Misleading to claim welfare reform will cut child poverty levels

Making hundreds of thousands of families poorer, and then making some a little better off, does not count as a child poverty reduction plan, writes Nicola Smith.

Last week much was made of the impact that Universal Credit will supposedly have on poverty levels, with the Secretary of State for Work and Pensions, Iain Duncan Smith, claiming “350,000 children” will leave poverty as a result of the reform.

But all is not as it seems. The Department for Work and Pensions’ impact assessment for Universal Credit (UC) does state that, “on reasonable assumptions, the combined impact of take-up and entitlements” might lift around 350,000 children out of poverty.

However, crucially, the department are comparing “Universal Credit with the benefit and Tax Credit system projected forwards to 2014/15”.

In other words, DWP’s estimate compares the number of children who will be in poverty after the Budget and CSR’s welfare cuts (but before the introduction of UC) in 2014-15 with the number who will be in poverty after both the cuts and the adoption of Universal Credit.

It’s worth remembering the scale of the welfare cuts the government is proposing. Over the next few years significant reductions will be made in benefits paid to children and families.

These include:

• The three-year freeze in Child Benefit;

• The cuts in Housing Benefit (many of which will affect families with children);

• The removal of the Baby Element of Tax Credits;

• The abolition of the Health in Pregnancy Grant;

• The abolition of the Child Trust Fund;

• The cuts to the Sure Start Maternity Grant;

• The reversal of the proposed Toddler Tax Credit;

• Cuts to disability benefits; and

• The indexation of all benefits to CPI to name but a few.

The TUC has calculated that these cuts could leave a duel earner family on minimum wage worse off by more than £2,700 a year. Family Action has found that the poorest families with new babies will lose more than £1,700 annually. These are significant reductions in family incomes which will have real consequences for children’s lives and future prospects.

And it also turns out the Institute For Fiscal Studies undertaken research to estimate how many children will be affected.

In a study funded by the Joseph Rowntree Foundation they have estimated that between 2011-12 and 2013-14 government policy will lead to the number of children living in relative poverty increasing by 300,000 – with absolute poverty levels rising by half a million. These changes result from the benefit cuts the government has committed to introduce over the next three years.

IFS’s research does not forecast forward to 2014-15, but it seems fair to presume that, given their analysis shows 100,000 and 200,000 children a year respectively are moved into poverty as a result of the benefit reductions over each preceding years, as a minimum the government’s cuts will mean another 50,000 will be moved into poverty in 2014-15 (compared to the current, pre-June 2010 Budget, system).

In other words, between now and 2014-15, at least 350,000 children will move into relative poverty as a result of the coalition’s benefit cuts. Then, when Universal Credit comes along, 350,000 may be moved out (mainly as a result of increased benefit take up).

At best, this suggests that the net impact of welfare reform on child poverty will be zero, and at worst, if the benefits of UC fail to materialise or if the cuts in 2014-15 affect (as they may well do) more than 50,000 children, the net impact of welfare changes on child poverty over the next four years will be negative.

Given the scale of the impacts in absolute poverty that the IFS forecast, it also seems likely that whatever Universal Credit achieves the cuts to benefits for families in the UK prior to UC’s introduction will mean that absolute levels of child poverty are higher than at present.

This outcome is very far removed from the DWP’s recent spin – and calls into further question the government’s commitment to the abolition of child poverty. Making hundreds of thousands of families poorer, and then making some a little better off, does not count as a child poverty reduction plan.

Thanks to Chris Goulden for pointing me to the IFS research.

Like this article? Sign up to Left Foot Forward's weekday email for the latest progressive news and comment - and support campaigning journalism by making a donation today. 

