House of Commons - Work and Pensions

Select Committee on Work and Pensions Written Evidence

Memorandum submitted by Child poverty Action Group (CP 27)

KEY RECOMMENDATIONS

In line with the Institute for Fiscal Studies analysis, there should be a £5 per week increase in benefit for every child living in a low-income family to ensure that the poverty reduction targets are reached (para 32).

There should be an explicit commitment by every relevant spending department to the goal of eradicating child poverty with child poverty related targets (para 40).

An adequate Minimum Income Standard should be established and used as the basis for social security benefit rates (para 55).

There is a strong case for establishing an independent body tasked with responsibility for monitoring, evaluating and advising this and future governments on tackling child poverty (para 56).

There should be a minimum income standard (MIS) for a child. This MIS should be enhanced where there is extra need, for example, where there is a disability (para 63)The combined value of Child Benefit and Child Tax Credit should be at least equal to the MIS (para 63).

The commitment to up-rate the Child Tax Credit at least in line with average earnings should be extended indefinitely. A requirement to up-rate by this method should be included in primary legislation (para 67).

Consideration should be given to writing off over-payments where these occurred as a result of administrative error (para 71).

The Social Fund requires urgent reform to ensure that it meets the objectives of eradicating child poverty, improving the health and educational attainment of children, and facilitating the move from benefit to paid work (para 78).

The most important priorities should be fundamental reform of the Social Fund and further increases in financial support to ensure that families have the resources they need while raising their children, and have the capacity to save, not to implicitly assume that this is already the case (para 84).

Conditionality based on personal or family behaviour should not interfere with entitlement provided that the person fits the relevant conditions of entitlement to that benefit (para 90).

There needs to be political consensus over the goal of ending child poverty by 2020 (para 95).

An increased minimum wage is an essential element to tackling child poverty (para 96).

INTRODUCTION

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The Child Poverty Action Group (CPAG) welcomes the Committee's inquiry into child poverty and is happy to contribute to it. We would also welcome the chance to add to evidence we set out if it would aid the work of the Committee. The inquiry is timely: the Department for Work and Pensions is due to publish the conclusions of it consultation on measuring child poverty by the end of 2003. In Budget 2003 the Chancellor stated that the government will examine measures needed to make faster progress in reducing child poverty. To this end the Treasury is leading on a "child poverty review", which will inform decisions in the next Budget and the 2004 Spending Review.

CPAG believes that the best guarantee for the future social and economic health of our society is to invest in our children and young people. Poverty remains one of the most serious problems facing children, with a negative impact on health, education, social and physical development and future life chances and opportunities. The Government's commitment to eradicating child poverty is to be applauded. It is a goal that deserves cross-party support and public endorsement. Eradicating child poverty is a radical and onerous ambition—one that requires a long-term sustained strategy.

This submission shows that poverty for children in the UK has increased, is significant in the lives of many (Part I) and that its impact is poorer outcomes and life chances for those afflicted by poverty (Part II). Having done so the submission shows that policy can make a difference, reviewing progress against the historic commitment to abolish child poverty by 2020 (Part III) and specifically addressing the Treasury's 2004 spending review. The submission discusses UK wide policy, but also that which has come from the devolved governance structures. The submission then discusses the DWP consultation on measuring child poverty (Part IV) and CPAG's response. Part V looks at current issues and policy debates: the Child Tax Credit, reforming the Social Fund, the Child Trust Fund and benefit conditionality.

PART I—THE EXTENT OF CHILD POVERTY IN THE UK

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1. It is often said that there is no "official" measure of child poverty. In practice the Labour Government has consistently been defining child poverty as any child living in a household with income below 60% of median income, after allowing for expenditure on housing costs. The Government's first milestone target is to reduce the number of children living in poverty by this measure by 2004-05. Other "indicators" of child poverty (including other measures of income—both "relative" and "absolute") are used (for example in the annual Opportunities for All report[305]).

2. The 2001-02 Household Below Average Income statistics[306] show that 3.8 million children (one in three) were living in income poverty. This compares to 1.9 million children in 1979.

3. Of the 3.8 million children in poverty:

— 55% lived with a couple and 45% lived with a lone parent;

— 52% lived in a family where one or more members of the household worked full time;

— 48% lived in a workless household;

— 45% lived in families with three or more children;

— 25% lived in a household where there were one or more adults with a disability;

— 47% lived in a family where the youngest child was under five years of age;

— 16% lived in London.

4. The risk of living in income poverty is not shared equally across all household types:

— 54% of children in lone parent households lived in income poverty compared with 22% of children in couple families;

— children in households where no adult is working are at significantly greater risk of income poverty (79%). However, nearly 1 in 5 children who live in a household where at least one adult was working was in poverty;

— half of children in a family with four or more children lived in income poverty; and

— children from black and minority ethnic households are more at risk of income poverty. 27% of children in white households were income poor, compared with 36% of Indian children; 41% of Black non-Caribbean children; 47% of Black Non-Caribbean and 69% of Pakistani and Bangladeshi children.

PART II—THE IMPACT OF POVERTY ON CHILDREN AND YOUNG PEOPLE

5. The evidence is clear and compelling: growing up in poverty has adverse consequences for children. The effects are manifested in different ways: on physical health and development; learning and behaviour and emotional well-being.[307] The result is that children are prevented from realising their full potential. There is a social and economic cost, during childhood but also as a consequence of the long-term legacy that poverty can leave. We do not intend to review the impact of poverty here in great depth, more data is provided in our publication "Poverty the facts" (available on request), but instead to highlight some key evidence which help to show the impact of poverty on the lives of many of the children in the UK.

Access to Necessities

6. The Poverty and Social Exclusion (PSE) survey derived a list of "socially perceived necessities,"[308] that is items and activities that a majority of people consider to be necessities that everyone "should be able to afford and which they should not have to do without". Children were defined as deprived if they lacked one or more necessities because the parents could not afford them. On this measure the survey found that: 34% of children lacked one or more items, 18% lacked two or more. Deprivation was higher for "non-white" children: 34% lacked two or more items compared with 14% of "white" children.

