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CHILD POVERTY IN SOCIAL INCLUSION PARTNERSHIPS
CHAPTER TWO CHILD POVERTY IN CONTEXT
THE GROWTH OF CHILD POVERTY
2.1 It is now well documented that income inequality in Britain has risen since the late 1970s and that the increase has been particularly marked among families with children (Goodman et al, 1997; Hills, 1996). Between 1968 and 1995/96, child poverty in Britain trebled: over this period, the proportion of children living in poor households rose from one in 10 to one in 3 (Gregg, et al, 1999). In Scotland, the percentage of children living in households below 60 per cent of median income peaked at 34 per cent in 1996/97, since when it has reduced somewhat (Scottish Executive, 2001).
2.2 This dramatic increase in child poverty is not one that is shared by all advanced welfare states. Comparative research indicates that, while child poverty has increased in many countries, in others it has fallen or remained stable. Over the past decade, for example, child poverty fell in Canada, Denmark, Finland, Norway, and Spain. It remained more or less constant in France, and increased in Britain, Germany, Italy and the USA (HM Treasury, 2000). Among the countries comprising the European Union, only Italy had a faster rate of increase in child poverty than Britain (Bradbury and Jantti, 1999).
2.3 Moreover, research indicates that child poverty is more prevalent in Britain than elsewhere in the European Union. Evidence from the European Community Household Panel for 1993 indicates that the percentage of children in poverty ranged from a low of 5 per cent in Denmark to a high of 32 per cent in Britain (Bradshaw, 1999).
REASONS FOR THE GROWTH OF CHILD POVERTY
2.4 The causes of this growth in child poverty in Britain are complex and there is scope here to mention only some of the more important factors.
2.5 Arguably the most important of these is the growth in worklessness - households in which no adults are in paid employment - over the past twenty years or so. Evidence from the Households Below Average Income data series produced by the Department for Work and Pensions indicates that, in Scotland, the proportion of dependent children without a parent in work almost doubled between 1979 and 1996/7, rising from 14 per cent to 26 per cent over this period. Although the proportion has fallen since the mid-1990s, Labour Force Survey estimates suggest that approximately one in 7 children in Scotland were living in a workless household in 2001 (cited in Scottish Executive, 2001).
2.6 The proportion of children living in workless households in Scotland (and the equivalent figure for Britain as a whole) is higher than in any other country in the European Union, according to estimates produced by the OECD (cited in HM Treasury, 2000).
2.7 The growth in the number of children living in workless households reflects a number of developments. These include the high levels of unemployment experienced during the 1980s and 1990s, the rise in lone parenthood over the same period, and the polarisation in employment among households with 2 resident parents between those with both partners in work and those with none (Gregg and Wadsworth, 1999).
2.8 The tax and benefit system also appears to have been an important factor behind the growth in child poverty in Britain. The tax burden faced by families with children has risen in recent decades. According to Treasury figures, the tax burden on a family with 2 children on mean male earnings increased by almost 20 per cent between 1969 and 1997 (HM Treasury, 2001). In addition, since the early 1980s, social security benefits have been increased in line with prices rather than earnings. As a result, the income of benefit recipients has fallen as a proportion of average earnings.
2.9 However, it is not just among children in workless households that poverty has increased. It has also increased among children living in households where someone is in employment. Indeed, between 1979 and 1995/96, the number of poor children in working households in Britain doubled (Gregg et al, 1999). Two of the most important causes of this growth in child poverty among working households are increased wage inequality and growth in part-time work. Although an increase in wage inequality has happened across the developed economies, the fastest growth has been in Britain (HM Treasury, 1999a, 1999b).
2.10 Finally, recent trends in demography have also played a part in the growth of child poverty. As Bradshaw (2001a: 15) has explained:
Our family demography does not help; a comparatively high fertility rate, low age of first marriage, high divorce rate, low mean age of child-bearing, high birth-rate outside marriage, high proportion of lone parents, high proportion of cohabiting couples, high proportion of families with 3 or more children (Ditch et al, 1998). All of these factors are likely to be associated with high rates of poverty.
CONSEQUENCES OF CHILD POVERTY
2.11 One obvious consequence of child poverty is that families have to get by on a relatively low income. Given the high costs of bringing up children (Middleton et al, 1997), that may mean having to cut back or do without budgetary items that many people would regard as 'necessities', quite apart from minor 'luxuries' that many take for granted (Gordon et al, 2000). Many poor families with children struggle to make ends meet (Kempson et al, 1994; Kempson, 1996).
2.12 However, the impact of child poverty can be far wider than simply the immediate financial effects. There is a growing body of evidence that suggests that the outcomes of poverty for children may be far-reaching and continue into adulthood (see Bradshaw, 2001b). As a recent report on child poverty by HM Treasury (2001: 2) noted:
Income can have a direct effect on children's outcomes through the effect on the child's ability to participate in everyday activities of the peer group, aspirations, educational and recreational activities, and nutrition and also the stress levels of the parent and the parent's ability to cope. Low income is however also correlated with a range of factors that are likely to lead to poorer outcomes in the future such as large family size, housing overcrowding, deprived neighbourhoods, low educational qualifications of the parent and poor mental health.
