Child poverty: time for honesty and a new approach
The latest analysis of child poverty figures from the Institute for Fiscal Studies reiterates yet again that the goal of ending child poverty by 2020, as enshrined in the Child Poverty Act, is now all but impossible to meet.
Relative income poverty among families with children looks set to rise considerably over the next decade, cancelling out all of the progress made under the last Labour government.
Labour’s attempt to end child poverty generated improvements in family incomes that benefited millions of children but, as the IFS figures show, it relied on ever higher levels of public spending - a strategy which was running out of road even before 2008, never mind now. At the same time, its highly centralized, even technocratic approach to tackling child poverty failed to speak to people’s everyday concerns about childhood, not least those officially labeled as ‘poor’. As a result, Labour struggled to secure widespread public support for its ambitions or mobilise families and communities behind them. Contrast this to the popular attachment generated for the newly created Children’s Centres.
The particular focus on internationally accepted definitions of poverty, while unimpeachable in social policy terms, pushed Labour ministers to prioritise short-term increases in cash benefits over long-term investment and reform to raise employment and wages among parents. This left the strategy too reliant on the beneficence of the next Budget and blown away by the fiscal implications of the financial crash. Families could end up as passive recipients of cash benefits, with some feeling trapped in low pay and dependency. These are some of the important insights emerging from a new programme of work at IPPR’s on the ‘Condition of Britain’, in which we are rethinking the centre-left’s approach to major social policy challenges.
No one wants to see more children living in poverty. But a future Labour government could not plausibly commit the kind of resources required to achieve the 2020 targets through higher public spending. What are the options when faced with this reality? Campaigners on the Left continue to press for greater spending (or perhaps more accurately fewer cuts) now. This is admirable, but does not have a plausible chance of success. Voices on the Right say the goal should be abandoned or redefined. Meanwhile, the Coalition government refuses formally to abandon the targets but pushes through benefit cuts that make them impossible to meet, perhaps the worst response of all.
There is another path. This would be to say that ending child poverty remains vital but will take longer than we hoped and will need to be pursued through different means to those used in the past. First, while income matters a lot, it also matters where that income comes from: earning enough to live a decent life is better than relying heavily on cash transferred to you from the state (although the tax and benefit system will always have a role in supporting families with children). Second, while government has a crucial role to play in enabling children to thrive, it is ultimately parents and their wider family and friendship networks that matter most. A good childhood is only possible if families live strong common lives with others. Institutions like Children Centres support community life better than income transfers. Moreover, they are much harder to cut or abolish.
The twin challenges now are to identify strategic priorities for public investment and economic reforms to lift family incomes and to develop a new statecraft through which to tackle poverty, rooted in people’s lives. On priorities, a good place to start would be families with young children, since the early years matter most for child development and that’s when the pressures of time and money really bite. And in an era of limited public budgets, rising living standards will have to come from higher levels of employment among parents and rising wages, rather than simply through more tax credits and in-work benefits.
This is the approach taken by the low-poverty countries that Tony Blair was trying emulate when he pledged to end child poverty back in 1999. In the Nordic nations, relatively few children live with parents who don’t work, many more lone parents are in work than in Britain, and more mothers in couples also work. Dual-earner couples with children face much lower rates of poverty – less than five per cent in Britain, compared to nearly 20 per cent among single earner couples. Public spending is focused on younger children, through more generous parental leave and good quality, universal childcare, rather than cash benefits spread across all children. In-work benefits tend to be less generous, partly because fewer parents face endemic low pay, while investment in back-to-work support is much stronger.
Shifting the UK towards this kind of model would mean prioritising investment in childcare, paid leave and employment programmes over cash benefits. Freezing child benefit in cash terms for a decade would free up £2.5 billion a year to invest in quality childcare services, while billions more a year could come from restricting tax relief for pension contributions to the basic rate. Beyond public spending, radical economic reforms are needed to lift wages and tackle low pay, such as a more ambitious role for the minimum wage or a new expectation that companies will share profits with their staff. There is a world of difference between the aspiration of work paying more than benefits and work that pays enough to live on. These reform priorities coupled with a new approach that puts families centre-stage should form the backbone of a revived child poverty strategy that reflects the new fiscal reality.