Written evidence from Child Poverty Action Group (CPM0028)

1. How should child poverty be measured and defined?

As leading sociologist (and co-founder of CPAG) Peter Townsend explains[1], poverty is about lacking the financial resources to meet a basic standard of living, relative to what is commonplace in society. If we accept that poverty is defined as a lack of financial resources, a child poverty measure must first and foremost measure income.

Deciding how best to measure income/poverty depends on what you want poverty measures to do.

Some desirable features include being able to:

1. Reflect expectations of what constitutes a basic standard of living at that point in time;
2. Be comparable over time;
3. Examine the extent and depth of poverty;
4. Examine regional, national and international differences;
5. Hold the government to account.

Relative Poverty

At CPAG, we use a relative child poverty measure. We believe that this should be the primary child poverty measure used by government, and other key institutions. A relative poverty measure delivers on most of the features outlined above:

• It reflects what constitutes a basic standard of living at a given point in time, by tracking how well people are doing financially, compared to other people in their society now.
• A relative income measure is quick to update (and project going forward), and changes over time can be easily interpreted.
• The UK government, the European Union, and many other countries use 60 per cent of median income as their poverty threshold, which means it is to some extent internationally comparable.
• The relative poverty measure has broad based support from a wide range of audiences including academic researchers, local authorities, children’s organisations and frontline services.[2]
• It better reflects the resources available to the government - if median income is growing it is likely that tax revenues are rising.

One drawback to using median income measures is that in short-term recessions poverty generally falls, as median income falls, while expectations of a basic standard of living may not, due to expectations of future economic growth. However, over the medium term this should cancel out, as in the recovery period strong growth in median household income means it effectively catches back up with expectations.

In addition to relative poverty… what else is needed?

One measure cannot fully capture the extent and depth of poverty. Therefore, in addition to the relative poverty measure, other poverty measures can be useful for increasing our understanding of child poverty – an important first step if we are to design effective policy solutions to tackle it. However, it is worth noting that whilst having a number of measures can be helpful for understanding child poverty, there is a danger in having too many measures. Firstly, having a broad consensus around one measure is useful for all the reasons outlined above. Secondly, having lots of different measures makes it easier to use the measure that is most favourable to a particular agenda. That is why it is important to have one unified and agreed upon central measure of poverty (we believe the relative child poverty measure fulfils this role), with other measures sitting alongside this central measure as needed, to avoid ‘cherry picking’ child poverty measures that best suit your purpose.

Absolute Poverty

An absolute poverty measure, alongside other poverty measures, can be useful for understanding poverty, however the current government tend to look at absolute poverty in isolation. This is worrying for two reasons:

1. Nearly all definitions of poverty make reference to having the financial resources to participate in society today – not society years ago; and
2. They are not effective at holding the government to account. The key driver of absolute poverty rates is economic growth, which the government has limited control over.

In effect, absolute poverty measures provide a warning and can show if real living standards are actually falling, but other than that they do not accurately reflect contemporary living standards. Therefore, they should only be used with caution and in conjunction with other relative measures.

Depth of Poverty

As outlined above, no one measure is going to capture both the extent and depth of poverty. In addition to relative poverty, the depth of poverty (i.e. how far households are from a basic standard of living) is also an important measure. This can be measured by looking at lower thresholds (eg, 50 per cent, 40 per cent) or by looking at the poverty gap, which measures how far below the poverty line the average household in poverty is. This is important when deciding on government policies to tackle child poverty. For example, removing the benefit cap would have a small effect on lifting families out of poverty completely, but would have a large effect on the depth of poverty that families affected by the cap are living in. This is because most capped households are living in deep poverty, so removing the cap would still mean most households are in poverty but they would be closer to reaching a basic standard of living, and a level where they could move out of poverty.

Housing Costs

Another feature of poverty measurement is whether to look at the rate before (BHC) or after housing costs (AHC). The key benefits of AHC measures are that they more accurately reflect how much families have to live on, when certain non-negotiable expenses have been met. They also capture large regional variations in housing costs, which is important to consider when thinking about government policy to tackle child poverty. For example, in London, high housing costs are a major driver of child poverty.

Other Measures

In recent years, we have seen the development of other poverty measures, including the measurement used by the Social Metrics Commission (SMC).

