children, families and the failure of uk anti-poverty policy

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© 2007 The Author. Journal compilation © Institute of Economic Affairs 2007. Published by Blackwell Publishing, Oxford Poverty amidst affluence? Blackwell Publishing Ltd CHILDREN, FAMILIES AND THE FAILURE OF UK ANTI-POVERTY POLICY Patricia Morgan Relative child poverty is often associated with single parenthood. In fact, children of single parents have always constituted a minority of relatively poor children in the UK. However, in the last decade the Blair government has pursued an anti-poverty strategy targeted at single-parent families with the result that children in couple families have become relatively poorer and powerful disincentives have been created that discourage people from taking the most viable routes out of poverty. Introduction Since 1970, there has been a growth in the proportion of children in low-income groups; children have now replaced pensioners as the demographic group with the highest relative poverty rate. This is a reversal of the previous historical trend, when relative poverty was falling even as average incomes – and hence the threshold at which it was defined – were rising. Unemployment and recession were important contributors to family income insecurity, with a particular increase in low-paid men, but other factors were driving a problem that would hardly be resolved by an economic upturn. There was an ongoing shift of the tax burden onto families, whose exemptions and allowances were allowed to decline in value and were raided to fund increased concessions for others, including the increasing numbers of poor and lone parents. The mindset which increasingly dominated considerations of child-contingent support from the mid-1970s dictated that across-the-board support for families was unjustifiable or ‘wasteful’ and, in so far as the money involved was not being ‘targeted’ at the needy or lone parent, was a contributor to child poverty. This was exemplified by the successful campaign against the Married Couples Tax Allowance. The 1997 Labour government set specific targets to reduce the number of poor children by at least a quarter by 2004/05 compared with 1998/99; to halve them by 2010 and eradicate poverty by 2020 or ‘within a generation’. The goal chimed with other interests and agendas – particularly those of feminists – as much as it gave new life to old left- wing inclinations to redistribute income and wealth. The proportion of under-fives whose parents received either Income Support or the in-work benefit Family Credit stood at nearly 40% by the 1990s, and approached 30% of children aged 12–15. Moreover, by the end of the 1990s, over one-half of all social security spending on child-contingent support went to lone parents. Payments and loans to cover needs and means-related maternity grants went mainly to lone parents, as did public sector housing. As the proportion of unwed births spiralled up from 8% to 40% in the 30 years to 2000, single motherhood overtook divorced motherhood, with three-quarters of ‘family’ breakdowns affecting young children involving unmarried parents. The percentage of first births outside any ‘partnership’ also more than doubled in a very short time (6% in the 1980s to 15% in the 1990s). Whites and Afro-Caribbeans in less affluent areas now raise children almost entirely as lone parents. More economic insecurity for families generally from the mid-1970s meant an incidence change in poverty, while groups with a high poverty risk expanded (a compositional change). The change over time is illustrated in Table 1 that shows that, in 1968, 65% of (lower) child poverty occurred in working couple families, 16% in non-working couple families, 4% in working lone-parent families and 15% in non-working lone-parent families. By the late 1990s, the ratio figures were 37%, 20%, 9% and 34%, respectively. While child poverty has come to be understood as something almost exclusively involving lone

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Page 1: CHILDREN, FAMILIES AND THE FAILURE OF UK ANTI-POVERTY POLICY

© 2007 The Author. Journal compilation © Institute of Economic Affairs 2007. Published by Blackwell Publishing, Oxford

Povertyamidstaffluence?

Blackwell Publishing Ltd

C H I L D R E N , F A M I L I E S A N D T H E F A I L U R E O F U K A N T I - P O V E R T Y P O L I C Y

Patricia Morgan

Relative child poverty is often associated with single parenthood. In fact,

children of single parents have always constituted a minority of relatively poor

children in the UK. However, in the last decade the Blair government has

pursued an anti-poverty strategy targeted at single-parent families with the

result that children in couple families have become relatively poorer and

powerful disincentives have been created that discourage people from taking

the most viable routes out of poverty.

Introduction

Since 1970, there has been a growth in the proportion of children in low-income groups; children have now replaced pensioners as the demographic group with the highest relative poverty rate. This is a reversal of the previous historical trend, when relative poverty was falling even as average incomes – and hence the threshold at which it was defined – were rising.

