House of Commons - Work and Pensions

Select Committee on Work and Pensions Second Report

11 Area-based child poverty

236. Child poverty rates vary enormously across different areas of the UK. Taken by country, Wales has the highest child poverty rate in the UK, using the HBAI income measure. The Households Below Average Income (HBAI) statistics show that child poverty in Wales is slightly higher (30% compared with 29% in England and 27% in Scotland). The latest HBAI figures for 2002-03 give a child poverty rate (AHC) of 27% for Northern Ireland. The BHC rate is higher than Great Britain at 22% compared with 21% but the figures are not comparable because of the different treatment of water charges.

CHILD POVERTY IN NORTHERN IRELAND

237. Until the inclusion of Northern Ireland in the Family Resources Survey 2002-03, there had been a seven year gap, with no poverty measurement taking place in Northern Ireland at all.[228] This led to the comment by the Northern Ireland Anti-Poverty Network (NIAPN) that "…child poverty levels in Northern Ireland are a skeleton in the cupboard that has been ignored on a national level."[229] Researchers from Queen's University Belfast and the University of Ulster recently published research on poverty and social exclusion in Northern Ireland.[230] They combined an income measure of poverty with a consensual measure similar to that used in the Poverty and Social Exclusion Survey in Great Britain. Using this measure they calculated that 37% of children in Northern Ireland were in poverty. The characteristics of children in poverty were very similar to those in Great Britain with a high child poverty rate in lone parent households, large families and families with a disabled adult or child. In addition, higher poverty rates are to be found in families who define themselves as 'Irish' or 'Catholic'.

238. Evidence suggests that the high child poverty rate in Northern Ireland can be attributed to a range of factors, including: the higher incidence of large families; a higher cost of living; unemployment; and low pay.[231] Over a quarter of families in Northern Ireland have three or more children,[232] compared with less than a quarter in Britain. Financial support for families with children tends to favour smaller families, as demonstrated by the higher rate of Child Benefit for the first child and the reduced rate of help with childcare costs through Child Tax Credit for those with two or more children. In addition, the cost of some essential goods and services is much more expensive in Northern Ireland than in the UK as a whole. The prices of fuel and light in Northern Ireland are 25% higher than the UK average; fares and travel are 13% higher; motoring costs are 11% higher and food costs 5% more in Northern Ireland compared with the UK average. However it should also be noted that housing costs are 29% less in Northern Ireland than the UK average.[233]

239. The NIAPN sets out very persuasive evidence showing how unemployment, underemployment, low pay and low income contribute to the high child poverty levels n the province.[234] Their written evidence compares data for 2002 which shows that 32% of children in Northern Ireland live in households whose only income derives from benefits, compared with 19% in Britain. Unemployment has long been a problem in Northern Ireland, although rates have fallen in recent years, and the province now has a lower unemployment rate than the North East of England, to which it is frequently compared. NIAPN also points out that households in Northern Ireland earn on average 20% less than the rest of the UK; average household income is 22% lower than the UK average; and 21% of average households' income is derived from social security benefits, compared with 12% in the UK.

240. The Committee recognises that an enormous amount of valuable anti-poverty work is being undertaken in Northern Ireland through the New Targetting Social Needs programme. But problems such as unemployment, economic inactivity and low pay cannot be left for the devolved administrations to tackle. The valuable lesson learned during the Committee's visit to Northern Ireland, and which is also reflected in the above facts, was that child poverty alleviation in Northern Ireland has to be tackled by the UK Government in co-operation with the devolved administration.

241. The Committee recommends that special measures are needed to bring Northern Ireland into line with household income levels in other parts of the UK and that Northern Ireland should be included in future PSA targets on child poverty in order to promote consistency and to reduce any distortion in the UK figures.

Child poverty and income deprivation by district, ward and region

242. Regions across Britain show considerable variation in both child poverty and child deprivation rates.[235] The HBAI statistics show that London has the highest child poverty rate (38% of all children in London - rising to 54% in inner London) and that the lowest rates are in Eastern England (23%) and the South East (30%) (see table 1). A similar picture can be seen using the child income deprivation index (CIDI) for England and Wales where London has the highest child income deprivation rate (30.1%) with the lowest rates in the South East (13.7%) and in Eastern England (15%) (see table 2).

