From the TUC

Child poverty: policies make a difference

11 Oct 2011, by in Society & Welfare

Today’s report by the Institute for Fiscal Studies has deservedly won a great deal of attention. There’s some startling figures, and not just about what’s going to happen to people in poverty. Take this, for instance:

at its low point, real median household income is forecast to be 7% lower in 2012–13 than it was in 2009–10, and to remain below its 2009–10 level until at least 2015–16.

In other words, by the latest legal date for the next general election, middle-income families will still be worse off than they were at the last election. The Telegraph has pointed out that “a typical couple with two children would be £2,080 worse off in 2013 in real terms than they were in 2010.” With remarkable restraint, the authors describe this as an “unprecedented collapse in living standards.” Of course, that doesn’t translate into an automatic advantage for either the Government or Opposition, but it’s bound to be very politically significant.

There’s an official target of eradicating child poverty by 2020, but there has to be an election by 2015 – which also happens to be the half-way mark between the point when the current government was elected and that target date. The IFS forecasts that the number and proportion of all children in poverty will rise by 2015 and then rise again by 2020:

Children in poverty

 

Millions

%

2010

2.5

19.3

2015

2.9

22.2

2020

3.3

24.4

And it won’t just be children who’ll be more likely to be poor:

Working age parents in poverty

 

Millions

%

2010

2.1

16.6

2015

2.4

18.5

2020

2.6

20.0

Working age adults without children in poverty

 

Millions

%

2010

3.5

15.0

2015

4.0

15.9

2020

4.9

17.5

At this point, the child poverty charities and campaign organisations have to pull out the stops to avoid giving the impression of political bias. Fortunately, I don’t face any such constraints, so I’m free to point out that this report reveals a huge difference between the performance of the last government and what we can expect from the current one.

Of course, the last government failed to meet its target of halving child poverty by 2010 – I was hugely critical of that failure, and the parties now in government made a lot of it as well. Nonetheless, the story is clear: a very strong performance in the period up to 2004-5 (“by far the largest and most sustained since the comparable series began in 1961”) and “less straightforward” progress after that.

But even including the “less straightforward” period, there was a further fall in poverty and the overall figures for relative child poverty.  Between 1998-9 and 2010-11, the number of children in relative poverty fell by 900,000 and the proportion by 6.3 percentage points.

This isn’t just a matter of party politics – it’s also about policy. The IFS study looks at the impact of the current government’s reforms. It does this by comparing the figures in the tables above with a forecast that assumes that none of those reforms are introduced:

The comparison suggests that the impact of changes to personal tax and benefit policy announced by this coalition government is to increase relative child poverty by 200,000 in both 2015-16 and 2020-21, and to increase relative poverty for working-age adults by 200,000 in 2015-16 and 400,000 in 2020-21.

The most important of these reforms is the decision to uprate benefits in line with the Consumer Price Index, instead of the Retail Price Index. This and the other benefit and tax reforms “more than offset” the significant reduction in poverty that Universal Credit would otherwise achieve.

For those of us who have been campaigning on poverty issues for many years, aligning the interests of middle-income Britain with those of people in poverty has been an important objective, but one we have never achieved. This seems in prospect – it isn’t just what the IFS report shows, it’s the growing realisation that inequality has been one of the forces generating the economic instability we’re all suffering from now. Today, the Financial Times reports (£) that the average household could be in fuel poverty by 2015 if the current trends for rising fuel prices and falling real incomes continue. Average fuel bills come to 6 per cent of median household income at present, that looks set to rise to 7.4 per cent in 2013 and by 2015 it will rise to ten per cent – and fuel poverty is normally taken to mean having to spend at least a tenth of your income on fuel.

It’s possible that government might intervene on fuel poverty – but we can expect to see more and more aspects of poverty becoming a reality of middle-income families’ lives over the next few years. Now is the time for a response that unites the poor and Middle Britain in a campaign for change.