New Clause 1

Child Poverty Bill – in a Public Bill Committee at 5:00 pm on 3rd November 2009.

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2010 poverty target

‘(1) The Secretary of State must, before the end of the period of three months beginning with the day on which the Act is passed, publish and lay before Parliament a report setting out an assessment of progress made towards meeting the 2010 target.

(2) The 2010 target is that in the financial year beginning with 1 April 2010, fewer than 1.7 million children live in households that fall within the relevant income group as defined by section 2(2).’.—(Mr. Gauke.)

Brought up, and read the First time.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I beg to move, That the clause be read a Second time.

Our debates on the Bill have generally, I hope, been constructively conducted, but there is no doubt that there is a view of the Bill that could be described as cynical and sceptical, and which has been advocated by my hon. Friend the Member for Beverley and Holderness on one or two occasions. That view is that the Bill is essentially distraction legislation. At the very point when the Government are about to fail to meet their 2010 target, which has been in place since the late 1990s, they have come up with a new idea—a Bill to enshrine a target for 2020. One can imagine someone sitting around somewhere in the Treasury looking at forthcoming issues, spotting a bit of a problem with the 2010 child poverty target and saying, “What are we going to do about it? We’ll come up with a Bill enshrining a target for 2020 and nobody will particularly mind, because we have our eyes on the slightly more distant horizon and all will be well”. In other words, it is a case of, “Do not judge us on what we deliver, judge us on our intentions,” which, if one wanted to make a partisan point, has often been the approach of this Government.

New clause 1 intends to return us to the here and now—the nitty-gritty of delivery on previously announced targets to ensure that they do not go by the wayside and that the distraction legislation approach does not work. The Bill enshrines something more demanding than the 2010 target. As the Financial Secretary said:

“The arrangement that the Bill sets out is significantly more demanding for the coming decade than the arrangements that have been in place over the past 10 years.”——[Official Report, Child Poverty Public Bill Committee, 20 October 2009; c. 8, Q17.]

That is all very well; we are supportive of the objective of the Bill. However, we should not forget the 2010 target and I hope the Government do not give up on it. The Minister, in his evidence, said that they have certainly not given up on it. In a moment, I will set out in further detail why this new clause would be very constructive.

Steve Webbrose—

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

I will speak at length while the hon. Gentleman has a drink. The base line figure is 3.1 million, I think, for the before-housing-costs measure in 1998-99, so getting halfway there would be 1.55 million, if going halfway to zero. He has a figure of 1.7 million. Is that because he is going only halfway to 10 per cent.? I am not quite sure why a figure of 1.7 million has been chosen.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

That is the basis of the number, as I understand it. The hon. Gentleman is now looking at me sceptically. On the basis of the shortfall that the Government refer to, one sees a figure of 600,000 and at the moment we are on 2.3 million, so I think that that was where we got the 1.7 million number.

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 might be able to shed some light on this. The base figure is 3.4 million children below the poverty line, so 50 per cent. would be 1.7 million. The IFS estimate was that we would get to 1.1 million, hence the 600,000 figure.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I am grateful to the Minister for providing that clarification. Having made the political knockabout point on why new clause 1 would be helpful to prevent the Government—

Mr. Stuartrose—

Photo of David Gauke David Gauke Shadow Minister (Treasury)

But before I move on, I give way to my hon. Friend.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

My hon. Friend takes the words out of my mouth. Political knockabout is holding this Government to account, ensuring that cynicism is not the driving purpose behind a piece of legislation dealing with such an important issue. The new clause is a perfect opportunity for the Government to show that their intentions are not cynical or there to distract, but serious and proper. If they accept the new clause, they will show that they are prepared to be held to account for 2010, as well as for their far away promises.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

My hon. Friend anticipates and exactly explains my argument. New clause 1 is constructive. The purpose of the Bill, described by the Secretary of State for Work and Pensions, is to hold the Government’s feet to the fire. That is a good expression, but why should we not hold the Government’s feet to the fire with regard to the 2010 target? We also hear the argument that the Bill forces Governments to have strategies and reports, and to focus their mind. I think that argument is persuasive, but why not start that process sooner rather than later? Why not have some analysis in a proper report to Parliament on what has worked? Why has there been progress in reducing the number of children in relative poverty living in workless households, but not in working families, as pointed out by the Institute for Public Policy Research? How much of the progress has been because of income transfers, or other factors such as education, child care, family breakdown and all the various points that we have debated in Committee? Why did progress stall a couple of years ago? For two years child poverty numbers went up and then stayed static.