The SMC measure of poverty it at its heart an income-based measure of poverty:

The Commission decided to focus its measure of poverty on the extent to which the material resources that someone has available to them now are sufficient to meet the needs that they currently have.[3]

In contrast to current income measures, the SMC measures adjust for factors such as financial assets (including savings), debt and additional unavoidable costs such as the costs of disability. Conceptually, accounting for these factors could improve our understanding of how many households are able to reach a basic standard of living. However, the difficulty lies in the implementation of these ideas. Firstly, there is no dataset which accurately measures all these features, they currently have to be imputed from different sources under different assumptions. There is the potential to create new measures, but then poverty rates are not comparable going back in time. Secondly, even with perfect data, assumptions would have to be made about the relative worth of savings/debt at different stages of the life cycle. The SMC measure can add to our understanding of child poverty, but is best used alongside pre-existing measures, rather than as a replacement.

2. The measures of child poverty changed in 2016. What has the impact of those changes been?

The government’s rationale for removing income-based and material deprivation indicators and targets, and instead focusing on household worklessness and educational attainment, was that more attention needs to be paid to the ‘root causes’ of poverty. While it is important to understand factors that may be a cause or consequence of poverty, neither worklessness nor educational attainment are measures of poverty. As outlined above, poverty is about the financial resources available to a household to meet their needs at any given time. Research demonstrates that child poverty measures that focus on income and material deprivation have broad based support from a wide range of audiences including academic researchers, local authorities, children’s organisations and frontline services.[4]

Furthermore, by deciding to move the focus away from income-based measures of poverty, it is CPAG’s view that government policy to tackle child poverty is less effective as a result (see responses below). In addition, the removal of these measures, alongside the removal of targets, make it more difficult to hold government to account for the rising levels of child poverty that we have seen in recent years. There is now less scrutiny of income-based measures by parliament, and one of the only opportunities for organisations like CPAG to hold the government to account for rising levels of child poverty is when Households Below Average Income (HBAI) data is published annually, at which point the government tends to focus their attention on absolute poverty measures, which is problematic for the reasons outlined above. Furthermore, by questioning established income-based measures, the government is able to avoid scrutiny by diverting attention towards a debate around which measure to use, rather than acknowledging that child poverty levels are rising.

3. What were the advantages and disadvantages of having a set of targets for reducing child poverty?

It is generally accepted that targets can be an effective way of ensuring governments take action on issues of concern. They can also be helpful for holding government to account if these targets are not met. The UK government had a set of targets to tackle child poverty, which were enshrined in the Child Poverty Act 2010.[5] The Child Poverty Act, including all targets, was abolished in 2016. There is strong evidence to show that the child poverty strategy enacted under the UK government between 1997-2010 - of which targets were a central part - was extremely effective at lifting children out of poverty. Over one million children were lifted out of poverty during this period, the largest reduction in an OECD country between the mid 90s and 2008.[6] See Q.4 for further analysis of the impact of removing such targets.

There is of course a debate to be had about what the ‘right’ targets are, and there are some audiences that believe that the targets outlined above place too much of a focus on income, which encourages policy solutions to poverty that focus solely on income. And, of course, income is improved with access to decently-paid jobs, childcare services, affordable housing, good education and so on – and all these should be part of any government plan or strategy to tackle child poverty. However, as outlined above, poverty is fundamentally about household income, therefore policy solutions that do not focus at all on income are unlikely to address child poverty effectively –as the last decade of rising child poverty rates has shown.

4. What has been the effect of removing from law the targets in place between 2010 and 2016?

Without targets, very little co-ordinated action to tackle child poverty has taken place, and child poverty has risen. Child poverty has been rising steadily since 2012, helped in large part by huge cuts to social security which have hit low-income families with children the hardest. Advancing such aggressive cuts to the social security budget would have been more difficult if targets for reducing child poverty had continued to be in place and reported on. Prior to COVID, the OBR estimates that the effect of government policies since 2010 was a £36bn reduction in social security spending.[7] It is predicted that by 2024/25, whether or not the £20 uplift in universal credit and working tax credit is kept, the number of children living in poverty (after housing costs) will be the highest since records began (4.4 million with the uplift kept, 4.7 million without).[8]

Strengthening accountability mechanisms associated to targets is also important. Targets were in place in 2010 when the first wave of huge cuts to social security were announced, but they were largely ignored by the government. This suggests that in any future strategy there needs to be a requirement that the OBR or another independent body reports on progress against targets so the government is held to account for meeting these targets.

Having specific, measurable targets to reduce child poverty makes a difference to child poverty levels. This has been evidenced by the removal of targets at a UK level, but also by the fact that other countries looking to take action on child poverty make targets a central part of their plan (New Zealand, Canada and Ireland have all introduced child poverty targets). In 2017, the Scottish parliament passed the Child Poverty (Scotland) Act, with unanimous support across the political spectrum. The Act includes clear targets to reduce child poverty by 2030. Alongside these targets, the Scottish government must produce delivery plans setting out how the targets will be met, and report annually on progress. The first delivery plan (2018-22) set out a programme of action to address income from employment, income from social security, and the cost of living – all key to determining child poverty levels.[9] Policies include Best Start grants for low-income families, a school clothing grant, the new Scottish child payment for low-income families, and an expansion of early learning and childcare. A clear example of ‘what gets measured, gets done.’

