A taxation and benefitssystem to end child

povertyWhose economy? Seminar

11 November 2010

www.cpag.org.uk/scotland

A taxation and benefits system toend child poverty

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Whose economy now? Child povertyand our current system

Progress to date: What’s worked andwhat’s not worked?

Looking ahead: a tax and benefitsystem to end child poverty

CPAG in Scotland

• Raising awareness

• Influencing policy

• Maximising family incomes

Whose economy now? Child povertyand our current system

• 260 000 (1 in 4) Scotland’s childrenofficially recognised as living in poverty(2008/09)

• undermining their health, education, lifechances and childhoods

• unusually high child poverty

• And all this before 2010 Budget andCSR assault on family incomes…..

New challenges

• £18 billion cuts to welfare, including:− Uprating using CPI not RPI− Child benefit frozen, and restricted− New DLA assessment to cut £1.1b− Contributory ESA limited to one year− Council tax benefit reduced by 10%− Housing benefit reductions, caps and

restrictions− Cuts to child tax credit−Cuts to working tax credit

− Health in Pregnancy grant scrapped− maternity grant restricted to first child

New challenges

• “tax and benefit changes are regressiverather than progressive across most ofthe income distribution” (IFS)

• Treasury’s analysis shows both welfarecuts and public service cuts announcedregressive

• families in bottom 40% incomes dropby over 5% by 2012/13, with drop of7% for poorest (IFS)

− Britain's top 1000 saw collective wealthincrease by £73billion in year to 2009/10

What’s worked?Real progress:

Child poverty fell by 600 000, in Scotland 100 000

Why?

• Defining child poverty and setting targets

• Benefits: tax credits and increases to universalchild benefit

• Labour market: NMW, in work support

• Services: investing in early years and childcare

What’s not worked?

• W2W agenda: unbalanced approach to rightsand responsibilities, and too often failed

• Over-reliance on work. Increasing in-workpoverty.

• Stigmatising language eroding public support

• Problems with complexity, take up,administration and adequacy of benefits

• Failure to tackle underlying inequality• extraordinary inequality in pay distribution

• a tax system allowing the wealthy toaccumulate…whilst the poorest paydisproportionately more

What would work: a tax and benefitsystem to end child poverty

Benefits: Manifesto for ChangeScottish Campaign for Welfare Reform

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• Increase benefit rates to a level where no one isleft in poverty and all have sufficient income to leada dignified life

• Make respect for human rights and dignity thecornerstone of a new approach to welfare

• Radically simplify the welfare system

• Invest in the support needed to enable everyone toparticipate fully in society

• Make welfare benefits in Scotland, suitable forScotland.

• http://www.cpag.org.uk/scotland/SCOWR-Manifesto.pdf

Increase benefit rates

• benefits should match Minimum IncomeStandards, what public think is theminimum required to enable an individualto meet their needs and live with dignity

• those who are ill or disabled should getadditional help to cover the extra costsincurred through ill health.

Respect for human rightsand dignity

• urgently review ESA and changes madeto move lone parents off income support

• Support carers by up rating CarersAllowance to Minimum Income Standards

• Make benefit and job seeking servicesaccountable at a local level to serviceusers

Radically simplify thewelfare system

• Harmonise the tax credits and benefitsystems, as much as possible, so thatpeople can move in and out of workwithout financial disruption

• Substantially up rate the earningsdisregard to remove barriers to paidemployment

• Extend universal benefits, e.g. makingchild benefit pay equally for every child

- simpler, easier to administer andwithout stigma than means testing

Invest in support needed

• Make employment in benefit and jobseeking services more fulfilling andbetter rewarded

• Give guaranteed access to a wellresourced wide range of employmentservices to all those who are seekingwork, including non claimants

• Invest in free or affordable, accessible,high quality childcare focused on thewellbeing of the child,

Suitable for Scotland

• Ensure that all welfare system takesaccount of the different legislative

framework in Scotland and is integratedwith devolved childcare, education,training provision.

Taxation to end child poverty

• Make tax policy more progressive.proof taxation decisions for theirredistributive effect.

• Increase the role of income tax

• Reduce VAT consumption tax

• Tax unearned wealth transfers such asinheritance

• Review council tax, but replacementmust be both fairer and raise necessaryresources for local services.

Conclusion• Progress on child poverty had stalled evenbefore the economic crisis.

• If serious about an economy that will end childpoverty we can’t just return to where we were.

• The welfare benefit system must be mended;and greater use made of universal benefits intandem with progressive taxation.

• We need to move away over-reliance onmeans testing of benefits for those at thebottom and the unfettered accumulation ofexcessive wealth at the top.

• Will also require a different kind of labourmarket with more equal pay distribution.

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