Have we forgotten our commitment to supporting children?

Evidence suggests that the Coalition's approach is making things worse, not better, for our children.

This is a response to my series on childhood in Britain by Tom Rahilly from the National Society for the Prevention of Cruelty to Children, Kate Bell of Child Poverty Action Group, and Roger Harding of Shelter.

Every parent wants the best for their children. From keeping them safe to ensuring that they flourish, they have a common set of aspirations which is echoed by the rhetoric of our political leaders. Ed Miliband has described his concept of the "British Promise": each generation expects their children to do better than them, while David Cameron has asserted in his New Year Message that “We are doing what’s right for our country and what’s best for our children’s future. And nothing could be more important than that.” It seems clear that the prospects for our children are a political priority.

But is this priority translated into action when it comes to making decisions? Or as we focus on resolving the economic crisis, have we forgotten our commitment to supporting children?

The picture is pretty gloomy. Research by the Chartered Institute of Public Finance and Accountancy (CIPFA) shows that children’s services have been hit disproportionately by spending cuts. The majority of local authorities have scaled back or closed services. In 2011/12 some councils were forced to slash their children’s services budget by more than 20 per cent, compared to overall cuts of around 10 per cent. Councils are avoiding cuts to statutory services, especially in child protection, and as a result cuts are inevitably falling on preventative services and family support such as Sure Start.

More broadly, research for the NSPCC, Action for Children and the Children’s Society shows the impact that changes to tax and benefit changes and responses to the economic crisis are likely to have on families. The number of vulnerable families is estimated to rise to over one million by 2015, with increases in the number of children in workless households, maternal depression, families in material deprivation, and numbers living in poor quality of overcrowded housing. Current measures to protect families from the impact of austerity are insufficient to stop this trend.

What about the key priority for Government and parents: keeping children safe? The Government has placed high priority on improving support for children in care. The Children and Families Bill, published on 5 February, aims to speed up public law proceedings and reform the process of adopting a child. These measures are welcome but do not in and of themselves improve the quality of support that children in care receive or the family support needed to prevent abuse and neglect before it takes place. An estimated 45 per cent of children in care have mental health difficulties as a result of abuse, neglect and their experiences in care. But too many children don’t receive the support they need - a 2010 study found that 49 per cent of children with an apparent mental health problem were not receiving or accessing a service from mental health services. Councils report that support for children in care is becoming scarcer; a trend that is likely to continue as funding pressures hit home.

These pressures are likely to get worse. Since 2008, the number of children in care has risen from 59,380 to 67,050. The government is right to highlight the difference that care can make. But the focus on early intervention appears to have been lost. The government recently cut support for early intervention by £150 million to support adoption. More help for adoption is welcome but it doesn’t make sense to fund it by cutting earlier support, which can help prevent initial harm. Early help was a key recommendation of the Munro review, supported by ministers just 19 months ago.

When we turn to child poverty, there is a better story to tell. Between 1998/99 and 2010/11, the number of children in poverty fell by 1.1 million, with real benefits for children’s prospects. Looking at child wellbeing between 1997 and 2010, the University of York found that 36 out of 48 indicators across the fields of material wellbeing, child health, subjective wellbeing, mental health, education, housing, child maltreatment, children in care, childcare crime and drugs, had moved in the right direction. The only indicators showing negative trends were immunization rates, diabetes, obesity, and sexually transmitted diseases.

But these trends look likely to go into reverse, as child poverty rates are set to dramatically rise in forthcoming years. The IFS predicts that an additional 800,000 children will be in child poverty (measured on the relative measure of 60 per cent of median income) by 2020. From 2010-2015 a working lone parent will lose over six per cent of their weekly income, compared to just over two per cent for a working single person; a couple, with kids, struggling to find work, will lose around 11 per cent compared to just over 8 per cent for the same couple without children. This assessment was made before the impact of the Welfare Uprating Bill, which restricts increases in financial support to 1 per cent across the board. It is likely to result not only in rises to relative poverty rates, but an absolute decline in living standards, as prices rise faster than families’ ability to pay for them.

And when we look at housing, it’s becoming increasingly clear that children are hit harder than most by our chronic lack of decent, affordable homes. For the rising number of children growing up in private rented homes, the dream of a stable place to live seems further away than ever. With the doors to home ownership or social housing locked for many, some families are seeing whole childhoods play out in homes that they can’t make their own. A private rental system designed decades ago, when most renters were students or young professionals, means that most are living from one six or twelve month contract to the next.

For parents, this means sending children to school in September without knowing where they’ll be living come the summer term. Living from tenancy to tenancy, on a merry-go-round of bedrooms, schools and friends, many of the 1.3 million families in privately rented homes wonder when their voices will be heard. If the government is to address the fundamental family need for stability, they must now look at reforming this system and give families a home where they can put down roots.

Examination of these three areas suggests that the rhetorical commitment to children’s prospects is currently just that. And nor has the relationship between different areas of policy been thought through. The Chief Executive of the Child and Family Court Advisory Service (CAFCASS) has warned that record numbers of children are likely to be taken into care this year, due to the effects of benefits changes and public sector cuts. Poverty is widely recognised as one of the factors that increase the stresses in families that can result in abuse and neglect. It also is critically linked to poor housing. The rising cost of paying for a home is a major contribution to family budgets squeezed far beyond the comfort zone, and more than a third of renting families say that they’ve cut down on food to pay the rent.

Times are undoubtedly tough. People know that and, to some degree, accept it - the response to the economic crisis is the defining issue of the 21st century so far. What people will never accept, though, is giving up on their dreams for their children. Whatever the response to our economic crisis, it has to keep the hope for our children centre stage. Sacrifices today have to pay off for children and families tomorrow. However, across areas like care, family support, family income and housing, the danger is that we are not only sacrificing today but sacrificing our children’s tomorrows.

The Coalition’s programme for government promised to make society more family friendly. Evidence suggests that this has not been the case. It’s time we think about how we can achieve the best for all children. Our future generations depend on it.

A playground in Tower Hamlets, where a recent study has shown that 42 per cent of children live in poverty. Photograph: Getty Images

Alan White's work has appeared in the Observer, Times, Private Eye, The National and the TLS. As John Heale, he is the author of One Blood: Inside Britain's Gang Culture.

Show Hide image

Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.