[UK] £4 billiion needed to get child poverty strategy back on track

from First Rung

The Government's existing policies will not be enough to reduce child poverty in line with its targets, despite its recent success in bringing child poverty down. A wide-ranging study by the Joseph Rowntree Foundation has estimated the future impact of current policies and examined what it will take to halve child poverty by 2010 and end it by 2020. This is the first systematic attempt to calculate what will be needed to achieve these ambitious targets.

The report suggests that if current policies continue unchanged, the Government's earlier target of reducing child poverty by a quarter (by 2004/5) might not be met until 2020. Although the number of children living in relative poverty has already fallen by 600,000, a further 1.1 million children will need to be reached to meet the 2010 target.

The report estimates that current policies on benefits/tax credits and moving more parents into work will only reduce numbers by 50,000 by that time. Increasing payments to poor families could achieve the 2010 target, at a cost of £4-5 billion a year above planned spending levels. But not ending child poverty potentially brings even greater economic and social costs.

The much more ambitious target of ending child poverty by 2020 can be achieved only with steady increases in planned spending on benefits. This is because some families will remain outside paid work, and under present plans their incomes would fall well behind rising living standards. However, the earnings of the many families with jobs who remain in poverty would also need to rise.

The report argues that it would be too expensive to rely only on state redistribution to end child poverty over this period. Ending child poverty in a generation can only be achieved if both benefits/tax credits are made more generous and parents' earning opportunities are improved. Specifically, the report concludes that:

* 'welfare to work' measures are important but they have a diminishing role over time because the families remaining unemployed face greater barriers to work (a growing proportion includes either parents with disabilities or those with very young children);
* reducing educational under-achievement among those who grow up disadvantaged will be a key part of improving long-term earning prospects for parents;
* decreasing the number of low-paid mothers by reducing gender pay inequalities needs to be another long-term goal;
* family friendly employment policies and better childcare can help improve opportunities for parents to work, including part time (not just for lone parents but also for second earners in couples).

For families who remain out of work, relative poverty can only be reduced if benefits rise with earnings (if not, the better-off will gradually pay smaller shares of their income to help the poorest).

Whatever the eventual cost of ending child poverty, the cost to society is likely to be much greater in the long term if the problem is ignored. As well as the human and social damage, there are direct costs to taxpayers. For example, poverty adds to the cost of children's services, while young people whose schooling suffers because of poverty will end up more likely to be unemployed and less likely to pay tax. Today's 16 to 18-year-olds who are not working or studying will cost the Exchequer £1 billion a year for each of the next ten years because of their lower employment chances.

The report's author, Donald Hirsch, Special Adviser to the Joseph Rowntree Foundation, said:

"Our findings show that the bold ambition of ending child poverty is achievable, but a strong commitment needs to be sustained for a long period. These targets can not be met through benefits alone. Families must be helped to improve their market earnings, at the same time as getting extra assistance if their incomes fall short. While the cost of ending child poverty is high, the cost of not succeeding is even greater and costs are escalating from one generation to the next.

People who grow up in poverty are increasingly likely to be poor as adults. This causes widespread hardship for individuals, and carries costs for all of society - including financial. A big investment to wipe out child poverty once and for all will bring benefits for generations to come."

Lord Best, Director of the Joseph Rowntree Foundation, said:

"All main political parties now agree in principle that a continuation of child poverty in our affluent country is unacceptable. Now we need a long-term vision of how to end it. Just as with pensions, this requires a commitment to ensure that the incomes of those who depend on state help do not continue to fall behind as we grow more prosperous as a nation. The amount of extra public spending required may seem large, but in fact represents only a small fraction of future economic growth.

"The Foundation is seeking to improve awareness among the general public that child poverty continues to cause unacceptable suffering in Britain. For some poverty means going without essentials like warm clothing and a proper diet. For others it means not being able to participate in activities that friends take for granted. If we all decide to share even a small amount of future increases in our incomes with those who have the least, ending child poverty remains an achievable goal."