Meeting the Challenge to Eradicate Child Poverty

Published in Bottomline in Spring 2006.

Between 1994/95 and 1997/98 the number of children living below the poverty line increased by 10% from 4 million to 4.4 million, representing over a third of all children in the UK.  Responding to these horrifying statistics, the government promised in 1999 to eradicate child poverty by 2020.  In this article we examine the current status of the government’s initiatives to combat child poverty.

The main tenets of the government’s policy of eradicating child poverty by 2020 are to encourage parents into employment and provide top-ups to those on low wages in the form of tax credits.  This has had some impact and has reduced the number of children living in poverty by 700,000 since 1999.  However, these figures undershoot by 300,000 the government’s own target of 1 million children.  Given that child poverty is high on the government’s agenda, what more needs to be done to ensure that all children in Britain are lifted out of poverty by 2020.

Households Below Average Income is an annual government publication which presents statistics in two ways: either a household's income is compared to average income or a percentage of average income such as half, or households are divided into tenths (deciles) according to their income, with those on the lowest income in the bottom decile and those with the highest income in the top decile. Data are given for income before and after housing costs and including and excluding the self-employed. In this article the after housing cost figures and including the self- employed are used.

The facts today from Households Below Average Income 2004/5

• Households with children are over represented amongst the bottom quintile of the income distribution. More than half (53%) of the bottom quintile of the income distribution is made up of households with children although they make up only 44% of the whole population.
• In 1996/97 households with children made up 44% of the total population but represented 57% of the bottom quintile of the income distribution.  There has, therefore, been a decrease in the proportion of children living in households with incomes in the bottom quintile since 1996/97 but this has remained static since 2002/03 when households with children made up 43% of the population and households in this income group accounted for 51% of the bottom quintile.
• Three out of ten children live in families where no one is in full-time work and one in five live in families where no one is in work.

Reducing the number of children living in poverty, which is calculated as families living on less than 60% of Britain’s median (average) level of household income, is no mean feat.  However, by looking at the composition of the bottom quintile of income distribution it is clear that families with children are not moving quickly enough out of the bottom quintile of income distribution although the biggest reduction, when comparing the composition of the bottom quintile of income distribution in 1996/97 and then in 2004/5, was in the proportion of single parent families.  The government’s policy of tax credits to top up those on low wages and an economic environment of low unemployment have had an impact.  However, in order to move the very poorest families over the poverty threshold more needs to be done.

In March 2005 the Fabian Society published a pamphlet that begins to address this question.  In it, the Fabian Society suggest that for targets to be met the public’s general awareness of poverty in Britain needs to change.  Increasing public awareness, they hypothesised, was necessary to raise support for the more deep rooting changes and redistribution of wealth that are needed in society in order to achieve the goal of eradicating child poverty by 2020.

Supporting these suggestions, research by the Fabian Commission on Life Chances and Child Poverty, in conjunction with MORI, showed Britain’s population has:

• Low levels of awareness of poverty and of the government’s pledge to end child poverty
• Denial of income poverty and very little awareness of the existence of in-work poverty
• Tendency to attribute child poverty to bad parenting rather than a real lack of financial resources
• Lack of empathy with people living in poverty

In order to provide comparative data the proportions of family types in Table 1 have been given after housing costs.  We have chosen to present the data this way because it better accounts for the impact of the high housing costs faced by many families.  Official figures, however, are now given before housing cost.

The government has recently proposed yet another change to the method of measuring poverty.  Child Poverty Action Group (CPAG) has commented as follows on the proposed method which uses material deprivation data.

“…the material deprivation and low income combined measure of child poverty needs to be both a ‘moderate’ definition of material deprivation – capturing more than only the very poorest children – and there needs to be a numeric continuity between the new measure and the previously used AHC  (after housing costs) measure to ensure both that those children whose families’ housing costs make them poor are accounted for and so that public confidence in both the statistics and the pledge is maintained.”

Conclusions

There has undoubtedly been progress towards reducing the number of children living in poverty from the high levels that the government inherited in 1996/97.

The commitment to end child poverty is to be encouraged. However, if targets are to be met, awareness of poverty in Britain needs to be raised and an understanding reached that in many cases work can not be the route out of poverty.  For instance households with large families will have high child care costs which may make it more economical for a parent to stay at home and provide the care.  Also, households with a disabled member have more care commitments and the disabled person may be excluded from employment opportunities through discrimination in the workplace and during recruitment processes.  Further investments are needed in benefits for such families as well as access to information and advice to ensure benefits take up

As the CPAG has commented, welfare reform is needed to meet the target of eradicating child poverty and the agencies responsible need the resources and support necessary to achieve this goal.  Poverty campaigners believe that eradicating child poverty requires a financial safety net (Income Support, Child Benefit and Child Tax Credit) of at least the value of the poverty line.  What is clear is that government rhetoric which uses terminology that distinguishes between deserving and undeserving families undermines collective public support for poverty reduction.

Public support and awareness are essential for the long-term success of welfare reform programmes and for a redistribution of resources in order to narrow the poverty gap.  At present the CPAG calculate that there is a poverty gap of 32.4% for a couple, both aged 30, with two children aged 5 and 11. The poverty gap is the difference between the poverty line of £284 per week and the safety net (Income Support, child benefit and child tax credit) which is currently provided at a weekly rate of £192.03 for such a family.