To ask Her Majesty’s Government what assessment they have made of metrics to measure United Kingdom poverty, in the light of the report from the Social Metrics Commission.
My Lords, the Social Metrics Commission was formed three years ago with the sole and express aim of delivering new poverty metrics for the UK. The need for an independent commission to do this was clear. When I was in government, there were two failed attempts to develop new measures in the lead-up to the Welfare Reform and Work Act 2016. It was obvious to me that whoever was going to be held accountable—the Government—could not in reality develop the measure by which they were going to be held to account. So we brought together top thinkers from left and right to create new measures. That is one reason why I am so grateful to noble Lords from the Labour, Liberal Democrat, Bishops’ and Cross Benches. Their participation, alongside Conservative Peers, reflects the make-up of the commission and the broad support for the proposed new measures.
Why was it so important to create new, agreed measures of poverty? The lack of an agreed measure has meant that Governments of any party have been left unaccountable for their policy actions to reduce poverty. One of the most concerning findings in the report is that, since 2001, and under successive Governments—Labour, coalition of Conservative and Liberal Democrat, and Conservative—although the composition of who is poor may have changed, the number of people in poverty has remained consistent. We cannot allow this to be the reality of our generation and we need an agreed measure to drive accountability, because what gets measured gets done.
The lack of an agreed measure also affects government behaviour. It was my observation of how Governments behave in Budgets and spending reviews that led me to create the Social Metrics Commission in the first place. When it came to the big economic decisions, it was quite obvious that the OBR and the IFS played a significant role in driving the accountability of Treasury decisions. However, there was no such equivalent for social policy decision-making. The events of the past 20 years have also shown that it is not enough just to have a measure of poverty. It is also crucial that it is an agreed measure and that it rewards decision-making that improves people’s lives. We need to move from a debate about measurement to one that drives better outcomes for people. It is too easy for those in this Chamber and in the other place to debate the 200,000 people who moved from one side of the poverty line to the other rather than develop a strategy to deliver improved outcomes for the 7.7 million who are in persistent poverty.
If it is important that we have this new measure, how does it actually improve on what we have had historically? There are many aspects of the commission’s approach to measuring poverty which are a significant improvement on what was previously used—too many to go into in detail in this short debate. However, the changes lead to two key positive impacts: they better identify who is living in poverty, and they provide a greater insight into the nature of that poverty and wider life experiences. The old measure was purely of income. Commissioners felt that this did not adequately capture the nature of poverty. They wanted to identify both the wider resources that families have available to them and the range of different needs that those resources must meet. It is, in effect, a balance-sheet model of available resources versus inescapable needs and costs.
My Lords, I pay tribute to the noble Baroness, Lady Stroud, for her key role in achieving a remarkable consensus on the vexed question of poverty measurement and for her willingness to shift her own previous position. I have three points. First, one of the report’s key principles is a restatement of a relative understanding of poverty,
“related to the extent to which people have the resources to engage adequately in a life regarded as the ‘norm’ in society”.
This stands in contrast to Ministers’ repeated reference to so-called absolute poverty statistics, in denial of the increase in relative poverty as their policies have begun to bite, and despite David Cameron’s promise that,
“the Conservative Party recognises, will measure and will act on relative poverty”.
Secondly, Ministers also tend to use the “before housing costs” stats, even though housing costs contribute to poverty. Where the report is truly innovative is in its measurement of total resources available, including also, as the noble Baroness said, a proxy measure of disability costs. As she said, this indicates that poverty among disabled people is seriously underestimated by conventional measures that take account of disability costs benefits but not of the disability costs these are supposed to meet. Will the Minister tell us the Government’s position on this very important point and also her response to the report’s evidence of even more extensive poverty among working-age families with children than shown in the Government’s own comparable stats?
Thirdly, the report rightly includes a measure of poverty depth—in other words, distance below the poverty line, sometimes called the poverty gap, and clearance above the line. This is really important. The experience of poverty is very different for the more than 4 million people the report estimates as living 50% or more below the poverty line and for the 1.3 million living within 5% of it. Professor Jonathan Bradshaw’s analysis of poverty gaps shows that children, on average, are living further below the poverty line than they did seven years ago. Will the Government undertake to publish regular poverty depth statistics?
