Osborne’s silence on child poverty speaks volumes

There is a telling silence in the chancellor’s autumn statement documents today - and that is the lack of any reference to child poverty, writes Alison Garnham.


Alison Garnham is the chief executive of the Child Poverty Action Group (CPAG)

There is a telling silence in the chancellor’s autumn statement documents (pdf) today – and that is the lack of any reference to child poverty.

One might think it is strange for a government legally required by an act of parliament to take steps to end child poverty by 2020 not to spell out how it plans to progress this agenda. But a look at the details of the autumn statement makes clear why the chancellor would want to keep quiet about his contribution to the fight against child poverty.

Although he presented it as a generous move on the government’s part to uprate most working-age benefits by 1% for the next three years, in truth this will have a profoundly detrimental effect on the incomes of poor families.

This is not simply a technical change, but one that will reduce the real value of benefits by an estimated 3.2% over the next three years, cutting more than £1.8 billion from poorer families’ and individuals’ incomes in 2014/15 alone.

Analysis (pdf) by The Institute For Fiscal Studies has already shown the significant projected rise in child poverty over the next decade stems primarily from the past decision to uprate benefits using the consumer price index (CPI) rather than the more generous retail price index (RPI) measure.

To renege completely on the promise of inflation-linked benefits can only plunge more families into poverty than ever before.

With September’s CPI figure coming in at 2.2%, a 1% uprating is miserly indeed. And to suggest this is appropriate because it is on a par with all earnings is simply untrue.

ONS figures show average earnings rose by 1.5% this year; instead, what Osborne has done is peg benefit uprating for the next three years to planned public sector pay rises, ignoring in the process the multiple advantages public sector employees have compared with those who rely on benefits for some or all of their income.

In addition, the chancellor claimed in his speech out-of-work benefits have risen twice as fast as average earnings in the last five years. So far, so true. But what he conveniently obscured is the fact that for many years, benefits have risen at a significantly lower level than wages. As earnings raced ahead in Britain until 2008, a stark disconnect between wages and benefits opened up: the value of out of work benefits fell, for example, from 21% of average earnings in 1970 to just over 11% by 2011.

In fact, manipulating the levels at which benefits are uprated is a tried and tested method of trimming social security spending both in good times and in bad. But when times are as bad as they are now, presenting cuts to the real value of benefits as ‘fair’ is disingenuous in the extreme.

And given these cuts will squeeze family incomes further than ever, it is no surprise that for the chancellor, silence on child poverty is golden.

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