Child Poverty Bill

It was an extensive consultation. Somewhere in my pile I have a copy of the government response to it. There was an interim and then a final response. That included those whom we would regard as the usual suspects in all this. More widely it included academics and specialists; I am getting a nod from the Box. I should be happy to share that information more extensively with the noble Baroness. It was because of the low-income and material deprivation measure that we decided to move and focus on before housing costs. Later we will perhaps delve more deeply into material deprivation measures, so I shall not speak more extensively on that at the moment. The noble Baroness explained what they are meant to capture. The noble Baroness asked why housing benefit is included as income in the before housing costs measure of poverty. We believe that it is right that housing benefit is included in the before housing costs income calculation. Households in receipt of housing benefit pay their housing costs using their total income, including housing benefits. Households that do not receive housing benefit will need to pay their housing costs through their total income. Including housing benefit enables like-for-like comparisons between the incomes with which households pay housing costs and meet their other needs. To deduct housing benefit from those that receive it would underestimate the total income with which they could meet their housing costs and other needs. The noble Lord, Lord Freud, and the noble Earl, Lord Listowel, talked about the lack of affordable housing. For decades, there has been a mismatch between supply and demand for new homes, with housing supply failing to keep up with our aspiring and ageing population. This has led to significant problems of affordability, particularly for those seeking to buy their first home. Addressing affordability and tackling poor housing are a key priority of the Government. We have made substantial progress over the past years, but, as I said, there is more to do. Over the years 2009-11, we will invest around £7.5 billion in affordable housing. With this investment, we are expecting to deliver 112,000 affordable homes. The Government’s ambition is to deliver 240,000 additional homes per year by 2012. In 2007-08 the number of housing completions was at its highest level for about 30 years, although, obviously, current market conditions have made that somewhat difficult to repeat immediately. As for the additional costs potentially associated with after housing costs targets, in the impact assessment to the Bill the Institute for Fiscal Studies estimated that eradicating child poverty could cost up to £19 billion in 2020 on a before housing costs basis, if this were achieved solely through increased tax credits and benefits. Obviously, this is not the approach supported by the Bill. The Bill is specifically designed to ensure that the Government use a wide range of interventions via public services, with financial support being only one of those interventions. This will be a more cost-effective, sustainable and efficient approach. However, there is uncertainty in quantifying these costs. Because there is a significantly greater number of children—more than 1 million would need to be lifted out of poverty on an after housing cost basis—we can be confident that, if achieved solely through tax credits and benefits, the costs would be significantly greater than £19 billion. Currently, the level of relative poverty after housing costs is 31 per cent, or 4 million children. Meeting the target would require a reduction to less than 1.3 million. As was noted at Second Reading by several noble Lords, the existing targets in the Bill are already extremely ambitious. The Pre-Budget Report sets out the five principles of our child poverty strategy: that work is the most sustainable route out of poverty; that families and family life should be supported; that early intervention is necessary to break the cycle—