My Lords, I congratulate the noble Baroness, Lady Stroud, on securing this debate and I pay tribute to her for the way she has led the work of the Social Metrics Commission. I declare an interest as chair of the Making Every Adult Matter coalition of charities, whose director served as a commissioner.
In the very short time available, I am tempted simply to say, “What gets measured, gets done” and sit down again, but throughout my professional career and as a member of your Lordships’ House I have been struck by how central the experience of poverty is to so many of the big social issues we debate. The direct impact of poverty is felt by one in five of the population and the indirect impacts ripple further still. Furthermore, the link between poverty and multiple disadvantage is deeply entrenched. This is brought home to me regularly through my work with the Making Every Adult Matter coalition, which focuses on the multiple and complex needs of 60,000 adults experiencing a combination of homelessness, substance misuse, mental health problems and contact with the criminal justice system. For these reasons I have followed the work of the Social Metrics Commission with keen interest.
The goal of the commission was to provide a new consensus around poverty measurement that enables government to take action and improve the lives of people in poverty. In my opinion, the absence of robust and clear measures, particularly the abandonment in 2016 of the child poverty targets, has contributed to the rising tide of poverty. Indeed, the IFS predicts a continuing rise in child poverty up to 2022. The measurement of poverty has for too long been a hot potato, with too much time being given to arguing about how and whether to measure poverty and not enough time devoted to taking action to reduce it. It was therefore vital that the commission was an independent and rigorously non-partisan entity, bringing together people of all political persuasions and none. The fact that the commission has produced a measure that is backed in its entirety by all its commissioners is testament indeed to the consensual way in which it has been led by the noble Baroness, Lady Stroud.
My Lords, I add my congratulations to my noble friend for securing this debate and, more significantly, for the achievement of setting up the Social Metrics Commission and for delivering this important report. Not the least of her achievements is to have assembled such an impressive group to come together to make these recommendations. The report tackles some of the problems inherent in the traditional HBAI targets, which were too one-dimensional in their approach. I was impressed by the way it looked at total net income, inescapable costs and housing, particularly overcrowding. While the total number in poverty may be similar to the overall HBAI outcome, there are some very significant differences in the people who are captured in the measure. This is important, because it should help Governments draw up better measures to tackle poverty.
One of the elements in the commission’s approach is to look at the pathways into and out of poverty. Here, I commend the approach of universal support, which was initiated in this House, to provide more coherent help for people who have particular barriers to work. Full-time work is confirmed in this report to be one of the most reliable ways out of poverty and as the employment rate has hit record levels, the people left behind need more than cajoling to find a job. They need help, often with multiple issues, before they can take and hold down a job. A person might need help with literacy, mental health issues and housing, for example, before they can work.
How best to handle these needs? The universal support structure can be expanded to tackle them. It is made up of three key elements. The first is a hub of services in main localities. I am pleased to understand that DWP is now based in about 100 local authority hubs. Secondly, there needs to be a gatekeeper or caseworker to help people navigate to the right elements of support. This is missing currently. Thirdly, there needs to be a way of sharing data, so that people do not get lost in the system. DWP already has the secondary legislation in place to do this, although it needs to consult on exactly how to run the system. My own preference would be to use electronic wallets, which would give individuals power over their own data.
7:57 pm
The Lord Bishop of Portsmouth
My Lords, Stalin, not often quoted on this Bench, is said to be the author of the maxim:
“A single death is a tragedy; a million deaths is a statistic”.
On that, and indeed on everything else, I disagree with the Marshal. A single person living in poverty is a tragedy; that millions do so is an affront to our values, our common decency and how we think of ourselves as a nation.
If we are to tackle poverty, we must agree on how to measure it. We therefore owe the noble Baroness, Lady Stroud, and her team a huge debt of gratitude—not just for taking into account the inescapable costs many families face, such as childcare and disability, nor just for the welcome focus on the lived experience of poverty, including such things as mental health, literacy and family stability, nor even for the suggestion of measuring poverty against a threshold smoothed over three years, but for bringing together a diverse, authoritative group of experts, for their careful dialogue and analysis, and for arriving at a measure of poverty on which we can all agree, wherever we sit in this House. That is no mean feat and it is one on which we can all, I trust, coalesce. It provides the foundations on which we can—indeed, must—build given the shocking rising figures, particularly on persistent and child poverty, on which there is no time to elaborate tonight.
