Child Poverty Bill

My Lords, the amendment is driving at whether the method of equivalising households selected here is the best one. The decision was taken to use the modified OECD scale in 2006, which was a move from the McClements scale for measuring poverty. The McClements scale worked by giving the first adult a weight of 61 per cent, the second 39 per cent and then further weights to additional household members, ranging from 9 per cent for an infant to 42 per cent for an additional adult. The modified OECD scale is much cruder. It assigns a value of 100 per cent to the household head, 50 per cent to each additional adult and 30 per cent to each child, regardless of age. According to Policy Exchange, the extra weighting of very young childdren in the modified OECD scale pushed up the child poverty rate by 100,000 children when the switch was made, according to the report Poverty of Ambition. We here face a conflict between targeting and comparability. The modified scale was chosen because it made our figures comparable with those of other EU states. However, targeting is different to comparing. If a scale is wrong and is a target, we will end up spending money and taking initiatives which are not targeted at the right people. If this was the case, we would be better off in using a scale which was a better match with the real world for the sake of our targets, and providing another set of figures for comparative purposes. It would, after all, be matter of a few strokes of the keyboard to adjust the figures to produce them in both ways. The evidence that we are using the wrong equivalence scale is pretty strong. I am indebted to the excellent paper by Jonathan Bradshaw of the University of York’s Social Policy Research Unit for focusing the concern. He points out that the scale used for benefits and tax credits originated with the Rowntree poverty standard in 1936, as adopted in the Beveridge report and altered by successive ad hoc up-ratings. They have never, according to his paper been rebased against a minimum income standard, or any other evidence or understanding of what families need. The McClements scale was based was based on an econometric analysis of household expenditure data from 1978 onwards. However the OECD scale was derived as a consensus of scales used by national Governments. This, according to Bradshaw, ""had no basis in science"." He continues: ""For reasons that remain obscure, the Statistical Office and the European Union (Eurostat) decided that their original scale was too generous to children and modified it"." That is the ugly history of equivalence. Bradshaw’s paper compares a minimum living standard with the modified OECD equivalence scale and concludes that the scale is, ""underestimating the relative needs of singles of working age and families with children. It therefore underestimates their poverty rates and overestimates the poverty rates of childless couples and single and couple pensioners. In fact the original OECD scale was a closer fit with MIS"—" minimum income standards. The amendment seeks to make sure that we do not build in expensive distortions to our support for the poor simply to save a small amount of effort by our statisticians when they supply data that can be compared with that of other countries. I beg to move.