Select Committee on Work and Pensions Written Evidence

Memorandum submitted by NCH (CP 13)


  NCH, the children's charity, is the largest United Kingdom voluntary sector provider of services to children, young people and families. NCH runs over 550 projects throughout the United Kingdom working with over 100,000 people every year—many of them living in or near poverty. We are one of the main providers of the Sure Start initiative and also run many Family Centres in disadvantaged areas. We are well aware from our practice of the detrimental impact that poverty has on children—adversely affecting their physical, psychological and emotional development.

  The government's announcement to abolish child poverty in a generation has generated widespread debate on how this can be achieved among children's charities and elsewhere. We welcome the decision by the House of Commons Work and Pensions Select Committee to set up an inquiry into child poverty in the United Kingdom and the effectiveness of the Government's policies to eradicate it.


  NCH welcomes and applauds the Government's ambitious aim to eradicate child poverty in the UK by 2020, and the targets to reduce it by a quarter by 2004 and halve it by 2020. The increase in income inequality since 1976 saw the UK move from one of the more equal developed societies to one of the most unequal in the 1990s. By 1997, poverty in some areas of the country was at levels not seen since the 1930s. Statistics show that by the mid-1990s one in five families had no adult in work, with figures for 1997 revealing that 4.4 million children were living in poverty—a scandalous statistic for the fourth-largest economy in the world.

  We believe that the start made by the Government to eradicate child poverty has been promising. Since 1997, child poverty levels have reduced by 500,000, but a lot more will have to be done if the Government is to meet their goal. Other factors, such as a change in economic performance or a halt to employment growth could make the Government's task much harder. Devolution has also added to the complexity of achieving this goal. The devolved institutions have the freedom to implement their own anti-poverty policies and are not bound to follow Westminster. However, tax and benefit powers, a powerful tool in any poverty reduction packages do remain a reserved power.

  The Government clearly identifies work and skills as keys to breaking the poverty cycle and increasing aspirations. The Chancellor has revolutionised the tax and benefit system—doing away with its outdated rigidity and complementing reforms with the New Deal and the National Minimum Wage. He has also instituted the Savings Gateway to increase the incentives for those on low-incomes to save, while the forthcoming Child Trust Fund will give all young people, regardless of background, a financial springboard when entering adulthood.

  In the long term, raising aspirations and giving all children and young people the opportunity to achieve is just as crucial and should hold equal policy importance and this has been given a much needed boost with the extra investment in education and health services. This is a policy area that could determine whether the Government succeeds or fails in eradicating child poverty by 2020.


  We welcome the record increases in Child Benefit with the rate for the first child being 25% higher in real terms than in 1997, while its universal nature has been maintained. The tax credits system has increased the incentive to work by reducing the poverty trap—giving a substantial boost to the incomes of the poorest working families. The Working Tax Credit supports those in work, but on low incomes, while the Child Tax Credit helps parents raise their children whether they are in work or not.

  We support the decision to double Child Tax Credit for the first year of a child's life—as many low income families feel a particular financial strain during this time and also to give a higher Child Tax Credit rate to parents with disabled children.

  We support the broad appeal of the Child Tax Credits which is available to nine out of ten families with children. Having all families in the same system means that poorer families do not suffer any stigma when they claim this tax credit. In addition, the decision to transfer payment to the main carer, rather than the main earner, is welcomed. The introduction of the Child Tax Credit and increases to Child Benefit now gives families earning less than £13,000 with one child £2,825, with two children £4,830 and three children £6,835.[147] On a whole, financial support for families has significantly increased for those on lower incomes. On average, families with children are £1,200 a year better off, whilst the poorest 20% of the population are, on average £2,500 a year better off in real terms.

  Tax credits, albeit with a few introductory problems, have significantly contributed to helping families on low incomes, but a high take-up rate is required if this policy is to succeed. A low take-up rate could make it harder for the Government to reduce child poverty, especially if employment growth slows or ceases. The introduction of tax credits has put a greater responsibility on claimants. They have to record the hours worked, earnings and any changes to childcare costs in order to ensure that they are not receiving an underpayment. We see this as a responsibility of the employer as well as the employee.

  The Government has introduced many changes to those on low incomes with regards to tax and benefits. We are concerned that more changes in the near future will lead to confusion. The Government should concentrate on maximising the take-up of tax credits and not look to alter the system further.

