Clause 2

Child Poverty Bill – in a Public Bill Committee at 11:30 am on 27th October 2009.

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The relative low income target

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I beg to move amendment 22, in clause 2, page 1, line 13, leave out ‘10’ and insert ‘5’.

We now move to targets and start with the relative low income target, which for a long time has been an internationally standard definition of poverty. There are always arguments concerning the principle that, as the economy grows so the poverty line rises, but in my view the poverty line should rise when economies grow. If the living standards of the majority are going up, then what it means to be poor goes up. If everyone in the class but us can go on a trip, or everyone in the class but us can afford the latest trainers for their children, that is a moving target and it should be a moving target. The fact is that the relative income target under clause 2 is entirely welcome and allows for international comparisons.

Then comes the question of how many children should be below the target. Ideally it would be nil, but in reality children will be living in households below 60 per cent. of the median. The day after a person loses his job, the chances are that he will be below the poverty line. That might be transient, and we will come to other measures that try to pick that up, but at any point there will be a frictional level of poverty in unemployment terms. How low is frictional? The purpose of our amendment is to point out that 10 per cent. is unduly unambitious, especially for a Bill whose long title states:

“Set targets relating to the eradication of child poverty”.

At Prime Minister’s Question Time a week or two back, the Prime Minister referred to eradication of child poverty. It was an entirely unqualified phrase and anyone hearing him would have assumed that child poverty would be eradicated. They might be rather surprised to discover from the Bill that a million children in child poverty would count as eradication. My mental arithmetic is not great, but I reckon that about 1,500 children in each constituency living in poverty would be described as eradication. I accept that 5 per cent. is not eradication either, but we must recognise that there will always be some transient child poverty, so if we are to use such language—as the Government clearly are—we need to be as close as possible to what the public will understand us to mean.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

In support of the hon. Gentleman’s point, the “Oxford English Dictionary” says that “eradicate” means to eliminate completely. Therefore, it is absolutely inappropriate for the Prime Minister or other Ministers to say that the Bill will eradicate child poverty when clearly, as it is now constituted, it will not.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I agree with the hon. Gentleman. I was wondering whether to amend the long title to “Set targets relating to the substantial reduction of”, but I might split an infinitive and I do not want to do that.

If the figure is not to be 10 per cent., what should it be? We have often asked ourselves what was in Tony Blair’s mind when he suggested that he wanted to abolish child poverty. As was famously said when somebody died, what did he mean by that? At the time when he made his pledge, countries in Europe had much lower rates of child poverty. I pray in aid Finland—as the Minister might expect me to do—because for the years 1996, 1997 and 1998, it had a child poverty rate of 5 per cent. It is indeed true that no country in the European Union now has a 5 per cent. child poverty rate. The rate in Finland has doubled to 10 per cent. and the United Kingdom figure for 2007 was a shameful 23 per cent.

Clearly, getting the figure down to 10 per cent. would be huge progress and entirely laudable, but it would certainly not be eradication and nor is it as bold as we should wish to be. The Government said that they chose the figure of 10 per cent. because that was about as good as they could get, and it is the lowest sustainable level that modern European countries could achieve. However, the Finnish figures of 5 per cent., 5 per cent., 5 per cent., 7 per cent., and 6 per cent. for a five-year period were much lower. Surely, if we are to set a target for 2020, which in a political context is a long-term target, we should be bold. We should not plan for failure, but I would rather narrowly miss a 5 per cent. child poverty target than comfortably hit a 10 per cent. target.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

I agree in general with the hon. Gentleman’s point, but, given our discussion and understanding of the perverse outcomes of the Bill, as constituted, I am surprised that he has not tabled an amendment that would set 5 per cent. for 2030. The focus would be on aiming to reduce over time, but, absolutely, staying on the deep-rooted causes as well as the immediate financial issue, whoever was in Government.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions 11:45 am, 27th October 2009

If the Minister’s response was, “All right, we’ll take 5 per cent., but we’ll do it in 2030”, I would probably accept and be happy with that. However, the question then is how quickly we can tackle that.

