its entirety by all its commissioners is testament indeed to the consensual way in which it has been led by the noble Baroness, Lady Stroud.
As we have heard, the commission has produced a new measure of poverty, which for the first time takes account of the total resources available to an individual, not just income. I am very pleased also to see links made between poverty and multiple disadvantage. I conclude by saying how strongly I hope that this measure is adopted by political parties and campaigners, but above all by the Government as their official measure of poverty, so that they can put in place meaningful policies to reduce poverty and address the plight of those who suffer from it. I look forward to hearing the Minister’s response.
My Lords, I add my congratulations to my noble friend for securing this debate and, more significantly, for the achievement of setting up the Social Metrics Commission and for delivering this important report. Not the least of her achievements is to have assembled such an impressive group to come together to make these recommendations. The report tackles some of the problems inherent in the traditional HBAI targets, which were too one-dimensional in their approach. I was impressed by the way it looked at total net income, inescapable costs and housing, particularly overcrowding. While the total number in poverty may be similar to the overall HBAI outcome, there are some very significant differences in the people who are captured in the measure. This is important, because it should help Governments draw up better measures to tackle poverty.
One of the elements in the commission’s approach is to look at the pathways into and out of poverty. Here, I commend the approach of universal support, which was initiated in this House, to provide more coherent help for people who have particular barriers to work. Full-time work is confirmed in this report to be one of the most reliable ways out of poverty and as the employment rate has hit record levels, the people left behind need more than cajoling to find a job. They need help, often with multiple issues, before they can take and hold down a job. A person might need help with literacy, mental health issues and housing, for example, before they can work.
How best to handle these needs? The universal support structure can be expanded to tackle them. It is made up of three key elements. The first is a hub of services in main localities. I am pleased to understand that DWP is now based in about 100 local authority hubs. Secondly, there needs to be a gatekeeper or caseworker to help people navigate to the right elements of support. This is missing currently. Thirdly, there needs to be a way of sharing data, so that people do not get lost in the system. DWP already has the secondary legislation in place to do this, although it needs to consult on exactly how to run the system. My own preference would be to use electronic wallets, which would give individuals power over their own data.
Finally, I welcome the emphasis in the report on relationships. Social isolation is a debilitating shortfall for people, almost the worst type of poverty. To tackle it we need to mobilise the whole of society to provide support for the most vulnerable. I am particularly encouraged by the outcome from “grand mentoring”, a project I have talked about previously in this House, in which older people mentor children leaving care. This is an approach we could expand for many lonely, vulnerable groups. I close by thanking my noble friend Lady Stroud once again for this opportunity.
My Lords, Stalin, not often quoted on this Bench, is said to be the author of the maxim:
“A single death is a tragedy; a million deaths is a statistic”.
On that, and indeed on everything else, I disagree with the Marshal. A single person living in poverty is a tragedy; that millions do so is an affront to our values, our common decency and how we think of ourselves as a nation.
If we are to tackle poverty, we must agree on how to measure it. We therefore owe the noble Baroness, Lady Stroud, and her team a huge debt of gratitude—not just for taking into account the inescapable costs many families face, such as childcare and disability, nor just for the welcome focus on the lived experience of poverty, such things as mental health, literacy and family stability, nor even for the suggestion of measuring poverty against a threshold smoothed over three years, but for bringing together a diverse, authoritative group of experts, for their careful dialogue and analysis, and for arriving at a measure of poverty on which we can all agree, wherever we sit in this House. That is no mean feat and it is one on which we can all, I trust, coalesce. It provides the foundations on which we can—indeed, must—build given the shocking rising figures, particularly on persistent and child poverty, on which there is no time to elaborate tonight.
We on this Bench were heartened by the Secretary of State’s speech not many days ago. We applaud the desire to build a fair and compassionate welfare system and the commitment to taking a more considered approach to rolling out universal credit, and we were encouraged by the decision not to extend the two- child limit. But we know that this marks only the start on welfare reform and tackling poverty. I therefore look forward to the Minister’s response, to the Government’s commitment to use the measures set out by the Commission, to them publishing a coherent, comprehensive strategy to tackle poverty and child poverty in particular, backing it with resources and sufficient political will to make a substantive, sustained difference.
It is no exaggeration to say that events of the past week show us to be in a state of some national crisis, caused by very different understandings of who we are and how we relate to the wider world. On that, no consensus is yet forthcoming. But, thanks to the work the Commission, we now have consensus on how we measure poverty. Now we must seize that opportunity and act with urgency, tackling the national crisis of poverty.
