child poverty and child outcomes

CHILDREN & SOCIETY VOLUME 16 (2002) pp. 131–140Published online in Wiley InterScience (www.interscience.wiley.com). DOI: 10.1002/CHI.707

Child Poverty and Child Outcomes

This article reviews the most up to date evidence on the prevalence ofchild poverty in Britain. It traces how child poverty has changed over

the last 20 years, and how child poverty in Britain compares with thatin other countries. Then there is a brief section describing the

characteristics of poor children. It then reviews evidence of the impactof poverty on the well-being of children drawing on the ESRCChildren 5–16 programme project—Poverty: the Outcomes for

Children (Bradshaw, 2001a). It concludes with a discussion of howthe Labour Government is doing in its aspirations to abolish child

poverty. Copyright # 2002 John Wiley & Sons, Ltd.

Introduction

Child poverty is at last at the centre of the Government’sdomestic agenda. For the last 20 years it was neglected: theword poverty was expunged from official discourse; little orno research on poverty or its consequences was funded bygovernment or the Economic and Social Research Council;ministers made speeches denying the existence of poverty.Meanwhile the proportion of children in poverty steadilygrew. The ESRC Children 5–16 programme presented anopportunity to explore what was happening to children (allchildren and young people not just those aged 5–16). Theproject—Poverty: the Outcomes for Children (Bradshaw, 2001a)reviewed the prevalence of poverty and the characteristics ofpoor children, compared child poverty in Britain withevidence from other countries, undertook a comparative studyof how the well-being of children was monitored in othercountries and produced a review of the evidence on the impactof poverty on the well-being of children. This article updatesthe results of that study in the context of the commitment toabolish child poverty in 20 years.

Child poverty in Britain

The proportion of children living in households with equivalentincomes below 50 per cent of the contemporary average afterhousing costs increased more than threefold between 1979 and1999/00 (see Figure 1). Most of this increase took place in theearly 1980s and the late 1980s. During the 1990s child poverty

Copyright # 2002 John Wiley & Sons, Ltd.

Jonathan BradshawSocial Policy ResearchUnit, University of York

Correspondence to: Jonathan

Bradshaw, Professor of Social

Policy, Social Policy Research

Unit, University of York,

Heslington, York Y010 5DD.

E-mail: [email protected]

rates have fluctuated up and down. The 1999/00 Family Resources Survey, on which thelatest estimate is based (Department of Social Security (DSS), 2001), includes a short periodjust after the introduction of the Working Families Tax Credit in October 1999. But we haveto wait for the next year’s data to see the full impact of the big increases in the real level ofChild Benefit and the child scale rates in Income Support in October 2000.

A slightly more up to date picture is to be gleaned from administrative statistics. We knowfrom Income Support statistics that the proportion of children dependent on IncomeSupport has been falling since 1995 when an incredible 25 per cent of all children wereliving in households receiving Income Support (or income tested Job Seekers Allowance)(see Figure 2) . The other source of evidence to draw on is POLIMOD the micro-simulation

Figure 1: Percentage of children in poverty, contemporary terms (after housing costs)

Figure 2: Percentage of all children who are in families receiving Supplementary Benefit/Income Support

132 Jonathan Bradshaw

Copyright # 2002 John Wiley & Sons, Ltd. CHILDREN & SOCIETY Vol. 16, 131–140 (2002)

model run by the Cambridge Micro-simulation Unit (Sutherland, 2001) and their estimatesare reviewed later in this article.

It is now fairly clear what factors contributed to this huge increase in child poverty.Economic factors played their part, in particular the two periods of rapidly risingunemployment in the early 1980s and early 1990s. Also jobs became more insecure, part-time, and episodic and self-employment increased. Jobs became more concentrated—anincrease in two earner families and an increase in workless families. There was a growth inthe dispersion of earnings between the skilled and unskilled and younger and olderworkers (though not between men and women). Although, during the period, there was aslight decline in the number of children in Britain other demographic factors drove up childpoverty. A large birth cohort of young people (the 60s boomers) left school and soughtto enter the tight labour market in the early 1980s. The number and proportion ofchildren living in lone parent families rose and the labour participation rates of loneparents fell.

So economic and demographic factors played a part but the most important lesson to learnfrom this period is that policy was also responsible—a variety of policy decisions made bythe Thatcher and Major Governments either exacerbated child poverty, or reduced thecapacity of the welfare state to protect children from poverty. Among the most importantof these was the decision to up-rate benefits in line with prices rather than earnings after1980. As a result the gap between the income of the working population and thebeneficiary population grew steadily (and went on growing until the increase in realbenefit levels in October 2000). Some benefits were abolished (i.e. entitlement for 16–18year olds), others froze on the vine (i.e. Child Benefit). The system of direct taxationbecame considerably less progressive, and there was a shift from direct to indirecttaxation, though no reduction in overall taxation. There were cuts in some services, mostnotably the housing programme, and real rents increased.