  The Government has also increased the incomes of the very poorest families. Income Support and Job Seekers Allowance awards for children under 11 have doubled and the disabled child premium has increased by 70% in real terms.[148] However, in some cases parents are unable to work due to an illness or disability. Whilst there has been an increase in the level of benefits to such families, their children need more support. For example, when working with young carers we regularly hear about how they often miss school due to the responsibilities of looking after their disabled parent(s). Without support there is a high probability that many young carers will fail to fulfil their academic potential and in some cases drop out of school altogether. This increases the risk of young carers entering adulthood in poverty and living on low incomes—an issue that the Government must address.

  We are particularly concerned about the number of workless households in the UK and the Government needs to make it a priority to address their needs. Making childcare more accessible or increasing the incentive to study or undertake training will increase their chances of moving out of poverty, and the value of out-of-work benefits will also need to rise.

  Furthermore, due to the intermittent employment nature of those on low incomes we see it as a priority to make support available to them to reduce their chances of falling into poverty. This may include looking at whether money from the Savings Gateway could be accessed or the savings limit for households when applying for tax credits could be increased giving a greater incentive to save when in work. Above all, we believe the Social Fund urgently requires reform to better assist those living in hardship.

  We support the introduction of the Child Trust Fund and await details of its implementation with interest. It is vital that the most vulnerable children, such as those in care, are not disadvantaged in any way. Given the decision by the Chancellor that children born from September 2002 are to be entitled to benefit from the Child Trust Fund we believe that children's charities have an important role to play in ensuring a high take-up rate. In relation to the impact of the Child Trust Fund it is worth noting that the benefits will not come to fruition until around the Government's target date to eradicate child poverty.

  If the Government is to meet its poverty reduction targets it will need to significantly increase spending on benefits for poorer families. We see a strong case for more financial support during the early years of a child's life. This could be done by extending the higher rate Child Tax Credit beyond the first year or through a top-up rate on Child Benefit until the child is three. This would give parents a choice of whether to use the extra money to pay for childcare or to stay at home by reducing their hours of work.


  The Government sees getting parents into work as the main solution to child poverty. There is no doubt that tax credits give parents a greater financial incentive to enter into employment. Nonetheless we believe that the Government should ensure that parents are not substantially disadvantaged if they wish to spend time with their child or children during their early years. This was also outlined in the Labour Party's 2001 manifesto which stated "Many parents, especially mothers, want to work reduced hours when they do go back to work."[149]

  However, there is growing evidence that parents, especially lone parents, would like to work less in order to spend more time with their children, but are not able to do so. Recent research by Professor Dex for the Joseph Rowntree Foundation found that "the preferences expressed by many mothers run counter to the direction of government "welfare to work" policies since they would prefer to do less, not more, work while their children are young."[150] This is an issue that the Government must address. At present any reduction in working hours will affect them financially.

  We welcome the introduction of workplace legislation to enable flexible working, but we question how applicable such legislation is to the kind of employment undertaken by low income workers.

  In addition, we suggest that public sector employers, such as local authorities, should lead by example and promote flexible working arrangements for all employees. In some disadvantaged areas, local authorities are often the main employers, so this could make a major difference.

  Furthermore, for those parents who are in employment but on low incomes we are of the view that gaining new skills and knowledge whilst in employment is vital. There is no longer such a thing as "job for life" and workers need to acquire transferable skills and engage in life-long learning in order to reduce the chances of them returning into or near poverty. The Government should examine the incentives and ability for employees on low income to access and take-up courses.

  There have been calls for the tax credit scheme to be more flexible to reflect the intermittent employment nature of those in low paid jobs. However, we believe that this may actually add to confusion and that this should not be a priority for the Government at this current time.


  As one of the main providers of Sure Start schemes we are well aware of the challenges families living in poverty have to face. From our experience Sure Start is an effective driver to break the poverty cycle. It gives parents in disadvantaged areas access to the help and advice they need from pregnancy to birth and beyond. At present, Sure Start covers 40,000 children under the age of four, about a third of the age group living in poverty. We are pleased that the government has committed funding to this initiative until 2013 as we see Sure Start, along with Children's Centres, as services that are key to reducing the child poverty.

  Sure Start has had a significant impact in addressing the issues and concerns of parents from disadvantaged areas and their children. However, it is also highlighting problems in other areas of service provision. For example, NCH Sure Start managers have identified adult mental health problems as a major issue, but find it difficult to access mental health services on behalf of their service users. In addition, other issues such as housing problems and benefits claims are also being dealt with by Sure Start workers because these are needs that parents bring for which other forms of support seem often to be lacking.

