WEDNESDAY 29 NOVEMBER 2000

MS S MIDDLETON

  140. You do not know of any research which conflicts with what you were saying or gives an alternative.
  (Ms Middleton) No; no, I do not. If you look at budget standards methods of establishing adequacy, they are not a million miles away, especially for the modest but adequate level that the Family Budget Unit produces. My own budget standards methodology produces lower figures because it is aimed to be a completely low, really minimum standard of living.

  141. May I move off that onto the question of tapering which is mentioned in the Treasury's discussion document? You have been a bit critical of it. Is there not an inevitable trade-off between the level of ICC and the steepness of the withdrawal rate so that the higher levels for lower income groups inevitably mean that there will be a steep tapering away as income rises? Is that not inevitable?
  (Ms Middleton) Yes, except of course there will inevitably be protection for those at the lower level because they will be on the maximum. The debate about tapers is not something I am expert in. I am not an economist. We do have very steep tapers in this country, much steeper, for example, than in either Australia or Canada. I know that the benefit in Canada has an incredibly shallow taper. I do really feel that a withdrawal rate of something like 50p in the pound for incomes between £240 and £300 a week is very, very steep indeed. Yes, there would have to be a trade-off within the current level of support which is being provided for children. As I think Professor Millar pointed out, there would be protection for those at the lower end who were on the maximum.

  142. What about the effect of loss of Housing and Council Tax Benefit? These things are not taken in isolation. We know it is already a problem.
  (Ms Middleton) Yes, the interaction. I have read with interest some of the evidence which has been submitted. I have to say that is not something in which I am an expert, but could I just say that to use the difficulties which Housing Benefit and Council Tax Benefit are currently confronting this Government with as an excuse for not making this incredibly useful and positive innovation would be a very, very great pity. The issues of Housing Benefit are well known for their historical intractability and it is going to be a very brave government which grasps that particular nettle but it has to be done. One of the important things to bear in mind when you are looking at various models of what will happen as a result of the proposed ICC is to look carefully at whether people are using gross income or net income. Obviously housing costs are tremendously important.

  143. How responsive should the system be to fluctuations in income?
  (Ms Middleton) I would agree with the evidence given by Professor Millar. Responsiveness is crucial. As she pointed out, we are preoccupied in this country with monitoring very small changes in income and so on, but not always. Family Credit was awarded for six months and there was never any big problem about that. I personally should like to see it awarded for at least that period because it has the added advantage then that it actually does provide that bridge between no work and work which Government is also seeking to provide. It also moves away from the preoccupation with the very detailed means-tests on a regular basis that seem to riddle our benefit system.

  144. May I follow on the points about definition issues related to child poverty? I read your article and thought it was fascinating stuff, very, very interesting. The Government has a commitment to abolish child poverty within 20 years and has hit on the definition which seems to be the received wisdom of looking as a measure at half average income for the household, which is an objective test and can be measured relatively easily. As I understand it, your approach was looking at a more subjective way of doing things which is going around doing a bit of Voxpop and finding out what people think it would be appropriate to spend on children. Am I right in that analysis?
  (Ms Middleton) No; no, you are not. I wish it were that easy. The income measure of poverty has been an immensely useful one and it is obviously there because it is easily comparable both within countries, across countries and all the rest of it. Remember that it has no basis in any real understanding of what families need to keep out of poverty. I understand it is a purely arbitrary measure based on the Belgian economy in about the 1960s, strangely enough. A colleague at Bristol told me that some time ago. The difficulty with it is that it does not really tell you anything. It tells you that a family is in poverty, but it does not tell you anything about how that poverty is being experienced within the family. It assumes that everyone in the family is sharing the poverty and my work has shown that is not necessarily the case. It does not tell you anything of itself about the depth of poverty. It has this strange assumption that if a family has one penny above the line they are not poor and if they have one penny below the line something dramatic has happened to make them poor and that is nonsense. We are beginning to find through research that the depth of poverty is very important. If you look at children who are in the deepest poverty, income poverty, they have very different characteristics to the ones who are closest to the line. It has all sorts of limitations. Very useful as a snapshot but not very useful in any real sense. The methodology I have developed, of which the budget standards for children were the first ones, involves a mixture of conventional budget standards methodology, which brings together committees of experts to deliberate on what is needed by a family of a particular size to reach a standard of living so, for example, for food you will have a nutritional panel. Have you ever noticed that nutritionists never talk about food, they always talk about nutrients? Then the other sort of measure of poverty which was developing during the 1980s, which was actually going out and asking people what they felt was necessary to keep people out of poverty. We tried to bring those two together. What we do is get people in the circumstances for which a budget standard is to be constructed, in other words for children we get mothers. We get them together to form their own budget standards committees. Before the meetings they fill in consumption diaries so that they are coming with some real understanding of what they actually consume themselves. Then they come and the task is for them to construct a list of goods, items, activities, they believe, are necessary for a child aged X to keep that child out of poverty in Britain today. The methodology is very rigorous, we do not just stop there, it is not just one set of groups, but the joy of the methodology is that the poverty line is being drawn up by people who are actually living those circumstances, who understand the realities of the day to day expenditure on children, what is needed. They do their own definition of what poverty is as well.

