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What was missing from the 2015 Budget? Anything to do with child poverty

This was a "see no poverty, hear no poverty" budget from a government in denial.

The Chancellor made claim to a truly national recovery throughout his speech but this is a ‘See no poverty, Hear no poverty’ Budget which continues to leave children and the low paid behind. 

Three statements made by the Chancellor in in his Budget speech yesterday caught my eye.

First, “Child poverty is down”.

This is notable for a couple of reasons. It’s the first time the Chancellor has mentioned poverty in a Budget or Autumn Statement speech in over three years. For a Chancellor who vowed to ensure we were all ‘in it together’ in his first Budget that’s a surprising omission. However, more strikingly, anyone who’s been paying attention knows perfectly well the outlook for child poverty is pretty bleak.

The claim that child poverty is down is true only if you ignore the impact of the Chancellor’s own policies, especially his big benefit cuts. Official child poverty statistics for the years in which benefit levels and tax credits suffered large cuts and the benefit cap and ‘bedroom tax’ were introduced (since April 2013) will be published only after May’s general election. 

The Institute for Fiscal Studies forecasts that the Chancellor’s tax and benefit decisions will lead to child poverty rising by 400,000 over this parliament and by 700,000 overall by 2020. In his first Budget, the Chancellor gave an assurance that that the policies he announced, overall, would not increase child poverty over the next two years. He’s unable to give a similar assurance for the impact of his policies over the course of this Parliament and beyond.

Second, “It’s the oldest rule of economic policy. It’s the lowest paid who suffer most when the economy fails and it’s the lowest paid who benefit when you turn that economy around.”

Rules get broken. At the moment, I imagine few people in low paid jobs feel they they’re benefiting from the recovery. Parents, especially.  They know perfectly well that the cost of a child is outstripping headline inflation, average wages, the minimum wage and benefit levels. 

The low paid who were hit by cuts to tax credits in the tough economic times are finding, in better times, that in-work benefits are still being cut. Indeed, the Chancellor’s cuts to Universal Credit, most recently at the Autumn Statement, are leading many to question whether, after all the upheaval and cost, universal credit will be capable of delivering its policy objectives of improving work incentives and reducing poverty.

Third, “we will use the resources from the bank sales and the lower interest payments and the lower welfare bills to pay down the national debt.”

This week the head of the National Audit Office bemoaned Whitehall’s failure to think through the impact of cuts. Today’s statement is a good example of that kind of myopic policy-making. All the main political parties accept that one reason why we need to end child poverty is because it damages our economy, adding pressures to public spending and wasting economic potential. So, spending cuts that create poverty aren’t cuts that the Treasury can bank – we also need to look to the other side of the ledger and factor-in the cost of poverty. Independent analysis CPAG commissioned from Donald Hirsch of Loughborough University shows the current annual cost of child poverty to be £29bn a year. This will rise sharply if poverty rises as the IFS projects.

We’re expecting the biggest rise in child poverty in a generation – a child poverty crisis – so you’d expect an urgent response, yet none appears to be forthcoming. Two-thirds of poor children live with  working parents, yet spending billions on a further rise in the personal tax allowance does little to help them as most of it is taxed away as in-work benefits are reduced. The same money channelled through children’s benefits, tax credits and universal credit would do much more for the low paid.

This is the last Budget before the general election. We’re hoping that the first Budget of the next Government, whoever is in power, sees, hears and responds to the poverty facing millions of our children.

  

 

Alison Garnham is chief executive of the Child Poverty Action Group

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The tale of Battersea power station shows how affordable housing is lost

Initially, the developers promised 636 affordable homes. Now, they have reduced the number to 386. 

It’s the most predictable trick in the big book of property development. A developer signs an agreement with a local council promising to provide a barely acceptable level of barely affordable housing, then slashes these commitments at the first, second and third signs of trouble. It’s happened all over the country, from Hastings to Cumbria. But it happens most often in London, and most recently of all at Battersea power station, the Thames landmark and long-time London ruin which I wrote about in my 2016 book, Up In Smoke: The Failed Dreams of Battersea Power Station. For decades, the power station was one of London’s most popular buildings but now it represents some of the most depressing aspects of the capital’s attempts at regeneration. Almost in shame, the building itself has started to disappear from view behind a curtain of ugly gold-and-glass apartments aimed squarely at the international rich. The Battersea power station development is costing around £9bn. There will be around 4,200 flats, an office for Apple and a new Tube station. But only 386 of the new flats will be considered affordable

What makes the Battersea power station development worse is the developer’s argument for why there are so few affordable homes, which runs something like this. The bottom is falling out of the luxury homes market because too many are being built, which means developers can no longer afford to build the sort of homes that people actually want. It’s yet another sign of the failure of the housing market to provide what is most needed. But it also highlights the delusion of politicians who still seem to believe that property developers are going to provide the answers to one of the most pressing problems in politics.

A Malaysian consortium acquired the power station in 2012 and initially promised to build 517 affordable units, which then rose to 636. This was pretty meagre, but with four developers having already failed to develop the site, it was enough to satisfy Wandsworth council. By the time I wrote Up In Smoke, this had been reduced back to 565 units – around 15 per cent of the total number of new flats. Now the developers want to build only 386 affordable homes – around 9 per cent of the final residential offering, which includes expensive flats bought by the likes of Sting and Bear Grylls. 

The developers say this is because of escalating costs and the technical challenges of restoring the power station – but it’s also the case that the entire Nine Elms area between Battersea and Vauxhall is experiencing a glut of similar property, which is driving down prices. They want to focus instead on paying for the new Northern Line extension that joins the power station to Kennington. The slashing of affordable housing can be done without need for a new planning application or public consultation by using a “deed of variation”. It also means Mayor Sadiq Khan can’t do much more than write to Wandsworth urging the council to reject the new scheme. There’s little chance of that. Conservative Wandsworth has been committed to a developer-led solution to the power station for three decades and in that time has perfected the art of rolling over, despite several excruciating, and occasionally hilarious, disappointments.

The Battersea power station situation also highlights the sophistry developers will use to excuse any decision. When I interviewed Rob Tincknell, the developer’s chief executive, in 2014, he boasted it was the developer’s commitment to paying for the Northern Line extension (NLE) that was allowing the already limited amount of affordable housing to be built in the first place. Without the NLE, he insisted, they would never be able to build this number of affordable units. “The important point to note is that the NLE project allows the development density in the district of Nine Elms to nearly double,” he said. “Therefore, without the NLE the density at Battersea would be about half and even if there was a higher level of affordable, say 30 per cent, it would be a percentage of a lower figure and therefore the city wouldn’t get any more affordable than they do now.”

Now the argument is reversed. Because the developer has to pay for the transport infrastructure, they can’t afford to build as much affordable housing. Smart hey?

It’s not entirely hopeless. Wandsworth may yet reject the plan, while the developers say they hope to restore the missing 250 units at the end of the build.

But I wouldn’t hold your breath.

This is a version of a blog post which originally appeared here.

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