Child Poverty Bill

My Lords, I am pleased that we have been able to reassure the noble Lord, Lord Freud, at least on some aspects of the Bill during the course of our deliberations. I am sorry that I am not able to accommodate him in respect of this amendment. The noble Lord expressed a concern in Committee that there may be a risk of the Government focusing on moving families who are closest to the poverty threshold just over it. Let me categorically assure him that this is not what we propose. This would be an entirely self-defeating approach, as it would be impossible to meet the targets this way, and we would be in breach of the duty to ensure as far as possible that children in the UK do not experience socio-economic disadvantage. It would also be morally wrong to ignore the needs of the most vulnerable children. Indeed, I have just moved a government amendment that requires specific consideration of the most vulnerable groups in the child poverty strategy. This is intended to ensure that the strategy does not focus only on children whom it is easiest to lift above the poverty line, leaving behind particularly vulnerable children who will be harder to help. I hope the noble Lord is convinced of our sincerity on that matter. It is worth outlining once again the many issues that arise from the data on those with the very lowest incomes, such as those below 40 per cent median income. They are acknowledged to have a higher degree of uncertainty and error. Some types of households with very low income that were recorded on the survey include the following issues. First, very fragmented incomes are under-recorded. Secondly, some households will have transitional periods of low income when they are between possibly well paid jobs at the precise time of the survey interview, or they are self-employed and their incomes can vary greatly from year to year. Thirdly, some households may draw on savings to cope with a longer period of minimal income. Finally, some households genuinely have to cope on very low incomes, and may get into debt to maintain levels of expenditure. Unusual households in which 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 income than in households below 40 per cent, and are therefore particularly unreliable as a measure of poverty. My noble friend Lady Hollis acknowledged that, and the noble Lord, Lord Freud, rightly focused on that in quite a lot of our Committee deliberations. The Institute for Fiscal Studies, to which he referred, has confirmed this, pointing to the fact that many of those with incomes below 40 per cent of median income are not those with the highest levels of deprivation. This is why households with incomes below 50 per cent and 60 per cent, including households below average income, are used in measures of poverty. This is in line with international best practice. The HBAI publication, to which my noble friend Lady Hollis referred, contains statistics on the number, proportion and characteristics of children in households with incomes below 50, 60 and 70 per cent of median income before and after housing costs, as well as in low income and material deprivation. It is published annually, so the 50, 60 and 70 per cent information is available. To be fair to the noble Lord, his amendment would not have required the 40 per cent to be a target; it related simply to the information that would flow from Clause 9. Perhaps he will correct me if I am wrong on that point. The 40 per cent figure simply does not flow from the data at the moment because of its unreliability. Indeed, the HBAI publication produces a bit of a health warning even on the 50 per cent figure. The noble Lord’s amendment would apply only to statements that are required under the final annual report on the target year and not to the reports that precede it. If his intention is that all annual reports that are required under the Bill contain information on these poverty thresholds, the amendment would simply not cover that. In summary, the targets already present a range of different measures of poverty, and as such ensure that we do not focus just on getting families over the line. There are problems associated with the measurement of the very lowest incomes, and I urge the noble Lord not to press his amendment to a vote.