Welfare Reform and Work Bill — House of Lords, 2016-01-25
Topic: Social Welfare
David Freud (Conservative, Centre-right): My Lords, let me go straight to that question while it is fresh in my mind. It is, of course, possible to be poor while both parents are in work, particularly under the present legacy system. That is why we are bringing in universal credit—to make that much harder. We are not arguing about the level of poverty; it is about what is likely to happen to the life chances of that child compared to both parents being at that level of income and out of work and in work. That is the argument I have been trying to make all afternoon, with, I think, some resistance Under Amendments 8 and 11, noble Lords seek to expand the reporting duty placed on the Secretary of State so that his annual report to Parliament must include data on children living in low-income families where one or both parents are in work. Their amendments would add the terms "low income" and "in work" to the list of terms to be defined in the annual report I have already gone on enough about the centrality of worklessness and educational attainment. Alongside these statutory measures, the Prime Minister has announced that we are committed to publishing a life chances strategy in the spring, which will set out a comprehensive plan to fight disadvantage and extend opportunity, including a wider set of non-statutory measures on the root causes of child poverty such as family breakdown, problem debt, and drug and alcohol addiction I have said before that work is the best route out of poverty but I want to restate our arguments about the centrality of tackling worklessness. The risk of a child being poor is dramatically reduced if at least one parent works. According to the latest statistics, the risk of being in relative poverty for a child in a working family is 13%, compared to 37% for a child in a workless family. So a child in a workless family is almost three times as likely to be in poverty as a child living in a family where at least one adult works. Perhaps those are the figures for which the noble Baroness, Lady Sherlock, was asking Last year, we published an analysis on the transitions into and out of poverty. What we found was staggering, although some might say that it was obvious. Of the children who are in poor workless families, 74% will leave poverty altogether if their parents move into full employment. The analysis also made clear that the more work parents do, the more likely they are to leave poverty, with 75% of children from poor families in part-time employment leaving poverty if their parents enter full-time employment. I remind noble Lords that we have a package of reforms to encourage people to work. These policies include the national living wage and changes to the personal tax allowance, which will allow people to keep more of what they earn. Furthermore, over 30 million individuals will see a tax cut as a result of the changes we will make in this Parliament. Some 570,000 individuals will be lifted out of income tax altogether by 2016-17 and, as a result of the introduction of universal credit, more people will enter work due to improved financial incentives. We have a vibrant and growing economy, and last year real pay grew by 2.1% On the question from the noble Baroness, Lady Hollis, on support for women, we are supporting families through the national living wage, which is expected to have a stronger positive impact on the female workforce, boosting the wages of three in 10 female employees by 2020. Our childcare reforms will provide support to women who want to find employment, helping them to increase their income We have discussed before that two-thirds of children in relative poverty are from working families, but let me go over my argument. I am not convinced that it will convince the noble Baroness, Lady Lister, but I must try. It is correct that the latest figures published in the HBAI show that 64% of children in relative poverty are from a family where at least one adult is in work. This proportion has grown over the last couple of decades due to the improved progress in tackling poverty in workless families. In 1996-97—the earliest period for which data are available—around 60% of children in relative poverty were from workless families, which is around 2 million children, and around 40% of them were in working families, which is around 1.5 million children. During the 2000s, there was progress in reducing the number in poverty in workless families by focusing spending on tax credits, but this had the unintended consequence of weakening work incentives that resulted in hardly any change in the number of children in in-work poverty, which stood at 1.3 million in 2009-10.