My Lords, I too thank my noble friend Lady Stroud for obtaining this important debate.
Parliamentarians have an opportunity to transform lives, society and our economy by tackling the root causes of poverty and taking an approach to social justice which changes the lives of the poorest and benefits everybody. When families on the margins find stability in work and escape social breakdown that holds them back, more adults and children can thrive and become net contributors within society. Demands on the public purse are reduced, and we all gain. However, given the shortness of time this evening, I will be brief and to the point.
By asking about social factors around poverty, the Social Metrics Commission has helpfully highlighted that, as my noble friend Lady Stroud mentioned, many people with disabilities are living harder lives than some ever realised, and that households earning up to £200,000 can receive childcare support, yet lack of quality affordable childcare continues to keep the poorest families out of work.
But it is with regret that I have to challenge the claim that the commission has united left and right, and point out that it has instead missed the elephant in the room. Why do I say that? First, although there is a greater focus on the social conditions of poverty, it remains a relative financial measure and will drive a financial rather than a social response. This runs counter to the Government’s emphasis on improving life chances in the Welfare Reform and Work Act 2016, which enabled policymakers to paint from a much richer palette. My noble friend Lord Freud, from whom it is a pleasure to hear again on this subject, committed the Government to,
“look at all the root causes … They include addiction, problem debt and family instability. The approach will enable anyone to hold us to account for the actions we have taken and the progress we have made”.—[
“tells us that the quality of relationships within a family had a greater impact on child outcomes than the structure of the family”.—[
While the family stability indicator did not provide a complete picture, it is essential to have in the mix—hence my second and perhaps even greater criticism of the commission’s work. It once again misses the biggest driver of poverty in the UK today: family breakdown. We will never adequately address poverty by ignoring this national crisis or failing to include indicators to measure it.
This is where left and right should concur. The Joseph Rowntree Foundation recently found that persistent poverty hovers at around one in 10 of most household types; for lone-parent households, it is one in four and rising. The commission’s own measure shows that most family types hover around a 22% poverty rate, while the rate for lone-parent families more than doubles, at 54%. Without adequate regard to the fact that we are a world leader in family breakdown, any commission, however well meaning, will fail not only to unite politics but to grips this ultimate root cause of poverty.
My Lords, I add my congratulations to the noble Baroness, Lady Stroud, and the Legatum Institute on establishing the Social Metrics Commission and on her leadership. Whatever our political differences, if we agree that it is a primary responsibility of government to reduce poverty, we must welcome the establishment of a better database and an extensively agreed definition and description of poverty. I hope that all the parties will be able to accept that the account of poverty so far provided by the SMC is an improved basis for understanding, for debate and for the development of policy.
Confronted by the statistics in the SMC report—some of them highlighted just now by the noble Baroness— we should be dismayed. It is a collective failure that 4.5 million children are living in poverty, that 6.9 million people who are in poverty live in families with a disabled person, and that 7.7 million people are living in persistent poverty. The challenge, presented anew by the SMC, is to put the reduction of poverty front and centre in our politics.
The SMC has admirably sought not only to understand material poverty but to take account of the lived experience of poverty: for instance, social isolation and mental and physical ill health. As it develops its methodology, I hope that the SMC will consider adding an indicator of cultural poverty, which has a profound effect on well-being, thence health, thence material poverty.
The massive and cumbrous social security system cannot move fast and takes time to get things right, as we see with universal credit. But policy must take account of social change, rapid as it is, the fragmentation of class, immigration, changing economic geography, the impact of technology: the actual experience of people’s lives. The UK Government, which at the moment—extraordinarily—has no official measure of poverty, should surely adopt the model offered by the SMC.
The SMC’s data and method can help us understand and address with new seriousness and effectiveness the problem, so glaringly exposed by the Brexit referendum, of the “left behind” and their alienation. Informed by the SMC, we shall be better able, if we will, to redress burning injustices, rekindle hope, heal divisions and, I would add, rehabilitate politics.
My Lords, I join other noble Lords in congratulating my noble friend Lady Stroud, both on her work within the Social Metrics Commission and on securing this debate on a subject which is clearly of deep personal interest to noble Lords on all sides of the House.