7. Research by the Centre for Research in Social Policy for Save the Children,[309] also discussed separately by Middleton in her submission to this inquiry, used data from the PSE and the British Household Panel Survey to investigate the number of children living in "severe poverty" and its persistence over time. They used a mix of income poverty and material deprivation to define severe poverty. The finding was that 8% of children—around one million—were in severe poverty (ie, they were poor on all of three measures: "income poverty,"[310] "child deprivation"[311] and "parental deprivation"[312]). In addition, 37% of children were "non-severely poor"—that is, poor on one or two of the three measures.

8. Severely poor children were found to lack items that were most highly ranked as necessities, for example:

— a warm waterproof coat (13% lacked the item);

— new properly fitted shoes (17%);

— at least seven new pairs of underpants (18%);

— meat, fish or vegetarian equivalent twice daily (31%); and

— fresh fruit and vegetables daily (21%).

9. The recent report,[313] published by the Department for Work and Pensions, on the Families and Children Survey (FACS) constructed a hardship index based on nine indicators of hardship, based around housing conditions, family finances and material deprivation, but not income poverty. The report itself indicates the hardship index "is a very conservative measure placing `in hardship' only those families who are experiencing serious difficulty . . . They are not meant to imply an exhaustive standard of family hardship not impoverished conditions."[314] The report shows that between 1999 and 2001 the proportion of non-working families experiencing severe hardship fell substantially: from 48% to 31%.[315] It remains sobering however that a third of non-working families were still in "severe hardship" by this conservative measure in 2001. The study found that families in hardship were more likely to belong to a minority ethnic group; both parents and their children were younger and they had bigger families; more were likely to be a social tenant; less likely to have educational qualifications and more likely to have a disability or illness.[316]

10. The PSE survey data was collected in 1999, before the introduction of the Working Families Tax Credit, increases in means-tested support for children and the Child Tax Credit. Research using the FACS[317] indicates an improvement in living standards for low/moderate income families between 1999 and 2001 (see para 9). This is welcome, nonetheless the PSE survey and analysis reveals a depressing picture of the extent to which children lacked necessary items and were unable to participate in social activities.

The Environment

11. The home and community environment in which children are brought up is crucial to their development and physical and mental health. The number of children killed in accidents has halved over the last decade and this has compressed the difference between social classes. Nevertheless children from manual classes still remain more likely to die in accidents than children from non-manual social classes.[318] Research published by the IPPR found that children in the 10 most deprived wards are more than three times as likely to be pedestrian road casualties than those in the 10% least deprived wards, even having controlled for the increased risk of accidents in urban areas.[319] Children and adults in deprived areas are more likely to make journeys by foot and less likely to have gardens or areas to play in. Indeed despite the wide-ranging benefits of play, research by the Children's Play Council found that play opportunities for children of school age are often restricted, children in low-income families often have fewer play opportunities than others.[320]

Health

12. "The general consensus is that there are strong links between socio-economic disadvantage and poor child health."[321] For children there is an association between being in poverty and increased risk of mortality (from illness, accident and suicide) and both physical and psychological morbidity.

13. A recent Department of Health review of health inequalities[322] highlighted a substantial social class gradient in infant mortality with children born to parents in social class V ("unskilled") suffering much the highest risk of death. Most childhood mortality occurs before the age of one, but class variations persist beyond. A review of evidence by Bradshaw examined the impact of poverty on children and showed that the overall risk of death for was 1.9 times greater for children in social class V as for children in social class IV.[323]

14. The Acheson Inquiry[324] discussed the role of diet and highlighted the fact that low-income mothers were not able to afford an adequate and healthy diet. This is likely to have an impact on the child throughout his or her life. The impact of poverty begins at birth with a link between social class and a greater risk of low birth weight. Children born to parents from manual social classes stand an increased risk of being born underweight than children from non-manual social classes.[325] Low birth weight may influence later cognitive function and educational performance: those of higher birth weight are more likely to achieve higher qualifications.[326], [327] This effect may persist beyond childhood as a study, published in the British Medical Journal,[328] has demonstrated. The same study concluded that although both lower social class and lower birth weight are associated with poorer cognitive ability of the two factors social class had the stronger influence.[329]

15. Breast milk is the best form of nutrition for infants but there is a steep social class gradient in breastfeeding from 57% of mothers in social class V to 91% in social class I.[330] As CPAG's recent report Poverty Bites: Food health and poor families[331] noted:

"Poorer educated, single and younger mothers are least likely to initiate breastfeeding, and those who do, stop sooner . . . infants from the lowest socio-economic groups are more likely to be anaemic, partly because they are more likely to be premature, with low iron stores, and to be fed cow's milk from a very earlier age. They are also more likely to experience common infections as a result."

16. There is a link between income poverty and the ability to afford an adequate and healthy diet. Children in low-income groups are, for example, 50% less likely to eat fruit and vegetables than those in the highest income groups. Poverty bites: Food health and poor families challenged the view that families in poverty have only themselves to blame for a poor diet.[332] People on low incomes are effective managers of food and money, but inadequate incomes, higher food prices and lack of choice can contribute to food insecurity and poor diets. Parents admit to going without food to feed their children, but spending on food is often cut to avoid or reduce debts—for many families food spending is the only flexible item of their budget. Poor diets are associated with poorer health.

Education

"Children coming to school hungry or stressed as a result of their social and economic environment will be unable to take full advantage of learning opportunities and stress, depression and social exclusion may reduce parents' capacity to participate in their children's education". Acheson report: Independent Inquiry into Inequalities in Health.[333]

17. The Family Fortunes study[334] found that educational items such as school trips, lessons and sport can account for a significant proportion of family spending on primary and secondary school children. CPAG's recent report, The Cost of Education—a Local Study,[335] points out that despite having a "free" school system, education related costs are a problem facing low-income families. The report highlights that "voluntary" charges for activities did not feel voluntary for many parents, and children may be deterred from joining extra activities that require costly equipment. If family finances prevent participation, children in poor families children may be identified and stigmatised as "different' and as poor (see paras 23-25).

