The coalition has already abandoned the Child Poverty Act

Yesterday on the pages of this blog, Stewart Lansley claimed that I had "hurled a hand grenade" into the poverty debate by urging Labour to rethink its approach to child poverty. Leaving aside the hyperbole of that statement, Lansley's case seems to be that my intervention "chimes with the line being taken by the coalition" in its attempts to redefine child poverty and its causes. Nothing could be further from the truth.

Nick Pearce is director of IPPR

Yesterday on the pages of this blog, Stewart Lansley claimed that I had “hurled a hand grenade” into the poverty debate by urging Labour to rethink its approach to child poverty.

Leaving aside the hyperbole of that statement, Lansley’s case seems to be that my intervention “chimes with the line being taken by the coalition” in its attempts to redefine child poverty and its causes.

Nothing could be further from the truth.

My starting point is that the fiscal position faced by the UK, combined with the cuts to benefits and services enacted by the coalition, now make it all but impossible to meet the targets to abolish child poverty by 2020 enshrined in legislation, particularly if we take the key objective to be the reduction of relative poverty amongst households with children (which is the primary focus of most commentators and campaigners). I am not alone in this view.

Back in 2011, the Institute for Fiscal Studies concluded that:

“…it is impossible to see how relative child poverty could fall by so much in the next 10 years without changes to the labour market and welfare policy, and an increase in the amount of redistribution performed by the tax and benefit system, both to an extent never  before seen in the UK. IFS researchers have always argued that the targets set in the Child Poverty Act were extremely challenging… It now seems almost incredible that the targets could be met…”

You can of course argue that unprecedented redistribution to poor families with children is possible in the next parliament, given the right political will.

If so, you would need to show, first, how any of the major political parties could be persuaded to put such a significant tax and spending proposal to the electorate, and second, how they could be elected if they did so, given the fact that the public places the eradication of child poverty low down its hierarchy of priorities and tends to blame its incidence on poor parenting, rather than structural causes.

But as it happens, Lansley doesn’t do this: he argues that the 2010 Act targets should be retained but on a revised timetable, by which I take it to mean that he thinks it will take longer than the next Parliament to meet those targets. If so, I concur entirely. That is indeed what I argued in the piece to which Lansley refers.

I also argued for a new approach, however.

We should not reject internationally accepted definitions of relative poverty nor downgrade the importance of raising incomes amongst poor families, as do government ministers and their associated think-tanks. But we should take a more strategic, long-term approach to how we can raise the incomes of families in poverty, chiefly by raising employment rates and wages at the bottom end of the labour market, and focusing on services, like universal childcare, that facilitate work and support dual earner households.

Where we have scope to increase income transfers, we should target these on pre-school children.

Approaches of this kind typify the Nordic countries, which have the lowest rates of child poverty of all the advanced economies. In Denmark, spending on families represented 2.9 per cent of GDP in 2009, a little above that of the UK (2.8 per cent). But almost 60 per cent of this spending went on services and benefits-in-kind, like universal childcare, and only 41 per cent in cash transfers.

In contrast, the UK spent two-thirds of its resources on cash benefits. Similar proportions are obtained for the other Nordic countries. Their biggest achievement has been to increase substantially the female employment rate through sustained investment in childcare and parental leave policies over many decades. That, combined with better wages at the lower ends of the labour market, has underpinned their success in reducing child poverty.

We know it can work here too: in the UK, child poverty rates are less than 5 per cent in dual earner households, compared to nearly 20 per cent for those in which only one person works.

To reply that we should do all of this and more – an ‘all of the above’ strategy – is in my view no longer fiscally credible. We have to prioritise in the years ahead if we are to gain public and political support for reducing child poverty once again.

An investment in services and work, alongside income transfers aimed at children in their earliest years, stands a far better chance of gaining public support and putting down institutional roots in wider society than the approach taken before 2010.

I also believe it would be a better way forward for social democrats, since it would engage people politically as agents in their own individual and collective advancement, rather than simply as recipients of transfers. It would nurture institutions, like Children’s Centres, in which families can live common lives and share personal experiences and histories. And it would be less reliant on the formalism of the law or the beneficence of the chancellor on Budget day.

To argue that this gives cover to the coalition to abandon the 2010 Act and its targets, as Lansley does, is defensive posturing. The truth is that the coalition has already effectively abandoned the Act.

Instead of pretending otherwise, we would do better to come up with credible plans for reducing child poverty that stand a meaningful chance of success in the years ahead.

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