All of that could be addressed in a report that could provide useful analysis and guidance for future actions. We could have a better appreciation of the significance of the recession—a point that has come up once or twice during our proceedings. The evidence from the likes of the Institute for Fiscal Studies is that the recession does not have a straightforward negative impact on child poverty, although one might be forgiven for thinking that it does, listening to some of the things that Ministers have said—in Department for Work and Pensions questions on 29 June in fact.

I asked the Minister a question about child poverty targets and she replied:

“Everyone, even the hon. Gentleman, must understand that in the current economic circumstances meeting the 2010 target is a real challenge.”—[Official Report, 29 June 2009; Vol. 495, c. 10.]

We could infer from that that the current economic circumstances—the recession—have driven child poverty up, but we know that not to be the case. Child poverty is a relative measure and, because median incomes tend to be hit harder by recession than those who are on benefits, by and large there is a small negative effect. There is an impact on the public finances and, to be fair, in the course of the evidence session the Financial Secretary made it clear that that was the concern. It is worth bearing in mind that there is a choice that is often followed. I refer the Committee to the evidence given by Mike Brewer:

“The Government had a choice, particularly at the time of the fiscal stimulus. They had a choice between where to spend the money and they chose, for example, to keep the higher rate of personal allowance, which they introduced under a personal, temporary measure, rather than spend it on tax credits.”

I mention that because the Government might have acted differently if they had had to submit a report to Parliament in the near future explaining the progress towards the 2010 target. Perhaps a bit of hauling of the feet to the fire in the immediate future might change policy decisions on the upcoming public borrowing requirement.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

Let me give a further quotation from Mike Brewer:

“The Government could have spent some” of that money

“on tax credits...That would have made a severe dent in child poverty, and I might well be sitting here now telling you that the Government were on track to hit their child poverty target.”——[Official Report, Child Poverty Public Bill Committee, 22 October 2009; c. 118, Q234.]

That could have been done, and the Government might have had a different approach to the 2010 target if there had been a report.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

Does my hon. Friend wonder, as I do, whether the 10p tax measure, which penalised so many low earners, would have been brought in by the Government before the election that never was if Ministers had known that they would have to produce a report showing the impacts? My hon. Friend will be aware that there are still losers from that 10p tax fiasco.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I am grateful to my hon. Friend. It would be necessary to look closely at the data to see if the remaining losers were families with children.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I was expecting the hon. Member for Northavon to intervene but, failing him, I certainly give way to the hon. Lady.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

The hon. Gentleman should look at what happened with the 10p tax issue. I felt strongly about it, but only in relation to women between the ages of 60 and 64, for whom there has never been any compensation. If the hon. Gentleman looks closely at what happened, families with children, for the most part, were big gainers. I have looked up the figures for my constituency. There were very large amounts of money a week, not just 10p on the tax. The hon. Gentleman is quite wrong about the impact that that measure had on families with children, albeit that it impacted unfairly on other groups, particularly women.

Photo of David Gauke David Gauke Shadow Minister (Treasury) 5:15 pm, 3rd November 2009

I am grateful for that intervention. I am not sure that I am wrong because I was not particularly making that point. Perhaps she is saying that my hon. Friend the Member for Beverley and Holderness is wrong.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

My hon. Friend can defend himself. In my experience he rarely is wrong. I am grateful for that intervention.

Kate Green, from the Child Poverty Action Group, made the point about the 2010 target when she said:

“However, there is clearly an important issue for us and for Parliament in terms of the credibility of the Bill and of making sure that as much is done as early as possible to continue progress towards the 2010 target—not least because children cannot wait until 2020 to see the quality of their lives improve.” [Official Report, Child Poverty Public Bill Committee, 20 October 2009; c. 31, Q75.]

Let us not forget the 2010 target. It would help to maintain credibility in that target, ensure that lessons have been learned from the successes and failures of the Government’s strategy over the past 10 years, and gain a better understanding of what needs to be done, if the new clause were accepted. It would strengthen the Bill. As my hon. Friend the Member for Beverley and Holderness rightly says, it would undermine those who consider that there is a cynical element to the introduction of the Bill.

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

I will be brief. A report on progress on the 2010 target would be welcome. I should explain my earlier intervention. When the 1998-99 baseline figures were originally produced they were 3.1 million. The Government then changed to a different equivalence scale which took them to 3.3 million. Then Northern Ireland was brought in which takes us to 3.4 million. That explains my confusion. I apologise for that. I am grateful to the hon. Member for South-West Hertfordshire for not pointing it out at the time. However, it raises an intriguing point about what constitutes progress towards a target that we used to think was zero but now turns out to be 10 per cent.

