Does cash or services have the biggest impact on child poverty?

We need to invest more money in eradicating child poverty, not simply shift current expenditure around.

There is a view being expressed in influential circles that the money spent on cash benefits (and tax credits) as part of the Labour government's child poverty strategy was wasted and that now it is much better to invest in services. The dominant rhetoric of the coalition government (supported by the Field and Allen Reviews and, to some extent, by Alan Milburn) is that very little was achieved despite billions of pounds being spent between 2000 and 2010, and the child poverty targets were not met. The Child Poverty Strategy (pdf) argued: “This government is committed to eradicating child poverty but recognises that income measures and targets do not tell the full story about the causes and consequences of childhood disadvantage. The previous government’s focus on narrow income targets meant they poured resources into short-term fixes to the symptoms of poverty instead of focusing on the causes. We plan to tackle head-on the causes of poverty which underpin low achievement, aspiration and opportunity across generations”. The Field Review (pdf) actually argued that investments in services should be funded by cutting child and family benefits. The chancellor immediately responded by reneging on his commitment to uprate child tax credits above the rate of inflation and instead to invest in early years for some deprived two-year-olds. James Purnell has joined the chorus and wants to freeze child benefit for 10 years in order to fund child care. Nick Pearce of IPPR has also blogged on the subject .

We need to recognise that the reduction in poverty achieved by the Labour child poverty strategy was mainly achieved by substantially increased and highly redistributive spending on cash benefits – tax credits including childcare tax credits, child benefits and educational maintenance allowances. Child poverty fell by a million. Without this extra cash it would have increased by a million. This evidence is rehearsed in Ending child poverty by 2020: progress made and lessons learned (pdf). Of course the state of the labour market, the minimum wage, and welfare to work played a part. Also extra spending on health, education and childcare helped. But the heavy lifting was done by cash transfers. The UK had the largest reduction in child poverty of any country in the OECD between the mid 1990s and 2008 - see here (pdf).

The claim that spending on services is better than spending on cash benefits may be influenced by the OECD, which publishes rather old (2007) data on spending on families with children as a proportion of GDP and break it down into spending on cash benefits, services and tax benefits. It is certainly true that this data shows that the Nordic countries have high levels of spending on services and low child poverty rates. But this is an association, not a cause. These countries have an egalitarian income distribution, high levels of parental labour market participation, high wages and, yes, heavy investment in good quality childcare. They also start with comparatively low pre transfer child poverty rates. Spending on cash benefits fell in all the Nordic countries in the 2000s and their child poverty rates increased.

The association between spending on services and child poverty is shown in Figure 1. There is a fairly weak association – thanks mainly to the Nordic countries. However there is no association between the proportion of family spending spent on services and child poverty rates or gaps.

Figure 1: Child poverty rate by spending on family services as % GDP

There is a much stronger association between spending on cash benefits and tax breaks and child poverty rates than there is with spending on services (see Figure 2).

Figure 2: Child poverty rate by spending on family cash benefits and tax breaks as % GDP

In EU countries there is a stronger association between child poverty gaps than child poverty rates and spending on cash benefits and tax breaks.  There is an even stronger association between spending on cash benefits and tax breaks and the reduction in child poverty achieved by transfers. See Figure 3.

Figure 3: % reduction in child poverty by % GDP spent on cash benefits and tax breaks in EU countries

Actually, it is the level of total spending on families - cash benefits plus services plus tax breaks – that is most closely associated with child poverty. The lesson is that we need to invest in children in all sorts of different ways. Spending on childcare probably helps to increase maternal employment, enhances gender equality, and possibly also has beneficial child development outcomes. But it is probably not the best way to tackle child poverty and income inequalities. Indeed, recent analysis of EU SILC data suggests that the UK is one of the countries where childcare for children aged two or less reaches the rich better than the poor. It does not tackle the poverty of older children – except possibly in the long term. To end child poverty – and to make long term savings - we need to accept that we are going to invest more money in children; not simply shift current expenditure around. This is politically difficult – but in policy terms, and for anyone who cares about child wellbeing, necessary. To shift spending from cash benefits to services now is going to result in increased child poverty.

