The claim
“We will maintain the goal of ending child poverty in the UK by 2020.”
The Coalition agreement, May 2010
The background
Today saw a battle of the think-tanks over the enduring problem of child poverty in the UK.
The charity Unicef released a report broadly supporting the approach taken by the last government, who lifted 900,000 children out of “poverty”, according to its preferred definition.
That’s bad news for the new government, who have drifted away from the expensive commitments to tackle inequality which the Labour government enshrined in the Child Poverty Act, despite voting for them in opposition.
Luckily the independent Centre for Social Justice (CSJ) think tank released a rival policy paper on the very same day suggesting that the way we measure child poverty is wrong, and you can’t just throw money at the problem.
In a week of U-turns, is the government trying to wriggle out of another commitment?
The analysis
The Child Poverty Act was passed with all-party support in 2010. The Act makes it a legal duty for the government to meet four targets.
By 2020, fewer than 10 per cent of children should live in households that earn less than 60 per cent of the median (middle point of the scale) national income. That’s a relative measure. If the national median income goes up, more people will automatically be in poverty, without any change in their income.
The Act also says that fewer than 5 per cent should live in absolute poverty, using the 60 per cent target again but comparing earnings with the unchanging benchmark of the 2010 median income.
There are two other targets: income plus “material deprivation” and “persistent poverty”, which tracks earnings over several years.
It follows that if the state gives people money directly, their income goes up, and if it passes the magic 60 per cent line they are no longer said to be in poverty.
Labour took this simple but expensive route and it worked, to a degree.
The CSJ report says: “During Labour’s 13 years in office, there was only a 6 per cent reduction in the number of children deemed to be in poverty.”
But that’s misleading. What Labour’s record – as summarised in this table – shows is that the percentage of UK children below the 60 per cent income threshold fell from 27 per cent to 21 per cent, from 3.4 million to 2.6 million children.
That’s a fall of 23.5 per cent, nearly a quarter, not six per cent. Maths fans will recognise this as a case of confusing percentage points with percentages.
But in recent years the progress has slowed, and that’s why the CSJ and the government think we’re getting poor value for money. The government spent £150 billion on tax credits between 2004 and 2010, and the percentage of children in poverty only fell from 22 to 21 per cent.
Out of 35 developed countries compared by Unicef, we’re still 22nd – hardly brilliant, though apparently an improvement on the past.
Of course, that doesn’t mean that the spending money on benefits, tax credits etc doesn’t work at all and we should simply stop.
The Institite for Fiscal Studies (IFS) produced a report last year which predicted that both relative and absolute child poverty would rise as a result of coalition policies.
The IFS thought each of those measures would hit 24 and 23 per cent respectively by 2020, a far cry from the targets of 10 and 5 per cent.
James Browne from the IFS told us the research doesn’t take into account the latest changes in the last budget, but they are likely to have a minimal impact and if anything will make things worse not better.
All of this makes it extremely unlikely that the government will hit the targets laid out in the Child Poverty Act.
Of course if you move the goalposts you might not miss, which could explain why the Work and Pensions Secretary has been saying for some time that he thinks Labour’s obsession with the 60 per cent target was overly simplistic and counterproductive.
The CSJ was set up by Mr Duncan Smith, and it’s clear that its policy team and Mr Duncan Smith are thinking along similar lines here.
In April last year Mr Duncan Smith wrote: “Our strategy for poverty is about transforming lives not just maintaining them on marginally higher incomes.”
The CSJ writes today: “We…urge the Government to adopt a measure of child poverty which promotes policies that transform lives, and not merely maintains people on marginally higher incomes.”
The think-tank adds: “Poverty is a multifaceted phenomemon which cannot be eradicated without an acknowledgement of its key drivers: family breakdown, educational failure, economic dependency and worklessness, addiction and serious personal debt.”
That sounds convincing, although the evidence base for some these assertions is questionable. Are these social problems the drivers of poverty, or its symptoms? And are issues like addiction and family breakdown inextricably linked with poverty?
CSJ Managing director Christian Guy appears to think so, telling BBC Radio this morning: “What’s the point of giving an alcoholic parent £10 a week extra, because unless you deal with the alcohol problem, all that money’s not going to the child and the lives aren’t changing?”
But in 2006 the Centre itself appeared to reject the notion of a simplistic link between income and alcoholism, saying: “There are no statistically significantly associations between overall alcohol consumption and occupational groupings. If anything, alcohol consumption has risen fastest among middle class women…”
The think-tank is right to point out that there are a number of strange side-effects from insisting on using that measure of relative poverty.
For example, in a recession, when the median income is likely to fall, households find themselves lifted out of poverty. They haven’t got any richer, it’s just that the 60 per cent line has got lower.
But relative poverty isn’t the only measure used by Unicef, and it’s not the only target set out in the Child Poverty Act. Under the legislation, ministers are also bound to consider precisely the kind of wider issues the CSJ mention – parenting skills, housing, education.
In fact, no one is saying that relative income inequality alone is a perfect measure of child poverty. The only dispute is whether we should drop the target, letting the government off the hook as far its legal responsibilities are concerned.
The verdict
FactCheck has to confess to a suspicion that the Government was poised to drop its commitment to the Child Poverty Act targets.
But after much prevarication, government spokesmen have told us the 2020 targets still stand, including that irksome pledge to have fewer than 10 per cent of the nation’s children living in households that earn 60 per cent of the nation median.
The government has already ruled out spending more on welfare payouts so unless the economy suddenly roars back into life it’s very difficult to say how those promises can become reality.
By Patrick Worrall
