House of Commons - Scottish Affairs

Select Committee on Scottish Affairs Minutes of Evidence

Memorandum submitted by the Child Poverty Action Group in Scotland

1. EXECUTIVE SUMMARY

— There has been significant progress in tackling child poverty since 1997 following policy action from both central and devolved government. However child poverty in Scotland, as across the UK, remains extremely high in comparison to adult poverty, in relation to other European countries and compared to the pre-1979 era.

— UK Government and Scottish Executive policy to tackle child poverty has focused on increasing the employment rate and targeting additional support at low income families. There has been limited focus on tackling underlying income inequalities.

— This submission argues that there are dangers in over-focussing on work as the solution to child poverty, particularly where the quality of employment opportunities is not adequately addressed, and where such a focus is not accompanied by action to tackle inadequacies in the benefit safety net for those who are unable to work. There are also limits to the impact highly targeted approaches to providing additional support to families can make on child poverty rates.

— CPAG in Scotland argues that for further progress toward the eradication of child poverty in Scotland government policy at UK and devolved level needs to:

— focus on tackling the low pay, insecurity, discrimination and family unfriendly practice that too often make work an ineffective route out of poverty;

— balance the focus on work with increases in the benefit and tax credit package for families who are not in a position to undertake paid work;

— balance the drive to target resources with the need to ensure support reaches all families that need it, for example balancing investment in tax credits with investment in child benefit, working toward a universal approach to providing childcare free at the point of delivery, and building on improvements in the nutritional quality of school meals with a shift toward universal free provision;

— seriously consider the role underlying income inequalities play in undermining further progress toward eradicating child poverty.

2. CONTEXT

2.1 CPAG in Scotland, as part of the Child Poverty Action Group, welcomes the Scottish Affairs Committee inquiry into Poverty in Scotland. CPAG's particular concern is with child poverty and our submission reflects that focus. However, as our evidence makes clear, child poverty cannot be tackled in isolation from adult poverty.

2.2 Child poverty in Scotland, as in the rest of the UK, remains extremely high. In recent historical terms, in relation to other European countries, and compared to adults, children in Scotland face unusually high risk of poverty. Nearly one in four are officially recognised as poor, compared to 18% of the population as a whole and almost double the 1979 rate.[1] Moreover Scotland's children are more than twice as likely to be poor than their peers in Scandinavian countries.[2] (See appendix for a fuller discussion of the definition and measurement of poverty).

2.3 Yet whilst child poverty remains high, the number of children in poverty has been decreasing. Unprecedented government commitments to eradicate child poverty within a generation, and policy action from both Westminster and Holyrood to support those commitments, are having an impact. This provides an important lesson for anti-poverty ambitions generally, that, with political will and investment, policy can reduce poverty.

2.4 Yet thousands of our children continue to miss out on the basics; on adequate clothes and shoes, on healthy food, on educational opportunities and on the social activities that bind children to their families, friends and wider communities and that allow them to develop to their full potential. Poverty continues to grind down the quality of children's lives and stunt their life chances.

3. RECENT CHILD POVERTY POLICY

3.1 Three key principles have underpinned child poverty policy within both central and devolved government. First, paid work is viewed as the key route out of poverty; second, targeting is seen as the most effective way of providing additional support to families; and third, there has been an underlying assumption that eradicating child poverty is possible without significantly challenging underlying income inequalities.

3.2 Increasing the numbers of parents in work is at the heart of central and devolved government strategy to end child poverty. At UK level policy has focused on increasing the numbers of people in work by promoting economic growth, the New Deals and reforming the welfare system. Rights to benefits have increasingly been accompanied by support to engage with employment, but also a stress on responsibilities, accompanied by compulsion and threat of benefit sanction. The UK government has taken action to make work pay by introducing the minimum wage and increasing in-work support through the working tax credit. Financial support to families, both in and out of work, has also been increased through the child tax credit.