Unemployment and recession were important contributors to family income insecurity, with a particular increase in low-paid men, but other factors were driving a problem that would hardly be resolved by an economic upturn. There was an ongoing shift of the tax burden onto families, whose exemptions and allowances were allowed to decline in value and were raided to fund increased concessions for others, including the increasing numbers of poor and lone parents. The mindset which increasingly dominated considerations of child-contingent support from the mid-1970s dictated that across-the-board support for families was unjustifiable or ‘wasteful’ and, in so far as the money involved was not being ‘targeted’ at the needy or lone parent, was a contributor to child poverty. This was exemplified by the successful campaign against the Married Couples Tax Allowance.

The 1997 Labour government set specific targets to reduce the number of poor children by at least a quarter by 2004/05 compared with 1998/99; to halve them by 2010 and eradicate poverty by 2020 or ‘within a generation’. The goal chimed with other interests and agendas – particularly those of

feminists – as much as it gave new life to old left-wing inclinations to redistribute income and wealth.

The proportion of under-fives whose parents received either Income Support or the in-work benefit Family Credit stood at nearly 40% by the 1990s, and approached 30% of children aged 12–15. Moreover, by the end of the 1990s, over one-half of all social security spending on child-contingent support went to lone parents. Payments and loans to cover needs and means-related maternity grants went mainly to lone parents, as did public sector housing.

As the proportion of unwed births spiralled up from 8% to 40% in the 30 years to 2000, single motherhood overtook divorced motherhood, with three-quarters of ‘family’ breakdowns affecting young children involving unmarried parents. The percentage of first births outside any ‘partnership’ also more than doubled in a very short time (6% in the 1980s to 15% in the 1990s). Whites and Afro-Caribbeans in less affluent areas now raise children almost entirely as lone parents.

More economic insecurity for families generally from the mid-1970s meant an

incidence

change in poverty, while groups with a high poverty risk expanded (a

compositional

change). The change over time is illustrated in Table 1 that shows that, in 1968, 65% of (lower) child poverty occurred in working couple families, 16% in non-working couple families, 4% in working lone-parent families and 15% in non-working lone-parent families. By the late 1990s, the ratio figures were 37%, 20%, 9% and 34%, respectively.

While child poverty has come to be understood as something almost exclusively involving lone

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parents, they

have not constituted the majority of poor or low-income individuals at any point in time.

Consequences of the focus on lone-parent poverty

The focus on lone-parent poverty rendered poor two-parent families largely invisible. It also overlooked how, by the mid-1990s, 15% of people in relatively poor households were childless single people (by 2002/03 this had expanded to 22%). Their representation amongst the poor had doubled over the 1980s. Single, childless people of working age have twice the risk of poverty than childless couples, being more polarised in terms of income than other households.

Conservative calculations are that family structure changes account for a fifth of the rising inequality since the 1970s. In the USA, changes in the distribution of male net incomes and family structure (i.e. less marriage, more lone parents and more childless couples) between them explain both the rising dispersion in equivalent household income and increasing family poverty after 1969. Changing family composition explains about a third of the increase in income dispersal in the USA, and about half for Australia.

The lone parent as the face of child poverty suggested a solution in tune with the ideology and objectives of feminism: the working mother. It was argued that women could easily and independently provide for themselves and their children were it not for inadequate state support and a disadvantaged position in the ‘sex-segregated’ labour market. The confident expectation was that, if they were not being prevented from doing so, 70% or even 90% of lone parents would eagerly rush into work.

It was not unreasonable to conclude that some people have less money than others because they work less. Growing levels of workless households and long-term benefit dependency made the UK unique in the Western world. As worklessness peaked in 1996/97, only two-thirds of single, childless adults and under half of lone parents had any employment. One-parent families were over nine times more likely than couple families to have nobody in work, and people in workless households were over nine times more likely to be below relative poverty thresholds than those with one or more adults working full-time.

However, the focus on mothers’ employment reversed the historical concern with male idleness. It also ignored the role played by the depletion of male

incomes in the rise of relative child poverty, and how workless lone parenthood is only one way in which inactivity is concentrated in single-adult households. Single men are much more likely to derive their income from benefits than married men and, as the employment gap by marital status increases, a growing proportion of non-participants have very low prospects of ever working. The exception is where lots of children make earnings redundant. By 2005, 17% of men aged 25 – 64 were completely inactive, compared with 5% in 1971. This is an ongoing trend, not a problem affecting one older generation. Employment opportunities make little impact. There has been a recent sharp growth in the number of males under 24 who are not in employment, education or training.

