Child poverty: Relative income poverty matters
The latest child poverty figures for 2010/11, due to be released on Thursday, are likely to show that almost 1million children have been lifted out of poverty since the late 1990s. Despite this significant progress, the moment will be marked by those pointing out that the target to halve child poverty by 2010 has been missed. Additionally, those who oppose the main measure of child poverty – the number of children living below 60% of equivalised household incomes – will point out that the money spent on boosting the incomes of the poorest households through increases in things like tax credits and Child Benefit, the main driver of reductions in child poverty over the last decade, could have been better spent if targeted at what some perceive to be the ‘causes of poverty’: for example educational disadvantage and worklessness.
The background to this is a fierce debate about measuring child poverty and whether an approach driven by targets to significantly reduce income poverty by 2020 is the right approach. A genuine attempt at understanding and measuring child poverty must go beyond one single relative income measure but it mustn’t move away from it entirely.
The main measure of child poverty identifies levels of relative, as opposed to absolute, poverty. It recognises that in developed nations no one should live with resources significantly less than the average so that their ability to participate fully in society is hindered. As countries get richer, expectations of what constitutes a decent standard of living change and the resources, including financial, needed to partake fully in that society alter.
In respect of child poverty this is an important principle. All children and families should be equipped with the material resources required to participate fully in society so that they are able to access the full range of opportunities that society presents. This includes access to warm and decent homes, a healthy diet and educational opportunities.
It is clear to anyone that there are many families in the UK who don’t have full access to these things and that this is often driven by a lack of money. Those unable to keep up with increased living standards become more and more excluded and the distance they have to travel in order to re-engage with society becomes greater.
Any relative income threshold is, by its nature arbitrary, although the links between material deprivation and living below 60% of median income are strong and the correlation between poor outcomes and children living on relatively low incomes is too strong to ignore.
All the main political parties believe tackling relative poverty is important. All the political parties recognised this through their support of the Child Poverty Act. This piece of legislation enshrines in law the requirement to reduce the number of children living below 60% of media incomes to 10% or less of all children.
The current Government went further in recognising the importance of relative income poverty by including a focus on severe poverty (those families living below 50% of median incomes and experiencing material deprivation) in their child poverty strategy. This followed recommendations from Frank Field in his Review on Poverty and Life Chances.
A focus on relative poverty and income doesn’t need to come at the expense of other measures of poverty or measures of poor outcomes for children. One argument has been that the Labour Government targeted spending on families in a way that only benefitted those just below the poverty line. Evidence from the Institute for Fiscal Studies has shown this wasn’t the case with families well below the poverty line benefiting from financial support from government as well as those just below it.
The obvious response is that income transfers aimed at reducing child poverty ended up trapping families on out-of-work benefits but the truth is that a larger proportion of the money was spent on childcare or tax credits to subsidise low pay and incentivise work. Even then it didn’t go far enough, with 57% of children living in poverty being in working households. Clearly this suggests a need to address pay levels but it’s clear that the alternative to not spending money on tax credits would have been to have left the poorest working families in the country worse off and even further behind their peers.
Frank Field suggested a range of ‘life chances’ indicators in his report, identifying key factors which he believes contribute to poor life chances and make it more likely poor children will grow up to be poor adults. There is some indications that reductions in child poverty started to improve outcomes for children. For example, the educational attainment gap closed between 2006 and 2010 and the under 18 conception rate fell. Other policy levers almost certainly contributed to these positive developments but some have been too quick to dismiss the direct impact of improving family incomes on positive outcomes for children. The causal link between low income and education attainment is clear as we set out in our 2008 report Why Money Matters.
A polarised debate about poverty measurements may appear unhelpful, particularly in the current context of increased levels of need and deprivation. This brings us back to one other key challenge of a pure relative income approach. How do we capture the extremes we’re currently facing which the relative income measure doesn’t quite capture? Other income measures of absolute poverty and persistent low income (both included in the Child Poverty Act) along with the focus on severe poverty included in the Government’s Child Poverty Strategy offer part of the answer as well as measures which focus on outcomes for children as opposed to family finances.
We must avoid a polarised debate which forces choices to be made between focussing on life chances and low income. Resources must be allocated in a way which ensures children don’t suffer now nor in the future. Poverty and social mobility are closely linked. Children won’t be able to achieve their potential if they are being made ever poorer, unable to concentrate at school and living in families under enormous financial strain.