18. The links between poverty, social class and poor educational attainment are strong:

— In 2002, only 59% of children receiving free school meals reached expected attainment levels in Keystage 3 for English, compared to 70% of those not receiving free school meals.

— Schools in the poorest communities have between 10 and 25% of pupils achieving five GCSE passes at grades A* to C against a national average of just under 50%.

— Nearly 90% of "failing schools" are located in areas of deprivation and have a large proportion of children eligible for free school meals.

19. The quality of the home environment and the lack of resources such as space to work, books and a computer at home can be important factors in influencing children's education. Financial pressures on low-income families can be particularly acute during school breaks, with parents unable to afford activities such as going away on holiday.[336] The Poverty and Social Exclusion survey shows that although a majority of parents thought that a holiday was necessary for children, one fifth did not get one due to financial constraint.[337] The inability to afford a holiday denies children and families an opportunity for relaxation and stimulation.

Family poverty

20. Professor Ruth Lister, in her submission to the Select Committee's Inquiry, argues that child poverty cannot be divorced from the poverty of the family in which children grow up. The extent to which parents, particularly mothers, make sacrifices for their children (acting as "shock-absorbers") is highlighted by research. The Small Fortunes survey found that in half of families where the parents were defined as poor (lacking three or more essential items) the children were not lacking essentials. Mothers reported going without clothes, shoes and entertainment to provide for their children. One in 20 lone mothers went without food and lone mothers on Income Support were 14 times more likely to go without food than mothers in non-claimant, two parent families. The Centre for Research in Social Policy/Save the Children research report suggested similar findings, that children in severe poverty "had parents who were sacrificing their own health and well-being by cutting back on food and clothing for the sake of their children."[338]

21. The Small Expectations study[339] explored the financial pressures on parents and children and the extent to which children's perceptions and attitudes were influenced by the experience of living in income poverty. The finding was that children "learned to be poor", that is the financial pressures on the family shaped their economic learning, behaviour and aspirations. The study, based on interviews with more than 400 children, found that children in lone parent or families in receipt of Income Support had much lower expectations about their future careers. Children learnt to expect, and to accept, less from an early age. Two thirds of children in lone parent or families in receipt of Income Support said that they were frequently told their family could not afford things they wanted, compared with less than half of other children.

22. A recent study explored how low-income families with children spend an increase in household income where this occurred following a move into paid employment. Children were the main priority for spending, with parents describing the lengths they would go to ensure their children's well-being, before and after the move into work.[340] Children were more likely to benefit than their parents, for example, in terms of food, clothing and materially. Parents were concerned that their children did not look poor by their appearance or the activities they took part in. Parents who felt less stressed financially found that the relationship with their children improved: "parents no longer snapped when the subject of money was mentioned."[341]

Embarrassment and Stigma

23. Children living in poverty experience embarrassment and stigma, if identified as poor they may be treated differently to, and by, their peers. Stigma is one of the reasons why children eligible for free school meals do not take up their entitlement. CPAG published research[342] on the non-take-up of free school meals found a third of children and over two fifths of parents identified embarrassment or fear of being teased as a key factor which put people off taking up their free meal:

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Anxiety about stigma and "being different" was also a key concern for parents:

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24. The importance of children's own perspective on poverty is increasingly recognised. Ridge has carried out research[345] to explore the issues and concerns that low-income children themselves identify as important. For example, the importance of fitting in and inclusion at school:

"I don't usually go on trips 'cos they are expensive and that . . . At our school they do loads of activities and they go to loads of different places . . . I don't bother asking". And on peer group participation:

"I just want to fit in the group . . . people take the mick out of me because I can't afford things. Like my trainers are messy and they don't suit me and I need new trainers and new clothes . . . I don't get decent clothes like everyone else does".

25. Poverty, where it is somehow "visible", tends to result in poor children being treated different from their peers. This is clearly unpleasant and uncomfortable for those children experiencing it. Beyond this it has financial implications through the non-take up of stigmatising benefits.

Part III—The Government's Record

26. The Select Committee Inquiry is primarily focused on the UK Government's strategy to tackle child poverty and so this part of the submission reviews the Government's record. This is set within the context of policy change that has been made not just by the UK government, but also in the Scottish Parliament and the devolved assemblies in Wales and London. One of the conclusions of the recent inquiry conducted by the Finance Committee of the Scottish Parliament into cross-cutting spending to tackle child poverty[346] highlighted the need for a better fit between the UK Government and Scottish Executive policies, amid changing boundaries of responsibilities.

The Progress

27. The Government is making solid progress in tackling child poverty. The situation it inherited should not be forgotten: the proportion of children living in income poverty[347] had increased from about one in 10 in 1979 to one in three by 1996-97.[348] By 2001-02 this stood at 30%[349] a figure which represents a slight reduction against the contemporary median. It was however a substantial drop against the official poverty "yardstick" of 60% of the 1996-97 median (up-rated in real terms): down from 34 to 20% of children between 1996-97 and 2001-02.[350] According to a report by UNICEF in 2000, the UK was near the bottom in a league table of relative income poverty, along with the United States, Italy and Mexico.[351] However, despite a decline in the number of children living in poverty the number in poverty remains near to historically high levels.

28. The Labour Party manifesto in 1997 did not include a pledge to tackle child poverty indeed there was no mention of child poverty at all. The decision to implement the planned abolition of lone parent benefit justifies the claim that the first two years "were dire for poor children,"[352] but measures to improve the incomes of families with children were announced before the Prime Minister's Beveridge lecture[353] in March 1999. Increases in Child Benefit, the Income Support family premium and the under 11's rate of the child premium were included in the 1998 Budget. The Chancellor announced: "I believe in future years that we can and should do more". The Prime Minister's pledge to eradicate child poverty within 20 years was unexpected and dramatically transformed the political and policy context.