We on this Bench were heartened by the Secretary of State’s speech not many days ago. We applaud the desire to build a fair and compassionate welfare system and the commitment to taking a more considered approach to rolling out universal credit, and we were encouraged by the decision not to extend the two- child limit. But we know that this marks only the start on welfare reform and tackling poverty. I therefore look forward to the Minister’s response, to the Government’s commitment to use the measures set out by the commission, and to them publishing a coherent, comprehensive strategy to tackle poverty and child poverty in particular, backing it with resources and sufficient political will to make a substantive, sustained difference.
It is no exaggeration to say that events of the past week show us to be in a state of some national crisis, caused by very different understandings of who we are and how we relate to the wider world. On that, no consensus is yet forthcoming. But, thanks to the work the commission, we now have consensus on how we measure poverty. Now we must seize that opportunity and act with urgency, tackling the national crisis of poverty.
My Lords, I too thank my noble friend Lady Stroud for obtaining this important debate.
Parliamentarians have an opportunity to transform lives, society and our economy by tackling the root causes of poverty and taking an approach to social justice which changes the lives of the poorest and benefits everybody. When families on the margins find stability in work and escape the social breakdown that holds them back, more adults and children can thrive and become net contributors within society. Demands on the public purse are reduced, and we all gain. However, given the shortness of time this evening, I will be brief and to the point.
By asking about social factors around poverty, the Social Metrics Commission has helpfully highlighted that, as my noble friend Lady Stroud mentioned, many people with disabilities are living harder lives than some ever realised, and that households earning up to £200,000 can receive childcare support, yet lack of quality affordable childcare continues to keep the poorest families out of work.
But it is with regret that I have to challenge the claim that the commission has united left and right, and point out that it has instead missed the elephant in the room. Why do I say that? First, although there is a greater focus on the social conditions of poverty, it remains a relative financial measure and will drive a financial rather than a social response. This runs counter to the Government’s emphasis on improving life chances in the Welfare Reform and Work Act 2016, which enabled policymakers to paint from a much richer palette. My noble friend Lord Freud, from whom it is a pleasure to hear again on this subject, committed the Government to,
“look at all the root causes … They include addiction, problem debt and family instability. The approach will enable anyone to hold us to account for the actions we have taken and the progress we have made”.—[Official Report, 9/12/15; col. 1599.]
8:05 pm
Lord Howarth of Newport (Lab)
My Lords, I add my congratulations to the noble Baroness, Lady Stroud, and the Legatum Institute on establishing the Social Metrics Commission and on her leadership. Whatever our political differences, if we agree that it is a primary responsibility of government to reduce poverty, we must welcome the establishment of a better database and an extensively agreed definition and description of poverty. I hope that all the parties will be able to accept that the account of poverty so far provided by the SMC is an improved basis for understanding, for debate and for the development of policy.
Confronted by the statistics in the SMC report—some of them highlighted just now by the noble Baroness— we should be dismayed. It is a collective failure that 4.5 million children are living in poverty, that 6.9 million people who are in poverty live in families with a disabled person, and that 7.7 million people are living in persistent poverty. The challenge, presented anew by the SMC, is to put the reduction of poverty front and centre in our politics.
The SMC has admirably sought not only to understand material poverty but to take account of the lived experience of poverty: for instance, social isolation and mental and physical ill health. As it develops its methodology, I hope that the SMC will consider adding an indicator of cultural poverty, which has a profound effect on well-being, thence health, thence material poverty.
The massive and cumbrous social security system cannot move fast and takes time to get things right, as we see with universal credit. But policy must take account of social change, rapid as it is, the fragmentation of class, immigration, changing economic geography, the impact of technology: the actual experience of people’s lives. The UK Government, which at the moment—extraordinarily—has no official measure of poverty, should surely adopt the model offered by the SMC.