  There are many parents living in or near poverty who are excluded from Sure Start support because of its targeted area approach. Pockets of deprivation surrounded by more affluent areas have undoubtedly often missed out. 700,000 children (23% of rural children) live in poverty in the countryside—representing 18% of all poor children, but there are only 15 Sure Start programmes covering rural areas.


  Accessible, high quality, affordable childcare provision will need to be significantly increased if work is to be a viable option for families living in poverty. We endorse the Government's National Childcare Strategy, launched in 1998 and the commitment to increase the number of childcare places. Research shows that there is considerable demand for good quality, convenient, reliable and affordable childcare with research pointing to 63% of non-working mothers and 78% of non-working lone mothers stating they would work or study if they had access to it.[151]

  Whilst the Government has made progress in expanding childcare places the cost of childcare is still too expensive for many mothers. There are regional variations to childcare costs, but this is something the Childcare Tax Credit does not take into account. The Childcare Tax Credit is helping parents meet childcare costs, but research by the Daycare Trust has revealed that "the childcare tax credit contributes to less than a third of the cost of an average nursery place."[152] This is not much of an incentive for workless households with children to enter the labour market.

  In addition, there is a need for more wrap-around care as many low-paid jobs go beyond the traditional nine to five working day. This is particularly the case for parents doing shift work, those who start early in the morning or who work during the evening or at weekends. It is important that childcare provision is available to meet their needs.

  We strongly support the recommendation in the House of Commons Work and Pensions Select Committee on Childcare for Working Parents report that called for Children's Centres to be expanded to the 30% most deprived wards, with the aim to establish Children's Centres in all areas.[153] Failure to address the issues surrounding childcare will make achieving the child poverty targets significantly difficult.


  Access to key services such as education, health and housing to families living in poverty are key components to breaking the cycle of deprivation. Children who are born in poverty are at risk of staying poor, as well as having a higher risk of illnesses. We welcome initiatives such as breakfast clubs and after-school clubs and the benefits such initiatives bring. We believe that breakfast clubs should be available in every primary school.

  Raising educational attainment for all children is clearly crucial to breaking the cycle of poverty. The government has invested record amounts in the education system but whilst standards have improved, the record on inclusion is more questionable. Policies such as reducing class size have had a positive impact, but only in the schools that were over-subscribed and not the inner city schools with a lower intake. However, the flagship Excellence in Cities initiative is showing signs of improving the attainment of those from disadvantaged backgrounds, but this initiative needs to be extended more widely and sustained in the long term. We welcome the decision to roll out Educational Maintenance Allowances, but we believe that more still needs to be done at an earlier stage to reduce the educational barriers faced by the most disadvantaged children and young people.

  Children living in poverty are more likely to suffer from ill-health so the Government needs to tackle the health inequalities that exist and improve access to health care for those living in disadvantaged areas. The National Framework for Children is a step in the right direction, making children's health needs a priority, but it must be implemented fully and effectively. We also welcome the emphasis in the Every Child Matters Green Paper to ensuring that every child receives the help they need, but note that significant resources will be required to make this a reality.


  For the Government to eradicate child poverty by 2020 there needs to be a concerted effort toward this goal by all government departments. However, some departmental initiatives seem to contradict the aim to eradicate child poverty. For example, to tackle school truancy fixed penalty notices and the threat of prison to parents have or are being introduced, but there has been very little emphasis on understanding why children truant and on tackling the underlying causes. A child may truant because of bullying or because of caring responsibilities or other problems at home. In such cases, issuing fines or the threat of jail could be totally counterproductive and result in school disaffection and a reduction in educational attainment.

  Similarly, measures such as making it easier to evict anti-social tenants or to reduce housing benefits—as currently proposed by the government—will only lead to the problem being displaced and push the poorest in society into further hardship. Such measures contradict the Government's aim to eradicate child poverty. Instead, resources should be targeted to help and support such families and give them opportunities to address their problems, such as counselling, drug treatment or help getting onto the New Deal.

George McNamara


11 September 2003

147   Budget 2003, Table 5.1: Levels of support for families from April 2003, HM Treasury HC 500. Back

148   Speech by Dawn Primarolo MP to the CPAG, September 2003. Back

149   Labour Party 2001 Manifesto, page 28 (2002). Back

150   Dex, S Work and family life in the 21st century (2003)News Release, Joseph Rowntree Foundation. Back

151   Woodland, S Miller, M and Tipping, S (2002) Repeat Study of Parents' Demand for Childcare, DfES 348. Back

152   Cost of childcare soars, BBC online, 6 February, 2002 Back

153   House of Commons Department of Work and Pensions Select Committee Report, page 23, 5th Report, Session 2002-03. Back

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