How does child poverty in Britain compare?

The UNICEF study (2000), based on analysis of the Luxembourg Income Study byBradbury and Jantti (1999), found that in the mid 1990s Britain had the third highestrelative child poverty rate out of 25 countries—only less than Russia and the US. Using amore absolute standard (the US poverty threshold) Britain did relatively better but stillhad a child poverty rate more than double that of our northern European neighbours. Themost up-to-date data come from the European Community Household Panel Survey 1998(1997 income data). The results shown in Figure 3 reveal that the UK has by far the highestchild poverty rate in the EU. The figure also gives the poverty rate for the over 65s from thesame source, and it shows that Britain also had a comparatively high older person’spoverty rate. But the child poverty rate is higher. This is also the case in some othercountries—but observe Belgium, Denmark, Greece, Austria and Portugal, all with muchlower child poverty than older people poverty rates.

We also know from comparative research by OECD (Oxley and others, 2001) that childpoverty in the UK increased at a faster rate in Britain between the mid 1980s and mid 1990sthan any of the 13 nations in the comparison. Indeed in over half those nations childpoverty actually fell (Figure 4).

Child Poverty and Child Outcomes 133


This research (Oxley and others, 2001) also reveals how important policy is in protectingchildren. Figure 5 gives the pre and post transfer poverty rates. The pre transfer povertyrate is the level of poverty that would result from market incomes if there were no taxesand benefits. Britain, because of unemployment and low in-work incomes has the highestpre transfer child poverty rate and thanks to taxes and benefits this is reduced by 40 percent. This is a more effective transfer system than Italy (were transfers actually increasechild poverty) and the US, but much less good than Finland and Sweden were transfersreduce child poverty by 80 per cent and France where they fall by 70 per cent. Policymatters and policy in the UK are shown to be comparatively ineffective.

The characteristics of poor children

The best source of data on the characteristics of poor children in the UK is obtained fromthe Family Resources Survey. Some of these data are presented in the Households BelowAverage Income (HBAI) reports (DSS, 2001) but for some of the data presented here wehave undertaken secondary analysis with the child as the unit of analysis.

Figure 4: Trends in child poverty (% point change). Source: OECD (Oxley and others, 2001)

Figure 3: Child and over 65 poverty rates 1997. Source: ECHP, 1998 (EU, 2001)



� 61 per cent of all poor children1 live in a household with no one employed and 78 percent of children in such households are poor.

� However 23 per cent of poor children live in households with someone working full-time—so having only one earner is not a guarantee against child poverty.

� The child poverty rate is very low if there are two earners in a household but 21 per centof children with one earner in a two adult household are poor.

� Child poverty is higher among the self-employed than employees.� Half of all poor children live in lone parent households and 59 per cent of children in

lone parent households are poor.� 59 per cent of poor children are living in households with a child aged 0–5.� The risk of child poverty is much higher if there are three or more children in a

household.� The presence of a disabled adult or a disabled child also increases the risk of child

poverty.� Over half of poor children live in social housing.� However 27 per cent of poor children live in owner-occupied dwellings.� Over three quarters of poor children are white. However the risk of child poverty is

higher in all minority ethnic groups, especially households of Pakistani or Bangladeshiorigin.

� Nearly half of all poor children are living in households receiving Income Support andthe risk of poverty for children in such households is 90 per cent.

We also know from the same source that child poverty varies regionally with Yorkshireand Humberside (within Britain) having the highest child poverty rate before housingcosts, and London the highest child poverty rate after housing costs. There are very largevariations in the child poverty rates by ward. The work of the Social Deprivation Unit atthe University of Oxford shows that there are wards in Scotland and Northern Ireland

1Children in households with equivalent income less than 50 per cent of the mean after housing costs.

Figure 5: Impact of transfers on child poverty rates in the mid 1990s. Source: Oxley and others (2001)



with over 90 per cent of children in households receiving Income Support, Family Creditor Disabled Working Allowance. This compares with some wards, mainly in the southof England where less than 1 per cent of children live in households receiving thesebenefits.

The outcomes of child poverty

As part of our project for the ESRC Children 5–16 programme we undertook a review ofthe outcomes of child poverty. We sought to answer three questions:

� Is there evidence that generally the outcomes for children have got worse over the last20 years or so?

� Is there evidence that worse outcomes are associated with the increase in relative childpoverty?

� Have poor children fared worse than children who are not poor over the last 20 years orso?

We reviewed outcomes under four domains:

1. Physical outcomes including mortality, morbidity, accidents, child abuse, teenagepregnancy, environmental degradation and homelessness.

