Is a ‘new’ approach needed? Or just a robust one?

There has been much discussion recently suggesting that rising poverty levels and projected future increases were evidence that previous ‘narrow’ approaches have ‘failed’ and a new plan was required. The Coalition Government’s child poverty strategy was introduced as a ‘new’ approach which focused on the ’causes of disadvantage’ and supporting families to ‘work themselves out of poverty’ rather than the previous approach of ‘cash handouts’ and ‘simply throwing money at the perceived symptoms’.

However, the previous government’s approach to child poverty also focused on getting people into work and also introduced policies designed to improve children’s ‘life chances’, to use the current political language, including free nursery places, Sure Starts, a class size cap and the introduction of Educational Maintenance Allowance. So what is ‘new’ about the Coalition’s approach and is it really justified?

A recent paper by Richard Dickens for the National Institute Economic Review summarises the evidence of the last government’s approach to child poverty and the relative successes of different strands of that approach. Dickens notes that

‘work itself had a modest role in reducing poverty and those entering work relied on substantial increases in government benefits to lift them over the poverty line … these findings cast severe doubt on whether the current coalition government strategy of promoting work will be any more successful than the policies of the previous government.’

and

‘what this is telling us is that the sort of jobs that those in poor households have been getting over the past decade or so do not pay enough on their own to raise households over the poverty line. This strategy is likely to fail without improving the wages obtained or pay progression in these jobs.’

Most people working on poverty in the UK are fully aware that poor work and low pay are major barriers to eradicating poverty, but the National Minimum Wage only appears as a footnote in the new strategy and the concepts of a Living Wage or Pay Ratios don’t feature at all in the document. Instead, there is a focus on ‘in-work’ conditionality via the Universal Credit to support people ‘who do the right thing, who take a full-time job’ lifting people out of poverty. Recent employment statistics shows that there has been a large increase in part-time employment  which suggests that the ‘new’ approach may be difficult to implement.

There is therefore nothing ‘new’ about putting work at the heart of a strategy to reduce poverty. But, equally, there is nothing robust about ignoring particular characteristics of the labour market whilst doing so. What does appear to be ‘new’ is the approach to in-work benefits through the tax credit syustem. Dickens notes that:

‘in contrast to the previous government, the coalition government is also implementing a large number of other changes to the benefit system that in general will reduce the benefits of those on low incomes. Child Benefit and Tax Credits face real-term cuts. There are planned cuts to Housing Benefit with the inroduction of a cap. Also benefits are to be up-rated in line with the Consumer Price Index rather than the generally faster growing Retail Price Index.’

There is sufficient evidence from the previous government’s approach to understand what worked and what didn’t work in reducing child poverty, but the current government appear unwilling to learn any of the lessons. They could easily be accused of keeping the bits that didn’t work that well and discarding the bits that did.

Child poverty levels fell when ‘there was a big drive to reduce child poverty’, according to Dickens. With child poverty playing second fiddle to social mobility and government ministers openly questioning the income related targets in the Child Poverty Act, it seems unlikely that the situation will improve in the foreseeable future.

A genuine, robust approach to ‘making work pay’ has to at least explore measures to improve wage levels, ways to introduce pay ratios, improve access to affordable quality childcare and improve progression routes when in employment. Such an approach also needs to recognise that not everyone is available to the labour market and that work is not the best or most appropriate option for everyone. Unfortunately the Coalition Government’s child poverty strategy appears to do none of these things.

Stephen Crossley

Institute for Local Governance

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3 responses to “Is a ‘new’ approach needed? Or just a robust one?

  • Adrian Sinfield

    Many thanks for telling me about the Dickens article and the very useful points it makes. That led me on to Mark Stewart’s article on earnings inequality in Britain in the same issue of the National Institute Economic Review. He looks particularly at changers by region and by industrial sector. His last sentence is: ‘Since the mid-1990s the growth in overall inequality has been driven primarily by that in London (with a smaller difference for the South East and East Anglia) and by that in the financial sector (with a smaller difference for the business activities sector)’, Mark Stewart, ‘Earnings Inequality in Britain’, NIER, Cot 2011, p R31.

    This is, I would argue, very important if one is trying to understand why some get left behind while others get more.

    This growth in inequality is even more serious because that top group usually receive a whole range of employee benefits including company cars, often more than one. These benefits and services often include financial advice on ‘tax efficiency’. Of course, that type of efficiency does not help the rest of us – and is part of the reason why official statistics show that the richest tenth pay a smaller share of their large income in one form of tax or another while the poorest tenth pay a larger share of their small income in total taxes than the average..

    As Richard Tawney said before the First World War, ‘What thoughtful rich people call the problem of poverty, thoughtful poor people call, with equal justice, the problem of riches’.

  • Ben Baumberg

    Really helpful article, supplemented by a really helpful comment from Adrian – thanks to both

  • What is made can be unmade « North East Child Poverty

    […] Joseph Rowntree Foundation have estimated that the cost of child poverty is almost as high as what it would take to end it. They are also currently working on a comprehensive anti-poverty strategy for the U.K. CPAG’s manifesto identifies ’10 steps to reduce inequality and put children first’. The Smith Institute have produced a comprehensive document looking at what we have learnt from a century of anti-poverty policies. Richard Dickens has looked at the record of the Labour government in an article called ‘Child Poverty in Britain: past lessons and future prospects’. The Fabian Commission on Life Chances and Child Poverty found that, when participants in discussions were presented with the reality of life in poverty, there was a ‘willingness to countenance higher taxes and redistribution to combat poverty and disadvantage’. Do we really need a shiny ‘new’ approach or, as I have suggested here before, just a robust one? […]

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