Since it makes men marriageable, more male employment might bring a reduction in benefit-dependent lone parenthood, and responsibility for supporting a family might keep more men productive and out of jail. This is anathema to UK politicians such as Harriet Harman and Patricia Hewitt who are adamant that any ‘assumption that men are financially responsible for families’ thwarts the ability of ‘women alone to provide adequately for themselves and their children’ (Coote

et al.

, 1990, p. 36).

Mother work: incentives and disincentives

Mother work might be the path to independence, but there has been no compulsion, just incentives to ‘make work pay’. Experience in the USA suggests that large increases, especially in full-time employment, are only achieved by mandatory ‘must work’ programmes. Unlike the USA, where a major factor is assumed to be low motivation, the belief here is that joblessness results from external barriers: the poor do not work not because they do not want to or judge it unworthwhile, but because they are ‘excluded’.

Unless you reduce disincentives to work by slashing benefit entitlements, one has to make in-work benefits higher than out-of-work benefits. The greater are in-work benefits, the bigger the withdrawal rate as income from employment rises. Attempts to manage or minimise the impact involve lengthening the taper (the amount withdrawn as income rises) to prevent a sudden loss at one point. A needy person is likely to be on a number of benefits or credits – to pay their rent, council tax, child carer and so forth – in addition to wage

YearAll children in poverty (%)

In working couple families (%)

In non-working couple families (%)

In working lone-parent families (%)

In non-working lone-parent families (%)

1968 100 65 16 4 151998 100 37 20 9 34

Source: Gregg et al. (1999).

Table 1:

Distribution of children in (relative) poverty by family-type in 1968 and 1998

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subsidies. Add in taxes and national insurance, and withdrawal may amount to the loss of much or even all of every extra pound earned at some points in the income distribution.

To get lone parents working, the Working Families Tax Credit (WFTC) replaced Family Credit (FC, the previous benefit for poorer working families) in 1999, with 2.5 times more money than under FC for working 16 hours or more a week. Moreover, none of the maintenance a mother received from the father counted against her entitlements. More than double the number of lone parents received WFTC by 2002 as received FC in 1997.

The ‘work to end poverty’ strategy hardly fulfilled the ‘make child poverty history’ commitment since it could not move no-work households over the poverty line. In answer to the call from the poverty lobby for ‘security for those who cannot work’, benefits were increased on a similar scale to in-work credits. This was followed by the link between receiving tax credits and working being broken, with a Child Tax Credit (with a family and per child element) separated off from a Working Tax Credit in 2003. In 2004, the point at which extra earnings reduce entitlement to the ‘working’ part was frozen, but the ‘child’ part was raised. A non-working parent could receive credits of £3,800 per year for two children and £5,430 for three on top of Income Support and its additions such as free school meals, welfare foods, prescriptions, appliances, furniture and so forth. The disabled child premium in Income Support doubled, the carer’s premium rose and opened the door to extended passport benefits, including TV licences. Non-means-tested Disability Living Allowance (available for behaviour problems), its mobility components and a carer’s allowance add another layer. Disability payments can double income for a non-working lone parent.

This was the decisive departure from anything resembling a US agenda, where in-work benefits were primarily a means to reduce the welfare caseload and increase employment rather than directly reduce poverty. In the USA out-of-work welfare was cut back.

Eradicating poverty via welfare benefits and making work pay

Juggling the competing objectives of eradicating poverty via welfare benefits and making work pay resulted in a chaos of multiplying and expanding benefits and credits. Increases in benefits for non-workers that reduce the rewards to work, are fended off with extras to increase the margin between being in and out of work. As people continue to receive the maximum subsidies for the least work, incentives are offered to increase the hours of work. Those out of work then fall behind – and so on. Out of the hat

came an extra £40 per week for lone parents and disability claimants in 2004 if they entered work at all: pushing their minimum wage to £12 per hour. A year on and those on Income Support were offered £20 a week more if they agreed to be trained, with help with travel costs, childcare costs for starting to work at less than the qualifying hours of 16 per week and training interviews.

