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Child Benefit Up-rating Order 2010

My Lords, I thank the Minister for introducing these regulations and orders, which are among the highlights of the Treasury calendar. We shall not be opposing the instruments but I have a few points for the Minister. As the Minister explained, these instruments, in one way or another, grant real increases in benefits and tax credits. Most but not all of the tax credits are being increased; because RPI fell in the year to last September, simply maintaining the value increases them in real terms. However, this analysis may not resonate with the average family. While prices fell in the year to last September, which is the reference period for the uprating, they are not falling at the moment. The latest year-on-year RPI figures show a 3.7 per cent rise and RPIX, which excludes mortgage payments, shows a rise of 4.6 per cent. The rate of increase is accelerating sharply, with annualised rates over a shorter period being very much higher. I would not like to be a Labour candidate, or canvassing for one, in a few weeks’ time, explaining the great munificence of a 1.5 per cent increase in, say, child benefit against inflation rates perceived as very much higher than that—but that is very definitely not my problem. I will start with child poverty, which the Minister mentioned. The Minister and I have been spared dealing with the Child Poverty Bill and I shall not repeat all the analysis that noble Lords spent many happy hours debating in the Moses Room. One thing is now crystal clear, and even the Government cannot escape this analysis: the Government have failed to meet their 2010 target to halve child poverty. That required the numbers to fall to 1.7 million. At the last count, 2.9 million children were living in relative poverty. The statistics have been going backwards since 2004, with particularly worrying increases in the number of such children in working, as opposed to workless, households. We do not rejoice in any of this, because it is yet another problem that a new Government will have to solve. The Government have often used the granting of real increases in child benefit and the child element of tax credits as a way of claiming an advance in the war on child poverty. Since the 2007 Budget, the Government have been claiming that their plans would lift 500,000, or sometimes 550,000, children out of relative poverty. I read very carefully the 2009 Pre-Budget Report, in which the changes included in these instruments were first announced, but I found no claims about the impact of the PBR, either on its own or cumulatively, since the 2007 Budget on child poverty figures. Will the Minister say what impact the child benefit and child tax credit changes in the instruments before us will make on the child poverty figures? If he cannot give an up-to-date estimate of the number of children who will be in relative poverty in 2010-11, can he say what impact these instruments taken on their own will have? If he cannot give that analysis, will he say why a Government who have bragged so much about their policies to reduce child poverty cannot calibrate one of their flagship PBR announcements on tax credits in those terms? The other area that I want to confirm with the Minister is how these increases will be clawed back next year. The Government have made it clear that the 1.5 per cent increases will not be permanent but will be offset against the inflationary increase that they expect on the basis of the September 2010 RPI figures. Let us take the basic element of the tax credit, which is currently £1,890 and is being increased by the tax credits regulations by £30 to £1,920—an increase of just short of 1.6 per cent. When they come to the calculations based on the September 2010 RPI figures, will the Government knock that 1.6 per cent off inflation for the year to September 2010 in calculating the increase allowed for the following year’s tax credits? If, for example, inflation to September 2010 is 4 per cent, will tax credit recipients get 2.4 per cent? If we translate that into the basic element of the tax credit, a claimant will get £51 extra in 2011-12 rather than the £81 that inflation would indicate for the year. If inflation slumps to 1.6 per cent—it is unlikely, but let us assume that it does—will they get nothing? It is important to be clear about this: if this is happening, it is another of the poisoned wells being left for an incoming Government.