2.13 For example, poverty appears to be associated with poor health, though demonstrating that a causal link exists between them is methodologically very difficult (Johnson, 2001). It is known, however, that children living in poverty experience higher rates of chronic illness and have lower life expectancy than their more affluent peers (HM Treasury, 2001).
2.14 Research also suggests that family income is significantly correlated with educational attainment. Although other factors are also important and the precise transmission mechanisms are not fully understood, poverty in childhood appears to contribute to low educational attainment. Low educational attainment can, in turn, have an impact upon future earning prospects in adulthood (Gregg et al, 1999).
2.15 Childhood poverty can also have a negative affect on opportunities and outcomes in later life (HM Treasury, 1999a). For example, Hobson and Kiernan (2001) found that experience of poverty in childhood was associated with a variety of adverse outcomes in adulthood as well as early motherhood. Although childhood poverty was not the most important factor associated with early motherhood, it reinforced the effects. Among their sample of women aged 33, those who were most clearly poor in childhood had significantly increased odds of having: no educational qualifications, low household income, and low levels of satisfaction with life.
ENDING CHILD POVERTY
2.16 The Government and Scottish Executive have both developed strategies to tackle child poverty and prevent future poverty. These actions have included measures to help ensure a decent family income, but also other policies aimed at the wider or non-income aspects of child poverty.
2.17 The Government has argued that work is the surest route out of poverty (DSS, 1998). Consequently, an important part of the strategy for improving family incomes is through helping people into work. This is being achieved through the numerous New Deals, including those for young people, lone parents, and the partners of unemployed people.
2.18 Action has also been taken to help 'make work pay'. This aim is being achieved through a range of measures, including the national minimum wage. Initially set at 3.60 an hour for people aged over 21, it now stands at 4.10. Measures to help make work pay that have been specifically targeted at families with children have included:
- The introduction of the Working Families Tax Credit (WFTC) and the Disabled Persons Tax Credit (DPTC) in October 1999. These 2 tax credits include a childcare component covering 70 per cent of approved childcare costs up to a maximum amount.
- The introduction of the Child Tax Credit in April 2001 and the Baby Tax Credit in April 2002.
- Substantial real increases in the level of Child Benefit since 1999.
2.19 A major reform of tax credits and income-related support for children is planned for April 2003. Income-related support for children (whether through social security benefits or tax credits) is to be integrated into a single Child Tax Credit payable by the Inland Revenue to the parent with primary responsibility for care of the children. This will provide a seamless and secure stream of financial support for children, which should help to smooth the path from benefits to work. In addition, the adult component of WFTC and DPTC, together with the childcare component (where applicable), will be replaced by a new Working Tax Credit, which will be paid to people in paid work whether they have children or not (HM Treasury, 2001).
2.20 Since 1999, the Government has also implemented substantial increases in the child scale rates for income-related social security benefits (including an increase of 70% in real terms for those under age 11). These have helped to improve the incomes of children in workless households. As noted above, these child allowances in Income Support and income-based Jobseekers Allowance will be incorporated into the planned Child Tax Credit in April 2003.
2.21 As well as these financial measures, a wide range of other types of initiative have been introduced that are intended to help tackle child poverty and give children the best start in life (see HM Treasury, 2001). In Scotland, these initiatives include the Childcare Strategy, Sure Start Scotland, New Community Schools and the Changing Children Services Fund.
2.22 The Childcare Strategy aims to provide good quality, affordable and accessible childcare in every neighbourhood. As well as additional childcare places, the strategy includes free nursery education for every four year-old whose parents want it. Sure Start Scotland aims to promote the physical, intellectual, and social development of babies and pre-school children, especially those who are disadvantaged in life. In the New Community Schools, teachers, health professionals, social workers and others aim to work together as members of a single team to provide the services that children need and address the barriers to learning that may exist. The Changing Children Services Fund has been introduced to ensure that public services are better able to work together in order to support the most vulnerable and excluded children. A substantial proportion of the fund is being used to help tackle drug abuse among children.
CONCLUSION
2.23 Britain has one of the worst records on child poverty among the advanced economies of the world. However, the Scottish Executive and the UK Government have introduced a range of measures aimed at tackling the problem and its outcomes in later life. The Government's claim that the tax and benefit changes introduced since 1997 will have reduced the number of children in income poverty in Britain by 1.2 million, assuming other things have remained the same, has been confirmed by independent estimates (Sutherland and Piachuad, 2001). Nevertheless, although the impact of some of these measures has been or will be fairly immediate, in other cases it will be many years before the effects become fully apparent. A problem that has developed over several decades will inevitably take a long time to be solved.
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