5. What is the impact of child poverty? How can we best measure the impact?

There is a large body of evidence highlighting the negative impacts of child poverty. Children in poverty have much lower educational outcomes as well as worse health.[10] When children in poverty get to adulthood, they have worse-paying jobs, poorer health and lower life expectancy.[11] The difference in outcomes between those in and not in poverty is sizable, whatever the chosen metrics. A more open question is what can be done to reduce the gap in child outcomes caused by poverty, i.e. what can be done to improve the educational, health and economic outcomes of those who grow up in poverty?

It is notoriously difficult to identify the impact of policies in childhood on childhood outcomes, let alone later-life outcomes. However, there is a growing body of literature which examines the effect of policy reforms to get good estimates of these impacts.[12] These studies find investing in children (through increased spending on benefits/healthcare/education) leads to large short-term and long-term impacts. Increased spending on benefits leads to better educational outcomes, higher-paying jobs in adulthood and longer, healthier lives.

6. What links can be established for children between financial hardship, educational under-achievement, family breakdown and worklessness?

Educational under-achievement

Poverty at home is the strongest statistical predictor of how well a child will achieve in school.[13] Evidence suggests that these outcomes are both a result of direct deprivation (eg, inadequate housing, difficulties providing healthy food, and less ability to afford books, computers, space to study and extracurricular activities) and the effect that coping with poverty has on parents’ mental health (eg stress and anxiety).[14] There is also evidence to show that increased children’s benefits lead to better academic performance, demonstrating the strong link between financial hardship and educational under-achievement.[15] For example, if household income for children receiving free school meals (FSM) was increased by £7,000, thereby bringing them up to the average income for the rest of the population, half the gap in outcomes at Key Stage 2 between children eligible for free school meals (FSM) and children not eligible would be eradicated.[16] The current government approach to this issue - of using educational under-achievement as an indicator of poverty, but not recognising the causal relationship between family income levels and educational outcomes – is seriously flawed. It ‘sets the cart before the horse’ by focusing on the impact of poverty, rather than the cause.

Worklessness

There is a clear relationship between worklessness and child poverty. In 2018/19, two-thirds of children in workless families were in poverty.[19] The majority of the third who were not in poverty were in households where someone is disabled – these households face additional costs, so they are often not much better off than households in poverty. While the government focusses on the issue of worklessness, centring any child poverty strategy on getting workless households into work is problematic for two key reasons:

1. Very few workless households are ‘voluntarily workless’. In 2018/19, of the 1.1 million children in out-of-work poverty, 500,000 were in households in which someone has a disability, 300,000 were in households with a young child and 200,000 were in households looking for work.[20] This leaves only 100,000 children in ‘long-term voluntarily workless’ households.
2. There are 3.1 million children living in poverty in households where someone works. Poor quality jobs (in terms of hours, pay and career progression), insufficient social security, high housing costs and expensive childcare mean work is not an answer to poverty for millions of households.

It is worth noting that COVID-19 will have increased the number of workless households, although the majority of children in poverty in workless households will still be in households where parents are unable to work because of disabilities (including caring for a disabled child), or because they are caring for young children. Supporting unemployed people back into work is important, but on its own it will not tackle child poverty effectively – for the reasons outlined above. The last decade has been characterised by the unemployment rate falling (as we recovered from the 2008 great recession and more jobs became available), but poverty, and in-work poverty, have been increasing. Even without government attention on the issue, the number of children in workless households will fall, as the economy recovers and the number of job opportunities increases.

Family breakdown

There are 2 million single parent families in the UK, 43 per cent of whom are living in poverty.[21] The vast majority of single parents are women, many of whom may have experienced relationship breakdown as a result of domestic violence. Around 15 per cent of mothers and 19 per cent of children fall into relative poverty upon separation, a higher share than fathers due to differences in work patterns pre-separation.[22]

Single parenthood is a temporary state, lasting on average for around five years.[23] Single parent families are more likely to be reliant on financial support from the social security system, making them more vulnerable to benefit cuts. For example, analysis by CPAG in 2017 showed that cuts in both the legacy and universal credit systems have hit families with children harder than any other group across the population, with lone parent families hit particularly hard. Lone parents with children were found to be £1,940 a year worse off on average as a result of cuts in the legacy benefit system, and £2,380 worse off as a result of universal credit cuts, compared to what universal credit first promised.[24] Social security reforms such as the benefit cap disproportionately affect single parent families, pushing many of these families into deep poverty. The child maintenance system is also not fit for purpose, with many single parents not receiving any financial support from the non-resident parent. The current approach of the government, which focuses on preventing family breakdown and ‘troubled families’, at the same time as neglecting children in single parent families by providing very limited financial support, is a key factor contributing to rising child poverty rates.