3.3 Increasing employment is also at the heart of Scottish Executive policy to tackle poverty. The first of the six objectives in the Scottish Executive's Closing the Opportunity Gap (CtOG) strategy to tackle poverty is to "to increase the chances of sustained employment for vulnerable and disadvantaged groups".[3] Specific work-focused Scottish Executive child poverty policy initiatives include the Working for Families fund, targeting resources to help parents, particularly lone parents, toward employment by overcoming childcare problems. A further strand in devolved policy has been the Hungry for Success programme seeking to improve nutrition and uptake of school meals as part of a wider health inequalities agenda.4,[4][5] There has, however, been no use of the Scottish Parliament's power to vary the basic rate of income tax or to reform local taxation.

4. CHILD POVERTY POLICY TO DATE: A BRIEF CRITIQUE

4.1 The key factors behind recent reductions in child poverty have been both rising employment levels and the development of means-tested tax credits aimed at families both in and out of work. Tax credits are a key lever behind the reduction in child poverty, despite the well publicized failings in the system and hardship too many claimants have faced through no fault of their own. There has been a limited redistribution of income to the poorest, but within an overall policy environment that has not challenged the incomes of the richest.

4.2 Targeting support at children through child tax credit has also increased incomes for families where no-one is working. However the decline in the value of adult benefit rates in relation to average incomes has contributed to a severe "poverty gap", of up to £148 a week, between a families benefit and tax credit income and the poverty line.[6] Furthermore, one out of five entitled families, including one in ten of the most deprived, miss out on tax credits worth £110 million in Scotland alone.[7] The decreasing value of adult benefit rates, particularly as they effect women's ability to maintain health and well-being in and before pregnancy, also impacts on children's life chances.[8]

4.3 Despite the minimum wage and tax credits, low pay (combined with job insecurity, lack of flexibility for working parents and sparse in-work support for those with disability or long term illness) continues to undermine work as a route out of poverty. Nearly a quarter of children living in poverty are in households where an adult is working full time,[9] whilst a couple with two children where one works forty hours a week for the minimum wage and who receive full benefit and tax credit entitlements are still left £50 per week below the poverty line.[10] Furthermore 30% of low pay in Scotland is within the public sector[11] over which devolved and central government have direct responsibility. Despite policy action aimed at improving employability and in-work progression the Scottish Executive has not grappled head on with poverty pay, whilst UK minimum wage policy leaves many families below the poverty line. Low pay is not the only driver of in-work poverty but Government is failing to resolve the irony of promoting progressive anti-poverty strategies on one hand whilst paying low wages on the other. Affordable childcare provision is another key to overcoming barriers to employment. Despite significant improvements childcare is still not accessible to many families in Scotland with a patchwork pattern of provision reflecting national targeting of resources and local prioritisation.

4.4 Devolved policy to tackle poverty by improving the school attainment levels of the most disadvantaged, and so tackle the deficit of opportunity they face, has had little impact to date[12]. Furthermore there is, as yet, no clear means of evaluating the impact of targeting support at integrated children's services and on children leaving care on child poverty generally. The Hungry for Success approach to improving child health through school nutrition has improved quality, but a highly targeted means-tested approach leaves an estimated 77,000 of those children officially recognised as living in poverty without a free school meal.[13]

4.5 In Scotland child poverty is falling in line with initial UK government targets (see A4 below). Yet extensive analysis shows that relying on current policy would see progress grind to a halt.[14] For families furthest below the poverty line progress is much more limited.[15] Policy simulation suggests that further impact of rising employment on child poverty is likely to be limited[16] and evidence, particularly from people experiencing poverty, indicates an overemphasis on paid work, too often of low quality, may actually damage the lives of children growing up in poverty by exacerbating the impact of parental ill health and disability and increasing family stress.[17] Nevertheless Ministers remain confident in their focus on work as the solution to poverty as can be seen in proposals for Welfare Reform.[18]

