The Staggers

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Child poverty is set to soar under the coalition

Cameron promised that there would be no "increase in child poverty". But the IFS says it will soar.

By George Eaton Published 11 October 2011 13:02

David Cameron has previously insisted that the government's austerity programme will not result "in any increase in child poverty". But today's IFS report suggests that entirely the reverse is true: the coalition's policies will lead to a dramatic rise in absolute poverty and relative poverty.

The number of children in absolute poverty in 2015 is forecast to rise by 500,000 to 3 million, while the number in relative poverty (defined as households with less than 60 per cent of the median income) is estimated to rise by 400,000. The planned introduction of IDS's Universal Credit will reduce the number in relative poverty by about 450,000 children and 600,000 working-age adults in 2020-21. However, other changes such as indexing benefits in line with the lower Consumer Prices Index (CPI), rather than the higher Retail Prices Index (RPI) (see James Plunkett's Staggers blog on the coalition's £11bn stealth cut), will more than offset the impact on poverty of the Universal Credit.

It's a finding that should set alarm bells ringing in Downing Street. Cameron and George Osborne have chosen, against the judgement of some in their party, 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 not only of being unfair but of being insincere. It was Cameron, after all, who made the Rawls-esque pledge 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."

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.

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10 comments

Tue, 2011-10-11 21:11 — Luddite (not verified)

ang: "Trouble is, the Tories don't give a damn about Joe underclass and his kids, but it will come back to haunt them when people decide they have had enough". Enough of what? Sitting on their arses watching day TV... blaming other's for their own short-comings.. 'any' here's a little secret working-class people don't care much for Joe underclass and their scratter kids neither.

Tue, 2011-10-11 22:20 — Lox (not verified)

Do you ever get close to the underclass, Ang?

I'm curious. To be honest, I find the blanket labelling of a group of people as a "class" pretty lazy. But I wonder what criteria you use: Income? Education level? Lack of personal aspiration?

Wed, 2011-10-12 11:04 — mcquade

Mr Danger, as your quote says, it is DUE to high inflation and weak earnings growth. And what triggered these phenomena? Well guess what Sherlock, government policy. Big DOH!

Tue, 2011-10-11 14:50 — swatantra nandanwar

There is 'absolute' or 'relative' poverty, but I'd go for a definition of 'actual' poverty.

Tue, 2011-10-11 14:10 — Guy Debored (not verified)

It doesn't seem to matter what they say or what the stats show, or how wide the disparity is between them. This government brook no argument. It's a bit like watching that famous Leeds game from the 1970s where they just keep hold of the ball.

Tue, 2011-10-11 14:25 — swatantra nandanwar

Surely someone can come up with a better definition or formula which describes actual poverty.

Thu, 2011-10-13 19:27 — andyg (not verified)

Where is the seperating line between "underclass" and class? And what is it that seperates it?

Tue, 2011-10-11 14:45 — Mr Danger

"the coalition's policies will lead to a dramatic rise in absolute poverty and relative poverty."

Eaton gives the impression that it is purely Coalition policy choices that lead to an increase in poverty, as if the fact that the country is going through a wrenching downturn had no part to play in it.

What the report says:

"This unprecedented collapse in living standards is chiefly
due to the (actual or forecast) high inflation and weak earnings growth over this period. As
families in poverty get much of their income from state benefits and tax credits, which are
typically increased in line with inflation, a fall in real earnings closes the gap between them and
families around median income, who get much of their income from earnings."

Tue, 2011-10-11 15:33 — ang (not verified)

TRouble is, the Tories don't give a damn about joe underclass and his kids, but it will come back to haunt them when people decide they have had enough.

Tue, 2011-10-11 17:26 — enzee199 (not verified)

There are probably lots of ways of doing it, but the big problem is getting a measure which is agreed and practical.

I think the current measure hails from the work of Townsend in the 1970s and his discovery of relative poverty set against the eradication of absolute poverty by the post war welfare state.

The criticism obviously is how do you determine the % of average income you must drop below to be classified as being in poverty as quite correctly it has been pointed out in the article that this can be very different if we are comparing countries, or even if we are comparing the same over time - for instance a person in the UK on 59% of average income today presumably compares well, at least materially, to the person on 59% in 1980 - if you beleive that 'a rising tide lifts all boats'

The measure is also case in point that it is impossible to create any 'objective' system of measurement as assumptions about inequality are in-built into the model. The relative poverty thesis was based on the notion that lacking financial resources hindered a persons participation within society.

Problematically this measure ignores things like social and cultural capital, so we could say that though a person has a lower financial income they may have additional resources such as having had a good education, or a good set of social capital so be more able to participate in society. The big problem here though is how do we measure this?

Or we could measure it by household goods owned such as the number of TV's per household, but then we may be led to conclude that poverty has declined when really it is the cost of TVs that have declined. The solution to this would be to use a range of goods, but then this makes measurement more complex.

As for simply shunting 60% down to something like 50%, or even 40%, well then the same criticisms apply as they would for the 60%.

In short there will never be agreement!