Child poverty is set to soar under the coalition

Cameron promised child poverty would not increase. The IFS says it will rise by 300,000.

"The right test for our policies is how they help the most disadvantaged in society, not the rich."

David Cameron, Built to Last, March 2006

Yesterday brought the welcome news that child poverty fell to its lowest level since 1986 during Labour's final year in power, from 22 per cent to 20 per cent. The party missed its target of halving child poverty by 2010 but it's some achievement that the measure, which tripled under Margaret Thatcher from one in nine children to one in three (the worst in Europe), fell at all during the deepest recession since 1945.

Data from the Office for National Statistics shows that child poverty, which stood at 26 per cent in 1997 when Tony Blair became prime minister, fell to 20 per cent in 2009-2010. The figure is not the result of a general fall in median income.

As Tim Nichols of the Child Povery Action Group notes at Left Foot Forward: "The headline poverty mark is 60 per cent median income, so if median income falls, so does the poverty line, leaving some people who were just below it now just above it. But median income actually rose slightly." Gordon Brown's tax credits may have been derided as hopelessly complex and bureaucratic, but the facts show that they got the money where it was needed most.

Today's release from the Institute for Fiscal Studies suggests that George Osborne's decision to reduce state benefits will have the reverse effect. The IFS warns that child poverty will increase by roughly 300,000 by 2013-2014, largely due to "cuts to the generosity of benefits and tax credits by the coalition government". It's a finding that should set alarm bells ringing in Downing Street.

Cameron and George Osborne have chosen, against the judgement of several of their colleagues, to claim that their austerity package is a "progressive" one. Should poverty increase on their watch (as it is now certain to), they will stand accused of being not only unfair, but insincere. It was Cameron, after all, who made the Rawls-like declaration that "the right test for our policies is how they help the most disadvantaged in society" and not the wealthy.

A year later he promised: "We can make British poverty history, and we will make British poverty history." More recently, he pledged that the Budget and the Spending Review would not result in "any increase in child poverty".

There are plenty on the right who have urged the coalition to shift the goalposts and reject the internationally recognised definition of poverty (Imran Hussain, head of policy at the Child Poverty Action Group, defended this definition on The Staggers last year). For instance, Neil O'Brien, the director of Policy Exchange, has argued: "The problem with what the IFS is saying is that the measure they use isn't an indicator of real poverty; it's a measure of inequality.

"It defines 'poverty' as being below 60 percent of the average income. This is a hangover from the Gordon Brown era. Real poverty isn't the same as inequality. The IFS's definition would mean that there are actually more people in poverty in Britain today than there are in Poland."

But the government, to its credit, has so far refused to abandon the relative measure of child poverty. When Cameron claimed that the Spending Review would not increase child poverty, he used the same definition as Gordon Brown. He may soon wish he hadn't.

George Eaton is political editor of the New Statesman.

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By refusing to stand down, Jeremy Corbyn has betrayed the British working classes

The most successful Labour politicians of the last decades brought to politics not only a burning desire to improve the lot of the working classes but also an understanding of how free market economies work.

Jeremy Corbyn has defended his refusal to resign the leadership of the Labour Party on the grounds that to do so would be betraying all his supporters in the country at large. But by staying on as leader of the party and hence dooming it to heavy defeat in the next general election he would be betraying the interests of the working classes this country. More years of Tory rule means more years of austerity, further cuts in public services, and perpetuation of the gross inequality of incomes. The former Chief Secretary to the Treasury, Seema Malhotra, made the same point when she told Newsnight that “We have an unelectable leader, and if we lose elections then the price of our failure is paid by the working people of this country and their families who do not have a government to stand up for them.”

Of course, in different ways, many leading figures in the Labour movement, particularly in the trade unions, have betrayed the interests of the working classes for several decades. For example, in contrast with their union counterparts in the Scandinavian countries who pressurised governments to help move workers out of declining industries into expanding sectors of the economy, many British trade union leaders adopted the opposite policy. More generally, the trade unions have played a big part in the election of Labour party leaders, like Corbyn, who were unlikely to win a parliamentary election, thereby perpetuating the rule of Tory governments dedicated to promoting the interests of the richer sections of society.

And worse still, even in opposition Corbyn failed to protect the interests of the working classes. He did this by his abysmal failure to understand the significance of Tory economic policies. For example, when the Chancellor of the Exchequer had finished presenting the last budget, in which taxes were reduced for the rich at the expense of public services that benefit everybody, especially the poor, the best John McConnell could do – presumably in agreement with Corbyn – was to stand up and mock the Chancellor for having failed to fulfill his party’s old promise to balance the budget by this year! Obviously neither he nor Corbyn understood that had the government done so the effects on working class standards of living would have been even worse. Neither of them seems to have learnt that the object of fiscal policy is to balance the economy, not the budget.

Instead, they have gone along with Tory myth about the importance of not leaving future generations with the burden of debt. They have never asked “To whom would future generations owe this debt?” To their dead ancestors? To Martians? When Cameron and his accomplices banged on about how important it was to cut public expenditures because the average household in Britain owed about £3,000, they never pointed out that this meant that the average household in Britain was a creditor to the tune of about the same amount (after allowing for net overseas lending). Instead they went along with all this balanced budget nonsense. They did not understand that balancing the budget was just the excuse needed to justify the prime objective of the Tory Party, namely to reduce public expenditures in order to be able to reduce taxes on the rich. For Corbyn and his allies to go along with an overriding objective of balancing the budget is breathtaking economic illiteracy. And the working classes have paid the price.

One left-wing member of the panel on Question Time last week complained that the interests of the working classes were ignored by “the elite”. But it is members of the elite who have been most successful in promoting the interests of the working classes. The most successful pro-working class governments since the war have all been led mainly by politicians who would be castigated for being part of the elite, such as Clement Atlee, Harold Wilson, Tony Crosland, Barbara Castle, Richard Crossman, Roy Jenkins, Denis Healey, Tony Blair, and many others too numerous to list. They brought to politics not only a burning desire to improve the lot of the working classes (from which some of them, like me, had emerged) and reduce inequality in society but also an understanding of how free market economies work and how to deal with its deficiencies. This happens to be more effective than ignorant rhetoric that can only stroke the egos and satisfy the vanity of demagogues

People of stature like those I have singled out above seem to be much more rare in politics these days. But there is surely no need to go to other extreme and persist with leaders like Jeremy Corbyn, a certain election loser, however pure his motives and principled his ambitions.

Wilfred Beckerman is an Emeritus Fellow of Balliol College, Oxford, and was, for several years in the 1970s, the economics correspondent for the New Statesman