Like many, I was shocked by the UN’s November report. However, I am critical both of the way Professor Alston explored just one side of the evidence and the extraordinary political nature of his language: for example, his conclusions that,
“poverty is a political choice”, and that this Government were guilty of outsourcing the British tradition of compassion of poverty and mutual concern. The Government have done many things to restore dignity through work, to raise the poorest out of the tax system and to introduce a living wage. Where the intent was honourable but the implementation flawed, such as with universal credit, these remain work in progress. The Government have not been not too proud to admit when they get things wrong. Of course, the report also contained valid observations, and indeed it encouraged the Government to introduce a single measure of poverty and of food security. Therefore I, too, wholeheartedly welcome the Social Metrics Commission’s attempt to bring a whole new approach to measuring poverty.
Poverty has been defined as,
“not having the resources to participate to some acceptable degree in society, to avoid shame as well as destitution”.
However, measuring the extent of poverty is much harder, and the old benchmark of those living on less than 60% of contemporary median income, ignoring as it did, assets, skills and liabilities, meant that it was never fit for purpose. We can address the issues that lie behind the statistics only if we can measure whatever it is about the household budget, on both sides of the balance sheet, which puts families into poverty. These can be myriad: childcare costs; inability to budget; household debt; costs relating to any form of addiction; and, most worryingly, disability, as we have heard.
The most heartening finding is that, through this new measure, around 2.7 million people are living at less than 10% below the poverty line, meaning that relatively small changes in their circumstances could make them able to rise above it. Sadly, the converse is also true of the 2.5 million who are less than 10% above the poverty line.
This research to find a relevant contemporary measurement of poverty, supported by the work that the Legatum Institute undertakes in identifying pathways from poverty to prosperity, provides crucial support for the development of policy by a Government committed to creating a country in which no one and no community is left behind. At least this new measurement will enable us to hold them to account.
My Lords, it would take more than three minutes to thank the noble Baroness, Lady Stroud, adequately, but I will use my introduction to give a commercial for the seminar that she and I, as chair of the All-Party Parliamentary Group on Statistics, will be holding in Room G on
Poverty statistics matter, not just as a proxy for misery almost inconceivable to Members of this House but because they underline other policy. When asked about the BBC licence fee in Oral Questions this afternoon, could the Minister have stood up and said that the Government want free licence fees for over-75s to go on, having read the report of the noble Baroness, Lady Stroud, and seen that only 12% of over-75s are in poverty? This policy is misdirected and does not survive contact with the facts.
Poverty is a Janus-faced statistic in the sense that, on the one hand, it is breakfast, lunch and tea for geeks like me and, on the other, it is controversial, even ideological. We have heard that there is a gap between the right, which tends to prefer what it considers objective measures of poverty based on absolute levels, and the left, which tends to prefer relative measures. Very wisely, the noble Baroness, Lady Stroud, has gone for a relative measure—55% of the median income—but her statistics are vastly more sophisticated than anything we have had in the past. They take account of families’ liquid assets and deal properly with the housing situation, which is important in poverty. This is a huge leap forward.
Personally, not being a great ideologist, I would be quite happy if we gave up disputing for evermore whether absolute or relative measures are right and settled for Stroud. As the noble Baroness would be the first to admit, there is more work to be done on her report. For example, I am concerned about the way it treats disability, important though that is. It would be much better to concentrate on those concerns than to allow this to be sucked once again into the endless maelstrom of political toings and froings and ideologically motivated views. Instead, let us settle for Stroud—or Stroud-plus, as it might be in today’s jargon—and use it from now on to see if we are really making progress against poverty.
My Lords, the debate has been incredibly rich. I do not know how to chip in with some fresh material. Let me try with some key points. First, the noble Baroness, Lady Stroud, should be thanked for leading the debate, but she has a huge team behind her: both the commissioners and the secretariat have spent two and a half years putting the report together. A gentleman called Matt Oakley deserves special praise for his sterling work over that period.
I am proud to declare an interest as an adviser to the Legatum Institute—I was involved, tangentially, in the launch—but I am also very sad because the report taught me that, over the past 25 years, the proportion of the country living in some form of poverty has remained almost static, at around 22%. That is a deep failure in government policy. It rocks one’s hope that anything can change, but I have hope: I think that the 14 million people living in poverty and the 7 million living in persistent poverty referred to by the noble Baroness, Lady Stroud, can be lifted out of that state if we have better mechanisms to support them.
I believe that the Government are not necessarily a cumbersome, inert agent in all this; when prodded, they can have better policy. As the noble Lord, Lord Lipsey, put it so well, these statistics can be the intellectual engine to improve policy. Disability is an example of that, as was mentioned by a number of speakers, including the noble Baronesses, Lady Tyler and Lady Lister. The disabled are overlooked; the SMC figures are clear about that. I suspect that we will look back at these years with a sense of national shame over not calculating properly the cost to families and individuals of being disabled, in terms of lost possibilities, the capital costs of equipment and the cost of support. These things have not been measured properly. When they are, we will be deeply ashamed.