29. The Government's strategy to reducing child poverty was summarised in the 2001 Pre-Budget report as having four main elements:[354] ensuring "a decent family income", delivering "excellent public services", supporting parents and "harnessing the power and expertise of the voluntary and community sectors". To measure progress the Government has published an annual report since 2000, "Opportunity for All", which monitors progress against a range of indicators. Publication of an annual report is to be welcomed. However, critics argue that some of the indicators are too narrow, some are not indicators of poverty and the wide range of measures makes it difficult to assess how progress is being made.

30. One issue has been the Government's own claims of progress and the fit with the Public Service Agreement (PSA) target to reduce child poverty by a quarter by 2004-05. Before the 2001 election the Government claimed that it "had lifted" 1.2 million children out of poverty (measured as children in households below 60% of the median).[355] Independent analysis suggested that the Government was on course to deliver. The 2001 manifesto pledged to lift a "another" one million children out of poverty.[356] In a speech during the campaign, the Chancellor put a date on this: the target was to lift a further one million children out of poverty by 2005.

31. After the election the claim to have lifted one million children out of poverty was clarified. The Opportunity for All report of September 2001 stated: "We estimate that as a result of the policies in place there are an estimated 1.2 million less children in low income poverty than there would have been"[357]. The Treasury provided further clarification: the 1.2 million included children who would have fallen into poverty had there been no change in policies after the 1997 election. The Household Below Average Income figures for 2000-01 (the year before the General Election) were published in April 2002. The reduction between 1996-97 and 2000-01 were 500,000—considerably short of the pre-election claim.

32. The Institute for Fiscal Studies estimated in its 2003 Green Budget the impact of government policies on the number of children in income poverty (including the introduction of the Child Tax Credit from April 2003). The baseline figure for the 2004-05 target is 4.2 million children—there will need to be fewer than 3.1 million children in poverty to meet the target. Based on information available at the time, the IFS concluded that the Government may miss the 2004-05 target by around 200,000 children unless further measures were taken to improve financial support. The IFS estimated that the per child element of the Child Tax Credit would need to be increased by £3 a week from April 2004. When the HBAI figures for 2000-01 were published in March, the IFS adjusted its estimate of the increase needed to around £5 a week. In line with the Institute for Fiscal Studies analysis, there ought to be a £5 per week increase in benefit for every child living in a low-income family to ensure that the poverty reduction targets are reached. CPAG is campaigning on this issue.

Spending Review 2004

33. In Budget 2003 the Chancellor put tackling child poverty at the heart of the 2004 Spending Review:

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The intention to make "faster progress" towards meeting the child poverty goals is significant and encouraging. We welcome the commitment to consult with the research community and voluntary sector. Our understanding is that this will include a series of Treasury-led seminars starting in autumn 2003.

34. Whilst the child poverty review and the commitment to make faster progress towards reducing child poverty are welcomed, there is a problem: until the DWP publishes the conclusions of its review of child poverty measures (see paras 47-50), we will not have a clear picture of what the goals are that the Government intends to make faster progress against.

35. The Finance Committee of the Scottish Parliament recently published, in June 2003, a report following a review of cross-cutting expenditure in relation to child poverty in Scotland. The review sought to examine the pattern of expenditure "directed at the relief and prevention of child poverty in Scotland", and the distribution between the UK government, the Scottish Executive and local and health authorities.[359] The conclusions and recommendations are timely in the context of the Treasury's child poverty review and the Work and Pensions Select Committee Inquiry. Although the Select Committee is focusing on the policies of the UK Government, the Scottish Finance Committee's report highlights useful and relevant issues, for example on funding formulas and how the budgets which target child poverty are determined, allocated and spent.

36. The Scottish Finance Committee report states "our concern is not with funding of universal services, which children access of right, but the additional funding within such programmes allocated to reflect the special problems of children in poverty . . .".[360] That said, the report does address issues arising from mainstream funding—for example in health and local government spending there may be difficulties determining which programmes or services benefit children. The Finance Committee also believed "it is more or less impossible to distinguish between expenditure that benefits children in poverty as opposed to all children",[361] unless projects are funded by a specific grant.

37. The Finance Committee says that it is unable to tell whether the Scottish Executive is delivering on its commitment (in "Closing the Opportunity Gap"[362]) to ensure that "health, education and care services are focussing their resources on these children and families who need most support". It gives two main reasons: firstly, there is a lack of publicly available evidence as to how local authorities and health services use resources to reflect the consequences of child poverty, and there is little analysis at local level of the extent to which expenditure is directed towards tackling child poverty. Secondly, it is difficult to track spending on programmes targeted on child poverty once resources are transferred to spending agencies.

38. The UN Committee on the Rights of the Child has welcomed the commitment to eradicate child poverty but expressed concern that the Convention was not being implemented to the "maximum extent of . . . available resources" as stipulated by Article 4 of the Convention.[363] The Committee recommended an analysis of all budgets across the UK Government and the devolved administrations "in order to show the proportion spent on children, identify priorities and allocated resources to the "maximum extent of . . . available resources".[364] The Committee also urged the UK Government "To take all necessary measures to the "maximum extent of . . . available resources" to accelerate the elimination of child poverty.[365]

39. The terms of reference for the Treasury's child poverty review provides an opportunity to put the goal of eradicating child poverty more at the heart of mainstream public services. People living in poverty clearly benefit from good quality mainstream services, such as health, education, housing and transport. However, the assumption that all boats will rise in not matched by experience. Families in poverty can have greater need for services but less access to them. The need for mainstream services to become more responsive to the needs of "disadvantaged populations" is recognised by the Department of Health[366] in the context of tackling health inequalities and the "inverse care law" where "the availability of good medical care tends to vary inversely with the need for it in the population served."[367]

40. There should be an explicit commitment by every relevant spending department to the goal of eradicating child poverty with child poverty related targets. In turn, this commitment should cascade down to authorities and spending agencies. The Treasury has set a form of precedent by the adoption of cross-departmental Public Service Agreements (PSAs). Such targets influence spending allocations but inevitably the emphasis is on outcomes rather than expenditure. The Scottish Finance Committee highlights the fact that spending intended to tackle child poverty is often incorporated into general expenditure heads. If spending is not ring-fenced "it is impossible to discern what happens to the resources at local level (or at least without very detailed work on the accounts of the lower tier authorities."[368]

The devolved Parliament and assemblies

41. Given the constitutional changes and shifts of power and responsibility since 1997 the role of the devolved governance structures has become important, not least as much work as been initiated by these bodies to tackle child poverty. This section summarises that initiatives taken to tackle child poverty.