45 Responses to “Misleading to claim welfare reform will cut child poverty levels”

  1. David Carter

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  2. Nicola Iannelli

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  3. John Dilworth

    Not to lose sight of this RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX @NicolaTUC

  4. Stephen Hart

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels http://bit.ly/foXSCV

  5. Tom Wood

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  6. Nicola Smith

    Claims on reducing child poverty don't stack up: UC may cut poverty but welfare cuts will raise it http://bit.ly/i56agX @leftfootfwd

  7. Rosemary

    RT @nicolatuc: Claims on reducing child poverty don't stack up: UC may cut poverty but welfare cuts will raise it http://bit.ly/i56agX @ …

  8. David Carter

    RT @nicolatuc: Claims on reducing child poverty don't stack up: UC may cut poverty but welfare cuts will raise it http://bit.ly/i56agX @ …

  9. Kelvin John Edge

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  10. T.O.O.L.S. Training

    Misleading to claim welfare reform will cut child poverty levels …: Making hundreds of thousands of families p… http://bit.ly/gFjv3x

  11. Nikki Hutchison

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  12. Double.Karma

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  13. lesa

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  14. Michael

    Misleading to claim welfare reform will cut child poverty levels | Left Foot Forward – http://j.mp/f9I7OM

  15. Abigail Scott Paul

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels http://bit.ly/foXSCV

  16. JRF

    Misleading to claim #welfrereform will cut child #poverty levels http://bit.ly/f1WMCh via @leftfootfwd @Chris_Goulden

  17. Don Paskini

    RT @jrf_uk: Misleading to claim #welfrereform will cut child #poverty levels http://bit.ly/f1WMCh via @leftfootfwd @Chris_Goulden

  18. Christopher

    Presumably you’re not taking into account changes in behaviour? If the whole point of the redesign is to give incentives to get back into work (and to help people), then maybe even more kids will come out of poverty?

    The trouble is, over the Labour years we ended up just seeing poverty as a financial problem, and a problem which we could solve by chucking money at (which seems slightly ironic if you ask me, as if money causes so many problems why do we use it to try to fix them?). This is something Frank Field picked up on at a talk I went to recently. He’s leading calls to focus on early years education and improve people’s life chances.

    However, as long as people quote stats about making more kids poor as soon as you try to change the benefits system, we’ll still be stuck with an ineffective, populist, short-termist system that dumps people on the heap but helps relieve the middle class’s conscious because they chucked some money at the poor people and then just walked away and got on with their own lives.

  19. Christopher

    • The three-year freeze in Child Benefit;
    • The cuts in Housing Benefit (many of which will affect families with children);
    • The removal of the Baby Element of Tax Credits;
    • The abolition of the Health in Pregnancy Grant;
    • The abolition of the Child Trust Fund;
    • The cuts to the Sure Start Maternity Grant;
    • The reversal of the proposed Toddler Tax Credit;
    • Cuts to disability benefits

    No wonder there’ll be an uptake in benefits – if there’s that many benefits how do you expect people to work out how many they are eligible for? If these are just the ones that are changing there must be even more.

    Again, the trouble is Labour’s solution to everything was to chuck some money at it, or invent a new benefit, or new policy, or (in the case of climate change) create a whole new department!!! Why don’t we just have some non-partisan evidence-based policy making, which seems to be what Frank Field and, to an extent it seems, Iain Duncan Smith are trying to do? Rather than this rhetoric-based populist policy-making that we naturally seem to tend towards.

  20. Chuka Umunna

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  21. Chris Goulden

    RT @AbigailSPaul RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels http://bit.ly/foXSCV

  22. Meurig Gallagher

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  23. Frieda_M

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  24. Emma Ritch

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  25. streathamsoul

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  26. Romila Chaplin

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  27. Anon E Mouse

    How on earth did our country ever get to the position where there are so different benefits available?

    I know people on this blog agree with giving rich people Child Benefit so they can feel their socialist dream is intact but the the administration of all these different benefits costs a fortune, makes people dependant on the state and as as been shown after thirteen years of Labour governance does nothing to decrease the equality gap between rich and poor. Quite the reverse in fact.

    What is more worrying is that Nicola Smith seems to want to continue to keep poor people poor which really shows Labour is far from the “Party of Aspiration” that it once was.

    When it used to win elections…

  28. Nicola Smith

    Hi there Anon – as ever it’s a pleasure.

    I can’t really see how you can have concluded I would rather people remained in poverty. In case you are really in any doubt I would far prefer that over the next few years the incomes of those already living in poverty were not cut. The point of the post is to draw people’s attention ot the fact that this is going to happen.

    As to why there are so many benefits it’s because people’s lives are complex – Disability Living Allowance, for example, provides disabled people who incur additional costs as a result of their disability with particular help, while the Sure Start Maternity Grant provides new mothers living on very low incomes with a £500 grant to help meet the costs of having a new child. I am no advocate of complexity for complxity’s sake, and would far rather we had a more generous and a simpler system, but with a limited amount of money to go around complexity is often a concequence of sharing out the cash so that households incurring particular additional costs receive more.

