Child Poverty

Lord Hendy Excerpts

Thursday 18th June 2026 Lords Chamber

[Lord Hendy (Lab)]

My Lords, I, too, thank my noble friend for securing this debate and for her eloquent opening which, together with the contributions of other noble friends, identifies the appalling and, indeed, rising levels of child poverty in this, one of the richest countries in the world.

No one could disagree with the measures proposed in the government strategy paper and those raised during this debate. However, I will focus on another aspect of the problem, which my noble friend Lady Donaghy has touched on: the problem of low pay. The Joseph Rowntree Foundation’s UK Poverty 2026 report points out that 1.2 million children in poverty live in families with no adults in work. That is tragic, but not perhaps surprising among the grisly statistics on poverty. However, 1.7 million children in poverty live in families where at least one adult is in work. Worse still, 1.6 million children live in poverty in families where every adult in the family is in work.

This shows that, unemployment apart, workers do not earn enough to banish poverty. In this country, wages are, quite simply, too low. It must be remembered that, of our population of 67 million, over half—34 million—are in work, yet they do not earn enough to generate the demand that would grow the economy.

The latest ONS figures show that, for full-time workers, median earnings are £39,000 per annum gross and £31,700 net. This equates to a weekly take-home of about £610 per week. When part-timers are taken into account, the gross median falls to £31,000 and £26,000 per annum net. That equates to a weekly take-home of about £500. Since this is a median figure, one half of all employees—that is to say, 17 million—earn less than that figure each week. The median for each of the categories of women, disabled and ethnic minority workers is less still. The median self-employed worker, full or part-time, also earns less than the comparative median employee.

Low wages are the reason why the cost of living tops the concerns of working-class people in this country. The Government’s efforts to cap energy and housing costs have not so far succeeded, and, to a large extent, are caused by events outside UK control. However, wages can be increased. Increases to the national minimum wage are not insignificant, but the national minimum wage is not a minimum wage; it is a minimum hourly rate, and it does not enhance the wages of the great proportion of the workforce who earn something more than the national minimum wage. The value of real wages is much the same today as it was in 2008.

The only way to increase the real value of wages is widespread collective bargaining. That is the reason that the OECD, the IMF and the ILO all now advocate it, and why the EU’s 2022 adequate minimum wages directive requires member states with a level of collective bargaining coverage below 80% of the workforce to produce an action plan to achieve at least that level within five years. This is ironic, because in this country we had a level of collective bargaining coverage in excess of 80% from the end of the Second World War until the 1980s, when the Conservatives started to demolish it. Collective bargaining coverage is now around 25% of the workforce, and its absence for the remaining three-quarters of our workers is the principal explanation for low pay. That absence is also a key component of lack of demand in the economy and a major contributor to government expenditure on subsidising low wages. I recall that 32% of those on universal credit are actually in work.

I hope my noble friend the Minister will reconsider the Government’s opposition during the passage of the Employment Rights Act to a mechanism for the reintroduction of sector-wide collective bargaining across the economy, which I and some of my noble friends will be very happy to discuss with her. Such a measure would be a key component in the strategy for the relief of child poverty.