Child Poverty Bill

My Lords, long-term poverty and the material deprivations that can result can reinforce the negative impact of low income on childhood well-being and life chances. The four targets in the Bill 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 income, the length of time experiencing low income and the lived experience of poverty all matter. I know that the noble Lord, Lord Freud, in particular is concerned that the Government will be focusing just on moving families closest to the poverty threshold over it, but we are ensuring that that is clearly not the case by having the full range of targets. Moving families from 58 per cent to 61 per cent of median income would not be sufficient to meet the combined low income and material deprivation target, nor the persistent poverty target. The noble Lord hinted at, and it is worth outlining, the issues with data corresponding to those with the very lowest incomes, such as those below the 40 per cent of median income line. They are acknowledged to have a higher degree of uncertainty and error. Some types of household with very low income recorded on the survey include the following issues. First, there is underrecording of very fragmented incomes. Secondly, some households will have transitional periods of low income, being between—possibly well paid—jobs at the precise time of survey interview or being self-employed, where incomes can vary greatly from year to year, as the noble Lord acknowledged. Thirdly, there will also be some households that are drawing on savings to cope with, perhaps, a longer period of minimal incomes. Lastly, there will be some households that genuinely have to cope on very low incomes, and perhaps get into debt to maintain levels of expenditure. Unusual households where incomes are not a good measure of material living standards make up a much lower proportion of households below 50 per cent or 60 per cent of median than households below 40 per cent of median income. This is therefore particularly unreliable as a measure of poverty. Analysis by the Institute for Fiscal Studies, no less, has confirmed this, pointing to the fact that many of those with incomes below 40 per cent of median are not those with the highest levels of deprivation. It is for this reason that households with incomes below 50 per cent and 60 per cent of median are used in measures of poverty, including in households of below average income. This is in line with international best practice. In summary, the targets already present a range of different measures of poverty and, as such, ensure that we do not focus on just getting families over the line. There are problems associated with the measurement of the very lowest incomes. Therefore, I hope that the noble Lord will not press this amendment.