Jonathan Bradshaw is Professor of Social Policy at University of York and trustee of Child Poverty Action Group.

 

Ending child poverty could also mean long-term savings. Photograph: Getty Images
Anoosh Chakelian
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“We need an anti-Conservative force”: Nick Clegg wants to work with Labour after the election

On the campaign trail in Sheffield Hallam, the former Deputy Prime Minister talks about how to challenge Brexit and the “Boudicca” Theresa May.

It’s pouring with rain and Nick Clegg has forgotten his coat. “It was so nice this morning,” he groans, looking doubtfully down at his outfit – a navy v-neck, pale shirt, rumpled blue blazer and dark trousers with some dried dirt splattered on the ankles. Yesterday evening, he and his team of activists had decamped to a pub after the rain became too heavy for doorknocking.

We are taking shelter in the Lib Dem campaign office in Sheffield (this interview took place before the Manchester attack). Teetering towers of envelopes and flyers, rubber bands and canvass papers enclose a handful of volunteers sipping tea and eating mini flapjacks. Giant diamond-shaped orange placards – “Liberal Democrats Winning Here” – are stacked against every spare bit of wall.

Clegg has represented Sheffield Hallam, a largely affluent and residential constituency on the west edge of the south Yorkshire city, for 12 years. It has stayed with him throughout his “Cleggmania” popularity as Lib Dem leader in opposition and his difficult days as Deputy Prime Minister in coalition with the Tories. Now he hopes to win it over as a vocal anti-Brexit champion.

After a relentless campaign by the local Labour party in a bid to “decapitate” the Lib Dems in 2015, Clegg’s majority fell from 15,284 to 2,353. He is hoping Labour is unable to further chip away at his support this time round.

“I’m confident but I’m not complacent,” he tells me, nursing a cup of tea as we wait to go canvassing. He believes voters who punished him last time – for going into government with the Conservatives, and breaking his tuition fees pledge – are changing heart.

“I was a target with a great big cross on me,” he says, tracing across himself with his finger. “I personally always think it was this odd cartoon caricature both made of me but also of how people view me... People stop listening to what you have to say – I distinctly was aware at one point when I literally could’ve said ‘Baa Baa Black Sheep’ and it would’ve made no difference. Whereas now, people are very keen to listen again.

“Those who were critical in the past now take a more nuanced view, perhaps, than they did of what I’ve tried to do in politics, and feel I have a role to play in the big debate on Brexit.”

“I was a target with a great big cross on me”

Even when he’s not raging against Brexit, Clegg exudes Proud European. He uses a Norwegian weather app – “they’ve invented something better than the BBC one!” – on his phone (which appears to have failed him today), and keeps stifling yawns because he was up until 2am reading a Hungarian novel called Portraits of a Marriage. “I really recommend it. It’s by Sándor Márai,” he tells me, eagerly spelling out his name. “Of course, I’m reading it in translation.”

Although Sheffield Hallam voted Remain as a constituency (calculated at about 65 per cent), Clegg is still having trouble with his anti-Brexit message among voters. “It’s a very British attitude,” he smiles. “Lots of people who voted Remain sort of say, ‘oh, come on’. The phrase I keep hearing is: ‘We’d better make the best of it.’”

We encounter this attitude when out doorknocking in Lodge Moor, Fullwood, on the rural edge of the constituency. The streets we visit are inhabited by elderly couples and families in detached bungalows with low, steep rooves and immaculate driveways, and rows of whitewashed semi-detached houses.

One father opens the door, as his young son drags an overzealous yellow labrador away from the threshold. He is an occupational therapist and his wife is a teacher. They also have a child with special needs. Although “Brexit’s a bit of a stress”, he says his family’s priorities are education and the NHS. “I haven’t made my mind up who to vote for,” he tells Clegg. “I do know that I won’t be voting Conservative, but I want to vote for an independent.”