Table 1: Percentage of children in households below 60% median income, by geographical region

Region Children in households

below 60% median income

%

England Before housing costs

20 After housing costs

29

North East 32 37

North West and Merseyside 22 30

Yorkshire and the Humber 24 30

East Midlands 23 29

West Midlands 22 29

Eastern 14 23

London 25 38

Inner 37 54

Outer 18 30

South East 12 20

South West 17 25

Scotland 23 27

Wales 25 30

Northern Ireland 22 27

(Source: HBAI)

Table 2: Numbers and Rates of Children in Income Deprivation in 2001 by Region

Region Total Child Population Aged under 16, 2001 Total Number of Children Aged under 16 in Income Deprivation 2001 Percentage of Children aged under 16 in Income Deprivation

East 1,049,695 156,890 14.95

East Midlands 819,200 146,740 17.91

London 1,401,290 421,040 30.05

North East 493,040 127,170 25.79

North West 1,373,050 330,500 24.07

South East 1,539,305 211,270 13.73

South West 910,950 137,275 15.07

West Midlands 1,074,010 233,665 21.76

Yorks Humber 988,630 214,915 21.74

Wales 565,665 135,920 24.03

243. To analyse poverty at district level or below, it is necessary to use CIDI as HBAI does not enable analysis below regional level. At district level, 13 of the 20 most deprived districts in England and Wales are in London, 2 more than in 1999 - Tower Hamlets having the highest child deprivation rate of 56.3% (see table 3). However, at ward level, four of the ten wards with the highest rate of child deprivation are in Liverpool and nine of the ten most deprived wards are in the North West region. The most deprived 20% of wards (1767 in total) are mainly clustered in London, Wales, the North East and the North West. With over half (53.1%) of the wards in London falling into the most deprived 20%, London has the greatest percentage of wards in the most deprived 20% (see table 4). Yet the most deprived ward in London (East India and Lansbury) is the 30^th most deprived ward suggesting that extreme pockets of deprivation are also elsewhere.

Table 3: Top 20 Districts with the highest rates of income deprived children for 1999, 2000 and 2001

1999 2000 2001

1 Manchester Tower Hamlets Tower Hamlets

2 Tower Hamlets Islington Islington

3 Knowsley Hackney Hackney

4 Liverpool Manchester Manchester

5 Islington Newham Newham

6 Hackney Haringey Haringey

7 Newham Camden Camden

8 Haringey Knowsley Liverpool

9 Westminster Liverpool Southwark

10 Nottingham Southwark Knowsley

11 Merthyr Tydfil Lambeth Lambeth

12 Middlesbrough Hammersmith and Fulham Nottingham

13 Lambeth Nottingham Hammersmith and Fulham

14 Camden Westminster Westminster

15 Greenwich Greenwich Greenwich

16 Kingston upon Hull, City of Middlesbrough Barking and Dagenham

17 Southwark Barking and Dagenham Lewisham

18 Barking and Dagenham Lewisham Middlesbrough

19 Newcastle upon Tyne Merthyr Tydfil Newcastle upon Tyne

20 Blaenau Gwent Kingston upon Hull, City of Kingston upon Hull, City of

Table 4: Number of wards in the most deprived 20% of wards in England and Wales on the CIDI, by region

Number of wards in most deprived 20% of wards in England and Wales Number of wards in the Region % of wards in each region falling in most deprived 20% of wards in England

Wales

East 105 1118 9.4

East Midlands 129 881 14.6

London 332 625 53.1

North East 181 484 37.4

North West 286 1006 28.4

South East (excluding London) 130 1499 8.7

South West 81 1088 7.4

West Midlands 143 761 18.8

Yorkshire & the Humber 131 496 26.4

Wales 249 881 28.3

Total 1767 8839 20

244. Table 3 also shows how districts have changed their ranking over a three year period. In 1999, 11 of the 20 districts with the highest income-deprived children rate were in London, but by 2001 that rose to 13. In 1999, the district with the highest child deprivation rate in Wales, Merthyr Tydfil, was ranked 11^th but by 2001 had fallen to 22^nd. In 2001, the English district with the highest child deprivation rate outside of London was Manchester with 45.6%. In 2001, Manchester was ranked fourth on the list when in 1999 it had been the most deprived district in England and Wales. The year on year figures for the worst districts show London moving up the table at a considerable rate over only a three year period. In 1999, three of the worst six districts were in London; in 2001, the figure had risen to five out of six.

