The state can't afford to cut back family support

Children are not a private luxury but the future workers and taxpayers of this country. Labour should pledge to reverse the fall in the value of child benefit.

The dog days are upon us and like most parents, I’m scrabbling around for childcare and searching for affordable activities for my child. The summer holidays cost – but as new research published by the Child Poverty Action Group (CPAG) and the Joseph Rowntree Foundation (JRF) shows, an ice cream here and play scheme there is just the beginning of it.

Cost of a Child in 2013 documents the minimum income required to bring up a child in the UK today. It draws on JRF’s on-going work, which regularly asks members of the public which items they think we should all be able to afford. What emerges from this exercise is a consensus that families need enough to cover the bare essentials such as food and shelter, but also require a modest amount to enable them to participate in normal social activities too.

The numbers are enough to make anyone sit up and think: the research estimates the minimum acceptable cost of a child over 18 years is £81,722 for couple, and £90,980 for a single parent. (The figure for single parents is higher due to the fact that there is only one adult in the family to offset some of the children’s costs by reducing their own). Add in childcare costs and the numbers increase still further - to £148,105 for couples and a staggering £161,260 for single parents, over the 18-year period.

The figures illuminate why families with children are generally at a higher risk of poverty than other groups in society: costs sky-rocket when we have children yet our earning power is compromised by childcare responsibilities. In recognition of this, the state helps us smooth our incomes over the course of our lifetime through the provision of child benefit and, for lower-income families, child tax credits too.

But as the report documents, both these sources of support have diminished considerably in recent years. Child benefit was frozen in 2010 and has consequently lost one-seventh of its value; tax credits look set to wither away in a similar manner as they are uprated at a mere 1% over the next three years.

With earnings lagging behind costs as well, it’s not surprising that a couple with two children working full-time on the minimum wage today net only 83 per cent of the minimum income they require. While the same couple can just about reach an adequate standard of living on the median wage – our national mid-point - a single parent family in the same situation is still almost 10 per cent shy of a decent standard of living.

There’s a question, of course, as to how much the state should help parents with the costs of their children. But children are not a private luxury as some current political debates like to suggest. Instead, they are the future workers and taxpayers of this country and supporting families with their children’s costs is more accurately seen as an investment, not the deadweight cost it is often presented as.

Labour has indicated that restoring child benefit to higher earners would not be a priority if it were in power but has remained silent on whether it would seek to restore the benefit’s real value to its 2010 level. Meanwhile, the coalition is proposing to pay childcare costs to families earning up to £300,000 between them, while through universal credit it will compensate only those earning more than £10,000. And the Conservatives are set to unveil plans later this year to introduce a married couple's tax allowance. But as far as I know, once the wedding is over, married couples don’t have any additional costs, so it is hard to see any rationale for it.

Meanwhile, think tanks such as IPPR have gone on record numerous times to suggest that child benefit be frozen for a decade and the money redeployed to pay for additional childcare support. The Cost of a Child report shows what a self-defeating strategy that would be: subsidising childcare by cutting child benefit is giving with one hand while taking away with the other. As we move towards the 'living standards election' of 2015, all parties need to think harder about how we re-commit to all our children - as we did after the Second World War through universal family allowances – we need to find more funds and better ways to help families at all income levels, working or not working, with the costs of a child.   

Washing hangs out to dry above children's bikes on the balcony of a residential development in the London borough of Tower Hamlets. Photograph: Getty Images.

Alison Garnham is chief executive of the Child Poverty Action Group

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How Theresa May laid a trap for herself on the immigration target

When Home Secretary, she insisted on keeping foreign students in the figures – causing a headache for herself today.

When Home Secretary, Theresa May insisted that foreign students should continue to be counted in the overall immigration figures. Some cabinet colleagues, including then Business Secretary Vince Cable and Chancellor George Osborne wanted to reverse this. It was economically illiterate. Current ministers, like the Foreign Secretary Boris Johnson, Chancellor Philip Hammond and Home Secretary Amber Rudd, also want foreign students exempted from the total.

David Cameron’s government aimed to cut immigration figures – including overseas students in that aim meant trying to limit one of the UK’s crucial financial resources. They are worth £25bn to the UK economy, and their fees make up 14 per cent of total university income. And the impact is not just financial – welcoming foreign students is diplomatically and culturally key to Britain’s reputation and its relationship with the rest of the world too. Even more important now Brexit is on its way.

But they stayed in the figures – a situation that, along with counterproductive visa restrictions also introduced by May’s old department, put a lot of foreign students off studying here. For example, there has been a 44 per cent decrease in the number of Indian students coming to Britain to study in the last five years.

Now May’s stubbornness on the migration figures appears to have caught up with her. The Times has revealed that the Prime Minister is ready to “soften her longstanding opposition to taking foreign students out of immigration totals”. It reports that she will offer to change the way the numbers are calculated.

Why the u-turn? No 10 says the concession is to ensure the Higher and Research Bill, key university legislation, can pass due to a Lords amendment urging the government not to count students as “long-term migrants” for “public policy purposes”.

But it will also be a factor in May’s manifesto pledge (and continuation of Cameron’s promise) to cut immigration to the “tens of thousands”. Until today, ministers had been unclear about whether this would be in the manifesto.

Now her u-turn on student figures is being seized upon by opposition parties as “massaging” the migration figures to meet her target. An accusation for which May only has herself, and her steadfast politicising of immigration, to blame.

Anoosh Chakelian is senior writer at the New Statesman.

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