Tim Nichols, of the Child Poverty Action Group, looks at the policies brought in under Labour thast helped bring child poverty down to the lowest levels for 25 years.
Tim Nichols is the Press and Parliamentary Officer of the Child Poverty Action Group
The coalition government has argued for an approach to ending child poverty that is not simply about moving a few families over an arbitrary line. They want a strategy that is about making work pay, rather than income transfers, or “poverty plus a pound” as Nick Clegg often puts it in his dismissive soundbite.
But the new child poverty figures out yesterday present a problem for the government’s analysis and strategy.
Not only do they show a fall of 200,000 in the number of children in poverty – bringing the figure, measured before housing costs, to its lowest level in 25 years – but they also show a reduction of 100,000 in the coalition’s new measure of material deprivation combined with severe relative low income (below 50 per cent median income).
It had been predicted that any fall in poverty for 2009/10 would be largely a consequence of a fall in median income following the recession. The headline poverty mark is 60 per cent median income, so if median income falls, so does the poverty line, leaving some people who were just below it now just above it. But median income actually rose slightly.
Therefore we can only really attribute the fall in child poverty to three key investments the previous government made in families from April 2009:
• A rise in child benefit for the oldest child to £20;
• A £50 annual rise in child tax credit above indexing;
• The introduction of a child benefit disregard in housing benefit and council tax benefit, so that working families on low income got more help with their rent and council tax.
This strategy, combining universal benefits, income transfers, housing support and tax rebates, was of course working in parallel with other elements of a broad strategy on child poverty, such as a decade of growing investment in Sure Start centres. Clearly, it was working.
Not only was relative poverty impacted, but also so was severe poverty and material deprivation. This is not just a paper exercise of children moving over an arbitrary line, the evidence clearly shows a real impact on the lives and wellbeing of children affected by socioeconomic disadvantage.
But all this progress is now under threat. The Institute for Fiscal Studies (IFS) has predicted that, as a consequence of the coalition’s programme of cuts, especially cuts to family welfare, child poverty will begin to rise again.
See the table below:
Millions % of children
Baseline year: 1998/99
3.4
26%
Latest figures: 2009/10 2.6 20% IFS estimate: 2010/11 2.5 – IFS estimate: 2013/14 2.7 – Coalition’s 2020 target – Below 10%
Sources: HBAI 1998/99-2009/10 (rounded figures before housing costs); Children and Working-Age poverty from 2010 to 2013, IFS 2010Many of the coalition’s cuts run directly counter to ministers’ stated priorities of making work pay and increasing work incentives. Tax credits and support to help meet childcare costs are suffering the swing of the axe from chancellor George Osborne and his Liberal Democratic deputy, Danny Alexander, while Iain Duncan Smith’s much vaunted Universal Credit is also being hobbled by the Treasury.
The work incentives that his Centre for Social Justice calculate are needed are now being wrecked by a refusal from the Treasury to fund the scheme at the level needed. Meanwhile Eric Pickles at the Department for Communities and Local Government is throwing another spanner in the works by insisting Council Tax Benefit is replaced by a complicated plethora of local schemes, turning the transparent work incentives that were intended into a postcode lottery for many claimants.
David Cameron made a great promise when he was seeking election to 10 Downing Street, saying in 2007:
“We can make British poverty history, and we will make British poverty history.”
But with the deputy prime minster taking the lead, the drive for progress on poverty has been lost due to his dismissal of adequate incomes today in favour of a focus on ‘life chances’ for tomorrow. It is time the coalition left behind the deputy prime minster’s vague rhetoric and got back in touch with the prime minster’s ambition.
The evidence base clearly dictates the kind of policies that successfully impact on children’s lives and wellbeing today. If the progress achieved – despite the awful economic circumstances – in the final year of the previous government were to be replicated throughout a full five-year term of the coalition government, there would be a million fewer children in poverty by the next election.
Only this concrete progress will change life chances for the next generation.
