Welfare Reform and Work Bill Committee

Written evidence submitted by 4Children

This submission sets out 4Children’s position on a number of key provisions in the Welfare Reform and Work Bill, and the concerns that we have regarding their implications for children and families across the country. In particular, we feel that:

· The abolition of the child poverty targets set out in the Child Poverty Act 2010, the removal of duties on national Government and local authorities to develop child poverty strategies, and the removal of child poverty from the remit of the Social Mobility and Child Poverty Commission, will greatly reduce the focus of policy interventions on addressing the issue of child poverty and risk setting back progress made in this area over a number of years.

· Reforms to tax credits set out in the Bill could have significant implications for many families, and these should not be legislated on until there is a better understanding of their impact and interactions with other recently announced reforms such as the introduction of a National Living Wage.

Child Poverty

Clause 6 of the Welfare Reform and Work Bill repeals a number of key sections from the Child Poverty Act 2010 which set the policy framework for Government interventions to tackle this issue. These include:

· Sections 1-10 of the Child Poverty Act 2010 which define the statutory targets relating to relative low income; absolute low income; combined low income and material deprivation; and persistent poverty. These sections also include provisions which place a duty on the Secretary of State to meet the targets by 1 April 2020, and to lay a UK Child Poverty Strategy before Parliament at least once every three years.

· Sections 19-25 of the Child Poverty Act 2010 which place duties on local authorities to produce local child poverty needs assessments and local child poverty strategies, and to co-operate with other authorities and bodies to reduce child poverty in their area.

4Children is very concerned that the abolition of these targets and associated duties will greatly reduce the focus of policy on driving down child poverty, a goal which all parties signed up to when the Child Poverty Act 2010 was passed with cross-party support. Whilst we recognise the Government’s desire to place an increased focus on the impact of worklessness and educational attainment, it is essential to remember the critical role that not having enough money plays in child poverty. And while supporting workless households is very important, analysis indicates that 63% of children in poverty lived in working families in 2013-14, meaning it is essential that strategies do not overlook these families. [1]

Additional provisions in this section, such as Clause 5 of the Bill which removes child poverty from the remit of the re-named Social Mobility Commission, appear to further downgrade the issue of child poverty and the importance of measures aimed at addressing it.

4Children therefore believes that the provisions in Clause 6 of the Bill which repeal the targets and duties put in place under the Child Poverty Act 2010 should be removed. Clause 5 of the Bill which changes the remit of the current Social Mobility and Child Poverty Commission should also be removed.

Tax Credits

A number of provisions in the Welfare Reform and Work Bill enact changes to the tax credit system announced during the 2015 Summer Budget, including:

· Clause 10 which enacts a four year freeze to many existing elements of tax credits.

· Clause 11 which removes the "family element" of child tax credits for new claimants from April 2017 (sub-section 11(2)) and limits payment of the "child element" to the first two eligible children from this date (sub-section 11(4)).

4Children recognises that a number of announcements in the 2015 Summer Budget, particularly the introduction of a ‘National Living Wage’, were aimed at addressing the issue of low pay and its impact on families. 4Children absolutely supports the principle of a high-wage economy. However, we are concerned at subsequent analysis from the Institute for Fiscal Studies which suggests that the overall impact of the suite of reforms introduced during the Budget "are regressive" and that "tax credit recipients in work will be made worse off by the measures in the Budget on average". [2]

Tax credits have been a key aspect of the support provided to working parents and children for a number of years. It is important not to remove this vital support without assurance that wage increases will offset such a loss and improve the lives of families in poverty. We therefore believe that reforms to the tax credit framework must not be rushed, and that before significant changes are made the Government must have a thorough understanding of the impact they will have on families, particularly in the context of whether the overall impact of the Government’s reforms programme will be positive or negative.

4Children therefore believes that the provisions in the Bill which enact changes to tax credits, including Clauses 10 and 11, should be removed until a more comprehensive understanding of their impact on families can be assessed.

September 2015

[1] Institute for Fiscal Studies, Nearly two-thirds of children in poverty live in working families (16 July 2015)

[2] Institute for Fiscal Studies, Summer Post-Budget Briefing 2015 – Paul Johnson’s Opening Remarks, p.3-4

Prepared 18th September 2015