Lord Freud – 2016 Speech on Welfare Reform

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Below is the text of the statement made by Lord Freud in the House of Lords on 29 February 2016.

My Lords, the other House has now considered Lords Amendment 1, which was proposed by the right reverend Prelate the Bishop of Durham, the noble Baroness, Lady Sherlock, and the noble Earl, Lord Listowel. The intention behind that amendment was to insert a new clause into the Bill, which would have increased the measures on which the Secretary of State was required to report annually to include income-based measures. As I have said previously, that amendment has technical faults and would require redrafting to make it work as noble Lords intend but, moving quickly beyond the technical defects in that amendment, I have repeatedly tried to shine a light on the fundamental flaws of the income-based measure.

The “poverty plus a pound” approach that results from measures of this kind led to billions of pounds being invested under the previous Government, with little or no transformational impetus in the life chances of young people. It is widely recognised that the low-income measures can give a misleading picture. For example in a recession, when average income falls, poverty can appear to be falling too even if living standards have not improved for those at the bottom.

I stress again that low-income measures drive the wrong action, as I have sought to explain throughout the passage of the Bill through this House. Such measures simply focus on treating the symptoms of child poverty, whereas the Government are intent on tackling the root causes such as worklessness and educational failure. It is in these areas where we believe that the right action can make the biggest difference to the lives of disadvantaged children, both now and in the future.

Moving on, it is clear that substantial concerns remain that publication of the statistics on children in low-income families through the Department for Work and Pensions annual HBAI—households below average income—may not continue. This is despite the very clear commitments that the Government have given in both Houses and the protections already in place to safeguard HBAI as a national statistics product.

As I have said previously, I believe that the only difference on this issue between us is the word “statutory”. Given the doubts and concerns that remain about the continued publication of this low-income data, I am able to say that we have listened, we have heard and we are willing to provide further guarantees. Three of the four income measures—including relative low income, combined low income and material deprivation, and absolute low income—are already routinely published in the HBAI publication.

Through the government amendment we are putting forward today, we propose to place a statutory duty on the Secretary of State to publish this information annually. This provision will give the data the additional statutory protection that noble Lords sought. The amendment also places a statutory duty on the Secretary of State to publish new data on children living in persistent low-income households annually. The information will be based on a new data source, and the first figures will be published before the end of the 2016-17 financial year.

However, let me be clear that although we have given full statutory guarantees that this data will be published annually, we will not commit ourselves to laying a report before Parliament on it. This amendment is about providing a further guarantee that information on low income is made available for all to see, every year. Reporting to Parliament on income measures would incentivise government to take the wrong action and would simply continue to incentivise actions, such as direct income transfers, that will not tackle underlying factors.

We need to move on from this unhelpful approach. Resources are finite and it is crucial that the Government prioritise the actions that will make the biggest difference to children. The evidence is clear that this means tackling worklessness and low educational attainment, as set out clearly in our life-chances measures and approach. Any move to report on these low-income measures would divide government’s efforts and undermine this new life-chances strategy. I firmly believe it would not help to bring about the transformative change that we all wish to see.

It is worth talking briefly on one technical point in our amendment. Subsection (3) provides for the absolute low-income measure to be rebased in the data publication. This is vital because over time an absolute low-income measure using a 2010-11 baseline, such as that proposed in Lords Amendment 1, would be likely to become increasingly meaningless due to growth in the economy. As a national statistics product, the data publication already has significant statutory protections, guaranteeing that any rebaselining would be carried out by statisticians following best practice and free of any political influence. I reassure colleagues on this point.

I hope that these proposals will be welcomed in this Chamber. I urge noble Lords not to insist on their amendment and beg to move the Motion on the government amendments in lieu.

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