It is worth reflecting on how quickly the numbers went up. We have had a staggering rewriting of history by the hon. Member for South-West Bedfordshire, who conveniently chooses 1987 as a base year. On another measure, child poverty rose from 1.7 million in 1979 to 3.4 million in 1997—to pick a year at random—so 1.7 million children were added to child poverty in 18 years. The Government target is just over 1 million, so we would be trying to take slightly more than that number out in the following 13 or so years—essentially bringing the rate down about as fast as it rose, which is a challenge.

Five per cent. may be a better target for further on, although one of the problems with child poverty targets is that we have whole generations going through. If we do not hit 5 per cent. by 2020, the children of 2020 will—strangely—be 10 years older by 2030 and their whole childhood will have been affected. As I said, we do not want to legislate for failure, but the political imperative of a 5 per cent. target is very different from a 10 per cent. target. A 10 per cent. target would require some serious effort, but a 5 per cent. target would make for a real hands-on, headline-grabbing target for Government—every Minister would be called in and asked, “What are you doing about it?” That target would seize Government as an objective far more, because it is so demanding.

The level of child poverty is shocking—that is why we have the Bill that we have. It is true that no one else is doing much—I see that the Danes were on 9 per cent in 2007, so it is possible even in the present circumstances to reach such figures. However, with a 10-year run at it, it ought to be possible to be much more ambitious. I commend the amendment to the Committee.

Photo of Andrew Selous Andrew Selous Shadow Minister (Work and Pensions)

I understand where the hon. Gentleman is coming from with his amendment. I am completely with him on what he and my hon. Friend the Member for Beverley and Holderness properly pointed out: eradication does not equal 10 per cent. A more honest long title for the Bill would refer to a substantial reduction or to moving UK child poverty levels to the best currently achievable in Europe, which is clearly what the Government seek to do. The Government are stuck with “eradication”—they have kept the word, which has entered the public consciousness, and moved the target. I have the brief from the End Child Poverty campaign, which talks about 1.3 million children who could be left in relative income poverty in 2010—the hon. Member for Northavon mentioned 1 million.

That said, I do not support the amendment for a number of reasons. I remember a debate in Westminster Hall on such issues some years ago, when my parliamentary neighbour, a Labour MP, the hon. Member for Luton, North (Kelvin Hopkins), said that it was a nonsense to talk about eradication and that if the United Kingdom had a target to achieve the best levels of child poverty, or the lowest levels that were achievable in Europe, that would be more honest and something that we could genuinely aim for.

The hon. Member for Northavon quoted some statistics. I shall quote a few, briefly, from the Government document, “Ending child poverty: making it happen”. At the moment the best level of child poverty in Europe is in Denmark, at 10 per cent., the next best being Finland on 11 per cent.—a large rise from the figures that the hon. Gentleman was talking about. Those figures were from 2007. If we go back two years to 2005, the best rate achieved anywhere in Europe was in Sweden, at a rate of 9 per cent. If we go back to 2001, we have two countries, Denmark and Sweden, achieving 7 per cent., which is a little nearer the hon. Gentleman’s 5 per cent. The plain facts of the matter are that in both 2005 and 2007, the best figure in Europe was around 9, 10 or 11 per cent.

I have my own personal philosophy in politics—one can be attacked both ways. One can be attacked for not being sufficiently ambitious and for being apparently satisfied with leaving 1.3 million children in poverty, which I do not believe a single member of the Committee would be. Alternatively, one can adopt another philosophy, which is my own as far as politics is concerned, to try to under-promise and over-deliver. I say to the hon. Member for Northavon that there are a number of reasons why politicians are held in low regard by members of the public, including the fact that sometimes our promises and aspirations are very big—perhaps a bit too big—and we fail in their delivery. I would rather take a more cautious approach. We would cut the current rate of 23 per cent. by more than half if we got to 10 per cent. That would not be good enough—of course I would like to go further. However, if we are putting something in law, there is merit in the Government’s approach of saying, “Let’s try to achieve the best levels that are currently achievable in Europe”, notwithstanding that every single member of the Committee would like to go further and make sure that no children are left in relative income poverty.