42. The Scottish Executive in its first Social Justice Annual Report reported stated: "we wish to make child poverty a thing of the past within a generation".[369] The Social Justice Report 2002[370] has six "Milestones" relating to children including "reducing the proportion of . . . children living in workless households" and "reducing the proportion of children living in low income households". Although the Scottish Executive has stated its intention to make, and to monitor, progress in reducing child poverty it has noticeably not adopted an equivalent of the UK Government's Public Service Agreement (PSA) target to reduce child poverty by a quarter by 2004-05. The Executive has adopted two cross-cutting themes "closing the opportunity gap" and "sustainable development". "Closing the Gap", published in 2002.[371]

43. The National Assembly for Wales publishes an annual Social Inclusion report, in this it states that ". . . tackling child poverty is a fundamental component of its broader strategy to improve the quality of life and extend opportunity to every community in Wales".[372] The Children's Commissioner for Wales in his first report to the Assembly described child poverty as a "national disgrace". In response, the Executive announced the establishment of a Child Poverty Task Force. The National Assembly for Wales has formally adopted the UN Convention on the Rights of the Child as a framework in its strategy for children and young people.

44. A Joint Ministerial Committee on Poverty exists to share good practice, chaired by the Chancellor with Ministers from the devolved administrations of Scotland, Wales and Northern Ireland.

45. The Greater London Authority (GLA) has published a report on poverty and social exclusion in London: "London Divided".[373] A draft Children's Strategy was published in April 2003 and the GLA has been consulting on an anti-poverty strategy for London ("Tackling poverty in London").[374]

46. The Local Government Association (which represents local authorities in England and Wales) has made social inclusion a priority. In 2002 the LGA agreed with the Government seven shared priorities for improving public services, one of which includes tackling child poverty. The Chair of the LGA's Social Inclusion Executive said "Local Government is a key player in the battle to reduce child poverty".[375] In April the LGA launched a campaign, "Quids for Kids", to improve the take-up of benefits and tax credits for families with children.[376]

PART IV—MEASURING CHILD POVERTY—THE DWP CONSULTATION

47. CPAG welcomed the DWP's consultation on measuring child poverty, although with some reservations. It was not always clear whether the main purpose was to agree a "headline" measure of child poverty, or whether the exercise was also about identifying measures to inform and monitor a broader range of policies, reflecting the multi-dimensional nature of the problem.

48. The preliminary conclusions on the consultation[377] state that there was no consensus on the preferred option to be used as a single measure. Two options for measuring child poverty have, however, been ruled out: a child poverty index and a "consistent poverty" measure on its own. The DWP is, however, looking at whether a consistent poverty measure could be combined with other indicators or included as part of a "tiered" measure.

49. There was wide agreement on some principles: that income, particularly a measure of relative income, should be central to measuring child poverty; that the Government should continue to publish the indicators for Opportunity For All (in addition to a headline measure); and that a relative income measure is not sufficient on its own.

50. However, two proposals supported by CPAG have been ruled out:

— a Minimum Income Standard is deemed not to be appropriate "for inclusion in a long-term measure"; and

— the setting up of an independent commission to "establish the poverty measure" is deemed not to be necessary.

Minimum Income Standard

51. CPAG is disappointed that the introduction of a Minimum Income Standard has been rejected. It need not be introduced as part of a headline measure but can be a useful tool in its own right. The DWP argues that there is no "simple answer" to what level of income is adequate for families with children and that "different research methods make different assumptions". Indeed, but there is no reason why a consensus on the approach and research methods is not possible.

52. The then Social Security Select Committee recommended in reports on the Integrated Child Credit and the Social Fund that the Government should establish a specific budget to fund research into the levels of income needed to avoid poverty and should set up a working party to assist the Government to draw up acceptable levels.[378]

53. One method of constructing a MIS is based on budget standards. A report on such budget standards work in Australia noted: ". . . the method identifies what needs have to be met in order to maintain a given standard of living and then costs them. This is a complex and formidable task . . . the fact that this requires judgments to be made which many will dispute reflects the inherent difficulties associated with obtaining quantitative measures of the standard of living, rather than any fundamental objection to the notion of a budget standard itself".[379]

54. Work by the Family Budget Unit (FBU) provides examples of establishing budget standards.[380] The FBU looked at two types of cost: "standard costs", such as food, clothing which do not generally vary according to area; and "variable costs" such as housing, fuel and transport. The budgets are not intended to be prescriptive. Researchers compiling budget standards never claim that they are working to an exact science. A family may choose or require a different pattern of spending, the crucial point is that if a family does not have the resources that reflect a particular budget standard it will not be able to meet all the needs on which the standard is based.

55. The UN Convention on the Rights of the Child recognises "the right of every child to a standard of living adequate for the child's physical, mental, spiritual, moral and social development" (Article 27 (1)). The Government ought to have a view on what is an "adequate" standard of living. CPAG believes an adequate Minimum Income Standard should be established and used as the basis for social security benefit rates.

An Independent Poverty Commission

56. The DWP has taken a narrow reading of the arguments for an independent poverty "commission" by concluding that such a body is not necessary to "establish the poverty measure". CPAG believes that there is a strong case for establishing an independent body tasked with responsibility for monitoring, evaluating and advising this and future governments on tackling child poverty. The body could have responsibility for "auditing" policies across government departments and would have the important task of keeping the headline measures of child poverty under review. An independent body would be best placed to devise a minimum income standard (or advise government on introducing a standard), as well as keeping it under review.