The SMC’s data and method can help us understand and address with new seriousness and effectiveness the problem, so glaringly exposed by the Brexit referendum, of the “left behind” and their alienation. Informed by the SMC, we shall be better able, if we will, to redress burning injustices, rekindle hope, heal divisions and, I would add, rehabilitate politics.
My Lords, I join other noble Lords in congratulating my noble friend Lady Stroud, both on her work within the Social Metrics Commission and on securing this debate on a subject which is clearly of deep personal interest to noble Lords on all sides of the House.
Like many, I was shocked by the UN’s November report. However, I am critical both of the way Professor Alston explored just one side of the evidence and the extraordinary political nature of his language: for example, his conclusions that,
“poverty is a political choice”,
and that this Government were guilty of outsourcing the British tradition of compassion of poverty and mutual concern. The Government have done many things to restore dignity through work, to raise the poorest out of the tax system and to introduce a living wage. Where the intent was honourable but the implementation flawed, such as with universal credit, these remain work in progress. The Government have not been not too proud to admit when they get things wrong. Of course, the report also contained valid observations, and indeed it encouraged the Government to introduce a single measure of poverty and of food security. Therefore I, too, wholeheartedly welcome the Social Metrics Commission’s attempt to bring a whole new approach to measuring poverty.
Poverty has been defined as,
“not having the resources to participate to some acceptable degree in society, to avoid shame as well as destitution”.
However, measuring the extent of poverty is much harder, and the old benchmark of those living on less than 60% of contemporary median income, ignoring as it did, assets, skills and liabilities, meant that it was never fit for purpose. We can address the issues that lie behind the statistics only if we can measure whatever it is about the household budget, on both sides of the balance sheet, which puts families into poverty. These can be myriad: childcare costs; inability to budget; household debt; costs relating to any form of addiction; and, most worryingly, disability, as we have heard.
8:10 pm
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For example, we include in the measure the available assets and the obligated debt of a household. Historically, you could be on an income just above the poverty line but in significant debt, and you would not have been considered poor, even if your debt repayments meant that you could not meet your needs. Alternatively, you could have been on a low income below the poverty line and have significant liquid assets, but you would have been considered poor. This seems potentially counterintuitive. Noble Lords may have known that assets and debts were not included in previous measures of poverty, but I can remember being seriously surprised a few years ago when I first came across this fact.
We also wanted to offset those resources against inescapable family-specific costs that had not previously been taken into account, such as the costs of disability and childcare. It is clear that disability benefits are given to people who are disabled to cover the extra costs of disability, but in the old measure they are credited purely as income and not offset against the corresponding extra costs of disability. This gives a distorted view of the available resources for a family coping with disability. The costs of childcare are typically unavoidable and related to working, but we all know that in any household they are offset against income. Having income as our sole measure of poverty does not acknowledge the inescapable and very real costs of working. Does my noble friend agree that understanding the inescapable costs of childcare and disability contributes to our understanding of the measurement of poverty?
The proposed measures also provide a greater insight into the nature of poverty and the wider life experiences of those who are in it. Poverty measures are created from the data housed in the big government datasets. We wanted to understand the depth, persistence and lived experience of those in poverty. Much of the debate in this House is about the number of those who show up in a snapshot of data captured at a single point in the year. While this is important, as it clearly shows vulnerability, we in the commission were even more concerned about those who show up in these surveys year after year, and about how far below the poverty line families actually are. So we created a measure that will assess the depth of poverty, to understand how far below the poverty line a particular family is; and a measure that captures the persistence of poverty, to show how long people have been in poverty.
We also wanted to capture the lived experience of those in poverty: the resilience gap between those who are in poverty and those who are not. So we developed a set of lived experience indicators that look at a range of issues, from mental and physical health, to work, community engagement and family structure, which may impact on the likelihood of people being in poverty, their experience of it and their chances of moving out of it in future. As well as improving our understanding, each of these measures provides clear levers for policymakers to target policy on reducing the number of people living in poverty, and improving the outcomes of those families who do experience hardship. This is one reason why this new measure has developed real consensus. Any genuine and sustained effort by Governments of any persuasion will be rewarded in the metric.