  145. If I were to say that is a rather empirical subjective approach, you would disagree with me.
  (Ms Middleton) I would put it back to you. Why is it any more subjective than the views of committees of experts? What it brings into it is an objectivity based on people's real lives and what is going on. That is where it becomes rigorous and objective.

  146. Is there a regional element to that? We are finding in many of our inquiries that there are vast differences. Mr Dismore's constituency is vastly different from mine. The interesting point he is trying to draw out is that if you asked the question in Hawick in my constituency and then asked it in North London, surely the answers would be vastly different.
  (Ms Middleton) It depends what the question is. The question is: what is necessary to keep a child out of poverty living in Britain today? You can take into account the differences in urban and rural areas by bringing together groups of urban mothers and rural mothers, but they are not talking about their own children, they are talking about a child. What we do is make sure the groups are mixed so that it brings together rich mothers and poor mothers and mothers in the middle and the whole point is that they discuss, they negotiate and they reach a consensus on what is necessary.

  147. You still end up with the one size fits all, even though the prices of things may be vastly different in London compared to the Lowlands.
  (Ms Middleton) I absolutely agree with you, but would you like to design a benefit system where you paid one rate of benefit in Hawick and another one in London?

  Mr Dismore: We have been thinking about it.

  148. It is something we perhaps ought to look at. Is there not also a possibility from your approach that you could end up with the reverse situation? What you are saying is that the net product you end up with is potentially going to produce a higher figure than the objective base line the Government uses, and it is an objective one which can be scientifically assessed. Whether it is a sensible one or not is a different issue. Could you actually end up with a situation as the overall average income increases where you may end up with your basket based approach, ending up with producing a lower figure than the objective criteria as living standards, as incomes improve?
  (Ms Middleton) Of course.

  149. Bearing in mind that your research shows that irrespective of income levels of the families, the amount spent on the children is roughly the same.
  (Ms Middleton) Yes, of course you would have to update the budget standards periodically, perhaps every ten years as people's priorities change. The actual 50 per cent of average income does not remain a static figure, it increases as incomes increase and you have to take into account changing consumption patterns and so on and so forth. It is a very useful way of establishing what adequacy is within a society because it does allow you, if you want to design a benefit system which for example takes into account the differences between urban and rural areas, to go out and do the work on that basis. In terms of the level it produces, if you want the honest truth, when I first did it, I used to lie awake firstly thinking that they were going to come up with figures three times the current benefit levels or they were going to come up with figures of about tuppence a week. In fact what you get, because mothers understand the reality of budgeting, what you come up with is something which is about 20 to 30 per cent above the Income Support levels pertaining at that time. Not a million miles away.

  150. When we were doing our report into Pensioner Poverty, we heard from the Family Budget Unit about their work attempting to set out a "Low Cost But Acceptable" income standard for older people. How does your approach differ from that, or does it?
  (Ms Middleton) I am not saying one is necessarily better than the other. It differs because the heart of the Family Budget Unit's method is still the committees of experts. They have moved much more recently to doing more focus group type work in checking budgets out.

  151. So they are catching up with you.
  (Ms Middleton) I would not be arrogant enough to say that. It does rely essentially on the judgements of experts still. There is room for both. We do not come out a million miles away. Their approach also differs because they tend to produce baskets of goods for a family as a whole whereas the approach I like to take is to disaggregate the family to start with and then gradually build up, but through a process of groups which actually negotiate out differences until you can get back to the family again, which is exactly the approach I have taken in Jersey when I have been doing work out there.