57. The Government has, following the report of the Victoria Climbie Inquiry, announced the intention to establish a "children's commissioner" for England. In light of the Children's Commissioner for Wales' emphasis on the importance of child poverty (see para 43), the commissioner for England should be enabled to give explicit attention to policies to tackling child poverty.

A Relative Income Measure

58. CPAG in evidence to the Social Security Select Committee Inquiry into the integrated child credit suggested that in the long term a different measure of income poverty, other than 60% of median income, may need to be adopted. However, the current income poverty measure should be retained for now and used consistently for the targets to reduce child poverty by a quarter by 2004-05 and by half by 2010.

59. Comparing income poverty across countries is problematic; nevertheless some comparison can be made using the 60% equivalised income measure. Doing so highlights substantial variation, defining children as those younger than 16 years, Bradshaw[381] used European Union data to show that the UK has the highest proportion of children in poverty on this measure (39% of children living in households in poverty), in Denmark the comparable figure was 3%, 7% in Finland and 10% in Sweden. These figures are drawn from the European Community Household Panel and caution is needed when comparing with the HBAI statistics, but the comparison is instructive. The UK performs poorly on this measure compared to our European neighbours.

60. The goal of eradicating child poverty is ambitious and onerous which is why the Government has achieved a consensus that a time frame of 20 years is reasonable and realistic. The target to halve the number of children in relative income poverty by 2010 is achievable, given the political will. Should new headline measures of child poverty be adopted there may be a case for reviewing the time frame for delivering on the pledge to eradicate child poverty.

61. The current income poverty measure has been criticised as more a measure of income inequality and that fixing a poverty line at a certain percentage of average income is arbitrary. This is simplistic; the line is not purely arbitrary: research shows systematic differences in access to services and activities above and below the 60% of equivalised median line.[382] The measure is imperfect, but it is far from useless as a flag of poverty and social exclusion.

62. Retaining a relative income measure does not mean that poverty will only be measured in terms of income. Other measures can also be adopted, as well, which allow a fuller understanding of the impact that income poverty may have on material deprivation. However the below 60% of median measure still offers a valuable—and simple—gauge of those most likely to be materially deprived.

PART V—CURRENT ISSUES AND POLICY DEVELOPMENTS

Child Tax Credit

63. CPAG supports the objectives of the Child Tax Credit. This does not mean that CPAG has abandoned its historic commitment to Child Benefit and the principle that universal provision is the best way of supporting children. The Child Tax Credit integrates into one payment financial support that was previously subject to a means test. The role of Child Benefit needs to be protected. CPAG believes that:

— There should be a minimum income standard (MIS) for a child, this MIS should be enhanced where there is extra need, for example, where there is a disability.

— The combined value of Child Benefit (CB) and Child Tax Credit (CTC) should be at least equal to the MIS.

Indeed the proportion of the total that consists of Child Benefit should be maximised. Child Benefit and the combined total of Child Benefit and Child Tax Credit should be up-rated at least in line with the higher of wage or price inflation. If Child Benefit is not up-rated along with earnings, the proportion of means-tested support for children will increase over time.

64. Critics have argued that the seemingly ad-hoc process of change that led to the Child Tax Credit has complicated the system of financial support for families. In its defence, officials suggest that the alternative was to have delayed measures designed to increase financial support for children (for example, the abolition of the married couple's allowance and the replacement with the children's tax credit). The Government did, of course, have the alternatives of increasing Child Benefit or existing means-tested benefits.

65. The Child Tax Credit has extended support to around 100,000 families who had been excluded from means-tested support—for example, students and student nurses and families with savings of over £8,000—which is welcomed.

66. The additional £2.5 billion spending, announced in Budget 2002, was an important political litmus test. It is also significant that the Opposition did not oppose the additional support for families with children, despite the fact that the same Budget included a 1% rise in National Insurance contributions.

67. The commitment to up-rate the Child Tax Credit at least in line with average earnings should be extended indefinitely. A requirement to up-rate by this method should be included in primary legislation.

68. The problems with the introduction of new tax credits have cast a shadow over the new scheme and it is understandable that confidence in the Inland Revenue's ability to administer the scheme has been dented. However the publicity given to the problems may have increased awareness of the new scheme and increased the number of families applying. The efficiency of administration and payment will be key to success.

69. Maximising take-up is crucial to the success of new tax credits. The first official estimates of the take-up of the Working Families Tax Credit[383] were published in December 2002. The figures showed that in 2000-01, up to 600,000 families were entitled to but did not claim WFTC. The upper estimate of the amount unclaimed was £1.4 billion.[384] The Social Security Select Committee report into the Integrated Child Credit noted that take up of the (short-lived) Children's Tax Credit ("baby credit"), was much lower than anticipated.[385]

70. Initial Inland Revenue statements have suggested that the take-up of the Child and Working Tax Credit has been high with 95% of those expected to claim in 2003-04 having come into receipt by 11 July 2003.[386] This sounds impressive, but the detail is a little more complex. The 95% figure appears to have been derived from an estimate of the number expected to claim in 2003-04—about six million.[387] Given that the 2003 budget report suggested that nine out of 10 families were expected to have an entitlement will have entitlement[388] the six million figure, is well short of the total number with an entitlement.

71. However, given the significant problems with administration not all families will be receiving their correct entitlement. There is the very real risk of significant numbers of families being over or underpaid as a result of official error. For those who are underpaid, they are missing out on a legal entitlement that could assist them and their children. For those overpaid it remains to be seen how (and whether) the Revenue will try to re-coup overpayments, something which could place substantial numbers of families in real hardship and could tarnish the public perception of the Child Tax Credit. CPAG believes thatconsideration should be given to writing off over-payments where these occurred as a result of administrative error. Secondly, in line with a recent National Association of Citizens Advice Bureau report,[389] we argue that those who have been overpaid, after a change of circumstances, who were not able to inform the Inland Revenue of this due to its own organisational problems, should not to be penalised for not having done so.