2. Cognitive outcomes mainly educational attainment.3. Behavioural outcomes including school exclusions, youth crime, smoking, alcohol,

drugs, suicide and child labour.4. Emotional outcomes including self-image, happiness and subjective well-being.

The details of the review have been summarised elsewhere (Bradshaw, 2001a). The pictureis rather complicated.

There are certainly a number of indicators of health (and health related behaviours) andwell-being among children, which have got worse over the last 20 years or so. Thus forexample there has been an increase in low birth weight births, some infections havebecome more prevalent (including HIV), the number of children classified as homelessand living in bed and breakfast accommodation has risen, school exclusions rose (but theyare now falling), youth crime increased, smoking among girls has become more prevalent,there are more young people consuming alcohol and abusing drugs, and suicide amongyoung men increased. However not all these outcomes are associated with poverty or itsproxies. Thus youth crime, alcohol consumption among young people and use of drugsare not associated with poverty. The fact that they got worse has probably little to do withrising poverty rates.

During a period when poverty increased threefold a number of critical indicators of childhealth and well-being, which are known to be associated with poverty continued toimprove. Thus child mortality fell, especially because fatal accidents among children fell.Teenage pregnancy fell (but from a high rate internationally). The dental health of childrencontinued to improve. Housing conditions improved, as did the educational attainment ofchildren.



However although they fell overall there is evidence that for a number of these indicatorsthe gap between the poor and the non-poor grew. This is certainly the case for childmortality, low birth-weight, child accidental deaths, teenage pregnancy, housingconditions educational attainment and youth suicide. It is probably the case for mentalillness, though we do not have good time series data on child mental health (or subjectivefeelings of well-being and self-esteem.).

So the evidence is far from straightforward to judge. There is probably a time lag in theimpact of poverty on outcomes. There is a shortage of evidence, in particular the UK hasno systematic procedure for monitoring the well-being of children and there is no survey,which collects data regularly on what children think and feel. We have instead to piecetogether evidence from a host of different sources and that evidence points in differentdirections. Children are robust, they manage, despite events. They are certainly protectedfrom the excesses of poverty by their parent(s)—it is parents (and mothers) who suffermost, protecting children from the assaults on their living standards (Middleton andothers, 1997). Also we are concerned here with the impact of an increase in relativedeprivation. Certainly for some children there was a real deterioration in their livingstandards but on average it was mostly a relative deterioration. For all these reasons wemight not see an impact of rising child poverty on child outcomes.

Prospects for child poverty

The prospects for child poverty are very good. The economy is still, despite threats ofrecession in good shape, with employment growing, and unemployment at its lowest levelfor 25 years. The number of children and lone parents dependent on Income Support isfalling. Demographic prospects are positive as well. While the number of retired peopleis increasing we are on a bit of an ageing plateau and for the next decade or so the increaseis considerably smaller than the ageing experienced in the last three decades. Fertility islow and falling. The Prime Minister declared in 1999 that it is the intention of theGovernment to abolish child poverty within 20 years. In addition to managing theeconomy to maximise employment and making major extra investments in education andhealth a host of new measures has been introduced. These include the National MinimumWage, real increases in Child Benefit and the Income Support scales for children, theintroduction of Working Families Tax Credit, Child Tax Credit, Childcare Tax Credit,the Childcare Strategy, the New Deals, particularly in this context, the New Deal for LoneParents. A National Fruit Scheme has been introduced and nutritional standardsreintroduced into school meals. The Social Exclusion Unit has been established and istargeting, among other issues, teenage conceptions. The Children’s Fund has beenestablished and is being distributed by a new Children and Young People’s Unit in theDepartment of Education and Science, which also has a brief to represent the interests ofchildren in Whitehall. A host of neighbourhood-based initiatives has been launchedincluding Surestart, Education Action Zones, and Employment Action Zones. TheGovernment is making considerable effort to monitor and evaluate these initiatives andhas begun to publish a major new annual report on poverty Opportunities for All withindicators designed to monitor the extent to which they are reaching their poverty targetsfor children, people of working age and older people.



Reductions in child poverty

The most up-to-date estimates of the Labour Government’s achievements come from themicro-simulation model POLIMOD (Piachaud, 2001). The most recent estimate takes intoaccount all the policies announced up to and including the 2001 budget. Sutherland (2001)estimates that these policies will have lifted one million children out of poverty (above 60per cent of median equivalent income before housing costs). That is a reduction of 29 percent in five years which is ahead of the Government’s own target. However this estimatedoes not take into account the impact of the labour market. As we have seen the number ofchildren and lone parents on Income Support has been falling. The proportion of childrenin workless families fell from 18 per cent in 1997 to 15 per cent in 2001 (Department forWork and Pensions (DWP), 2001b). I have estimated that an additional 320,000 childrenwill have been lifted out of poverty by the increase in employment of their parents(Bradshaw, 2001b). So if we add this to the proportion lifted out of poverty by policy wehave a reduction of 38 per cent in five years.

