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Child poverty targets will be missed, and austerity is to blame

We’ve dropped the ball. Joe Giddens/PA

The swingeing report of the Social Mobility and Child Poverty Commission that the Child Poverty Act 2010 targets for 2020 cannot be met is no surprise. The commission was responding to the government’s draft child poverty strategy, which it described as “lamentable” – pointing out its failure to explain how to get from where we are to where we want to go.

The child poverty targets were to reduce the relative child poverty rate (children living in households with equivalent income less that 60% median) to 10% by 2020 and to reduce “absolute” child poverty to 5% by 2020. There are other targets for deprivation and low income, severe deprivation and low income and persistent poverty.

Curiously, the latest data still suggest that we are on trend to achieve the relative target. This may be why, in March 2014, Ian Duncan Smith told the Today programme child poverty was on target to fall to 1.3m by 2020.

But median income has been falling for the last four years, and so the poverty threshold and the numbers of children below it have been falling – or at least not yet rising. The absolute child poverty rate only began to increase in 2011/12, the latest year for which we have data.

Meanwhile, Landman Economics and the National Institute of Economic and Social Research (NIESR) have modelled the future and concluded that relative child poverty will increase to 3.5m by 2020 – sweeping away all the gains made by the Labour government after 1999.

This is not inevitable; it is the result of present policies. Policy brought child poverty down, and policy has increased it.

Austerity bites

Tellingly, pensioner poverty rates have continued to fall since 2010. The Office for National Statistics has estimated that between 2007-08 and 2011-12, the median income of retired households has increased by 5.1%, while in contrast, the median incomes of working-age households have fallen by 6.4%. This stems directly from decisions made by the coalition.

The first big factor was the decision to tackle the deficit overwhelmingly through spending cuts rather than tax increases. It is significant that the Lib Dems have now said that they will commit to the 2017/18 deficit reduction targets, but not the balance between spending cuts and taxation.

We can also point to various specific decisions that transfer the cost of spending cuts to families with children who received assorted benefits. The list is long but worth reiterating: the abolition of educational maintenance allowances and health during pregnancy grants, freezing child benefit, the switch to CPI rather than RPI for uprating, cuts in childcare tax credit, the bedroom tax – and much more where that came from. These have all hit the incomes of poor families with children hardest, in addition to the increase in unemployment and record youth unemployment.

In contrast, pensioners’ incomes have been protected by the “triple lock”, which ensures that the basic pension and pension credit are uprated by whichever is higher: either inflation or 2.5%.

How the consequences of cuts are distributed across services is so far more difficult to establish firmly, but there is evidence that the highest per capita cuts have been in local areas with the highest child poverty rates.

The Chancellor has also introduced costly cuts in taxation on higher rate tax payers, beer and petrol. In the last budget, he gave away £11 billion in cuts in corporation and other business taxes, and his increases in the income tax threshold are costing the exchequer £12 billion by 2016/17. The revenue foregone by these tax concessions is all money that could have been spent reducing child poverty.

Onward and downward

The European Commission has urged the UK government to “Continue efforts to reduce child poverty in low-income households”. The Children’s Commissioner for England has argued that the cuts “place the Government at risk of not meeting its obligations to children and young people”. UNICEF will publish an Innocenti Report Card in the autumn, which will probably red card the UK government for its child poverty record.

There is evidence that this slippage is already having an impact on child outcomes. After a long period of decline, statutory homelessness has increased sharply since 2010. And in the last quarter of 2013, 64% of households granted the main homelessness duty had dependent children.

And similarly, after a long remission, there has been an increase in youth suicides since 2007, particularly for 20-24 year olds. That trend was not sustained in 2012, but it needs careful watching. Not least since child happiness, which was improving for a decade, has begun to tail off since 2010.

The Child Poverty Commission was therefore quite right to sound a note of alarm at the state of things. Unless government policy radically changes, the picture will only keep getting worse.

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