The Social Fund

72. The increases in financial support for children that the Government has introduced enables families to better meet normal bills and expenses, but there is ample evidence that low income families go without basic essential items because they cannot afford them (see paras 6-9). Lump sum payments have a role to play in meeting key government objectives such as the eradication of child poverty, tackling social and financial exclusion and reducing worklessness.

73. In April 2001 the Social Security Select Committee published a report on the Social Fund.[390] The Committee concluded: "We urge the Government . . . to take a radical look at the Social Fund. So that it may work to enhance the strategy to reduce child poverty, rather than work against it . . . We have concluded that the scheme in its present form needs urgent overhaul and an injection of funds. Without such action, there is a strong possibility that the wider social policy objectives of the Government will be endangered".

74. Two and a half years later the Social Fund has not been overhauled, and no proposals for significant reform put forward. In its response (which curiously slipped out during the summer recess),[391] the Government said that it did not accept that the operation of the Social Fund worked against wider social policies, such as the eradication of child poverty.[392] There was a commitment to keep the fund "under review".

75. Given the overwhelming volume of evidence highlighting the continued failures of the Social Fund it is surprising that the Government has been dragging its feet. Responsibility lies with the Department for Work and Pensions, but the Social Fund is not a mystery to other parts of government, particularly the Treasury.

76. Officials may feel daunted at how to fundamentally improve a system which is inherently flawed, but a government capable of change of the magnitude of new tax credits should be up to the challenge. The issue and the need for fundamental reform will not go away.

77. CPAG, in partnership with One Parent Families and the Family Welfare Association, has put forward a package of proposals for improving provision for lump sum items and expenses for families with children,[393] more consistent with the objectives of eradicating child poverty, improving the health and educational attainment of children, and facilitating the move from benefit to paid work. We recommend a staged approach—full implementation will be determined by the legislative timetable. The options include:

— Child Development Grants payable at key stages of a child's life. In common with the Sure Start maternity Grant the payments could be based on "life events" that generate one-off expenses.

— Child Health and Safety Grants payable when items to maintain the health and safety of children are needed.

— A Secure Homes Grant for families who separate or are homeless (including where domestic violence has occurred).

— An Opportunity Grant which would streamline existing provision to help parents make the transition from benefit to paid work.

78. CPAG believes that the Social Fund requires urgent reform to ensure that it meets the objectives of eradicating child poverty, improving the health and educational attainment of children, and facilitating the move from benefit to paid work.

Child Trust Fund

79. In Budget 2003 the Chancellor announced that children born after September 2002 will be entitled to the Child Trust Fund. Further details were due to be published by the Treasury in the summer but, at time of writing, these have not yet been released.

80. The Government published proposals[394] to introduce the Child Trust Fund and a "Savings Gateway" in April 2001. The paper described the role of financial assets as a "fourth pillar" in the Government's welfare strategy and as a means of promoting inter-generational mobility "extending to the children of lower income families the opportunities that might be taken for granted higher up the income ladder."[395]

81. The objectives of tackling inequality of wealth, providing assets for all and providing incentives for low-income households to save—where they can afford to do so—deserve support. Under the principle of so-called "progressive universalism" the initial endowment will be higher for children in low- income families. Additional payments by the Government at certain ages may only be made for children in low-incomehouseholds. Linking the maximum endowment to children in households receiving the maximum Child Tax Credit would mean that one in three children will be eligible for the higher payment.

82. CPAG has been concerned about some of the arguments put forward in support of asset-based welfare, particularly the claim that evaluation of the Individual Development Accounts, piloted in the United States since 1997; that "the poor can save". The Government paper refers to American evidence and argues that "poverty by itself does not explain the saving behaviour of lower-income groups . . . [Instead], institutional factors, such as incentives, information, access and facilitation . . . [are] more influential than personal characteristics, even poverty".[396]

83. Some of the strongest advocates of asset-based welfare, particularly in the United States and Australia, do so on the premise that so called "traditional" forms of welfare, in the form of direct cash payments, have "failed". The assertion that the poor can save implies that people living in poverty do have enough to meet their needs; the "problem" is not a lack of income but a lack of motivation.

84. CPAG believes that the most important priorities should be fundamental reform of the Social Fund and further increases in financial support to ensure that families have the resources they need while raising their children, and have the capacity to save, not to implicitly assume that this is already the case.

Education Maintenance Allowance

85. Education maintenance allowances (EMAs) will be introduced in September 2004. CPAG supports EMAs if they are in addition to existing benefit and tax credit entitlements. There remains a concern that Child Benefit could be withdrawn for the over 16s. This concern may be unfounded: in the 2002 Spending Review the Chancellor stated that the cost of EMAs would be met by "lower unemployment". However, the current review of financial support for over 16s could be the catalyst for revisiting the funding of EMAs.

86. Without wishing to send hares chasing, CPAG would strongly oppose the removal of Child Benefit for over 16s. The decision to introduce EMAs nationally was based on the evaluation of pilot schemes. In none of the pilots was Child Benefit removed and EMAs paid instead.

Conditionality

87. Balancing "rights with responsibilities" has been a constant theme of the 1997 and 2001 Labour administrations. The social security system has been used increasingly to try to influence behaviour. Conditionality is not new. Parents with care receiving Income Support face a "benefit penalty" if, without good reason, they fail to co-operate with the Child Support Agency. Payment of the Sure Start maternity grant is conditional on making contact with a health professional.

88. A proposal to remove Child Benefit from the parents of persistent truants seems to have been shelved. CPAG strongly opposed the idea and we welcome the fact that there appear to be no plans for its introduction.

89. CPAG criticised comments made by some MPs during a debate on the Bill: calls for "weekend prisons" for bad parents, claims that mothers used their children as benefit books and a call for misbehaving mothers to be placed in sink estates by motorways. The government is now proposing to introduce Housing Benefit sanctions in a Home Office White Paper. The Department for Work and Pensions has recently consulted on the proposal.[397] CPAG opposes the proposals along with many other leading voluntary organisations and charities. The social security system should not be used as a tool for punishment. Sanctions imposed on families inevitably have an impact on children. Children in families labelled as "anti-social" will be at a particularly acute risk of both hardship and stigma. The DWP consultation gives no consideration to how the welfare of children in families will be protected. As a commentator said of welfare reform in the United States the underlying assumption was that the "behaviour of certain adults can be changed by making the lives of their children as wretched as possible."[398]

A political strategy

90. A social security system should be designed in such a way as to protect personal dignity and privacy. Conditionality based on personal or family behaviour should not interfere with entitlement provided that the person fits the relevant conditions of entitlement to that benefit.