  152. Are you in favour of this then?
  (Ms Middleton) What?

  153. The ICC.
  (Ms Middleton) Yes.

  154. If you have any criticisms at all, what are the main two?
  (Ms Middleton) They will relate to what I said earlier about the plight of parents in poor families. If the ICC were to be used to say "Okay, we've sorted out the kids, they aren't responsible for what's going on, but now we are going to use sanctioning on employment tax credit", I think that would be a very great mistake. I have concerns about what could happen to Child Benefit in the future, about the potential to erode it, but that could happen anyway.

  155. It is an integral part of your general acceptance of the scheme that Child Benefit is a strong and continuing independent element of it. If it were folded into it, you would have—
  (Ms Middleton) I would have greater concerns. Again, I perhaps do not feel quite as strongly as some people do about taxation at the higher levels of Child Benefit. Work I have done with mothers about that suggests that most mothers would not object to taxation at the very high levels of income, but the point is they are talking about levels very high up the income scale. We do find that even for mothers from the A/B socio-economic groups Child Benefit is a very important part of the family income. It depends on the tapering, does it not? If you have a very shallow taper as you do in Canada, where it perhaps still covers 90 to 95 per cent, it is perhaps not so bad but in general my principle would be to try to keep it separate.

  156. You have mentioned the shallow taper in Canada and elsewhere several times now. Presumably if you have so much money to spend, one of the trade-offs is the amount of help you can concentrate on the poorer people and the amount you need to produce a shallower taper and rightly or wrongly our Government has decided that the steeper taper allows you to spend more on the people at the bottom of the pile. In Canada they obviously take a slightly different view. How would you answer that?
  (Ms Middleton) How I would answer that is by going back to the evidence about how spending does not fluctuate very much in families of different types. You have to try to provide as adequate a level as possible for all children whatever their circumstances. Yes, within existing resources you are going to have to make those sorts of choices, but that is a very big "within existing resources". Government has shown that it is willing to put extra resources in to support the children and it is to their credit that they have massively done so, even though we are not allowed to mention redistribution. One of the telling things from Professor Millar's work is what was said by women in Canada, that they were prepared to take the rough justice in return for the security and guarantee and all the rest of it.

  157. This may not be your own specialism but do you have a view about the timetable within which we are trying to bring in this quite fundamental change? Is 2003 too soon, not soon enough? Is there a worry about the process of getting from where we are now to the Government's published plans in 2003?
  (Ms Middleton) There is a concern. So much depends on the detail of what is going to happen. If we are looking at the sort of system where everybody has to move to filling in income tax forms, yes, we are going to go too quickly. I do not know about the timetable but I just have a feeling that a very great opportunity is being missed to look thoroughly at what we provide for children, what the purpose of it is, whether it is adequate, what the structure should be and so on and so forth, in this understandable rush to get this reform through. I do not know whether 2003 is too soon. I am not expert enough, but I suspect the way things go, it is probably going to be pushing it.

  158. From what you were saying earlier, you would be in favour of having a freestanding, separate and distinct piece of legislation to deal with this because you were saying there is a bit of incoherence about the real motivation and the real goal, or at least it is a bit blurred. Do you have a view about whether we as legislators should be saying, okay, rather than just bolting on things to an edifice which is already quite complicated, maybe we should stand back and with a clean sheet of paper devise legislation which does this in a way which is more understandable?
  (Ms Middleton) Yes, in an ideal world, especially given all the complexities you have mentioned about interactions with Housing Benefit and Council Tax Benefit and so on. There is a sense in which as well the jury is still out about whether tax credits are the best way to reduce poverty, even at that level. I suspect the reality is that it will end up being bolted on to the existing system.

  159. You were talking earlier about the need for research and perhaps the inadequacy of the existing data, notwithstanding the valuable contribution your own work has made. If somebody said to you that they would stop the process and do nothing about getting a new legislative system into being until they could get adequate data, how long would that take to do very thoroughly? Would you be prepared to fill the delay?
  (Ms Middleton) It depends what you wanted to do. For me personally, if I were asked to redo the budget standards for children, it would take six months.