Child Poverty Bill

My Lords, I thank the noble Baroness for moving the amendment. It has been a good but short debate. To a certain extent, we have gone over old ground, as the noble Baroness anticipated when she moved her amendment. I say from the start that the Government are with my noble friend Lady Hollis and the noble Lord, Lord Freud, on this issue. There is a difference between having information which is useful information that could be put into the development of the strategies and something that is an additional target. We have already had quite a full debate around the questions of whether poverty should be measured before or after housing costs and whether an additional after housing costs target should be added to the Bill. I am afraid, therefore, that the arguments I will make in response to this amendment will not be new; I will briefly reiterate them one last time in the hope of persuading the noble Baroness, Lady Thomas, and her colleagues to accept the Government’s point of view. We have measured poverty on an after housing costs basis since the 2003 Measuring Child Poverty consultation, and have retained this measure in the Bill. The reasons for this are threefold. First, we consider that the material deprivation measure captures the impact of poor housing on living standards, both because specific measures of housing quality are included in the list of items used for the combined low-income material deprivation measure; and also because, if a family has high housing costs, this will impact on their disposable income, and therefore on whether they can afford other items on the list. So it is not just the two specific housing-related items that are on that list; it is the impact on the rest of the collective items on that list. Secondly, we consider that there are drawbacks with an after housing costs measure which can understate the relative standard of living that some individuals may have by paying more for better quality accommodation. Thirdly—and I recognise that I might risk the wrath of the noble Baroness in mentioning this—the vast majority of European countries only produce and publish poverty statistics using the before housing costs measure. It is important for our goal to be among the best in Europe in the child poverty stakes that we are able to compare ourselves against these countries. But I accept that the noble Baroness is seeking to add an additional target and not to substitute one. We consider that the four challenging targets that we have in this Bill already enable us effectively to capture the different facets of poverty. We do not consider that adding a fifth target is beneficial. I should also comment on the 10 per cent target level proposed in the amendment. As I noted during Grand Committee, the level of relative poverty after housing costs is 31 per cent or 4 million children. Meeting this target would require a reduction to less than 1.3 million. As a number of noble Lords have recognised, meeting the existing targets in the Bill by 2020 is already extremely ambitious. Including the additional after housing cost target proposed would clearly make the goals set by the Bill even more challenging, with resulting resource implications. To the extent to which the after housing costs measure will understate the relative standards of living of some individuals, we would be using additional resources in an untargeted way. The Government recognise the importance of ensuring that children live in suitable, good quality, affordable housing. I say to the noble Lord, Lord Martin, that it is absolutely essential; it is a key part of our strategy. We recognise the detrimental impact of poor housing conditions on children’s health and educational development. This is reflected in Clause 8(5)(d), which requires the Secretary of State, in preparing the UK child poverty strategy, to consider what measures ought to be taken in regard to housing. Similarly, Part 2 of the Bill will require local authorities and their delivery partners to address housing issues where these arise in their local areas. For example, we expect the needs assessment process to identify the quality of housing experienced by families with children that live in poverty in the local areas. I shall pick up on one or two of the more specific points. The noble Lord, Lord Best, ran through how local housing allowance works and its implications, but I would say that we have four targets in the Bill that the Secretary of State has a duty to meet, and relative income is only one of them. The material deprivation target is key as well, and therefore in making an overall judgment, we have to look at all four targets. The noble Lord, Lord Martin, expressed his support for the mantra of "housing, housing, housing", and I think we all subscribe to that. The Government have already done much in terms of tackling overcrowding by investing to make sure that we address the issue of the lack of affordable housing. Over the two years 2009 to 2011 we will invest around £7.5 billion in affordable housing, and we expect to deliver 112,000 affordable homes. Whether you are for or against the amendment, embedded within the strategy and our approach to tackling child poverty is a strong determination to deal with housing issues. The noble Lord also talked about the need for people to be able to keep warm. He may wish to know that currently one of the items in the material deprivation measure is being able to keep accommodation warm enough in winter, so the issue is addressed specifically in that target. The noble Baroness, Lady Thomas, and the noble Lord, Lord Best, talked about including housing benefit as income in the before housing costs measure of poverty. It is right that housing benefit is included in the before housing costs calculation. Households in receipt of housing benefit pay housing costs using their total income, including housing benefit. Households not receiving housing benefit will need to pay housing costs through their total income. The noble Baroness smiles because she has heard it before, but that does not make it any less true. Including housing benefit enables like-for-like comparisons between the incomes that households have with which to pay housing costs and to meet their other needs. I agree with my noble friend Lady Hollis that if you are looking at after housing costs, you have to look at issues around transport as well in order to see the total picture. The noble Lord, Lord Kirkwood, said that not having the after housing cost measure represents a change. The PSA targets are based on the before housing costs measure which have been established since the 2004 consultation on tackling child poverty, and that is why the Bill also targets the before housing costs measure. I end by saying that the after housing costs figures are still going to be available and will help to inform the debate and the development of strategies around child poverty. However, what we do not support is making those figures an additional target in the Bill. For the reasons I have advanced, the targets set out in Clauses 2 to 5 measure on the before rather than after housing costs basis and in other ways the strategies set out in the Bill arising from them will ensure that the impact of housing costs on families’ living standards is taken into account. On that basis, I hope that the noble Baroness will not press her amendment. If she does, the Government will oppose it.