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

What we want in the Bill are targets for child poverty that are ambitious but realistic, and clause 2 defines the target that less than 10 per cent. of children will be living in relative low-income poverty.  Under the Bill, that target must be met by 2020, but it must be maintained beyond that date, rather than being a momentary effect in 2020. We want it to be sustained permanently, and schedule 2 sets out that aim. That is a very stretching target, but it is one that international evidence suggests can be achieved. The hon. Member for South-West Bedfordshire is right that 10 per cent. would be a dramatic improvement on what we have seen in the UK for a long time. It would be the lowest achieved in the UK since records began in 1961.

The comparison with other European countries is very telling. The hon. Member for Northavon was right about Finland achieving 5 per cent. in 1996, 1997 and 1998, but, as the hon. Member for South-West Bedfordshire pointed out, at the moment, the level of child poverty in Finland is above 10 per cent., so the evidence suggests that, while one can sometimes achieve 5 per cent., that figure has not been sustained over time and we need a target that can be sustained.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I hope that I can make an intervention that helps the Minister’s argument. We heard from the Institute for Fiscal Studies in the evidence sessions that its estimate on the basis of current policies was that by 2020, if nothing changed, the relative child poverty level would again be above 3 million. Does the Minister accept that projection?

Photo of Stephen Timms Stephen Timms Parliamentary Under-Secretary (Department for Business, Innovation and Skills) (Digital Britain) (also HM Treasury), Financial Secretary (HM Treasury) (also in the Department for Business, Innovation and Skills)

I have seen something along those lines from the IFS. It is certainly right that with the way the world economy has been in recent years, and probably will be for a while yet, the natural tendency if one does nothing is for the numbers to go up. Holding it steady requires action. Reducing it on the scale at which we are aiming requires substantial action, hence the importance of the Bill. Echoing what the hon. Member for South-West Bedfordshire said, and according to the most recent data that I have seen, Denmark is the only European country where child poverty is as low as 10 per cent. In other Scandinavian countries and elsewhere in Europe, it is higher.

Alongside the relative low-income target that we are discussing, there are targets for absolute low income, combined low income, material deprivation and persistent poverty. By setting four targets, we are recognising the need for a comprehensive and challenging definition of success and the need to measure progress and drive action against different facets of poverty. The duty to meet the targets is absolute, and the only way to change them would be to repeal the legislation.

The problem with the amendment is that it fails the credibility test, as the hon. Member for Northavon probably recognises. In questioning me in the evidence session a week ago, he expressed scepticism about the achievability of a target of 10 per cent. I do not know whether it was for rhetorical effect, but it was the view that he expressed. Given that scepticism, it is difficult to see how he supports making the target twice as demanding, as he does in his amendment.

We want a tough target—that is absolutely right—but not an impossible one, as that is useless. If we go into this with everyone saying that the target is impossible and that no country in Europe has ever managed to reach it, it will be a much less effective target than one we can argue is achievable. All of us want the legislation to work, and on that basis, I hope that the hon. Member will withdraw his amendment.

Photo of Steve Webb Steve Webb Shadow Secretary of State for Work and Pensions

I like to think that politics is the art of the possible. What people are despondent about regarding their politicians is the opposite of what the hon. Member for South-West Bedfordshire said: the paucity of vision; the fact that we do not dream dreams that are exciting and motivating; the fact that we are all a shade of vanilla; the suggestion that we should have cautious targets and not go too far, but rather over-deliver, under-promise and go to the electorate with a slightly cagey approach because they have been let down so often in the past.

What this sort of amendment would achieve is a bold vision. The Minister said that it has not been done before, which obviously people said when man had not been on the Moon. What about a bit of vision? What about a bit of boldness? Many people will find puzzling the idea that it is not possible to sustain “only” 650,000 children in poverty in this country, that it is an unattainable and unrealistic dream and that we cannot legislate on that basis. Just to accept that there must always be two thirds of a million children in poverty seems a bit disappointing, to say the least.

However, I do not sense a groundswell of support in the Committee, so I beg to ask leave to withdraw the amendment.

Amendment, by leave, withdrawn.

Clause 2 ordered to stand part of the Bill.