Thanks to the substantial real increase in the Income Support rates for children in October2000 there has been a closing of the gap between the Family Budget Unit Low Cost butAdequate Budget from £23.51 per week in January 1998 to £5.95 per week in October 2000for a lone parent with two children under 11 and from £32.29 per week to £11.17 per weekfor a couple with two children under 11 over the same period. So there is still a gap but ithas closed substantially (Bradshaw, 2001b).

The latest Opportunity for All report (DWP, 2001b) shows that all the child povertyindicators are moving in the right direction.

All this is good news. However the news for poor children has not always been good sincethe election of a Labour Government. Almost their first social policy decision was toimplement Conservative plans and abolish the lone parent premium in Income Supportand One Parent Benefit—both of which would have made some of the poorest families withchildren worse off if they had not have subsequently increased Child Benefit and IncomeSupport by so much. The one penny cut in the income tax rate in the 2000 budget was awasted opportunity, costing the exchequer £2.44 billion—enough, if spent on the child scalerates of Income Support, to lift another 695,000 children out of poverty (Bradshaw, 2001b).The 2000 Budget was very generous to children but after the outrage over the 75 p increasein the basic retirement pension in that year, the 2001 Budget was a budget for pensionersand gave very little extra to children. In the 2001 election the Labour Party once againpledged that there would be no increases in direct taxation during the next parliament.

Meanwhile there are inevitably limits to the welfare to work strategy—not every out ofwork parent with a child is going to be able to get a job even if they want one—partlybecause of the spatial concentration of unemployment and partly because of sickness,disablement, lack of skills and a reluctance among lone mothers to abandon their childrento low quality, inconvenient and expensive childcare (Marsh, 2001).

Future challenges

There are some who argue (Piachaud, 2001) that the task of ending child poverty getsharder the nearer the government gets to its target. Certainly as a labour market becomes



more buoyant, better-educated parents will get jobs most quickly and it will always beharder to place the less skilled. But once in the labour market, in-work benefits shouldoperate as effectively for early entrants as late entrants. For those unable to get access tothe labour market, in Income Support we have a minimum income guarantee, whichprovides a floor (as long as it is claimed) below which no one should fall. So the gapsbetween the poverty threshold and income are equal for all, and as the real level of IncomeSupport is raised so everyone should be lifted above the poverty threshold. If a recessionbites and unemployment increases then that floor, having been raised in real terms, shouldbe equally effective in keeping children out of poverty. The only challenge to this picture isthrough the treatment of housing costs. Tenants may receive housing benefit but it doesnot cover all their rent. Owner-occupiers cannot receive mortgage interest payments ifthey are in employment and when they lose their jobs full mortgage interest payments donot kick in for 26 weeks and only about a quarter of the population has mortgageprotection insurance.

So our system of support for housing costs still requires some attention if the benefitsystem is to become a foolproof safety net. However the key to the safety net is the level ofIncome Support for families who are out of the labour market and the level of in-workbenefits/tax credits. Therefore the decisions that the Chancellor is going to announce inthe 2002 Budget about the level and structure of the Integrated Child Credit (ICC) arecrucial to achieving the child poverty objectives. The Consultation Paper on IntegratedChild Credit (Inland Revenue, 2001) failed to provide any details about the levels. TheInstitute of Fiscal Studies (Brewer and others, 2001) has made a number of more or lessinformed guesses about what they might be. They estimate that in order to avoid any poorlosers the ICC will cost £1.8 billion to achieve 3.3 million gainers and 1.1 million better offlosers. In order to avoid all losers it will costs £2.4 billion. This is not an enormous sum—about a 1 p increase in the standard rate of income tax will do it. But the Government haspromised not to increase the standard rate of income tax. Without tax increases and withvery large increases in public expenditure on education and the National Health Servicecoming on stream there may be a hole in the public finances. The public finances will beginto suffer further if and when the recession begins to bite.

The UK remains a comparatively low taxed economy. All the evidence (British SocialAttitudes, 2001) suggests that the majority are prepared to pay more tax in order toimprove public services and abolish poverty. If the Government is going to achieve itsobjectives in abolishing child poverty it will have to bite the bullet of increases in directtaxation. The choices in the end are political.

References

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Bradshaw J. 2001b. Child poverty under Labour. In Tackling Child Poverty in the UK; an End in Sight?Fimister G (ed.). Child Poverty Action Group: London.

Brewer M, Clark T, Myck M. 2001. Credit Where it’s Due? An Assessment of the New Tax Credits.Institute of Fiscal Studies Commentary 86.



Department for Work and Pensions. 2001a. Income Support Statistics: May 2001, Analytical ServicesDivision: Newcastle.

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