    And actually I haven’t mentioned the withdrawal of Child Benefit for higher earners in the post, the Child Benefit reference is to the freeze which will affect all families with children including those on the very lowest incomes. But if you want to know my views on universal benefits there are plenty other posts for you to choose from (and I believe several already have your comments attached to them).

    Cheerio – Nic

  29. Nicola Smith

    Christopher,

    Thanks for your comments. It’s a good point re: the number of benefits there are and actually the TUC is supportive of the principle of simplification and has welcomed the moves under Universal Credit to make the system easier to understand. However, at the same time we are opposed to using the introduction of UC as a cover for cutting people’s incomes.

    Neither the DWP nor IFS have attempted to model behavioural impacts. My view on this is that there may be some changes but that they won’t be huge – most unemployed people already want a job the problem in the main is that there aren’t enough. And key parts of UC are not decided – for example if childcare support for working parents, pension deductions under auto-enrollement travel costs for getting to work and/or deductions of passported benefits (such as free school meals or free prescription costs) aren’t included in better off in work assessments they may end up being fairly meaningless. And for some people their barriers to work are far greater than financial incentives – years of worklessness, low confidence, no skills or formal education, limited English, significant childcare, lack of flexible jobs etc etc – these are complex barriers to overcome.

    On your key point I fundamentally disagree – poverty is by definition about income and it is simply wrong to pretend it can be ended without state action to redistribute wealth. To start with some people can’t work – without income transfers from the state some disabled people with children and lone parents with young children and childcare responsibilities will simply stay poor. This is also the case for lots of unemployed parents – the problem for many families is a lack of jobs, not a lack of motivation. And lots of people who are in-work are poor because their wages don’t pay enough. So again, without employers or the state acting to increase their incomes they will remain in poverty. I am very much in favour of a sustainable solution to poverty – which means raising productivity in low-paying industries, investing heavily in skills and high quality labour market programmes, building union organisation, better enforcing employment rights and continuing to raise the minimum wage to name but a few parts of the solution – but state income transfers will also be an inevitable part of the answer.

  30. Anon E Mouse

    Hi Nicola – The system is overly complex – it must be or you would be unable to produce such a list of benefits – I go with keeping it simple.

    In your reply to Christopher you make a typical mistake (in my opinion – never humble) in assuming there is a set pot of money to go around and therefore you assert that redistribution is the answer.

    Your second premise is based on a flawed interpretation of wealth. The idea should surely be to increase the pot of wealth available and then the distribution isn’t important providing everyone pays their fair share and everyone has enough (comparatively) to live on.

    It’s Peter Mandelson and his “comfortable” to see people getting “filthy rich” I agree with I’m afraid.

    Anything else is simply the politics of envy but overall it’s a good article…

    (I’m on holiday with a new computer so things are good…)

  31. Broken OfBritain

    Misleading to claim welfare reform will cut child poverty levels | Left Foot Forward http://fb.me/GdyQNro6

  32. Nick H.

    RT @BrokenOfBritain: Misleading to claim welfare reform will cut child poverty levels | Left Foot Forward http://fb.me/GdyQNro6

  33. Marsha de Cordova

    RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  34. Kelvin John Edge

    RT @BrokenOfBritain: Misleading to claim welfare reform will cut child poverty levels | Left Foot Forward http://fb.me/GdyQNro6

  35. Daniel Pitt

    Misleading to claim welfare reform will cut child poverty levels http://bit.ly/i56agX #ConDemNation

  36. Richard

    One man’s envy is another’s justice.