As one benefit or credit after another has been cast forth or enhanced, there seems to be little comprehension of how they would interact and bureaucracy floundered trying to cope. There should have been an awareness of the numbingly complex and largely ineffective Australian welfare reforms (also to diminish poverty by encouraging work) before similar moves were made here. Total spending on child-contingent but largely ‘targeted’ support rose from £10 billion per year in 1975 to £22 billion in 2003 prices, with spending per child rising 2.5-fold. A part-time working lone parent (without childcare costs) saw a rise in real income of 7% between 1988 and 1997, 39% between 1997 and 2002, and 11% between 2002 and 2004. As lone parents’ proportion of child-contingent support increased faster than their proportion of children, they received payments more than five times larger than couple families and, on average, depended on benefits for two-thirds of their income.

Means-testing invariably creates widening target populations. Those on the welfare margins change their behaviour to qualify or stay eligible, and there is constant pressure to let more people in. With the Working Tax Credit split off from the Child Tax Credit, there was no reason why low-paid childless workers should not be subsidised. With nearly a third of households receiving at least a half of their income from state benefits, a policy promising to destroy welfare dependency has extended it beyond anything previously imaginable.

If poverty definitions long ago moved away from any criteria of want, there is also movement beyond notions that poverty is simply a lack of present cash, opening up new ways for government to intervene. Income maintenance obviously does not make the poor self-sufficient. It is assets which represent stored-up purchasing power, cushion income shocks and are useful for retirement, higher education and housing. The percentage of people who have no assets is rising and is, again, concentrated in one-adult households. Convinced of their merit, the government made babies the beneficiaries of a ‘baby tax credit’ in 2002, and a child trust fund, of £250 or £500 if the family income is low, with a similar sum being paid when the child reaches the age of seven.

Trampled in the rush?

Labour’s reforms led to an increase of about 5% in the proportion of lone mothers who worked 16 or more hours per week, driven by higher rates of entry

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and retention in the labour force – although after entering work, exit rates are still twice the average.

The increase was largely limited to parents with one child, while around 93% of couple families have at least one parent working 16 or more hours a week and over two-thirds have both parents working. Having targeted the easier-to-place lone parents, similar gains will be harder to achieve with the remainder, with the target of 70% unattainable until at least 2015, if at all. Moreover, this is not a static population. The reduction in the percentage of non-working lone parents has been partly offset by an increase in the number of children in lone-parent families, by about 150,000 between 1998/99 and 2004/05 (rising above 3 million for the first time), adding another 50,000 to the relative poverty roll.

So much money, such high hopes and such a poor return. Researchers from the Institute of Fiscal Studies might well ask us to ‘consider whether the increase in employment . . . justified . . . [the] level of expenditure?’ (Brewer and Browne, 2006).

The employment potential of mothers

Before so much was stacked on mothers’ employment as the frontline solution to child poverty some questions should have been asked – not least about employment potential. With the advance of lone parenthood, the average age of lone mothers has declined and their number of children has risen substantially. Single, rather than divorced or widowed, they represent morelow-ability girls, who have never worked, live in social housing and almost half do not have even a single G-grade GCSE. Over a third of non-working lone parents have a sick or disabled child, with 5% having two or more. The lack and expense of childcare seem to worry 5% or less of lone mothers on Income Support and only 15% are at all interested in work at all as many consider it hardly worthwhile financially. Even when the last child reaches 16, a third move onto Incapacity Benefit themselves.

Even employed lone parents usually command low wages and in-work assistance for long periods. By 2005, parents earning £5,220 or less qualified for the maximum childcare credit of £10,920 a year for two children (£6,370 for one child); a subsidy for people whose earnings are less than the cost of minding their children. In 2006, the subsidy rate for childcare rose to 80% of the costs, so that the lowest-earning parents with two children received childcare costs up to £240 per week.

In-work benefits are justified precisely because they subsidise those whose productivity is such that they cannot earn a living wage for themselves, let alone support dependants as well. Either the parent is a full-time mother and the state provides the income, or the parent becomes a supplementary earner to this primary provider and the state pays

childcare costs. Thus, costs are shifted from one form of welfare to another.

