The recent political manoeuvring around abolishing the cap for some families on benefits has brought the issue of child poverty back to the fore.
The Labour Party is setting up a Child Poverty Taskforce to look into the matter and there is pressure from within and without to do something in the October Budget. Meanwhile, John Swinney is well ahead of the pack, claiming, on his elevation to party leader, that the eradication of child poverty is his “single most important objective”.
So. what does the evidence and research suggest is achievable?
First and foremost, given that the dictionary definition of eradicate is ‘doing away with completely’, then ending child poverty is a non-starter in anything approaching the current political environment. The evidence for why this is so comes from two main sources.
It costs several billions
First, what are the financial implications? Here we only have estimates for the cost of reaching the Scottish Government’s current target of a 10% rate by 2030. (Note: this 10% applies to ‘the number of children living in households with less than 60% of equivalised – i.e. adjusted for family size and composition – median income’. Using this definition, latest figures show that around one in four children (24%) are ‘living in poverty’ in Scotland.)
In 2018 the Institute for Public Policy Research in Scotland (IPPRS) estimated this cost to be an extra £3.8 billion, while in 2022 the Fraser of Allander (FAI) estimated a range of between £4.6 to £5.3 billion, with each estimate being dependent on the policy measures used.
It should be emphasised that these are very difficult calculations to make, not least due to the complicated behavioural effects that need to be taken into account, so the calculations should be seen as ball park figures but we’re talking about £4 billion plus.
This equates to around 1.5% of the total Scottish Budget or a quarter of the Health & Social Care budget – at a time when the Scottish Budget is already stretched and many public services are struggling to even maintain existing levels of output and delivery.
IPPRS also looked at what it would cost to go further and estimated that it would take around £10 billion to reach 5%, with each extra percentage drop costing disproportionately more. Neither body looked at the potential cost of eliminating child poverty but the clear implication is that it would be considerably higher.
What others do
Second, what does the international evidence tell us is the best case scenario? The latest UNICEF figures for income-based child poverty rates – again based on 60% of equivalised median incomes – (see Innocenti Report Card 18 ) – show that, over the three year period 2019 to 2021, the best performing, wealthy, nations had child poverty rates of 10% (Finland and Denmark) or above (Norway and Iceland are next, both at 12%).
The UK was much higher at 21%, although not that much higher than countries like France (20%) and Sweden and Switzerland (both 18%). (Note: figures over this period of time could have been affected by the pandemic but the figures are not dissimilar to those seen in previous Unicef report cards.)
The UNICEF analysis also showed that some countries have made great progress in recent years (2012-14 to 2019-21), with the likes of Slovenia, Poland and Latvia cutting their child poverty rates by around a third and Japan, Ireland and Canada by around a fifth. However, none has managed to get below 10%. Impressive, but not eradication.
On the other hand, some have regressed, with the child poverty rate rising by over a tenth in Norway, Iceland and Switzerland and, standing apart from the rest, by over a fifth in the UK.
So, while there is considerable room for progress in Scotland and the UK, what hope for ‘eradication’ if even very wealthy, high tax, countries struggle to get the child poverty rate below 10%?
Let’s redefine it
The biggest aid to eradicating child poverty would be to redefine it. UNICEF calculates that if a threshold of 50% of the median income, instead of 60%, were applied, then Sweden and Norway achieved child poverty rates below 3% in the 1990s. This is effectively eradication, given the inevitable churn of some households falling into poverty before being pulled back out again. Of course, such a move might be seen as cheating but it gives some idea of the importance that definition has in this field.
You could go further, to 40% of the median, sometimes described as ‘living in extreme poverty’. Again, this would be easier to achieve and it would also have the benefit of reaching those most in need.
Such a change of emphasis – towards addressing those living in extreme poverty or ‘destitution’ – is something that has been championed by the Joseph Rowntree Foundation (JRF). In 2016 it came up with a three-pronged target for what would effectively solve poverty in the UK: first, an end to destitution; second, less than one in ten people living in poverty at any one time; and third, nobody living in poverty for more than two years.
In other words, the very deepest forms of poverty need to be weeded out and poverty itself should be small scale and non-permanent. While the JRF has a wider purview – its definition of destitution revolves more around the absence of essential items – a similar set of targets could also be applied to solving ‘income based’ child poverty, where ‘destitution’ is defined as 40% of median income and poverty as 60%.
Removing the cap on the number of children receiving benefits in a family would be a good start to reducing child poverty, but it would only take us back to a position we have already seen in recent years. To make real progress, either towards a 10% target, or eradication, will require much more funding and greater targeting.
The latest UNICEF report starts to highlight, through other countries’ examples, ways of helping achieve this.
It is worth noting that, even in financial terms, recent years have highlighted clear flaws with using income-based measures. For example, this week’s Institute of Fiscal Studies (IFS) report on ‘Living Standards, poverty and inequality in the UK: 2024’ shows that, at the UK level, although poverty rates changed little between 2019-20 and 2022-23, rates of material deprivation rose.
This shows the contrasting impacts on such measures from stagnant wages for median earners alongside high inflation, especially for basics like food and energy. (Note: for those who favour using a ‘basic wage’ approach, the IPPRS analysis calculates that introducing a Universal Basic Income (UBI) is likely to increase child poverty, rather than reduce it, due to income distribution consequences.)
The long road ahead
Beyond pecuniary measures, even greater challenges await, as deep poverty has a lot to do with inadequate levels of health, education, parental employment status and housing quality.
Taking into account such wider issues complicates policy matters considerably, in that, given a fixed Budget, increases in child benefits could come at the expense of frozen, or falling, real terms funding for schools, mental health, affordable housing and other child-centric budgets, as indeed we are already seeing in Scotland.
All of this highlights the need for a well-constructed plan, not just pious words and hollow pledges. We’ll have to wait and see whether the UK Government’s Taskforce comes up with something concrete and viable. However, a radical solution, even if proposed, seems unlikely to be seriously followed up on. It’s simply too expensive and not a high enough priority right now.
Meanwhile, in Scotland, yet again the government shows no real appetite to do what is necessary in order to meet one of its ‘gold standard’ targets.
Leave a Reply