245. Further research on the child income deprivation index shows that roughly two-thirds of poor children live in 24% of wards.[236] Thus, policies concentrated on the 20% most deprived wards exclude around a third of poor children. The analysis also shows the extreme spatial concentration of child poverty. Half of child poverty is found in only 12% of wards and a third in 5% of wards.

246. This lengthy analysis shows the extent of child income deprivation within areas of England and Wales. It also leads to the question of whether or not the Government's approach of targetting resources at children through area-based initiatives is the right way forward. The Committee believes that while area-based policies are important for the social environment in which children grow up, they are no substitute for policies that ensure adequate incomes for all families wherever they live. We therefore recommend that the Government review the targetted initiatives that are currently in place and consider whether a universal approach might be more effective in the run-up to the 2010 target.

Child poverty in London

247. London is not only the region with the highest child poverty rate, but it also has the highest number of children living in poverty, reflecting its large population (19% of all poor children live in London).

248. Evidence suggests that child poverty in London is chiefly caused by the high levels of worklessness in the capital, the high cost of living in London and the lack of affordable childcare. The higher proportion of lone parent families and minority ethnic groups also increases the risk of poverty for children in London. These groups also have higher levels of worklessness, thereby increasing the poverty risk further.[237]

249. Figures from the 2001 Census show that one in nine households in London is a lone parent household compared with less than one in ten in England and Wales. Of the twelve local authorities in England and Wales with the highest proportion of lone parent households, six are in London.[238]

WORKLESSNESS AND LONE PARENTS IN LONDON

250. In written evidence, the Greater London Authority (GLA) closely analysed the issue of worklessness and pointed to Census figures showing that nearly a quarter (23%) of households with children in London have no adult in employment compared with 16% nationally.[239] GLA's analysis shows that local authority districts in England which have a high proportion of children in workless households, such as Liverpool, also have a high proportion of worklessness in households without children. This is not the case in London. GLA states:

240

251. The Census figures show that half of lone parents in England and Wales were not in employment but in London this rises to 58%, 61% in Inner London.[241]

HIGH COSTS OF LIVING IN LONDON

252. The Association of London Government (ALG) point out that

"London's high costs exacerbate child poverty in the capital. Many London children continue to live in poverty in workless families as the high costs of housing and childcare in the capital make it difficult for their parents to move into employment."[

242

253. Research conducted by the Centre for Economic and Social Inclusion examined the costs of moving into work for people living in London and found that lone parent and couple families need to earn between 27% and 60% more than people need elsewhere to be £50 better off. The research found that lone parents in London moving into part-time work need to earn more than the minimum wage to be £10 better off - this is not the case elsewhere. Nationally, a lone parent moving into full-time work at the minimum wage and with high childcare costs will be £24.65 better off than they were on benefits, whereas in London they would need to earn £7.43 per hour to achieve the same weekly gain.[243]

Childcare

254. Figures from the Daycare Trust show the high costs of childcare in inner London, with a typical full-time nursery place for a child under two costing £168 and a childminder costing £137. This compares with £134 and £121 nationally.[244] The high childcare costs in London, combined with the fact that the childcare element of Working Tax Credit (WTC) covers only 70% of costs up to a limit of £135 for the first child and £200 for two or more, results in parents having to pay more for childcare even though they are on a low-income.

255. Highlighting some of the problems in London with supporting childcare costs for working parents through the tax credits system, Declan Gaffney of the GLA said:

245

Housing

256. The HBAI figures illustrate the implication of high housing costs in London. When measured before housing costs, 24% of children in London and 36% in Inner London are in poverty. However, when measured after housing costs these figures jump to 38% and 54% respectively. Nationally, 21% of children are in poverty before housing costs and 28% after housing costs.