The massive injections of resources required to propel people into work at all inhibit further progress, with hours and earnings bound by welfare awards. There has been a continued shift from full-time work towards the minimum hours that have to be worked for top-ups of maximum credit and childcare payments to be received. Even the increase in labour market participation by lone parents has been partially offset by reductions in the hours of those already working.

The increased incentives for short hours of work have also worsened incentives to work for over half of individuals in couple families, particularly where the partner works, and lowered the incentives to progress for the majority, with income loss of 70% or more over much of the income distribution.

Child poverty: from lone parents to couple families

The result of the Blair government’s strategy was that child poverty (measured relatively as 60% of equivalised, median income after housing costs) fell by around two-thirds of that required to meet the target in 2005 and was roughly back at the 1994/95 level. If a Report to the Office of the Deputy Prime Minister found it all ‘disappointing’ (Bradshaw, 2004, p. 25), there was worse to come as the figure began to rise again after 2004/05. Having come down from 34.1% of children in 1996/97 to 28.4%, it rose to 29.8% in 2005/06.

Relative child poverty resulting from lone-parent poverty underwent a significant drop, falling particularly for children of parents in part-time work, and for children of disabled adults, for disabled children, local authority tenants, households with children under five and families with four or more children. When lone parents work at least 16 hours a week at the minimum wage, tax credits lift most out of poverty.

What has made the poverty fall stall and then reverse is the rise of relative child poverty among couple families, except those with two full-time earners (and even here the rate has not declined at all). A greater percentage of children living in households with an income less than 60% of the median have two parents. The figure has risen to 60.3% in 2005/06. Children in a household where the parents work also make up a higher proportion of those in poverty because the poorest working people are in two-parent families. Over 80% of poor children with working parents live in couple families, where the vast majority, or 1.4 million out of 2 million, have at least one adult working. This is predicted to increase to 1.8 million by 2010. All told, 21% of children in couples with one full-time worker were below the poverty threshold in 2005/06, compared with 13% of those with a

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full-time working lone parent. For those with one part-time worker the proportion of children in couple families who were poor was 49%, compared with 27% in single-parent families.

Government provides support on the basis of family structure and not family need. Poverty rates are calculated on an ‘equivalised’ basis which takes account of the numbers living on an income. But, bizarrely for an anti-poverty strategy, its policy instruments incorporate an ‘invisible’ second-adult principle, which makes couples less eligible for help and poorer people subject to marriage penalties. A couple’s combined income is counted against entitlements, with no exemption or allowance made for the support of another adult – if anything, there are lone-parent additions for some benefits, or extra charges for two adults. While a working lone mother can keep all contributions from the father without losing subsidies, all of his income would count against benefit entitlements if he lived with them.

A two-child couple needed to work 74 hours a week at the minimum wage to clear the poverty threshold in 2004/05, yet a lone parent with one child needs to work only 16 hours to be above the threshold. A lone parent with two children and in social housing would have needed to earn £78 a week, while a comparable couple would have needed more than four times as much – an increase from three times as much in 2003/04. Making lone parents central to a tax-and-benefit system which is unresponsive to two-parent families has backfired and helped sabotage the campaign to end child poverty.

Where do we go from here?

To halve child poverty by 2010, the most widely advocated strategy would raise Child Tax Credit by nearly 50% in real terms, while perhaps skewing it towards big families. The cost would be around £4.5 billion, with nearly two-thirds having to be spent anyway to maintain the present rate of child-contingent support. Achieving the 2010 target requires a fall of an average of 200,000 poor children each year, after average falls of less than 100,000 with all the expenditure over the past seven years.

A package between 2010 and 2020 that linked all child-contingent benefits and tax credits to earnings would cost another £12 billion, and might reduce child poverty to 8.5%. To go below the 5% level would require increases much faster than earnings – a doubling in real terms of tax credits and benefits between 2010 and 2020. This would cost £28 billion, nearly 2% of GNP, and would require substantially higher taxation and/or radical cuts to other budgets. The marginal cost of getting each of the last 500,000 children out of poverty runs at nearly four times as much per child as the previous million taken out before 2010. In 2006, a two-earner

couple earning £10,000 and £25,000 respectively were already £5,473 a year better off if they lived apart. Under the proposals for tackling persistent child poverty, they could be £7,500 a year better off.

