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2 March 2015

The market, not just the state, needs to up its game to tackle child poverty

Without money to spend, the next Labour government will need other levers other than big spending to tackle poverty

By Kate Green

Under the Tories, child poverty doubled between 1979 and 1997. By contrast, Labour set an ambitious target to eradicate child poverty. We lifted more than one million children out of poverty by 2010/11 and pensioner poverty halved. 

This was achieved through a range of redistributive measures, such as tax credits and the pension credit, as well as increasing the employment rate and making work pay. But now, under the Tory-led coalition, progress has been thrust into reverse.

Absolute child poverty and rates of material deprivation are higher than when Labour left office. Half of all those in poverty are in work. The IFS predicts that by 2020, the gains made under Labour will have been all but wiped out.

A Labour government will not tolerate this situation. But in the next parliament, the scope for fiscal measures to do the heavy lifting will be less. And as Ed Miliband has repeatedly made clear, it’s incumbent on markets as well as governments to take steps to reduce inequality and tackle poverty. So our agenda for the next parliament will ensure that those with the broadest shoulders bear the largest burden, through increasing tax on those earning more than £150,000 and reducing tax breaks on their pension contributions, and a mansion tax on properties worth more than £2 million.

At the same time, we’ll introduce a new, lower 10 pence starting rate of tax, benefitting 24 million working people on middle and lower incomes, paid for by scrapping the unfair marriage tax allowance. But we’ll also expect much more of markets, with our energy price freeze, which will cap gas and electricity bills till 2017, our bankers’ bonus tax to pay for our youth jobs guarantee, and our commitment to increase the national minimum wage to £8 an hour by the end of the next parliament, and to promote the living wage. Boosting employment and ensuring that people can gain the skills and qualifications to progress at work and improve their earnings will also be a priority for the Labour government. So we will ensure that as many young people have the opportunity to gain good vocational qualifications as go to university, and that apprenticeships lead to qualifications at level 3. And our extension of free childcare to working parents for 3 and 4 year olds to 25 hours a week, and increased paternity pay, will help families with young children to make ends meet and make work pay.

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For those who can’t work, because of sickness, disability or caring responsibilities, we will ensure benefits are assessed and paid efficiently and promptly. Axing the bedroom tax will make a huge difference to the 600,000 households affected, two thirds of them with a disabled family member. And we will ensure that the basic state pension continues to keep pace with the cost of living through the triple lock. These are the priorities for a Labour government to tackle poverty: helping families cope with the cost of living, making work pay, and ensuring our tax and benefits system is fair. We will expect everyone who can contribute to do so, but in return everyone will know that the welfare state will be there when they need its support. It’s a radical departure from failed Tory trickledown economics. And it will deliver the sustained reduction in poverty that is our goal.

Kate Green is shadow spokesperson for disabled people and MP for Stretford and Urmston. She is a speaker at the Fabian Society/BrightBlue conference A Future without Poverty today, which you can follow on #NoPoverty.

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