I am about to try to get the Government off the hook slightly: if we make the 2010 goal attainable, they might try to attain it. If we start with 3.4 million and we are  trying to get, not to zero in 2020, but to 1.2 million children, then half way is not 1.7 million, it is 2.3 million. That would be half way to the target, not half way to abolition because they have given up on abolition. The current figure is not 2.3 million; it is 2.9 million and has been 2.9 million for the last five years. We have made no progress on child poverty in the last five years. So even getting from 2.9 million to 2.3 million would be a real achievement in those three years.

Perhaps it is naive of me to suggest this, but if the Chancellor knew that the 2010 goal was 2.3 million, not 1.7 million, he might think that it was feasible and he might take measures in the pre-Budget statement, even at this time. Could the Financial Secretary mention to the Chancellor that, were he to take measures that would take a projected 600,000 children out of poverty by 2010, we would be prepared to regard that as reaching the 2010 target? I am happy to place that on the record. It raises a serious question about what constitutes progress on the Bill. We thought that we were heading for zero. Now we know that we are only heading for 10 per cent., so it is not quite as unattainable as we originally thought.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

This is an honest inquiry. I am aware that Liberal Democrat Members rarely converse about these matters. Has he cleared that statement on the record with the hon. Member for Twickenham (Dr. Cable), as I would hate him to be taken by surprise?

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

I shall do so during the imminent Division in the House. I cannot see any reason why we would not want a report on progress towards the 2010 target. We might have an argument about what the 2010 target is, but a clause to that effect in the Bill would be entirely welcome, regardless of whether it is in these precise words or at this point in our deliberations. A report would be entirely welcome.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I am grateful for the opportunity to speak on the new clause because it gets to the heart of some of what the Bill is about. I understand that there is some cynicism among Opposition Members, but I am surprised at what the hon. Member for South-West Hertfordshire has been saying. It seems to go something like this: “The Government, in order to distract attention from what they’re doing and because they’re worried that they might lose the election next spring, are trying to pass legislation that will tie us lot into something that we don’t particularly want to do. Therefore, we’re trying to push the ball back and talk about what happens in 2010.”

Were the Government doing that, it would be unworthy. It would also be unworthy to use the Bill as a political ploy or dividing line. I do not think that it is. I think that the vast mass of organisations that have given us evidence are concerned about having a straightforward approach to dealing with child poverty. To deal with the point made by the hon. Member for Northavon, the reason why it is child poverty and not everybody else’s, is that all the statistics show, as he knows, that children are the most likely people in this country to be in poverty. They can do nothing about it because they are dependants. That is also the point of defining the age range, although I agree that over the next three, four or five years,  attitudes towards 16 to 18-year-olds will change dramatically. We may well have to go back and ask what a child is, because our understanding of what young people between 16 and 18 should be doing is changing.

On the point about the numbers, the hon. Member for South-West Hertfordshire knows, because he and I have sat on the Treasury Committee together and have been through the figures, that the Government have always been accountable for the figures. There has always been the opportunity to press. There have always been criticisms of the fact that the 2010 target is challenging, that there were hiccups at certain points and that it depends on the definition of poverty. One of the important factors in the Bill is that we are not just looking at relative and absolute poverty; it is about material deprivation as well, which is stunningly important.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

As the hon. Lady says, the Government have always published the figures and been accountable, the Treasury Committee asks questions about them and so on. However, the view that the Government have taken and that we have supported is that a statutory framework would add some value. The point of new clause 1 is to include within that statutory framework something to do with the 2010 target.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

The hon. Gentleman has conceded that he was wrong to be cynical, which I certainly welcome. In the years to come, I think that issues of material deprivation will be more important than ever. It was interesting that when Save the Children gave a presentation on the subject, the issue that the young people brought up time and time again was going on holiday. There was a time some years ago, when I was a newspaper reporter, when if one talked about a family being in poverty, someone would say, “But do you know they’ve got a colour television set? They can’t be poor.” Now it seems that people say, “Well, they can’t be poor, they go on holiday.” Actually, it is right that Parliament should assert that children and families are entitled to go on holiday and have friends round for tea. It is expected that children should have their own bedroom and other such things. I hope that it will also be possible to introduce measures about living space, which I discussed with my hon. Friends the other night.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