Reducing child poverty to negligible levels implies raising non-work incomes. The proposed doubling between 2010 and 2020 would mean a single woman on £55 Jobseeker’s Allowance receiving nearly £200 cash (not including the baby premium) at 2006 prices were she to have a child (with free housing). Since claimants purportedly suffer acute disadvantages when moving from welfare to work, a huge investment in personal advisers and other helpers is also called for, involving a long-drawn-out process of ‘advice, support and preparation’.

Because of the way poverty is measured its level depends in part on changes in median incomes which determine the level of the poverty line. As 800,000 children were taken out of poverty between 2000 and 2005, 200,000 went back into poverty as rising median income moved the goalposts. More measures and more money are needed to hold gains, or to keep up with a moving target, let alone make progress; we are forever pushing the boulder uphill, as it rolls back down again. Reducing poverty by this method requires increases in the benefits received by low-income households above earnings and commensurate tax rises that push down everyone’s incomes.

In fact, the average annual growth in household income since 1997 came to a halt after 2001/02. The revenues from income tax had increased from £74 billion in 1996 to £136 billion in 2006 with an increase of nearly £9,000 per household in the overall tax take. Taxation has never reached so low down the income scale. Single people pay income tax on earnings well below subsistence levels – for employees with dependants the situation is even worse. The starting rate for income tax in 2007/08 is £5,225, and abolition of the 10% tax band will raise taxation for low earners. If this qualifies them as needy, they may claim credits or benefits.

Despite the bottom two income quintiles receiving the lion’s share of public transfers, Labour’s redistributive programme was barely sufficient to halve the growth in inequality up to 2003/04, but not to reduce it, and it is rising again. Even researchers for the Institute of Public Policy Research now acknowledge that changing household composition, formation and dissolution, with more lone parents, single adults and double-income couples, have helped to drive inequality (Dixon and Margo, 2006).

Welfare, determinism and warnings from history

Architects of welfare have an implicitly deterministic view of people as helpless victims of

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forces beyond their control. Policy considerations never seem to factor in possible behavioural change, or take heed of Beveridge’s warning that: ‘If money is paid on any condition, it tends to bring that condition about; if it is paid or given on degrading conditions, sooner or later it degrades’ (Beveridge, 1948, p. 149). The dynamic consequences of ‘targeting the needy’ are rarely considered. There is a huge downside to any means-testing strategy and the more ambitious such a strategy is the more it destroys in terms of work, savings, self-advancement, honesty, mutual care and co-operation.

The lavish rewards for dependency ensure that people now work the system on a massive scale. Given the incentives for couples to split up or live separately, not only is support paid to at least 200,000 more lone parents than actually exist, but ‘strategic single parenthood’ has become a commonly accepted way to maximise income. Only when joint incomes reach £50,000 per year is there no loss from being a couple.

At work, income can be maximised by officially receiving wages that qualify for the highest credits, while picking up a surplus in cash. The employer splits the difference and keeps the wage bill down.

Ever greater means-tested benefits and credits mean ever more people facing higher withdrawal rates if incomes rise, deterring them from improving their standards even if they are taken out of poverty. As the child-based elements of benefits rise faster than the work-based elements and current spending plans assume that this trend will continue, the negative impact on work incentives will increase over time.

Given the static poverty population illusion, the assumption is that there is a finite number of ‘needies’ or, in economic jargon, the elasticity of supply is zero. In reality, the supply of needy people is close to infinity and the supply is elastic. By increasing the financial entitlements of low- or no-income people that are contingent on having children, anti-poverty policies are helping – in the words of Thomas Malthus – to ‘create the poor which they maintain’. Immense discrimination in the system against two-parent families also displaces reproduction outside of marriage. The transfers that individuals make within households are the first line of welfare in society, yet collaboration is penalised because it is thought wrong to share within families. As people have children without any resource base of their own, the ‘family’ comprises the mammalian unit of mother and young, sired by passing males and kept and sheltered by the impersonal agencies of government.

There is an inter-generational aspect here. Coming from a non-intact-family background is associated with higher downward social mobility, with suggestions that poverty is having a greater impact on later or adult poverty for teenagers of the

1980s compared with teenagers of the 1970s, but that this is mediated by the growing prevalence of lone parenthood over successive generations.