Thirdly, I want to convey a sense of the great opportunity here for the Minister if she can brings these statistics into the centre of government policy-making. Stakeholders are on the side of change. I encourage the Minister to look at the fantastic YouGov report on what voters think of the statistics. The press coverage on launch was incredibly powerful. The winds of change are blowing in the Minister’s direction; I encourage her to set up her sails and make these changes as soon as possible.
My Lords, I too thank the noble Baroness, Lady Stroud, for her work and for this debate. As she has said and as my noble friend Lady Tyler agreed, what gets measured gets done—but the noble Baroness also reminded us that it needs to be an agreed measure. If we do not have an agreed measure, it will be difficult to solve the problems of poverty.
I should also say that the independence of the Social Metrics Commission has been crucial in identifying the new measurements. In particular, they include assets rather than just income and they add in unavoidable additional costs such as childcare or a disability. They allow for high housing costs to be reflected and for the adequacy of housing to be measured, which is vital to so many people on low incomes who have to live in unfit conditions, who are perhaps rough sleeping or who are in temporary accommodation.
As we have heard, the Social Metrics Commission has concluded that 14.2 million people are in poverty in the UK, of whom more than half are in persistent poverty: that is, they are in poverty now and have been for two out of three previous years. Those figures are worrying, but it is particularly worrying that so many of those living in poverty are actually in work. I read a recent report from the Joseph Rowntree Foundation which concluded that over the past 30 years the UK has effectively swapped mass unemployment for mass low-paid work. I concur with that conclusion—but it demonstrates that we have a very big problem to solve.
“behind a web page and an algorithm”.
I am very concerned about the Government’s policy of digital by default. It is a feature of universal credit, but the truth is that one in five of the UK population does not have the required skills or the necessary resources to engage with a digitally based benefits system. Indeed, the House has repeatedly warned Governments of this.
I conclude by saying that too many UK citizens are living in a cycle of low-paid jobs and poor prospects. No one should have to depend on food banks. The report of the Social Metrics Commission helps us to identify the real extent of poverty and the ways of addressing it, because the damage created by social exclusion and financial inequalities simply cannot be allowed to continue unaddressed.
My Lords, this worthy debate has been far too short. The noble Baroness, Lady Stroud, deserves our congratulations on all that she has done, together with her team, which was mentioned a moment ago. She is right to encourage the putting of poverty at the heart of government policy, although we recognise that this will entail a major change of approach. The SMC report which she has presented reminds us that there are no official measures of poverty in England or across the UK as a whole. As others have said, can the Minister say why this is? How is it possible to target poverty, particularly child poverty? We have heard from a number of Peers that what gets measured gets done—the noble Baroness, Lady Tyler, and the right reverend Prelate made that same point.
Noble Lords may recall the debates we had at the time over the use of income measures in the Child Poverty Act, which was renamed by the coalition Government as the life chances Act. My noble friend Lady Lister will certainly recall that, as indeed will the noble Lord, Lord Freud, who led the charge in those days. The income measures were replaced by reporting obligations on workless households and educational attainment, particularly at key stage 4. Can the Minister please remind us of progress on those reports, which are required to be made to Parliament? I think that two are due by now under those arrangements.
It would seem that the Social Metrics Commission accepts that an income component to measuring poverty is appropriate. This would base its data on the FRS. As we have heard from a number of noble Lords, its metric of total resources available is proposed to include all sources of post-tax earnings and income, including benefit and tax credit income, liquid assets available for immediate use—I can see that there may be some difficulties with those at the margins—deductions for family-specific recurring costs such as housing and childcare, along with the inescapable costs of disability. I think that the report floats the possibility of social care being included at some stage. We are thoroughly supportive of the proposals to include rough sleepers as living in poverty. Indeed, it should be impossible to describe them otherwise.