91. The Government has been reluctant to initiate or engage with a debate about the underlying principles of tax and benefit reform. Neither has the Government been averse to making cuts in social security benefits (eg, Lone Parent benefit and Incapacity Benefit). In his Beverage speech Tony Blair argued for a mix of "universal and targeted help" but claimed "the one is not superior or more principled than the other".[399] Such a debate is essential as Ruth Lister in her submission to the Select Committee argues that there has to be "a political as well as a policy strategy" to combat child poverty.

92. The Chancellor, speaking at a CPAG conference in 2000, recognised the need to engage public opinion when he called for a "crusade for children". Speaking at the Labour Party conference in September 2000 the Chancellor said that the Government would be seeking "a new mandate" at the next election for the pledge to eradicate child poverty.[400] The speech appeared to signal an end to the approach described as "doing good by stealth."[401] In the event, child poverty was not made an election issue. The ambitious pledge to lift a further one million children out of poverty received limited coverage in the Labour Party manifesto. Nevertheless a few days after the election Robin Cook, then Leader of the House, claimed that eradicating child poverty was the Government's "number one priority".

93. The need for public engagement with and support for tackling child poverty was stated explicitly by the then Secretary of State for Work and Pensions, Alistair Darling, in the forward to the consultation document on measuring child poverty: "The Prime Minister's pledge to eradicate child poverty is a significant and demanding undertaking . . . But the Government alone cannot achieve this ambition without public support over successive Parliaments."[402]

94. A challenge for the Government is to counter the view that poverty—"real poverty"—is a thing of the past. Public opinion is often shaped by outdated, sometimes sentimental, views and images of what it means to be poor. The experiences of the past are not used as a touchstone for what is expected for our health services, education, housing or quality of life, but often standards of the past are applied to what it means to be poor today.

95. There has been some progress in the way the media portrays people living in poverty—with the exception of asylum seekers—but media coverage of poverty is limited. This may in part be due to the fact that poverty is not an "adversarial" issue. There is the danger of a gap between the Government's child poverty pledge and the public's engagement and interest. Not only is public engagement necessary but given the difficulty of the task, and the time-scale over which it is to be delivered there needs to be political consensus over the goal of ending child poverty by 2020.

Labour market policies

96. The underlying structural causes need to be addressed. Childhood poverty is brought about by structural factors: low wages and low benefits. Therefore as well as social security measures the Government has a role to ensure that the labour market functions in an equitable fashion. CPAG believes that an increased minimum wage is an essential element to tackling child poverty.

97. Improvements in strategies to insure adequate, affordable, childcare and other forms of support for working parents, issues on which organisations such as the Daycare Trust and One Parent Families have campaigned, are important in ensuring the labour market functions adequate returns for families with children.

98. The Joseph Rowntree Foundation has made an explicit call for direct redistribution to reduce relative poverty. Work commissioned for the Joseph Rowntree Foundation shows that if the UK economy grows at the same rate in the next 20 years as it did between 1981 and 2000 total growth would be more than £500 billion. It is suggested that of this only 5%—less than £25 billion—would close the "poverty gap."[403] Households on middle incomes have, over the past 20 years, seen an increase in income of almost 50% in real terms. Increased, and explicit, redistribution of resources towards families with children is essential to meet the challenge of eradicating child poverty.

CONCLUSION

99. CPAG supports the goal of eradicating child poverty by 2020. For those who have campaigned for an end to child poverty for many years, this is an exciting time. There is a real chance for government to make substantial improvements in the lives and the opportunities of the UK's children. This submission has discussed the extent of child poverty together with the impacts that it has on the lives of poor children. It has discussed the Government's record, supporting the level of progress that has been made and arguing for more. This inquiry, together with the 2004 Spending Review and DWP's consultation on measuring child poverty, provides a good opportunity to make more progress. The task is certainly a formidable one, and one that requires continued policy reform and adequate resources to tackle child poverty. Nevertheless it can be done.

Paul Dornan

30 September 2003

301 Reproduced in Walker, R (ed), "Ending child poverty-Popular welfare for the 21st century?", The Policy Press, 1999. Back

302 HM Treasury, Press Release, 143/01, 13 December 2001. Back

303 "Defeating the five giants", speech given at Toynbee Hall, 13 September 2002. Back

304 Townsend, P, Poverty in the United Kingdom: a survey of household resources and standards of living, Penguin, 1979, p31. Back

305 See Department for Work and Pensions, "Opportunities for All", Fifth Annual Report 2003, The Stationery Office, 2003. Back

306 National Statistics, "Households Below Average Income An analysis of the income distribution from 1994-95-2001-02" Department for Work and Pensions, 2003, pp 53-4, Table 4.4 and 4.5. Measure is After Housing Costs. Back

307 Bradshaw, J (ed), "Poverty: the outcomes for children", Family Policy Studies Centre and Economic and Social Research Council, 2001. Back

308 See Gordon, D, Adelman, L, Ashworth, K, Bradshaw, J, Levitas, R, Middleton, S, Pantazis, C, Patsios, D, Payne, S, Townsend, P and Williams, J, "Poverty and social exclusion in Britain", Joseph Rowntree Foundation, 2000. Back

309 Adelman, L, Middleton, S and Ashworth, K, "Britain's Poorest Children" Centre for Research in Social Policy and Save the Children, 2003. Back

310 The measure used was 40% of median household income before housing costs. A before housing costs measure was the only income measure available in the PSE survey: "An after housing costs measure is, arguably, a better measure of the disposable income households have to spend and it would have been our preferred measure". Ibid. p 13. Back