We can break the cycle of poverty
Britain now has the first comprehensive plan for supporting children since the Child Poverty Act of 2010. The Child Poverty Review, published today, recommends measures ranging from the expansion of family hubs, breakfast clubs, free school meals and childcare to reforming temporary accommodation and specialised family interventions to support troubled families. It represents a bold attempt to honour the government’s promise of the biggest-ever reduction in child poverty in any one five-year period.
The review has identified poverty-induced educational underperformance as “the key risk factor” for our country. It is one of the main reasons why one million under-25s – who grew up as austerity’s children – are currently out of work, and why millions more adults never escape a lifetime of low earnings. In arguing that we have to invest now to save money in the future, the report ushers in the most sustained attempt yet to break a cycle of poverty that means poor children are five times more likely to be poor adults.
The costs of bringing up a child
A new study released by Moneyfarm estimates that bringing up a child costs £13,830 a year, adding up to £250,000 for the first 18 years. The website tracked 150 essential child items to reach that figure. The Child Poverty Action Group (CPAG) calculated the costs at between £200,000 and £250,000, averaging out at between £267 and £309 per week.
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CPAG’s annually updated figures show that costs have risen dramatically – by £100,000, or £106 a week – during the very decade and a half that child benefit was regularly frozen and many allowances reduced or abolished.
So it is perverse that, just as the costs of bringing up a child are rocketing, Kemi Badenoch has pledged that a future Conservative government would deny our country’s poorest children the £66 a week that Universal Credit pays for the third and subsequent children by restoring the two-child cap. This benefit is merely a fraction of these weekly costs.
What’s even more worrying is that the Tories’ proposed reintroduction of the two-child rule would hit the under-fives most. The costs of bringing up a toddler from birth to three are estimated by Moneyfarm to be £53,201. This cost – and a two-child rule since 2017 – helps to explain why the country has so many more in poverty from birth and in their earliest years. As many as 36 per cent of all under-fives are in poverty, compared with the average of 31 per cent of all children and 26 per cent of 11- to 15-year-olds.
The role of the welfare state
Since 1910, when tax reliefs were first given for bringing up a child, and especially since 1945 when family allowance was introduced, there has been cross-party agreement that while parents have the first and foremost responsibility for the upbringings of their children, the country should offer some help.
But today’s Conservatives overlook this agreement when it comes to the fortunes of any child other than the first or second in the family.
The Conservative lie
Conservatives now claim that middle-class taxpayers cannot afford to have children because they are paying their taxes to subsidise welfare claimants having third and fourth children as they “game” the benefits system.
They base their claims on a report by the Centre for Social Justice (CSJ), which argues that an out-of-work couple with three children can obtain the same income from welfare benefits as a working parent with no such help who earned £71,000 a year. They use this to generalise that under Labour you are better off out of work than in work. But this is wholly wrong.
The case study they have chosen is one where disability benefits are paid to the out-of-work family, but they have not taken account of those benefits for an in-work family. Even so, a working family with the same characteristics would always take home more income by working than by not working. And as Professor Donald Hirsch has pointed out, the incentive to work is significantly increased by abolishing the two child limit for families without disabilities, because they can escape the benefit cap by earning at least £10,150 a year. If they are not in work and not receiving any disability benefits, they would be subject to the benefit cap, creating a maximum income of just over £22,000 – or £25000 in London – and no matter the family size, that payment has to cover everything from food, clothes and toiletries to gas, electricity and housing costs.
It may be a source of criticism from the anti-poverty charities that even after the Child Poverty Review the benefit cap remains, as do the five-week wait for benefits, the rules about deductions and the much-criticised levels of housing benefit. But Conservatives cannot continue to make bogus claims which wrongly imply that the benefit cap has been removed.
Why life is tough for many families
Tory opponents of the Child Poverty Review also fail to understand how many parents make decisions based on one level of income coming into the home and then find, because of illness, redundancy or family break-up, their financial position is totally different.
That is why even the most exemplary planning could not have anticipated the position under which many of the country’s third and fourth children grow up – like, as official statistics show, the 17,730 households who happen to have twins, triplets, or other multiple births; the 1,740 children who are in a larger family because they are adopted; and 3,280 now being looked after by a relative or family friend. And Conservatives would leave in place the “rape clause” that has required 3,600 mothers, who have been subject to an involuntary conception, to apply for an exemption from the two-child rule.
The fallout from the Budget
Rachel Reeves has been unfairly criticised for her Budget preparations, but no one has worked harder and done more, alongside Bridget Phillipson and Lucy Powell, not just to end the two-child rule but to mount the biggest assault on child poverty for years. The Conservatives are responsible for another lie: they speak as if the share of our public spending going to families with children has been rising, when in fact for the past decade and a half it has been falling. According to the House of Commons, “non-health-related, non-pensioner welfare spending fell as a share of GDP from 4 per cent in 2009-10 to 2.6 per cent in 2023-24”. If we exclude housing benefits, the fall is from 1.5 per cent to 1 per cent of GDP. “Families with children have been especially affected by benefits changes,” writes the IFS, “both because of their greater reliance on benefits, and because some of the reforms are specifically targeted at this group (such as the ‘two-child limit’). In fact out-of-work families with children have lost £5,500 a year and in-work families with below the 40th percentile of household earnings have lost £3,100 on average.”
And far from the Budget forcing spending on families up to unacceptable levels between now and 2030, the OBR says non-pensioner and non-health welfare spending will go down by over 0.1 per cent of GDP in 2030-31. While child poverty will be coming down, direct expenditure on families with children is now taking up a smaller, not a higher share of our national income. Welfare has not been preferred over work.
[Further reading: Rachel Reeves’ rage-bait Budget]
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