Child Poverty Bill

My Lords, I thank the noble Lord, Lord Freud, for his amendment, which deals with an interesting and relevant issue. I agree with the noble Earl, Lord Listowel, that early intervention and support for children in care and for families is important. I am sure that we will discuss this at greater length in due course in Committee, particularly as our Green Paper is due out soon. I think that the noble Lord’s party also produced a possibly equivalent publication yesterday. That approach is a key part of building the strategies and is not inconsistent with needing to address the issue of people who are persistently in poverty. The two must both be addressed. The amendment proposes that a second persistent poverty target is included in the Bill, and would introduce a corresponding duty on the Secretary of State to meet it. It would also require the progress against the new measure to be reported in the annual progress report. The proposed target measures the persistence of combined material deprivation and low income. The existing target measures the persistence of low income and is set out in Clause 5. We recognise the importance of including in the Bill a measure of persistent poverty. The length of time that a child is in poverty can have a significant detrimental impact on their experiences and life chances, so it is necessary to ensure that moves out of poverty are sustained and that children do not experience the negative consequences of persistent low income. We also believe that it is crucial for the targets to capture material deprivation, and the combined low income and material deprivation target will ensure a focus on those families that are experiencing the material effects of living in poverty. It recognises that some families face unusually high unavoidable costs, which mean that their living standards are poor even though their income does not fall under the relative low income poverty threshold. The material deprivation measure in Clause 3 complements the persistent poverty measure in Clause 5 because material deprivation is more likely to affect households which have been poor for a number of years than those households experiencing temporary low income, the point that the noble Lord, Lord Freud, effectively made. We appreciate the importance of having a range of targets that provide a comprehensive definition of success in eradicating child poverty and the need to measure progress and drive action against the many facets of poverty. That is why we have included four complementary poverty targets in the Bill, including a persistent poverty target and a material deprivation target. However, we believe that including further targets would run the risk of a lack of focus. In addition, I can say that we are not aware of any evidence to suggest that the proposed measure would add significantly to the comprehensive definition of poverty created by the four targets. Decile units aside, the target level proposed in the amendment essentially renders the new target unnecessary. The Bill already places a duty on the Secretary of State that requires fewer than 5 per cent of children to be in poverty according to the combined material deprivation and low income measure by 2020, and therefore it is extremely unlikely that this target could be met without meeting the proposed new target as well. So for the 5 per cent target to be met and the 10 per cent target not met would require the poverty rate on this measure to fall from 10 per cent or above to 5 per cent in the single year prior to 2020 and, even less likely, that all the children lifted out of poverty in that single year to have been poor on this measure for the previous three years. This would allow for the 10 per cent of children who have been poor during three of the previous four years, even though only 5 per cent were poor in 2020, the fact that the 5 per cent material deprivation target essentially requires that the proposed new target is met means that the amendment would add unnecessarily to the Bill. There is also a technical reason why the amendment could not be accepted in its current form, but obviously these things can be sorted out. Any measure of persistent material poverty would have to relate to calendar years rather than financial years, as stated in the amendment, because the only longitudinal survey available to measure income and material deprivation produces estimates for the calendar year. The noble Lord, Lord Kirkwood, asked whether it is feasible. The answer is yes, but other components would need to be added to the present longitudinal study in order for it to pick up material deprivation because you would be tracking the same families over the period; at the moment, material deprivation does not do that. Someone said that it has been recognised that child poverty cannot be understood merely through the measurement of income. Poverty is also the result of being deprived of those things in life that it would be assumed to be necessary in order to be a full member of contemporary society. These items are not just material objects but include social activities. They change over time as we experience technological development and social change, and any measure of material deprivation must recognise this. In addition, it needs to be recognised that parents and children will have different needs, and therefore an understanding of child poverty requires a measurement of both parental and child material deprivation. Let me also say that the persistent poverty measure in Clause 5 is not intended to be a measure of persistent material deprivation, rather it is a measure of persistent low income and has been included because evidence shows that being in a low-income household for a continuous period of time can, not surprisingly, adversely affect children’s outcomes. We know that children who live in persistent poverty are more likely than those who experience temporary poverty to be at risk of poor outcomes, such as being suspended or expelled from school or living in bad housing. We acknowledge that some children who experience persistent material deprivation will not be captured by the persistent low income measure in Clause 5. However, they will be captured by the material deprivation measure in Clause 3. The target for this measure is less than 5 per cent, revealing our commitment to tackling the material effects of poverty and low income. Unlike low income, material deprivation is unlikely to be a short-term situation. Material deprivation is measured according to which items from a selection of basic goods and services a household cannot afford. These goods and services tend to be accumulated over a number of years. Therefore, we would expect to see less distinction between persistent and temporary material deprivation than between persistent and temporary low income. This is one reason why we did not use material deprivation to define our persistent poverty measure. We have established methods of measuring material deprivation that show that it is an aspect of poverty that does not change rapidly. This is to be expected, as material deprivation will lag behind income falls, and moving out of material deprivation will lag behind income rises. We know of no evidence to suggest that the proposed measure would add significantly to the definition of poverty encapsulated by the four targets. The noble Lord, Lord Freud, referred to the IFS report. We will be quoting extensively throughout our proceedings from the substantial work that the IFS does. We recognise in particular that the surveys do not necessarily pick up self-employed income to the full. It is frequently the case that those at the bottom end of the distribution scale are shown not to be in hardship. There are issues here. The measure for relative low income has been fixed at 60 per cent of the median partly because it takes us above those problem areas. That said, I hope the noble Lord will accept that we are on the same page in trying to address the issues. However, this proposal would not add anything of significance to the Bill.