4.6 However CPAG has serious concerns that the potential benefits of increased support to enter work for those affected by long term illness and disability, and those with caring responsibilities, as outlined in the Governments Welfare Reform Bill, are at risk of being undermined. A lack of resources to support the roll out of the Pathways to Work approach, an over-emphasis on compulsion and associated sanctions, and the restructuring of benefits for sick and disabled people risk leaving many claimants on sub-poverty payment rates. The level of proposed new sanctions will be prescribed in regulations but the Green Paper refers to benefits being reduced down to JSA levels. Yet three quarters of children in a family receiving JSA are currently left in poverty. The impact upon sick or disabled claimants, who face significant extra living costs, is likely to be much worse. It is not just those at risk of being sanctioned that face sub-poverty benefit payments. It is proposed that claimants of the new Employment Support Allowance (replacing incapacity benefit) are placed on a "basic allowance" in line with Jobseeker's Allowance (JSA) rates whilst their capability for work is being assessed. It seems inevitable that placing sick or disabled people on JSA rates will actively plunge a particularly vulnerable group of people—and their children—into poverty.[19]

4.7 The limitations of targeted approaches to tackling child poverty are also becoming apparent. Far too many families in poverty miss out on, or have to repay, vital tax credits; parents are still unable to access affordable childcare because they fall outwith current targeted initiatives; and tens of thousands of poor children don't receive free school meals. A 2005 UNICEF report on Child Poverty in Rich Countries[20] highlighted the problem targeted social expenditure creates across the developed world and concluded that benefits universally provided, though apparently more expensive, can avoid the poverty traps targeting creates.

5. TOWARD THE ERADICATION OF CHILD POVERTY

5.1 CPAG believes a number of policy shifts are needed if further progress is to be made toward abolishing child poverty in Scotland.[21]

5.2 First, action to increase the employment rate of parents needs to focus on tackling the low pay, insecurity, discrimination and family unfriendly practice that too often makes work an ineffective route out of poverty.

5.3 Second, the focus on work needs to be balanced by increases in the benefit and tax credit package for families who are not in a position to access paid employment.

5.4 Third, the limits of targeted approaches need to be recognised. Policy needs to rebalance the need to target resources with the need to ensure support reaches all families that need it. Further increases in tax credits need to be balanced by investment in child benefit to ensure financial support reaches children whatever other fluctuations in household income, employment status or relationships occur.[22] Childcare strategy must build on current patchwork improvements toward a policy of universal childcare, free at the point of delivery. Similarly school meals policy needs to build on the improvement in nutritional quality toward a more universal free school meal approach.

5.5 Finally, given that those countries that have low levels of child poverty also have more equal income distribution,[23] consideration of the role income inequality plays in undermining progress in tackling child poverty is urgently needed.

1 http://www.scotland.gov.uk/Publications/2006/03/08155404/0 and Poverty: the stats; CPAG, 2006. Back

2 See J Bradshaw, A review of the comparative evidence on child poverty, JRF, 2006 Figure 2. Back

3 http://www.scotland.gov.uk/Topics/People/Social-Inclusion/17415/opportunity. Back

4 http://www.scotland.gov.uk/Topics/Education/Schools/HLivi/schoolmeals/hungry-for-success. Back

5 CPAG internal analysis. Back

6 CPAG press release 6 March 2006. Back

7 http://www.jrf.org.uk/conferences/centenary/pdf/understandingandovercomingpoverty.pdf p18. Back

8 http://www.dwp.gov.uk/asd/hbai/hbai2005/excel-files/chapters/chapter-4-excel-hbai06.xls£'4.4 BHC & AHC'!A1. Back

9 http://www.jrf.org.uk/conferences/centenary/pdf/understandingandovercomingpoverty.pdf p20. Back

10 Defined as less than £6.50ph see http://www.poverty.org.uk/reports/scotland%202005%20findings.pdf. Back

11 http://www.scotland.gov.uk/Topics/People/Social-Inclusion/17415/CtOG-targets/ctog-target-f. Back

12 CPAG in Scotland internal analysis. 23% of children are living in poverty (see Note 1 above) yet only 13% get a free school meal (see http://www.scotland.gov.uk/Publications/2006/06/05141444/1). Back