The worries about what happens next in the fight to end child poverty

When New Labour first came to power in 1997, it initially tried to dampen expectations about its ability to solve social problems, but within two years was starting to make bold promises. Tony Blair’s pledge in 1999 to end child poverty within a generation took many by surprise, and still stands as the government’s most ambitious specified social goal.

Are ministers now regretting the setting of a target that, a quarter of the way through the period set for meeting it, is proving tough if not impossible to achieve? Yes, if what they mind most about is headlines highlighting the failure, in the first six years, to reduce child poverty by quite the promised one-quarter. No, if what is more important to them is that this high-profile pledge has helped give momentum to a strategy that requires high priority in Budgets year after year to meet long-term goals.

And looking at the record so far, ministers have every reason to be pleased. The number of children in poverty, measured as being in households with below 60% median income, fell by closer to a fifth than a quarter, but this is a huge achievement in itself. From the mid1970s to the mid-1990s low income families were not sharing in the general increase in prosperity. Since the late 1990s, in a period of healthy growth, these families have become better off faster than the average. This is a historic break in trend. It has been achieved largely by bringing many more parents into work and by making tax credits more generous, so reducing the chance that those who are working remain poor.

Yet without big new efforts, including substantially more public cash at a time when overall resources are tight, this progress could now stall. The Joseph Rowntree Foundation has looked at the best evidence available to estimate what will happen next on current policies. Its findings make worrying reading.

Current and planned welfare to work measures will get some of the 45% of lone parents still not working into jobs, and many of these will thereby escape poverty. However, plans for uprating benefits and tax credits will work in the other direction. Although part of the Child Tax Credit is being uprated in line with average earnings, other benefits and tax credits are set to rise more slowly. The result is that, even if the wages of those on low incomes keep pace with the average, the total relative income of poor families both in and out of work will fall. The combined effect of uprating and welfare to work policies is broadly neutral, with child poverty set to remain close to present levels under these policies.

So how can government keep up the momentum? Part of the solution will have to rely on extra redistribution. At various times, Gordon Brown has announced substantial jumps in the tax credits that go to Britain’s poorest families, both in and out of work. For those remaining outside work in particular, more of the same will be needed in the future. Quite simply, this is because in a system where basic benefits only get uprated by prices, child poverty will deepen rather than reduce for non-working families if nothing extra is announced.

The Rowntree report estimates that about £4bn a year will be needed in extra redistribution, compared to present plans, to meet the next interim target of halving child poverty by 2010. This is affordable if we choose to give it priority: it is less than 1% of public spending, or 3p for every £10 that we earn as a nation. It is also important to note that two-thirds of this is to correct for the fact that on present plans we will pay progressively less in benefits as a proportion of our incomes. In the longer term, though, the costs would be much higher — an estimated £30bn more a year compared with present plans — in order to meet the 2020 target if we relied on redistribution alone. This is caused mainly by the progressive deterioration over such a period of the relative value of benefits under present policy: pegging them only to prices and not earnings deepens relative poverty.

So, over this longer period other measures will need to contribute. The government needs in particular to think about how to enhance the earnings of working families who are still poor, where well over a million children still live. Even after tax credits, people in low-paid jobs have a high chance of poverty — for example, nearly 40% of low-paid fathers are poor. A long-term strategy needs to start by looking at why pay inequalities are greater in the UK than elsewhere in Europe.

This has a lot to do with the structure of employment and of skill use, which can be linked to the UK’s wide social inequalities in educational achievement. So the poverty levels of 2020 will have a lot to do with what is happening today in schools, especially among disadvantaged children who will become tomorrow’s disadvantaged parents. The billions being poured into education need to focus in particular on improving those children’s prospects. At present, most funding goes to schools based on a capitation formula that gives an equal amount for each pupil within each local authority, and thus is not skewed to the most needy.

Relative pay for mothers could also be improved by pushing forward vigorously with the enforcement of equal pay for men and women. Many lone parents end up doing low-grade jobs that indirectly discriminate, offering pay rates and hours that do little to lift their families out of poverty. The hours worked in a household are just as important for improving earnings as the wage rates. This applies also to couples, and one of the biggest tasks for the government, as it acknowledges, is to create more opportunities for second earners to work, if only part time.

In fact, in the next few years, similar questions will arise for lone mothers and mothers with working partners. Is it feasible for me to work? Can I get the right childcare and suitable hours? Will I be able to reconcile my contribution to the material well-being of the family through earning income and their wider well-being with being there for my children when they need me?

Politically, we are coming to a better understanding that working and being at home for children need not be an either/or. The objective is rather to provide choices and opportunities for each family to create the right balance for their own needs.

This requires practical things like the right childcare at the right time and place. But it also depends on attitudes, notably among fathers and employers. By creating less of a long-hours culture, we could, ironically actually enhance the earnings of many poorer families, by improving the earning options for mothers. This kind of social change may in the end make just as important a contribution to ending child poverty as the benefit and tax credit rates announced each year in the Budget.

Donald Hirsch is Special Adviser to the Joseph Rowntree Foundation and author of ‘What will it take to end child poverty? Firing on all cylinders’, details at www.jrf.org.uk