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
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The UK press’s timid reaction to Brexit is in marked contrast to the satire unleashed on Trump

For the BBC, it seems, to question leaving the EU is to be unpatriotic.

Faced with arguably their biggest political-cum-constitutional ­crisis in half a century, the press on either side of the pond has reacted very differently. Confronting a president who, unlike many predecessors, does not merely covertly dislike the press but rages against its supposed mendacity as a purveyor of “fake news”, the fourth estate in the US has had a pretty successful first 150-odd days of the Trump era. The Washington Post has recovered its Watergate mojo – the bloodhound tenacity that brought down Richard Nixon. The Post’s investigations into links between the Kremlin and Donald Trump’s associates and appointees have yielded the scalp of the former security adviser Michael Flynn and led to Attorney General Jeff Sessions recusing himself from all inquiries into Trump-Russia contacts. Few imagine the story will end there.

Meanwhile, the New York Times has cast off its image as “the grey lady” and come out in sharper colours. Commenting on the James Comey memo in an editorial, the Times raised the possibility that Trump was trying to “obstruct justice”, and called on Washington lawmakers to “uphold the constitution”. Trump’s denunciations of the Times as “failing” have acted as commercial “rocket fuel” for the paper, according to its CEO, Mark Thompson: it gained an “astonishing” 308,000 net digital news subscriptions in the first quarter of 2017.

US-based broadcast organisations such as CNN and ABC, once considered slick or bland, have reacted to Trump’s bullying in forthright style. Political satire is thriving, led by Saturday Night Live, with its devastating impersonations of the president by Alec Baldwin and of his press secretary Sean Spicer by the brilliant Melissa McCarthy.

British press reaction to Brexit – an epic constitutional, political and economic mess-up that probably includes a mind-bogglingly destructive self-ejection from a single market and customs union that took decades to construct, a move pushed through by a far-right faction of the Tory party – has been much more muted. The situation is complicated by the cheerleading for Brexit by most of the British tabloids and the Daily Telegraph. There are stirrings of resistance, but even after an election in which Theresa May spectacularly failed to secure a mandate for her hard Brexit, there is a sense, though the criticism of her has been intense, of the media pussy-footing around a government in disarray – not properly interrogating those who still seem to promise that, in relation to Europe, we can have our cake and eat it.

This is especially the case with the BBC, a state broadcaster that proudly proclaims its independence from the government of the day, protected by the famous “arm’s-length” principle. In the case of Brexit, the BBC invoked its concept of “balance” to give equal airtime and weight to Leavers and Remainers. Fair enough, you might say, but according to the economist Simon Wren-Lewis, it ignored a “near-unanimous view among economists that Brexit would hurt the UK economy in the longer term”.

A similar view of “balance” in the past led the BBC to equate views of ­non-scientific climate contrarians, often linked to the fossil-fuel lobby, with those of leading climate scientists. Many BBC Remainer insiders still feel incensed by what they regard as BBC betrayal over Brexit. Although the referendum of 23 June 2016 said nothing about leaving the single market or the customs union, the Today presenter Justin Webb, in a recent interview with Stuart Rose, put it like this: “Staying in the single market, staying in the customs union – [Leave voters would say] you might as well not be leaving. That fundamental position is a matter of democracy.” For the BBC, it seems, to question Brexit is somehow to be unpatriotic.

You might think that an independent, pro-democratic press would question the attempted use of the arcane and archaic “royal prerogative” to enable the ­bypassing of parliament when it came to triggering Article 50, signalling the UK’s departure from the EU. But when the campaigner Gina Miller’s challenge to the government was upheld by the high court, the three ruling judges were attacked on the front page of the Daily Mail as “enemies of the people”. Thomas Jefferson wrote that he would rather have “newspapers without a government” than “a government without newspapers”. It’s a fair guess he wasn’t thinking of newspapers that would brand the judiciary as “enemies of the people”.

It does seem significant that the United States has a written constitution, encapsulating the separation and balance of powers, and explicitly designed by the Founding Fathers to protect the young republic against tyranny. When James Madison drafted the First Amendment he was clear that freedom of the press should be guaranteed to a much higher degree in the republic than it had been in the colonising power, where for centuries, after all, British monarchs and prime ministers have had no qualms about censoring an unruly media.

By contrast, the United Kingdom remains a hybrid of monarchy and democracy, with no explicit protection of press freedom other than the one provided by the common law. The national impulse to bend the knee before the sovereign, to obey and not question authority, remains strangely powerful in Britain, the land of Henry VIII as well as of George Orwell. That the United Kingdom has slipped 11 places in the World Press Freedom Index in the past four years, down to 40th, has rightly occasioned outrage. Yet, even more awkwardly, the United States is three places lower still, at 43rd. Freedom of the press may not be doing quite as well as we imagine in either country.

Harry Eyres is the author of Horace and Me: Life Lessons from an Ancient Poet (2013)

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder