Child Poverty Bill

My Lords, I thank the noble Lord, Lord Freud, for giving me the opportunity to explain government policy on this issue, but first I wish to pick up the comments of the noble Earl, Lord Listowel. He made a fascinating suggestion. On too many occasions we get wrapped up in the Westminster bubble. We have connections with the outside world but we can become remote from what is happening at the sharp end. Although there are lots of influences at play when we develop legislation, including consultation and engagement with stakeholders and the people on the front line, I readily accept that the more that we who have the privilege of sitting here and in the other place understand the experiences of suffering people who live in poverty and whose interests we should be looking after, the better it will be. The noble Earl also mentioned industry. This issue is not limited to parliamentarians and benefits from the engagement of business. Indeed, a lot of good work goes on in that regard. On the issue of strategies, engagement at local level looking at needs assessment on the part of local strategic partnerships and partners is another way to ensure fuller engagement. One could argue that you do not have to be poor to want to eliminate poverty, but understanding its ramifications and seeing that up close is hugely important. I thank the noble Earl for his suggestion in that regard. I say to the noble Earl that once we reach the target, Schedule 2 of the Bill makes it clear that the level, or no less than that, has to be maintained beyond 2010. I remind noble Lords that the relative low income target refers to, ""less than 10% of children"," so it is not a case of reaching the 10 per cent or just under the 10 per cent. That is no excuse for stopping there. However, as I shall go on to explain, reaching that target is a challenge. As we have discussed, the Bill contains four child poverty targets to be met by 2020. The relative low income target is only one of the targets and progress has to be made against all of them. HBAI is key dataset for the analysis of income poverty and is treated as such by both researchers and the Government. The noble Lord, Lord Freud, has on several occasions implicitly challenged the data and their robustness. We shall have a debate on that on a subsequent amendment. Any data based on surveys have their qualifications, but questioning the nature and robustness of the data on which these targets are built is not an excuse to cast them aside, even though there are issues that need to be understood around them. The importance of HBAI comes from the fact that the household income data it contains have been extensively reviewed and processed to ensure that they are properly comparable between households. The survey used to calculate these statistics, the Family Resources Survey, is the most comprehensive survey of incomes and income sources in the UK, with an extensive suite of validation procedures to ensure that the data are of high quality. The data play a vital role in the analysis of patterns of benefit receipt, and are used for policy evaluation and benefit forecasting. Every year around 25,000 households across the country are surveyed—an annual sample larger than almost any other UK social survey. However, the Government’s low-income statistics are based on a survey and, as with anything based on a survey, are subject to a degree of uncertainty. It is for that reason that it is necessary to round the statistics to the nearest 100,000 children or percentage point. In practice, a change in the target level from 10 per cent to 9.85 per cent of children would not be measurable to that degree of accuracy. We need a whole-number target, which is why we have chosen less than 10 per cent—I accept that this was a probing amendment to establish why we chose that figure. To measure levels of low income to an accuracy of more than the nearest percentage point would involve a significant boost of the sample size and, obviously, of the costs of the survey. There will always be criticism that households whose income is just over the percentage of median income set in the target will not benefit from the legislation, and that this is arbitrary. However, the Bill contains four child poverty targets to be met by 2020, and these have been chosen on the basis of extensive consultation. In establishing the targets, we are recognising the need for a comprehensive definition of success that captures the many facets of poverty, long-term poverty and material deprivation that can reinforce the negative impact of low income on childhood well-being and life chances. Targets ensure that policy will have to tackle poor living standards and persistent poverty, as well as raising incomes at a given point in time. Together, the targets reflect the reality that the length of time experiencing low income, and the lived experience of poverty, matter. A relative child poverty level of below 10 per cent would be the lowest in this country since at least 1961. It would more than reverse the doubling of relative child poverty between 1979 and 1998-99. As I said, by setting a range of targets in the legislation, we are confident that achieving all the targets will make a real and lasting difference to the children of the UK. Reducing child poverty rates to those consistent with other modern European economies with historically low levels of child poverty, such as Finland, Sweden and Denmark, would be a major achievement. The best child poverty rate that has ever been achieved in Europe is 5 per cent, but the figure has not been sustained. Using data from 2007, the best in Europe would equate to a level of 10 per cent. We propose to reduce the rate to less than 10 per cent, alongside extremely challenging targets to reduce the number of children in households suffering from persistent poverty, low income, material deprivation and absolute low income. The Government believe that it would not be possible to define eradication as zero children in relative income poverty. However, a rate of less than 10 per cent is an ambitious but technically feasible goal for the sustained eradication of child poverty that would put the UK’s child poverty rate firmly among the best in Europe. There were technical issues with the survey used to measure poverty that meant that some children in families with short-term low income, or whose incomes were not recorded accurately in the survey—the noble Lord has referred to that—will be classed as in poverty even though they do not have low-income standards. I hope that that has explained the 10 per cent figure. If achieved, it would put us in line with the best in Europe, and to focus on it along with the other three would enable us to make a real difference to children who are in poverty today.