Despite all the claims, no investigation or monitoring of the effects on child outcomes of all the extra expenditure over the last ten years appears to have been undertaken. As money,

per se

, is barren, income support programmes are likely to have little positive impact on child development. Instead, the state subsidises the depletion of social capital by dissolving the links that hold people together.

As soon as real rises in entitlements diminish, as in 2005/06, the poverty total rises. If we do not support circumstances where the exit rate from poverty is more likely and reinforce these exits, we increase one and deter the other, entrenching long-term welfare dependency. While couple families numerically make up more of the poor at any one time, they are more able to capitalise on help, move further up the distribution and more likely to stay in higher-income groups. This is prevented or impeded to the degree that handicaps are imposed on mutual support at the starting line. It is also now impeded by the long income range over which means-tested benefits are withdrawn at a high level – whilst tax is also paid.

New Labour’s ambitious policy to end child poverty is failing on its own contradictions. The faith in ‘targeting’ has been embraced as much by Conservatives as New Labour and the former have Gordon Brown to thank for testing it to destruction first. What we learn from history is that we do not learn from history, with the experience of the 1930s, let alone the Speenhamland system of 1780 –1830 – which subsidised the wages of the poor – forgotten. As this sucked people into welfare dependency, the pauper and the ratepayer began to overlap, employers paid below subsistence wages, there was no incentive to better oneself and massive encouragement to have children early and often.

Our history, as much as experience worldwide, also gives hints about how to pull people out of poverty. A report from the conservative Social Justice Policy Group recently condemned Churchill’s ‘vision of welfare as a safety net’ for holding people down and undermining social cohesion (Clark and Franklin, 2006). The authors ought to ask themselves why poverty and inequality declined in the post-war decades, and the underclass (or ‘roughs’) retreated? Whether Churchill’s or not, a low level of public assistance kept the floor of welfare below the ceiling of wages. This was combined with a low tax regime, not least due to universal allowances for dependants, as in other countries today that have lower child poverty. As allowances were not lost as income rose, there was a base upon which to build. For similar reasons, greater equality and lower poverty has been the norm in Southeast Asian countries, without huge public transfers, high taxation or vertical

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38 c h i l d r e n , f a m i l i e s a n d t h e f a i l u r e o f u k a n t i - p o v e r t y p o l i c y

redistribution. Laws requiring people to support their family members limit the scope of public assistance programmes, and help ensure that private income transfers maintain living standards.

References and bibliography

Beveridge, W. (1948)

Voluntary Action: A Report on the Methods of Social Advance

, London: Allen & Unwin.Bradshaw, J. (2006)

How has the Child Poverty Rate and Composition Changed?

, York: Joseph Rowntree Foundation.

Bradshaw, J.

et al

. (2004)

The Drivers of Social Exclusion

, London: Office of the Deputy Prime Minister.

Brewer, M. and J. Browne (2006) ‘The Effect of the Working Families’ Tax Credit on Labour Market Participation’,

Briefing Note 69

, London: Institute of Fiscal Studies.Brewer, M. and J. Shaw (2006) ‘How Many Lone Parents are

Receiving Tax Credits?’,

Briefing Note 70

, London: Institute of Fiscal Studies.

Brewer, M.

et al

. (2006)

Poverty and Inequality in Britain 2006

, London: Institute of Fiscal Studies.

Brewer, M.

et al

. (2007)

Poverty and Inequality in the UK 2007

, London: Institute of Fiscal Studies.

Clark, G. and P. Franklin (2006)

First Principles: Poverty is Relative and Social Exclusion Matters

, London: Social Justice Policy Group.

Coote, A., H. Harman and P. Hewitt (1990)

The Family Way

, London: Institute of Public Policy Research.

Department for Work and Pensions (2007)

Households Below Average Income 1994/95–2005/06

, Leeds: Corporate Document Services.

Dixon, M. and J. Margo (2006)

Population and Politics

, London: Institute for Public Policy Research.

Gregg, P., S. Harkness and S. Machin (1999)

Child Poverty and its Consequences

, York: Joseph Rowntree Foundation.Hirsch, D. (2006)

What Will it Take to End Child Poverty?

, York: Joseph Rowntree Foundation.

Patricia Morgan

is a Visiting Fellow at the University of Buckingham ([email protected]).

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