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10 July 2006

Why we are failing our children

Despite tax credits and other measures, the government is further away than ever from meeting its ch

By Donald Hirsch

Living in poverty is never wearing something
That someone else has not already worn
Living in poverty is never buying something
That someone else has not already bought
Living in poverty is getting tired of people
Wanting you to be grateful
Living in poverty is checking the coin slot of
Every vending machine as you go by
Living in poverty is hoping your toothache
Will go away
Living in poverty is watching your mum
Making lunch, dropping a piece of meat,
Then looking round to see if anyone saw
Living in poverty is buying a lottery ticket
When you can’t afford it
Living in poverty
Still hoping

Meirion, 12
From Waiting for the Future: poems by children on poverty and bad housing (Shelter and End Child Poverty, 2006)

A year after the campaign to “make poverty history” worldwide, Britain is still failing its own poor. During the ravages of Thatcher’s 1980s, we grew used to the idea of a polarised society in which those on the lowest incomes picked up the crumbs of growing prosperity, but did not fully share in it.

Today, in contrast, both main parties say they want to “end child poverty”, and accept that poverty needs to be measured in relative terms. Labour has made a promising start, cutting child poverty by a fifth with the help of substantial redistribution. Yet the proportion of children with below 60 per cent of median income remains higher than in all but three countries of the EU, and the factors that make it so have not, in the main, been removed. New analysis unveiled by the Joseph Rowntree Foundation shows that, for all the welcome measures in place to help families on low incomes, child poverty will remain at its present levels unless more is done.

In 21st-century Britain this does not mean significant numbers of children dying of malnutrition. What it does mean is tens of thousands of children without permanent homes, hundreds of thousands of families unable to afford to feed or clothe themselves adequately, and 2.3 million children whose parents have less than half the disposable income of a typical family. This last group of children is 2.5 times as numerous as in 1979. Living on incomes substantially below the semi- official poverty line, these children may have televisions and three meals a day, but many are miserable at school because they cannot afford to do or have the things that their friends take for granted. An estimated half a million children are ashamed to invite their friends back to their homes.

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Moral outrage over such social ills has proven fragile in recent years. Can a war on child poverty ever muster the sustained commitment, equivalent to the priority given to improving the health service, that is required? Only if the public can be persuaded that polarisation will cause growing harm not just to the poor themselves, but to our whole society.

The costs of failure are visible all around us. Studies show that, in the health service, even primary care is more expensive for disadvantaged children, let alone treatment for the more serious conditions that can be caused by poor childhood health. We see the cost in the disaffection of young people on our streets and in our schools. This is the result not only of poverty, but is often fed by the pressures of growing up in material hardship. The knock-on effects pervade the way we relate to public services: would we be so obsessed with an unattainable quest for school choice, were we not concerned about who our children were going to school with?

The costs of child poverty are most tangible in the £8bn a year spent on children’s services. These have many purposes beyond alleviating the impact of poverty, but protecting and providing adequate services for children proves more expensive when they suffer the fallout of disadvantage at home.

Childhood poverty also incurs long-term economic and social costs because of the substantially worse job prospects of children who grow up poor. These costs will grow steadily if poverty is not reduced. A striking finding of the Rown- tree research is that the “inter-generational” impact of child poverty has doubled in a decade. That is to say, adults who grew up poor in the 1980s and are now themselves in their thirties, often with their own children, suffer twice as much relative disadvantage as those who grew up poor in the 1970s. They entered work in a more polarised society, where risks such as unemployment were greater than earlier. If this trend goes unchecked, family poverty and its attendant costs will continue to grow from one generation to the next.

If we recognise these arguments and make ending child poverty a top social priority, what would this entail? The answer is tied up with the factors that have caused child poverty to be nearly twice as high as it was a generation ago, with children replacing pensioners as those most likely to be poor. In particular, UK children, compared to children in other European countries, are more likely to have lone parents, less likely to have parents who work and more likely to have parents who are low-paid or who work part-time.

Falling behind

One in four children in Britain has a lone parent, more than in any other EU country apart from Sweden. In Sweden, the great majority of single mothers work. In the UK, until recently, only a minority did, and most of the rest depended mainly on state benefits for support, benefits nowhere near enough to raise them above the poverty line. Despite a recent improvement in the lone-parent employment rate to roughly 55 per cent, this is still below European norms. Even though overall the UK has high employment rates, jobs are distributed more unevenly, with some families having two jobs and others – especially those with lone parents – having none.

