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.
45 Responses to “Misleading to claim welfare reform will cut child poverty levels”
JRF
Misleading to claim #welfrereform will cut child #poverty levels http://bit.ly/f1WMCh via @leftfootfwd @Chris_Goulden
Don Paskini
RT @jrf_uk: Misleading to claim #welfrereform will cut child #poverty levels http://bit.ly/f1WMCh via @leftfootfwd @Chris_Goulden
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.
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.
Chuka Umunna
RT @leftfootfwd: Misleading to claim welfare reform will cut child poverty levels: http://bit.ly/i56agX writes @NicolaTUC