“I’m very keen on staying in Europe but I can’t see a way around it,” says a retired man with fine white hair in a scarlet jumper who lives on the road opposite. Clegg counters: “It may all be too late, it may all be hopeless, but I wouldn’t underestimate how public opinion may shift.” The man will vote Lib Dem, but sees battling Brexit as futile.

“Labour’s days as a party of national government have ended”

“The frustrating thing for us, as Lib Dems” – Clegg tells me – “is I would lay a fairly big wager that it will be precisely those people who will then say in a year or two’s time that this Brexit’s an absolute nonsense,” though he does admit it’s “politically tough” for his party to make Brexit central to its campaign.

“It would be much better if you were leader,” the retired man’s wife chips in, pulling on a blue cardigan as she joins them at the doorway. “Tim [Farron] – he’s a nice man, but he’s not quite the same.”

Clegg as an individual gets a lot of love at almost every doorstep. “You should come to Knit and Natter,” beams one woman involved in the local church. “You don’t have to knit – as long as you can natter!”

When I ask whether he feels nostalgic for Cleggmania, Clegg says he does not “hanker after past glories”. He does, however, miss being in government – and compares Theresa May’s current persona with the woman he knew and worked with in cabinet.

“She has been converted from what I found to be a rather conventional, not wildly exceptional politician by the sort of hysterical sycophancy of the Daily Mail and others into this colossal political figure, this sort of Boudicca,” he splutters. “I’m sure she would say this about herself – she has very little peripheral vision. She’s not an innovative politician. She’s not a big picture politician.”

Although Lib Dem leader Tim Farron has ruled out coalition deals with May’s Conservatives and Jeremy Corbyn’s Labour, Clegg urges his party to work with Labour following the election. “The Labour party is still operating under this illusion that it can win an election – it can’t!” he cries. “It’s irrelevant who’s leader. It doesn’t matter whether it’s Jeremy Corbyn or David Miliband – there is no way that the Labour party can beat the Conservatives under this electoral system . . . It’s impossible.”

“I am self-evidently a pluralist – why else would I go into coalition?”

He believes that because the “pendulum of politics” is stuck on the right that “we can’t continue with business-as-usual after 8 June”.

“If we all just carry on talking to ourselves in our own rabbit hutches, all that will happen is we will carry on with this dreary, soulless, almost perpetual one-party domination by the Conservatives,” he warns. “The dam needs to break within the Labour party, and the moment they understand that they can never win again – that their days as a party of national government have ended – can you start thinking about how to mount a proper challenge to Conservative hegemony.”

Clegg clearly wants an active role in future cooperation. “I am self-evidently a pluralist – why else would I go into coalition?” he asks. “I’ll always be happy to play my part in doing what I think is right, which is that we need a proper anti-Conservative force or forces in British politics.”

Labour’s campaign in Sheffield Hallam is not spooking local Lib Dems as much as in 2015, when it was polling ahead of them in the build-up to the election. Concerns about Corbyn’s leadership and Labour’s vote in favour of Article 50 appear to have dented its once surging support here.

“I’m voting Lib Dem,” declares a middle-aged man in big aviator-framed glasses and a silver chain, opening the door and looking distinctly unimpressed. “But not because it’s you.”

“Ah,” grins Clegg.

“I’m voting Lib Dem because I don’t want Labour in. I don’t want anybody in at the moment; I don’t like anybody’s politics,” he rumbles. “But it made me cringe when I heard Corbyn speak. Because he’s got the giant-sized ripe-flavoured carrots out, and people don’t realise they’ve got to pay for them.”

Clegg will be relying on such voters to keep his seat. But even if he doesn’t win, don’t expect him to disappear from political life until the Brexit negotiations have well and truly concluded. “It would be a dereliction of duty to the country to fall in line with the conspiracy of silence on the terms of Brexit both Labour and the Conservatives are trying to smother this election campaign with,” he says. “It’s the question of the day.”

Anoosh Chakelian is senior writer at the New Statesman.

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