The whole purpose of the Bill is to put child poverty targets on to a statutory footing to ensure that Governments take them seriously and deliver them. The purpose of the amendment is to ensure that the 2010 target—the immediate one—is not forgotten. I therefore hope that the hon. Lady will support the amendment or tell us now why putting the 2010 target in the Bill is harmful.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I will come to that. I agree that there has to be transparency. It is also important that we are able to measure properly what is happening and follow through the statistics. One of the most important measures in tackling child poverty—the only such measure in the Budget or the previous year’s PBR—is the change in housing benefit rules, which has come into force while the Bill has been making its way through the House. The rules were to be changed around October-November time so that more child benefits could be retained rather than double-counted and clawed back. That was worth—the  hon. Member for South-West Hertfordshire should remember this, because he was on the Treasury Committee with me and we heard this together—either £250 million or £350 million, which was calculated to get a certain number of children out of poverty. I am sure that, as with the similar change in housing benefits for pensioners, local authorities will have problems, but I suspect that the change in housing benefit rules will ultimately lead to a change in the numbers. That will probably happen next spring.

The hon. Member for South-West Hertfordshire asked why it is necessary to enshrine the measure in legislation, and we have discussed part 2 of the Bill. It is important to recognise that there have been efforts to address the issue and to get all the other agencies involved without a statutory framework. That was done through the new deal for communities programme, which was introduced in 2000 or 2001. The local strategic partnerships were also set up so that all the agencies could come together, starting with the poorest 25 per cent. of local authorities, to bend their purchasing power to tackle poverty. While that had some effect, it did not work particularly well, so it is important to have legislation stating that all the agencies should work together to tackle child poverty. There should be a statutory framework, not only for the Government target, but also for local agencies and authorities to bend their purchasing power.

The next issue is why we do not tack on to the Bill a provision that requires the local agencies and authorities to say what they are doing in three months’ time. The Government have been open about the difficulties that they face in meeting next year’s target. No one is in any doubt about that: the Work and Pensions Committee has probably looked at it, the Treasury Committee has certainly looked at it and there have been questions in the House. We all know that there are difficulties.

The issue could have been dramatically avoided if, instead of taking 2.5 per cent. off VAT, we had spent the money and tacked it on to tax credits. The hon. Gentleman might recall that that was one of the things that I proposed on the Treasury Committee, but the other members were not startlingly enthusiastic about it. The cost of the VAT cut was £2.6 billion, which was the exact amount needed to deal with child poverty.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I recall that it was £2.6 billion, but I will look again at the figures. I have the disadvantage of not having inspiration coming to me via pieces of paper while I speak. As I recall—I will look at the papers that we had at the time—

Photo of David Gauke David Gauke Shadow Minister (Treasury) 5:30 pm, 3rd November 2009

I think that I can help the hon. Lady, although I was off the Treasury Committee by the time that this happened. The VAT cut was worth £12 billion. The increase in the personal allowance, which was made permanent, was worth £2.6 billion, which could have been used for increasing tax credits.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

I thank the hon. Gentleman. I recall that, at the time, we could have said, “Instead of tacking it on, we can increase the tax credits and that will, at a stroke, deal with the whole problem of child poverty.”  However, there was not a great mass of people jumping up and down saying, “That’s a really clever idea.” We need to recognise that, although we all agree with the end of child poverty, we are not always so happy about voting for the means to do it, particularly when times and priorities are tight.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

The hon. Lady is making a persuasive case for new clause 1. Does she think that, had the new clause included a statutory obligation to put the report in place, that may have increased her leverage and influence in the Committee and that she might have won that argument?

Photo of Sally Keeble Sally Keeble Labour, Northampton North

No, I do not think that at all. That was some time ago, when circumstances were different and we were looking at different options. To make the first aim of the Bill, which is effectively being passed in the new year, the production of a report in three months’ time is not quite the point. The Bill is supposed to end child poverty. However, I understand and share Committee members’ concerns. It is a bit like the example of full employment with unemployment still at 5 per cent., but in this case, ending child poverty means that the figure is still 10 per cent.

In passing legislation that has some challenging targets and a lot of important measures that relate to changing the way that people work and that considers the work of a range of local agencies to find ways to co-operate and tackle a problem that has defied Governments for a good period, it is not constructive to say that a report must be produced in three months.

Photo of Graham Stuart Graham Stuart Conservative, Beverley and Holderness

May I point out that quite the opposite is true? There could be nothing better than a report on what progress the Government have made, including what has worked and what has not, to create the platform from which, based on a realistic assessment of past efforts, we can move towards the diminution, if not the eradication, of poverty among those who technically qualify as children under the Minister’s aim. Surely, it is the right thing to do: it is focused on the now and on understanding what has gone on before, and it informs the future. The hon. Lady should support the amendment, because it is absolutely in line with what she has said.