The government’s welfare-to-work policies could, in the next few years, bring two-thirds of lone parents into jobs: close to EU norms. But even if this happens, many children would be left in poverty. This includes the half of poor children who have working parents. A generation ago, if your father worked, even in a relatively low-paid job, you were unlikely to be poor. But since the 1970s, pay has become much more unequal in the UK. For example, in 1975 the pay of a man near the bottom of the wage distribution was about 60 per cent of one in the middle; now it is less than half. The son or daughter of a man with a low-paid job has nearly a 40 per cent chance of falling below the poverty line, even after the help of tax credits. One thing that could change this is a chance for the man to earn a higher wage. Another is improved oppor-tunities for his partner to work, even if only part-time.

Gordon Brown has used the tax credit system to transfer in excess of £8bn more per year to families, concentrating on poor households. Yet redistribution does much less than in other countries to correct inequalities. Another striking contrast is with Sweden, which has similar levels of child poverty before distribution but less than half the level after redistribution than Britain (see graph, left). This is because our tax credit system is superimposed on a social security system that is much less generous than in other countries. General payments to families with children, such as child benefit, are lower. So are general benefits for being out of work. This is hardly surprising, given that the government has been uprating these benefits in line with prices only since 1981, causing the poorest families in Britain to have missed out on a quarter-century of economic growth.

The case for fair pay

So what could now be done to meet the government’s targets, which are to halve child poverty by 2010 and to end it by 2020? One way of approaching this is to consider what extra redistributive policies would be needed to cut poverty directly. Such policies would cost about £4bn a year by 2010 and about £30bn by 2020. The first of these amounts is easily affordable, given the political will. It represents less than 1 per cent of public spending. But using government redistribution to eliminate all child poverty by 2020 is inconceivable, not just because of the large cost, but because it would require huge public transfers to families with children, which could distort decisions both about working and about childbearing.

So, over the longer term, ending child poverty will depend as much on how we live and work as on extra government transfers. One precondition is that families with children have more chances to improve their pay, without having to neglect domestic responsibilities. The barriers to doing so are particularly great in London, where decent childcare remains elusive and expensive, and where high rents create work disincentives for those on housing benefits. London is the only region where child poverty has failed to fall in recent years.

Another issue with particular relevance in London is fair pay: the national minimum wage is particularly inadequate in the capital for meeting families’ needs, and this is where the “fair pay” campaigns have taken off. But in the long term any improvement will depend more on reducing educational inequalities and encouraging employers to use labour more smartly than on a publicly enforced minimum.

Must Britain take the American low road to job creation through low pay and insecurity, or can it follow the European high road to better-quality jobs, underpinned by decent training, while avoiding the worst economic effects of over-regulation? If the first of these, it is hard to imagine child poverty ever disappearing.

Finally, future reductions in child poverty will be influenced by how people decide to live, and culturally influenced decisions about work. These are highly sensitive issues, but we should not take today’s patterns as given. If the trend towards more children living with one parent continues, child poverty could rise further – unless society is willing to devote significantly greater resources to supporting such families. On the other hand, cultural change within some ethnic groups could work in the other direction. In particular, only one in four women from Pakistani and Bangladeshi backgrounds works; if more eventually did so, child poverty in these communities, which is more than double the national average, would fall substantially.

Many of these factors are highly unpredictable and not all can, or should, be influenced by any government. Nevertheless, a public strategy to end child poverty can be coherent as long as it sets its sights widely. This means not just ensuring that benefits and tax credits help direct a share of future economic growth to our least well-off children, but making a concerted effort to help tomorrow’s parents earn a decent living.

Since many of the parents of 2020 are still at school, the government could start with an all-out assault on educational disadvantage based on social background. This is yet another area where the UK is close to the wrong end of the European league. Educational performance at age 15 is more closely linked to home background than in all but two other EU countries. The top priority in education policy should be to reduce these social disparities in student achievement. l

“What Will It Take To End Child Poverty? Firing on all cylinders” is published by the Joseph Rowntree Foundation. www.jrf.org.uk

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