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34 Responses to “Coalition must not destroy legacy of lowest child poverty for 25 years”
Ash
‘They want a strategy that is about making work pay, rather than income transfers, or “poverty plus a pound” as Nick Clegg often puts it in his dismissive soundbite’
This remark makes me about as angry as anything the insufferable, sactimonious prick has ever come out with.
I well remember moving from the dole into employment under the Tories in 1996. All of my family’s housing benefit and council tax benefit was withdrawn immediately, and we didn’t qualify for Family Credit because my net income, at £769 a month, was too high. (I was supporting a wife and two children on that.) By the time I’d paid for a train ticket to work, we were worse off than we’d been on benefits.
Then tax credits came in. They were worth more than £4000 a year to my family. £4000 a year! Not only were we lifted out of poverty, but we could actually think for the first time about saving up a deposit for a house, taking an annual holiday, signing the kids up for sports clubs etc.
‘Poverty plus a pound’ my arse.
(Oh, and worth adding: if Labour has chosen to spend £15 billion or so on ‘lifting the poor out of tax’ by raising the tax threshold, rather than on tax credits, low-income families like mine would have been a few *hundred* pounds better off rather than a few thousand. Most of the money would have gone to people with household incomes two, or four, or six times higher than ours. Which is exactly what’s happening now, of course.)
Ash
Sorry, should be “if Labour *had* chosen…” in that last paragraph above.
Anon E Mouse
Ash – I’m sure you’ll agree then that whilst the £4000 was a lifesaver for you it makes no difference to Eric Clapton who’s worth £millions and that the money should be given to those in need and not wasted on multi millionaires.
I can feel a shared position with coming on… its going to be good…
So Ash. Do you think it’s fair for minimum wage workers to give their money to pay to millionaires?
scandalousbill
Anon,
I am not quite sure if your argument holds. Unless you can show that Clapton is a tax evader, it would seem that he would make a larger contribution than a minimum wage worker. It could also be argued that the cost to the minimum wage worker would increase without this type of larger contributions.
Or are you advocating that if an individual can afford a privately funded service, they should not be required to pay for a publicly funded one.
Tim Nichols
@Murray Rothbard and Anon E Mouse
The word poverty has been used for both absolute and relative meanings for hundreds of years and dictionaries record this usage. This is just pedantry. Whether we label it ‘poverty’ or not is neither here nor there. The main qustion is: ‘is there a problem here?’ Your real criticism therefore seems to be that you don’t see inequality as a problem, or the kind of consequences it brings to the UK as anything to worry about. You are of course entitled to this view, but many other people do not want the kind of segregated society created by the high level of inequality we experience in the UK; nor do they think it is fair that the poorest children have life expectancies over a decade shorter than the wealthiest, are twice as likely to acquire a disability, and are much less likely to reach their full potential in schooling and the acquisition of skills and qualifications.
If the article is socialist spin, then there must be a lot more socialists around than care to admit it, including David Cameron and the IFS.
Child Benefit has always worked in tandem with progressive taxation. Yes, Eric Clapton may get child benefit, but he pays much more in tax than a minimum wage worker. Universal child benefit has many advantages, including high take up and ensuring that within household budgets sufficent resources are spent on childrens needs. Means testing child benefit would lose many of the advantages and cost the taxpayer more due to double means-testing, which requires double the bureaucracy. Means testing through income tax is simple and efficient. Why make the taxpayer pay for thousands more bureaucrats through double means-testing bureacracy?
@13eastie
It was during the 1980s that rates of both lone parents and workless families rose steeply, so it’s rather weird to blame a government that came in after that change had happened.
CPAG has indeed been critical of the Labour government’s child poverty record. They could and should have done more. As we have said many times on this point, the glass is half full. You may only want to look at the emply half of the glass, but it is important that we recognise and understand both. We need to appreiciate the progress that was achieved, and how it was achieved, as well as understanding why the greater progress hoped for was not realised.