I was delighted on the day of the launch to stand with commissioners from the Joseph Rowntree Foundation, Making Every Adult Matter and the Institute for Fiscal Studies; to have endorsements from the Child Poverty Action Group, the most reverend Primate the Archbishop of Canterbury, and the Centre for Social Justice; and to have academics such as Paul Gregg and Naomi Eisenstadt supporting us.
What does the measure tell us? The good news is that there are fewer pensioners living in poverty than previously thought. This is a tribute to the hard work done to improve the lives of pensioners over the past two decades and shows that concerted policy action can really make a difference. However, there are many other findings that challenge us to sharpen our focus. Some 14.2 million people are in poverty at any one time, but as concerning for me are the 7.7 million people who are in persistent poverty. These people have spent all or most of the past four years in poverty. Perhaps the most concerning finding to come out of the new measure is the link between disability and poverty. In nearly half of all households in poverty there is a disabled adult or child. Disability has been seriously underestimated in historic poverty measurement, and therefore most likely in our strategies.
What happens next? I have been delighted by support from all parties. A few weeks ago we received a letter from the Prime Minister asking us to work with her officials. Last week the chairman of the Work and Pensions Select Committee asked us to work up a draft Bill that could put the measures into legislation. We believe that there is consensus around these new measures, and we and other organisations will start to use them as we make the code public. We urge the Government to seriously consider adopting them as their own, too. I ask my noble friend to commit her department to exploring how the UK’s measurement of poverty could be improved by using the Social Metrics Commission measure and to outline what steps her department is taking to assess whether or not to adopt the measures as official government metrics.
In conclusion, I welcome this report and, while we may well continue to need the existing poverty measures for comparative purposes, I hope that the Government will respond positively to its recommendations.
As we have heard, the commission has produced a new measure of poverty, which for the first time takes account of the total resources available to an individual, not just income. I am very pleased also to see links made between poverty and multiple disadvantage. I conclude by saying how strongly I hope that this measure is adopted by political parties and campaigners, but above all by the Government as their official measure of poverty, so that they can put in place meaningful policies to reduce poverty and address the plight of those who suffer from it. I look forward to hearing the Minister’s response.
Finally, I welcome the emphasis in the report on relationships. Social isolation is a debilitating shortfall for people, almost the worst type of poverty. To tackle it we need to mobilise the whole of society to provide support for the most vulnerable. I am particularly encouraged by the outcome from “grand mentoring”, a project I have talked about previously in this House, in which older people mentor children leaving care. This is an approach we could expand for many lonely, vulnerable groups. I close by thanking my noble friend Lady Stroud once again for this opportunity.
I therefore urge the Government again to reintroduce the family stability indicator. Previously the Minister, my noble friend Lord Agnew, told this House that evidence,
“tells us that the quality of relationships within a family had a greater impact on child outcomes than the structure of the family”.—[Official Report, 2/11/17; col. 1539.]
While the family stability indicator did not provide a complete picture, it is essential to have in the mix—hence my second and perhaps even greater criticism of the commission’s work. It once again misses the biggest driver of poverty in the UK today: family breakdown. We will never adequately address poverty by ignoring this national crisis or failing to include indicators to measure it.
This is where left and right should concur. The Joseph Rowntree Foundation recently found that persistent poverty hovers at around one in 10 of most household types; for lone-parent households, it is one in four and rising. The commission’s own measure shows that most family types hover around a 22% poverty rate, while the rate for lone-parent families more than doubles, at 54%. Without adequate regard to the fact that we are a world leader in family breakdown, any commission, however well meaning, will fail not only to unite politics but get to grips with this ultimate root cause of poverty.
The most heartening finding is that, through this new measure, around 2.7 million people are living at less than 10% below the poverty line, meaning that relatively small changes in their circumstances could make them able to rise above it. Sadly, the converse is also true of the 2.5 million who are less than 10% above the poverty line.
This research to find a relevant contemporary measurement of poverty, supported by the work that the Legatum Institute undertakes in identifying pathways from poverty to prosperity, provides crucial support for the development of policy by a Government committed to creating a country in which no one and no community is left behind. At least this new measurement will enable us to hold them to account.