Child Poverty Bill

My Lords, I make no apology for introducing this amendment again on Report. All the other amendments in the group are consequential on the first one. Amendment 2 would add the after housing costs as a fifth target in Clause 1 to the measure of child poverty. The relative low income in a household would be calculated by capturing both the before and after housing costs. This would give a much truer picture throughout the country of the disposable income of a qualifying family. As I have said before, both these sets of figures are collected by the households below average income surveys. The amendment does not mean that extra statistics will have to be collected. Our contention is that using the before housing costs figure masks a lot of child poverty; a much more accurate picture is achieved by using the after housing costs figure. This is illustrated by the number of children recorded as living in poverty: 2.9 million in the before housing costs figure, rising to 4 million in the after housing costs figure. We had a long debate in Committee encompassing housing itself, how poor housing can impact on child poverty, the problem of overcrowding and what is being done to provide more affordable homes. These are all important matters which affect child poverty. Although each is worthy of debate, I do not intend to go down any of those roads today. I will concentrate on why it is important that after housing costs should be added to the targets in the Bill. In his reply to my similar amendment in Committee, the Minister said that, ""the Government recognise the importance of housing costs to families’ disposable incomes and the impact of those costs on their overall living standards"." He went on to say that, ""measures of housing quality, specifically the number of bedrooms relative to the number of children and whether families can keep their homes in a decent state of decoration",—[Official Report, 19/1/10; col. GC 140.]" were captured in the UK strategy in Clause 8, so would be reflected in the material deprivations score. Yet where that house happens to be is an important factor—not just its state of dilapidation or size. It is one thing if it is in an urban area, well away from the south-east, where there is quite a lot of social housing. It is a variation if it is in an outer suburb of London but with good transport links. In both cases, rents—including private sector rents—may be pretty reasonable. It is another matter if the house is in a rural area where there is little if any social housing, such as areas of rural Herefordshire where all that is available is private sector rented housing. Housing is likely to take up a far larger proportion of a family’s disposable income. If it is in London, where rents are sky-high, that is another matter altogether. It is no coincidence that London is where child poverty is worst of all. The London Evening Standard has been doing a good job of highlighting child poverty in its reports on the dispossessed. It quotes Fergus Drake of Save the Children UK, who said: ""We are outraged that one in five children in London still live in severe poverty, often going without hot meals, the clothes they need or without proper heating at home. We are losing hundreds of thousands of children to poverty, which is killing their childhoods"." We often try not to use London as an example of where our policy should be specially considered, because we who live here sometimes bend over backwards not to sound London-centric. However, on this occasion we should not duck the issue. Because of the huge variations in the cost of housing throughout the country, both before housing costs and after housing costs must be included in the targets, otherwise we are in danger of missing those families whose poverty is not addressed in the before housing cost figures. I repeat what I said at Second Reading: housing benefit is not discounted in the before housing cost figures, so a relatively large family may look as though it has a sizeable disposable income. Of course, it has nothing of the sort, because the housing benefit chunk of that income is its rent. The Minister countered that argument by saying that a householder uses his or her total income, not just housing benefit, to pay housing costs, and might choose to live in a nice house and a nice area. However, that is unrealistic. Most people who receive housing benefit use that sum to pay the rent because that is all they have for rent. In Grand Committee, the Minister was keen to quote the recent report of the Institute of Fiscal Studies, entitled Poverty and Inequality in the UK: 2009. It says: ""When deciding whether or not to measure living standards on an AHC basis as well as BHC, the main issues are whether people face genuine choices over their housing and whether housing cost differentials accurately reflect differences in housing quality. It is often argued that some individuals do not have much choice over the type or cost of housing services that they consume, whereas they have considerably more choice over the purchase of other consumption goods (such as food or clothing). For these individuals, it could be argued that an AHC measure is a more suitable measure of their well-being"." The Joseph Rowntree Foundation, which uses the AHC measure, says: ""Lack of choice over housing costs and quality is particularly important in the social rented sector, where individuals tend to have little choice over their housing and where rents have often been set with little reference to housing quality or the prevailing market rents"." The Equality and Human Rights Commission also endorses AHC, pointing out that using material deprivation is an indirect method of taking into account the various costs that qualifying households face. It says: ""We are not convinced that the combined low income and material deprivation target will provide a full solution to this issue. Although we strongly support the inclusion of the material deprivation target, we do not agree that it suitably addresses the issue of differing housing costs in the way that using an AHC measure would"." Crucially, it goes on to say: ""Material deprivation is not a suitable means of attributing the cause of the deprivation (for example, whether it is due to housing costs, living in a rural area, a member of the family having a disability etc.) and it will therefore be difficult to implement the correct policy response"." The arguments are not rocket science. Nearly all commentators recognise that the further down the income scale one looks, the more important are the after housing costs, because housing tends to make up a greater proportion of income at the bottom of the income scale. If one looks at incomes over the whole spectrum, before housing costs may be more reasonable, but the Bill is concerned solely with child poverty and therefore with families at the lower end of the income scale. In many low-income areas, such as the most rural areas of the country, there is very little social housing and many families simply do not have a choice whether or not to live in a nice house or an expensive area. They have to live in the private rented sector, perhaps to be within reach of schools, jobs and transport. As for the argument that many families in qualifying households live in cheaper housing but near good transport links, particularly around London, I found some comments made by Doreen Kenny from the Greater London Authority to be illuminating. Giving evidence to the Work and Pensions Committee in another place, she said: ""People are reluctant to travel for the length of time it takes to commute into where the part-time jobs are, which is mainly in inner London. Coupled with that is the low pay for most part-time jobs. Half the part-time jobs in London pay less than £7 an hour, so it is just not worth working part-time unless they are very local and it fits in with the school and childcare responsibilities, or they are very well paid and flexible."" If the before housing targets were thought to give the truest picture of poverty throughout the country, why do all the think tanks, academic institutions and pressure groups that I have come across prefer to use the after housing costs for those at the lower end of the income scale? Why, come to that, will the Government continue to collect the after housing costs if they are not to be relevant to this Bill? To what will they be relevant? After all, we are not saying that the Government should remove the before housing costs from the Bill, just that they should add the after housing costs target too. It will not cost them a penny more because they are collected in the household surveys anyway. I hope that the Minister and I can continue our understanding not to mention international comparisons. I still believe that there is an unanswerable case for the after housing costs target to be in the Bill. I beg to move.