Poverty: The 2010 consensus in tatters

Dropping the child poverty target would mean accepting a level of poverty much higher than almost all countries of comparable wealth.

Stewart Lansley is a visiting fellow at Bristol University and the author of The Cost of Inequality

Last week the head of the IPPR think-tank, Nick Pearce, hurled a hand grenade into the poverty debate.

In an article entitled ‘Labour must drop its child poverty target‘, Pearce, a former adviser to Gordon Brown, argued that Labour’s partially successful but expensive anti-poverty strategy “had been running out of road even before 2008, never mind now”.

Pearce’s intervention chimes with the line being taken by the coalition. While the Conservatives and the Liberal Democrats voted, in opposition, for the 2010 Child Poverty Act, both parties have been distancing themselves from the Act and its targets, while embarking on a radical reappraisal of how to define and tackle poverty.

This rethink is being driven by three main themes. First, that giving the poor more money is not the way to fight poverty. The work and pensions secretary, Iain Duncan Smith, has constantly dismissed what he calls “poverty plus a pound”.

Secondly, that the role of income transfers should be downgraded with benefit levels frozen and the savings directed to improving ‘life chances’ such as early years education.

Thirdly, the government is attempting to redefine the causes of poverty away from broadly societal explanations – such as a lack of jobs, low wages and rising living costs – to individual ones, such as family breakdown, bad parenting and drug addiction.

In 2010, it seemed as if a clear political consensus had emerged – that poverty was relative, much too high and needed to be tackled by a twin-based approach – cure and prevention. With calls for poverty targets to be dropped, for poverty to be redefined downwards and a switch in rhetoric that is more anti-poor than anti-poverty, that consensus has now unravelled.

Yet all of the arguments for change are weak.

Take the claim that boosting low incomes does not work. An LSE study of the boost to low incomes from 1997 to 2005 under Labour – which cut child poverty by some 700,000 – showed that even small sums make a big difference. Low-income families with children increased their spending on children’s footwear and clothing, books, and fruit and vegetables, relative to other families with children.

While drug addiction and poor parenting may contribute to poverty, the dominant explanation for Britain’s high global poverty count is to be found in its fragile labour market. One in five workers are low paid – the highest rate after the United States amongst comparable economies – and double the figure of the mid-1980s. There are now 45 applicants for every unskilled job vacancy in the UK.

When Costa Coffee recently advertised eight jobs – just three of them full-time and all low paid – for a new branch in Nottingham, there were 1,700 applications. Pitching cash benefits against better services is also no answer – only a twin-track approach will work.

The effect of the ‘rethink’ – essentially a barely disguised cover for dropping promises made in opposition – is now becoming all too clear. The ‘big bang’ benefit cuts from April will wipe £20 billion from the welfare bill and the pockets of the poorest. This is a strategy of ‘poverty minus a pound’ that, as the Institute for Fiscal Studies has shown, will add 1.1 million children to the poverty count by 2020.

The Act’s targets – an unambiguous statement of intent – were always going to be challenging. While few claim they can now be met by 2020, that is not a reason to abandon the targets or repeal the Act. The coalition has been itching to do just this, but perhaps until now, has seen such a move as too politically explosive.

Repealing the Act would send a very negative signal. Without the legal pressure, the likelihood is that Britain would end up locked into a permanently high level of poverty – of between a fifth and a quarter – while life chances would continue to stagnate.

The best option is to stick with the Act, its principles and targets but revise the timetable, thus retaining the force of the legally binding commitment. Dropping the targets would mean dropping the Act’s obligations and accepting a level of poverty much higher than almost all countries of comparable levels of wealth.

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