We Need To Talk About Poverty

Today’s reports from the Social Mobility and Child Poverty Commission should explode the idea that we will have made any substantial progress on reducing child poverty by 2020.

Even without modelling the impact of the additional spending cuts planned by all parties after 2015-16 (“the elephant in the room,” observes the Commission), some heroic assumptions about employment growth are needed to make a big dent in current levels of poverty.

The Government has responded by suggesting that it’s all more complicated than that. Certainly when we talk about poverty we are talking about more than boosting incomes; but incomes are a good proxy for working out whether the other interventions are working or not. Still, in the face of the scenarios reported by the Commission, we may need to start talking about alternative measures for what success looks like by 2020 and then derive a policy programme from those. Here are some possibilities:

  1. While achieving the targets set for 2020 prior now looks impossible, moving in the right direction will be challenging enough. Even a political commitment to doing that – backed by a plan with measurable success criteria – is worth something right now. The Government for now continues to insist – incredibly – that it will hit the targets for 2020. That statement tells us very little about its true ambitions for reducing child poverty. The Opposition faces the same credibility gap, after all it too is promising further spending cuts if it wins the election.
  2. Poverty is damaging to children, and persistent poverty is especially so. It may be that, if we can’t achieve major reductions in poverty per se, we can nevertheless achieve significant reductions in persistent poverty, i.e. we could look at focusing for the period 2015-2020 on a reduction in the proportion of children spending let’s say more than one year in poverty. This would be linked to a policy programme that includes, for example, promoting progression for parents in low pay (our recent work reported in Making Progress suggests that 70% of those who start off in the bottom quintile of the wage distribution stay there for at least one year); and potentially, in line with one of the Government’s key themes, to tackling cycles of chronic disadvantage in which drug or alcohol addiction may play a part for some families.
  3. Some of the effects of poverty can be alleviated by the provision of services. To pose the extreme case, in a society that had a National Food and Energy Service in addition to a National Health Service, we may be much less concerned about the incomes of families. There are good reasons to stop short of that level of collective provision. However, free school meals, additional help in school funded by a pupil premium for children who live in poor families and potentially an extended school day and year all move in the direction where services for children may insulate them from the negative impact of low parental income. Accounting for new services in measures of poverty is difficult but ignoring their impact doesn’t feel right either; and thinking further about policy in this area would certainly be fruitful.
  4. In a similar vein, focusing exclusively on incomes misses something important: assets. Drilling into the recent ONS Wealth and Assets survey, for example, shows that 19% of individuals who have never worked or are long term unemployed have total wealth less than £12,500. In other words, if they have kids, they have neither income nor wealth to help those kids to get on. By contrast, the same proportion of individuals who have never worked or are long term unemployed have total wealth of over £600,000. Obviously we have less reason to be concerned about the prospects of their children than those of the first group (though, as many novels suggest, there are damaging cycles of chronic advantage as well as chronic disadvantage). Instead the policy question here is whether alongside making some progress on alleviating income poverty, we want to do the same for asset poverty on the basis that providing people with assets may have longer-term impact and give families the help they need to break out of a cycle of poverty. Both Labour and the Liberal Democrats are talking about taxing wealth (or mansions, if you like), however there is no discussion about turning those taxes into new assets. Something like a ‘citizen’s inheritance’ funded by wealth taxes may have powerful effects.


Related items:

Page 1 of 1