We know that despite the substantial effort on the part of the commission there are still gaps where the policy is not oven-ready. The approach of the commission is caveated by reference to, “within existing data and research”. The report indicates that the commission decided that it was not possible to move immediately to a new method of equivalisation and that more work would be needed. Can the Minister say how any future work on this is to be undertaken? I think that we were given a hint that there may be a Bill in the offing at some stage. Will this be the responsibility of the DWP or the Social Metrics Commission? Who has responsibility for and ownership of the project? At the end of the day, this should be about sending a message to Government about changing the dire state of our communities blighted by poverty. We have some 14.3 million people living in poverty, including 8.2 million working-age adults despite the success of universal support, as well as 4.6 million in persistent poverty. I could go on. We must build a picture of those in poverty so that we can better understand their challenges and what they need to make progress in their lives.
My Lords, I thank my noble friend Lady Stroud for securing this debate and all those who have contributed to today’s debate of this important question. I really commend the work of the Social Metrics Commission.
Measuring poverty is complex. There are many factors affecting a person’s standard of living, and reaching consensus on whether a person’s circumstances indicate poverty is difficult to assess objectively. Of course, assessing poverty accurately across the whole population requires robust data. This is why academics here and abroad have developed so many measures, including low income, material deprivation, social exclusion, consumption, expenditure and multidimensional poverty. I was struck by the reference by the noble Lord, Lord Howarth, to the lack of indicators for cultural poverty—our collective experiences. That is a very good point, because it emphasises the reality that the possibilities for how we approach the way we measure poverty are, if not quite endless, enormous.
As noble Lords know, this Government already publish official data that sets out the number and characteristics of households that fall below various income thresholds, as well as a measure of material deprivation. These are well-established measures, often used for international comparison purposes. We will continue to publish data on them in line with the statutory commitment that we have made. However, the Government accept that the current suite of measures is not without limitations. For example, the relative poverty line moves with average income, which is useful when looking at whether groups are keeping up with the middle of the income distribution over time but does not show whether the average incomes of those on the lowest incomes is improving in real terms. If everyone’s incomes were to double tomorrow, the number of people in relative poverty would be unchanged. On the other hand, the absolute poverty line moves with inflation, providing a better measure of how the income of those on low incomes compares with the cost of living.
Our persistent poverty measures assess the numbers in relative poverty for three of the last four years, and are helpful in identifying groups struggling to escape low income. Our material deprivation measure looks at the goods and services that people report they can access, taking account of the costs that parents and pensioners face as well as the resources they have. At 11%, the number of children in material deprivation has never been lower. That means, for example, more families able to afford fresh fruit and vegetables every day and more children who have a winter coat.
We therefore welcome the Social Metrics Commission’s work. Its new measures aim to better reflect what it has identified as the unavoidable costs that are combined with a person’s income. This goes further than our current low-income data, as while it takes account of housing costs, it does not take account of the costs of childcare and disability, as referenced by a number of noble Lords. The commission has also identified further costs—for example, care costs—that it thinks should be taken into consideration if appropriate data was available.
The recommendations in the report are too numerous to cover here, but I offer a couple of examples of the elements we need to assess. First, we need to look at the quality of the data used to estimate some of the costs included in the commission’s measure. Indeed, its report accepts that there are data-quality issues. There is also the possibility that including some additional costs but not others could skew the measure towards certain groups. The commission’s report indicates that there may be more children and disabled people and fewer pensioners compared with the official statistics. What would be the impact on the measure if social care costs were also included? Children and disabled people were particularly referenced by my noble friend Lady Stroud.
In disregarding disability benefits from the calculation of relative poverty, we cannot lose sight of the fact that these provide a valuable financial contribution towards the extra costs that disabled people can face. I want to encourage my noble friend Lord Bethell. We spend over £50 billion a year on benefits to support disabled people and people with health conditions. That is £8 billion more in real terms than in 2010. PIP, the personal independence payment, is better at targeting support to those who need it most, as we see with 31% of people on PIP receiving the top rate of benefit compared with 15% under DLA. Alongside this, the proportion of people with mental health conditions getting the highest level of support under our system is over five times higher than under the old system. We believe that disabled people should have every opportunity to thrive in the workplace, and we provide financial support to ensure that someone’s disability or health condition does not hold them back at work. My noble friend Lord Bethell referenced how difficult it is for people to go to work, but it is really encouraging that 973,000 more disabled people have entered work in the last five years.
Over the coming months, we look forward to the release of further information, including the programmes used by the commission to produce its estimates and the papers supporting its decisions around what its measures should include. To answer my noble friend Lady Stroud, while we are unable to make any commitments to the Social Metrics Commission at this stage, we will want carefully to consider the detail that underpins the methodology that the commission has employed when this is made available to us. The department is also keen to be involved in the stakeholder discussions on some of the critical and more complex issues associated with the commission’s measure.