  37. socialist

    RT @myinfamy: Misleading to claim welfare reform will cut child poverty levels http://bit.ly/i56agX #ConDemNation

  38. wendy

    i am a single mother which i arrure you is noway by choice but bad choices in the people i have children with, (i have two) i have since 2006 been studying so that when i return to work it is a position that paid well so i could come off benefits all together and work round schooling so i could continue to be there for my children. unfortunatly i have come to the last stretch and the most expensive, also unfortunatly i can not go on 5 yrs wasted time and funding money, i will now have to return to work if i can and if i do not come out worse off to sit on a checkout , my children will have to go into childcare as supermarkets do not care about school hours and single parents, and i will now forever till they leave school (another 18 yrs) be reliant on benefits which is just what i did not want, i had planned it all so carefully and found out myself with no help from jobcentre all the courses and where i could study , the funding etc etc for it all to fall apart, there now is no funding anywhere that i can get to finish my last three courses totalling 2500 , what a complete waste. all i have been trying to do is put myself in a position to be a better person and not one who sucks the system, i was a year and half off going back to work now its going to be longer as i wont put my youngest child into childcare untill he is 5.
    this is what has happened to lots of us who had planned to better our position while we could.

  39. Shocking new report reveals 1.6m children live in 'severe poverty' | Left Foot Forward

    […] Left Foot Forward’s Nicola Smith reported yesterday, those welfare reforms, which work and pensions secretary Iain Duncan Smith claimed […]

  40. Warnings of generation lost to poverty | Left Foot Forward

    […] of an increase in child and working age poverty, and Left Foot Forward having just yesterday exposed the misleading claims by the government on the impact its welfare reform plans will have on levels […]

  41. Ness

    One other element that will put children into poverty is the assumption in Universal Credit that self-employed people earn at least the minimum wage for the hours they do. Some don’t

  42. Tackling the scourge of child poverty in Wales | Left Foot Forward

    […] the scrapping of Child Trust Funds, the scandalous hike in VAT, and a raft of potentially dangerous changes to welfare on the way, it seems we have a government in Westminster that’s determined to repeat the mistakes […]

  43. Rachael Chrisp

    RT @leftfootfwd Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC

  44. Clare Fernyhough

    The fact is that the Universal Credit is not a ‘do all’ as far as simplification. Benefits became tailored to peoples’ circumstances since we are all not old, young, single, with a family etc.

    I think many people will be in for a real shock when they finally understand what the Universal Credit will replace. For example, it seems that it will only really be for those on a very basic income, providing a limited amount of subsidy to those on minimum wage. Whereas at the moment, a father on an income of £20,000 a year, might expect a considerable amount of money in subsidy. One family I know of gets around £10,000 in tax credits despite the breadwinner earning a reasonably good wage.

    All of this is about to end I’m afraid. One might say that tax credits should never have been available to families who could have easily done without it; most just managed with a wage and child benefit payments. The problems is that these families now rely on tax credits because of the ever increasing costs of living, petrol etc. Some middle income families have only been able to afford a house because of tax credtis.

    For poorer families the outlook is not good is perhaps more serious for single people and couples without children who are on minimum wage who have never had government support. These people face an unprecidented attack on their rights to at least have a roof above their heads. Whether you receive Housing Benefit, Local Housing Allowance or nothing at all, social rents are set to increase by up to 10% per year, by order of the government. Those in receipt of benefits will have to pay a chunk of that toward their rents from 2013, those not receiving benefits will find that their social housing rents will have risen so much that they will not afford to rent at all and will lose their secure tenancies (my rent was low because wages are low in my area, but will double to £120 per week within five years; one bedroom flats similarly since they cost as much to rent as my small semi). The LHA levels for my area do not reflect rental costs at all, and even if someone managed to secure such a property, year on year rising living costs or Housing Benefit cuts will soon mean that people will not afford to rent at all. So where will these hundreds of thousands, if not millions of people live? No one has yet been able to answer that question for me, so I will answer it below.

    You only have to research the emergence of tent cities in America where the working poor and many professionals can no longer afford to rent to see what happens when a country removes such support via adequate wages and benefits. Of course, we do like to follow the USA in everything……

    Helping the poor with one hand and taking away their only means of stability, social housing, with another is hardly a recipe for social mobility. This is just one of many cuts that will negate any attempt via the Universal Credit at alieving child poverty. Whilst changing and challenging peoples’ welfare dependency and their attitudes toward work is important, it is vital that the poor and vulnerable are given the income needed for housing and living costs. I am ashamed that our country is about to make sure that they get neither.

  45. Lowest common denominator politics: the cuts and the myths of welfare dependency  —   MULE

    […] where one adult is in employment. But, as covered recently in Mule, child benefits and services are being cut as well in a variety of different ways, potentially costing dual earning families on minimum wage up to […]

Leave a Reply