Photo of Sally Keeble Sally Keeble Labour, Northampton North

It is actually a new clause, not an amendment. We have had reports on what has happened with the 2010 targets. We have had reports on what works and on what is projected to happen. I hope that we will have some more measures in the autumn statement, which we will get soon, that will help to deal with some of the problems that we face tackling child poverty as we come out of the recession. It is not very impressive to suggest passing legislation that will at first produce a report, knowing about all the work that has gone into it and knowing what issues and challenges are involved. That is more a demonstration of Opposition petulance than of having a concerted commitment to taking the powers in the legislation, which will be difficult to implement. It will be challenging and will call on a whole range of agencies to look again at some of their work and priorities, and it will take some time for the effects to work through.

The focus should be on getting the legislation and workings in place, and after a reasonable time, we can come back, see how the legislation has worked and ask, “Has this way of getting local authorities to work together and look at these measures worked?” We also need to ask how we are getting on with tackling not only absolute and relative poverty, but material deprivation. There are some real challenges, including in relation to housing.

I very much hope that the result of the Bill will be to reduce child poverty and that how we regard the issue will change. I also hope that the legislation will make us much more intolerant of some of the material deprivation that affects the lives of poor children, as well as making us intolerant of the absolute and relative poverty in which, unfortunately, too many children in this country still live.

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 am grateful to my hon. Friend for making some important points. The hon. Member for South-West Hertfordshire made the point that, on the whole, there has been a constructive tone to these debates. He is right, and I am glad that that has been the general tone of the Committee. The arguments presented have not been overstated—there has been the odd exception, but on the whole that has been true. I welcome such an approach.

As we have heard, the new clause would require the Secretary of State to publish a report on progress towards reducing child poverty by half by 2010. I suggest to the hon. Gentleman that the aim of such a report is, in fact, already covered in the Bill, because clause 8 will require the Secretary of State to publish a strategy that sets out the measures that will be taken to meet the child poverty targets in clauses 2 to 5. To ensure that the Secretary of State reports on the progress on tackling child poverty, clause 13 will require the Secretary of State to produce and lay before Parliament an annual progress report.

Through that combination, what the hon. Gentleman is endeavouring to secure with the new clause will be delivered, although it is true that it will happen a little later—I suppose that three months after the Bill’s Royal Assent is likely roughly to take us up to summer next year. The process that I am describing will take a little bit longer. He said that his aim is to keep feet to the fire regarding the 2010 target, but he does not need to worry too much on that score. Feet will be kept to the fire on that, as we have seen and, no doubt, will continue to see.

The hon. Member for Northavon suggested that, according to one interpretation, we would actually hit the 2010 target. His former colleagues in the Institute for Fiscal Studies have suggested that, on the basis of the measures that have been announced, child poverty is likely to reduce by 1.1 million by the end of the financial year 2010-11. On the calculations that the hon. Gentleman set out, that would be halfway towards eradication as defined in the Bill—it is kind of the Liberal Democrat party to laud the Government’s success.

The other way that we could look at the matter is in relation to the absolute poverty target, which has already been halved. We could say that we hit the target on that basis, but many people would accuse us of shifting the goalposts rather radically if we did so. I think that it has always been understood that the 2010 target meant a  reduction to 1.7 million from 3.4 million, or that it related to the number living below the relative poverty line.

Nevertheless, I suggest to the hon. Member for South-West Hertfordshire that, in effect, what he wants to happen will happen in due course under the arrangements already in the Bill. Having an extra report next summer is not really going to help. I therefore hope that the hon. Gentleman will withdraw the motion.

Photo of David Gauke David Gauke Shadow Minister (Treasury)

I am grateful to the Financial Secretary for his comments. However, the strategy and reports contained in the Bill relate specifically to the 2010 target. On that basis, new clause 1 would add something to the Bill. I shall therefore press for a Division.

Question put, That the clause be read a Second time.

The Committee divided: Ayes 7, Noes 7.

Division number 11 Nimrod Review — Statement — New Clause 1

Aye: 8 MPs

No: 7 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly agreed to.

New clause 1 read a Second time.

Question put, That the clause be added to the Bill.

The Committee divided: Ayes 7, Noes 7.

Division number 12 Nimrod Review — Statement — New Clause 1

Aye: 7 MPs

No: 8 MPs

Ayes: A-Z by last name

Nos: A-Z by last name

Question accordingly negatived.