To answer the noble Lord, Lord McKenzie, about who will be empowered through where we go next, I want to make it clear that we welcome the opportunity that we as a department have been given to work with the Social Metrics Commission. As a number of noble Lords suggested, as with so many things in life, this is more important than politics.
In tackling poverty, ensuring that we have robust measures for assessing the nature and extent of poverty is vital. The department is thinking strategically about the issues behind poverty, including housing, debt, low pay and worklessness. We will raise housing supply to 300,000 new homes per year on average by the mid-2020s and are investing £9 billion into our affordable homes programme, so that we can deliver more homes where they are needed most. Our economy has grown for the 23rd consecutive quarter in a row and we are backing businesses to deliver better jobs, better incomes and better lives for people across the country. Since 2010, there have been 1,000 more people in work every day and 80% of the rise in employment has been in full-time work. That suggests that it is important that we look more closely at low pay across all employment sectors, not just the private sector.
I thank my noble friend Lord Freud for his reference to the introduction of universal support. It is doing an enormous amount to help, but I also take on board his suggestion with regard to the importance of sharing data. That is incredibly important. There is also the possibility going forward for claimants to be able to work withelectronic wallets.
I now move to our approach as a Government. We are firm in our belief that work is the pillar of a strong economy and strong society, and we have clear evidence about what works. We know that, for those who can, work offers the best opportunity to get out of poverty and become self-reliant. Adults in workless families are four times more likely to be in poverty than those in working families, and children in workless households are around five times more likely to be in poverty after housing costs than those where all adults work. Indeed, the Social Metrics Commission recognises that, under its new measure, the majority—68%—of people living in workless families are in relative poverty, compared with just 9% of people living in families where all adults work full time. Our policies therefore strongly reflect that work is the best way out of poverty. One example is the Access to Work scheme, which now allows people to claim up to £57,200 annually to help pay for the additional support they need in the workplace. That is particularly targeted at the most vulnerable and the disabled.
Children need role models and parents need dignity and self-worth to believe that they can achieve their potential of supporting their children. The principles of UC entirely support this truth. I particularly take on board what my noble friend Lord Farmer said regarding the elephant in the room and the importance of including the family. I commend all the work that he does on the reducing parental conflict programme. It is important to note that the Social Metrics Commission does look at the family—the reference is to family, relationships and community—but we need to look further at this and see how it all comes together. It is for those reasons that we are pushing ahead with the most ambitious reform to the welfare system in decades, delivering real and lasting change to the lives of many of the most disadvantaged people in society—and yes, as my noble friend Lady Stroud said, focusing on better outcomes for people.
Universal credit is, of course, at the heart of these reforms and will tackle poverty by helping an extra 200,000 people into work. It is a modern benefit with one monthly payment that adjusts to earnings, avoiding the cliff edge associated with the legacy benefits it replaces. Those in work under universal credit earn an average £600 extra a year, and because it is a simpler system than Labour’s complex mix of tax credits and benefits, 700,000 families will get money they are entitled to which they are currently missing out on.
I take issue with what the noble Lord, Lord Shipley, said about the UC system being digital by default. That is simply not the case. Universal credit focuses on strong personalised support, with work coaches and case workers, and we will offer home visits where needed. We want to focus on individuals and we do so.
As my noble friend Lady Bloomfield of Hinton Waldrist said, we are listening to concerns. We note when we get it wrong, and it is a work in progress. I thank the right reverend Prelate for his welcome for the Secretary of State’s comments in her recent speech in this regard.
Our policies are making a difference. Under this Government income inequality is down year on year and remains lower than 2010, both before and after housing costs. Since 2009-10, annual incomes of the poorest fifth have increased by £400 above inflation before housing costs, whereas the incomes of the richest fifth have fallen by £800, showing that people are able to progress. Our official statistics show that there are 1 million fewer people in absolute poverty compared with 2010, including 300,000 children, and that the number of children in material deprivation has never been lower. There is so much more that I would like to say. We believe that building stronger partnerships with local services and organisations is key to identifying barriers and providing cohesive support for those who need extra help.
My noble friend Lady Stroud has asked what I believe is a question of great importance for all of us in this House, and I stress that the Department for Work and Pensions takes this very seriously. I thank my noble friend for the work the commission is undertaking and look forward to its further work in the future. Ultimately, however, this Government will be held to account for their progress in tackling poverty, and I have no hesitation in recommending our reforms as the right approach if we are to make a long-term difference to people’s lives and build a society where everyone can realise their potential.