257. Several organisations, including the Association of London Government (ALG), pointed to the problems of the interaction of WTC with Housing Benefit and Council Tax Benefit, which dulls the intended work incentive of WTC.[246] Shelter pointed to four key problems with Housing Benefit that undermine the effectiveness of benefits and tax credits in reducing child poverty: work-related benefits (including Child Tax Credit) which are taken into account when assessing income in the Housing Benefit calculation; the steep Housing Benefit taper which decreases Housing Benefit by 65p for every pound earned, with a further 20p decrease in Council Tax Benefit; rent restrictions which result in an average shortfall of £19 a week for families in private rented accommodation; and poor administration and the complexity of Housing Benefit.[247] The problems with Housing Benefit disproportionately impact upon those living in high cost areas such as London.

TRANSPORT COSTS

258. A further aspect of the high costs of living in London is transport costs. Research suggests that high transport costs limit people's mobility within London when deciding to take a job.[248]

259. The GLA is currently piloting a scheme in seven areas of London to provide discounted travel passes for those moving into employment and also claiming Working Tax Credit or Child Tax Credit of more than £10.43 per week.

CHILD POVERTY AND ETHNICITY IN LONDON

260. Using the 2001 Census figures, the GLA highlights the importance of tackling child poverty within minority ethnic groups in London and it is worth looking at their analysis in some detail.

261. More than two-fifths (41%) of children in London, and over half (53%) in Inner London, belong to minority ethnic groups, compared with 9% nationally. The minority ethnic population of London is very diverse with the largest group - Black African - accounting for 8.3% of the child population. According to the GLA, 80% of the projected growth in London's working age population to 2016 will be accounted for by minority groups. This is particularly important for the child poverty targets as minority ethnic children have a higher risk of being in a workless household - in England and Wales, 16% of all children were in workless households, compared with 20% in London. With the exception of Chinese, Indian, mixed White and Asian children, children in other minority ethnic groups have a much higher risk of being in a workless household across the Greater London area - around 30%. However, there are also substantial differences between areas of London.

262. Finally, the GLA also say that demographic trends may lead to a worsening position in London. Although nationally the child population is forecast to reduce by 7% over the period 2001 to 2011, the child population of London will continue to grow and minority ethnic children will account for an increasing proportion. The GLA concludes:

"…the Government's aims with regard to poverty reduction will not be met in London without major changes in the relative welfare position of most black and minority ethnic communities."[

249

263. As outlined in section 8, the Department does have an employment strategy aimed at increasing the employment rate of minority ethnic groups. However, the extent to which it will be effective in London is open to question. In oral evidence, Declan Gaffney of the GLA suggested that earlier intervention in deprived areas might be one way to tackle worklessness among the minority ethnic population. For example, rather than waiting for minority ethnic young people to leave school and eventually move into the New Deal for Young People, Jobcentre Plus and employers should be working with schools to ensure that young people are aware of the opportunities that are available to them.[250] In oral evidence, the Secretary of State stated: "I agree with you that there is a particular challenge in London both on poverty and on employment."[251] When asked whether he accepted that real inroads into child poverty were necessary he went on to say: "Yes, I would agree that progress in London is an absolute necessary condition towards hitting our target."[252]

264. The Committee is persuaded that special measures are needed in Inner London to ensure that the 2010 target will be met. The Committee recommends that the Housing Benefit disregard on earned income be substantially increased in Inner London and the proportion of childcare costs covered by the childcare element of Working Tax Credit be increased to 90% in Inner London. We also recommend that Jobcentre Plus be given additional resources to help minority ethnic groups and lone parents in the capital move into work.

228 Annex 4 Back

229 Ev 83 Back

230 P, Kelly G, McLaughlin E, Patsios D and Tomlinson M (2003) Bare Necessities: Poverty and social exclusion in Northern Ireland Back

231 Annex 4, Ev 44, 84 Back

232 Ev 85 Back

233 ref visit note Back

234 Ev 84-85 Back

235 Regional variations of poverty within Northern Ireland are not as yet available. Back

236 Ev 180 Back

237 Ev 8-9, Ev 152 (vol III) Back

238 GLA (2003) 2001 Census Key Statistics: People, Families and Households, DMAG briefing, 2003/14, London: GLA Back

239 Ev 157 (vol III) Back