Child Poverty Bill

My Lords, this is pretty obviously another probing amendment. It raises the issue of why the Bill fixes on a figure of 60 per cent of median income as the target that defines the limit of poverty. I quote from the Policy Exchange document, Poverty of Ambition: ""So why choose 60% of median income as the cut-off? The answer is that there is no scientific reason, except that most academics and policy experts are happy to accept such a definition. They appear to have settled on 60% because it produces the sorts of poverty numbers they regard as plausible"." It would therefore not be acceptable for the Minister to respond to this amendment by saying that many academics think that 60 per cent is the right answer. I am very concerned that the figure has been developed as a classic example of groupthink, which has caused more tragedies in history than virtually anything else—from the Trojans thinking it smart to take wooden horses left by Greeks into their city, to people around No. 10 deciding that Saddam Hussein must have weapons of mass destruction. I might point out that the 60 per cent figure is also suspiciously round. I have been a banker for many years, and when someone comes up to me with a round figure of 60 per cent, I look at it with great suspicion. If it had some kind of scientific basis, it would inevitably come with a decimal point attached. Does it really make a difference to a family to move them, for instance, from 58 per cent of median income to 60 or 61 per cent of median income, especially when the target process will encourage exactly that kind of manipulation? We may have seen such manipulation in recent years. We will discuss the iron triangle later, because I have tabled another amendment. However, I will warm everyone up to the topic by arguing that we should not set the 60 per cent figure in isolation. The amount that we pay people in income transfers has an obvious impact on their incentive to work, depending on the marginal withdrawal rates that we establish. If we have withdrawal rates that motivate people back into economic activity, we have to worry about the cut-off point at which people start contributing to the Exchequer, and about the support level. This Government have not yet done the work of linking the three elements of the iron triangle. They may discover that when they do—I have a feeling that they will look at this pretty deeply—there is some serious modelling involved, and that the 60 per cent figure may not be the optimal one. In other words, if they fixed a higher or lower figure, it might encourage more people into the workplace, and overall poverty rates would be lower—even at the arbitrary 60 per cent figure, which is not based on anything scientific or on minimum income standards. Jonathan Bradshaw, at the University of York, did us all a service in his paper that showed how arbitrary the figures that we are talking about have been. I would welcome hearing from the Minister either why this is the best possible figure, or why the Government may have to do more work to establish that. I beg to move.