Child Poverty Bill

I thank the noble Lord, Lord Freud, for the amendment. We read the wording of the amendment to try to determine what it meant because it is not entirely clear. However, the noble Lord has explained it. We had assumed that its purpose was to ensure that any measure of income within this context should focus only on those items that have a clear and direct impact on the child, and indeed there is some merit in that argument. As I have explained before, the four targets in the Bill have been chosen on the basis of extensive consultation, including the consultation on measuring child poverty in 2003. In establishing four targets, we have recognised the need for a comprehensive definition of success which captures the many facets of poverty. Long-term poverty and the material deprivation that results can reinforce the negative impact of low income on childhood well-being and life chances, so the targets ensure that policy will have to tackle poor living standards and persistent poverty as well as raising incomes at a given point in time. We strongly believe that together, these targets reflect the reality that income, the length of time experienced on low income, and the lived experience of poverty matter. So while I welcome the contribution of the noble Lord and acknowledge, as I have done previously, that a range of difficulties are involved in accurately measuring income, it remains difficult to determine what additional benefits would arise from the suggested addition to Clause 6. I would ask the noble Lord to consider the practical implications of the approach that seems to be implicit in his amendment, that it would seek to specify in regulations particular items or sources of income which are or seem to be child-focused. We know that income sources are distributed in different ways in different households, and that people living in poverty often sacrifice their own well-being to reduce the impact that low income has on their children. Furthermore, accurately following income from source to expenditure would be difficult, and perhaps impossible. However, I am not sure if that proposition flows from what the noble Lord is seeking. The noble Lord referred to the major lacuna in the data, and indeed we discussed that at some length in Committee, largely as a result of his probing. He referred again today to the informal economy. It is absolutely right that we need to make sure that the data are as robust and secure as possible. Dealing with the informal economy is not easy. It has to be tackled in a number of ways. The noble Lord will acknowledge that the Government were seeking to tackle fraud over declaration of income and tax evasion. I am tempted to say that I am not sure how a non-dom would fill in the questionnaire for these purposes, but perhaps one should not be unkind enough to stray in that direction. The noble Lord made reference to income or resources being made available in kind rather than cash if that were beneficial—we are thinking here about free school meals and those sorts of issues—and was suggesting that somehow the measurements would run counter to that. The noble Lord will recall a discussion we had after Committee; we said that if these things did develop, we would expect the surveys to be built with such provisions in mind so that they would be counted as income. In Committee we ran through the principle and the basis on which so-called benefits in kind could and should be included in the statistics. In terms of the robustness of the data, the noble Lord referred to the IFS judgment. We have heard some criticisms from the IFS on the data, but it nevertheless considers the data robust enough to use as the basis for much of the evidence that it produces—for example, in the following recent studies. The IFS tax benefits model, TAXBEN, was based on the FRS and used for Analysis of Tax and Benefit Changes affecting Families with Children. In More Unequal—but Why? the IFS analysed the change in inequality, commenting that the FRS offers a substantially larger sample than the previous survey used. This work has contributed to the large study undertaken by the National Equality Panel. The annual IFS report, Poverty and Inequality in the UK, presents the most recent HBAI data it helped to validate. The data have also been used by a variety of other respected research organisations, including the London School of Economics, the National Policy Institute, the University of Cambridge, the Fawcett Society and the University of Oxford. We have common cause with the noble Lord in wanting the data to be as robust as possible and we believe that significant efforts have been undertaken. We shared with the noble Lord some of the background—questionnaires and the approaches taken to the survey—which led to the production of the data. There is, of course, a constant desire to make sure that we keep that as up to date as possible. The income statistics we will use to measure progress against the targets in the Bill provide the best available proxy for child poverty. The statistics used in the Households Below Average Income publication comply with best practice on measuring household income. The survey underpinning HBAI exploits the best available methodologies to capture household income. A huge amount of time and effort is invested in ensuring that our estimates are robust and the Family Resources Survey is widely recognised as a world-class instrument for poverty measurement. In addition, HBAI is produced to national statistics standards. Among other things, this means it meets agreed standards for integrity and quality. More generally, the range of targets included in the Bill means that we will make a robust assessment of the levels of child poverty. The combined low income and material deprivation measure will ensure that we capture the essence of what this amendment is seeking to address. If income is not being spent to the benefit of the child, then this will be seen by the fact that the child is more likely to be materially deprived. Indeed, even those basic items associated with the adult or adults in the household are likely to be negatively affected if income is not being appropriately or effectively used. I consider this amendment to be unnecessary. We have in place appropriate measures to capture material deprivation, and any additional flexibility in measuring income that may have been intended from this amendment will not add value. The noble Lord may wish to note that HBAI is already subject to reviews which ensure that the statistics will benefit from any developments in income measurement—for example, along the lines suggested by the noble Lord—so that we make sure that best practice is always applied. I hope, on that basis, that the noble Lord will withdraw his amendment.