7. How effectively does the Department for Work and Pensions work with other Government departments, particularly the Department for Education and the Treasury, to reduce child poverty?

It is CPAG’s experience that without a cross government child poverty strategy, very little co-ordinated work to tackle child poverty is taking place. CPAG engages with the Department of Work and Pensions, the Department for Education and the Treasury, on various issues to do with child poverty, and it is a common experience that ministers and officials will tell us that the issue we are raising is the responsibility of another department. Whilst CPAG recognises that many of the policy asks we campaign on require resources and therefore will always involve the Treasury to a degree, telling civil society organisations that they need to direct their advocacy elsewhere is not an adequate response. Instead, a conversation should be happening at the heart of government about how best to tackle child poverty, and the role that each government department can play in delivering on a plan to prevent and reduce child poverty. CPAG believes the best way to achieve this is through a cross-government child poverty strategy, with associated targets.

8. How effectively does the Department for Work and Pensions work with local authorities and with support organisations to reduce the numbers of children living in poverty and to mitigate the impact of poverty on children?

CPAG is concerned that an increasing amount of pressure is being placed on local authorities and support organisations to mitigate the impact of poverty on children, when child poverty is being driven by central government policy that local authorities have no control over. An example of this would be the impact of the benefit cap, which pushes many families with children into deep poverty. A standard response from the DWP when asked about the impact of the benefit cap on low income families is to point to discretionary housing payments as the solution, rather than recognising the impact of the policy on a national scale.[25] Furthermore, evidence submitted to CPAG’s Early Warning System[26] suggests that the administration of DHPs by local authorities at a local level is sometimes problematic.

During the coronavirus pandemic, we have also seen the responsibility for mitigating the impact of poverty falling to local authorities. In response to pressure from civil society organisations and others, the government has increased funding for local welfare assistance and other forms of emergency support. Whilst this increased funding is welcome, it has been provided on a short term basis – the recent Covid Winter Grant was announced in November 2020 and has to be spent by the end of March 2021 – limiting the ability of local authorities to design and deliver sustainable local welfare assistance schemes in their local area. Furthermore, the government must be held to account for presenting this increase in funding as a panacea for child poverty.[27] The money provided to local authorities to help support residents during the pandemic, whilst important, is not a quick fix to the long term drivers of child poverty. Many of these drivers stem directly from DWP policy decisions - for example the five week wait in UC, the two child limit, and the benefit cap – which push families into poverty that then has to be mitigated by local authorities and other local support services such as foodbanks, which have seen rising demand over the last decade.

9. What would be the merits of having a cross-government child poverty strategy?

How well has this worked in the past?

The last Labour government enacted a child poverty strategy that focused on: work, through policies including the New Deal for Lone Parents and the minimum wage; financial support in the form of tax credits, increases to child benefit and help with childcare costs; and investment in services such as Sure Start. At the same time, ambitious efforts were made to bring down health inequalities, and to promote inclusive education and children’s services under the ‘Every Child Matters’ agenda. The drive to eradicate child poverty spanned all departments, led by the Treasury, and child poverty fell.

Cross-party agreement was reached on the need to tackle child poverty by the time of the 2010 election, resulting in the Child Poverty Act 2010. As outlined above, the Act set out child poverty reduction targets and created a duty for the government to introduce, and report against, a child poverty strategy, which was to cover:

•         skills and employment of parents;

•         financial support for children and parents;

• information, advice and assistance to parents and the promotion of parenting skills;

•         physical and mental health, education, childcare and social services; and

• housing, the built or natural environment and the promotion of social inclusion.

The Coalition government’s subsequent child poverty strategies did not sufficiently address families’ material resources and the high costs they faced, and child poverty started to rise. The first strategy, A New Approach to Child Poverty: tackling the causes of disadvantage and transforming families’ lives, focussed on ‘combating worklessness and educational failure and preventing family and relationship breakdown’, rather than family incomes. Services were also heavily cut, with the loss of hundreds of Sure Start centres, for example. This period saw the announcement of enormous cuts to social security, including the four-year benefit freeze, lower benefit cap and the two-child limit. In 2017, the Welfare Reform and Work Act 2016 renamed the Child Poverty Act the Life Chances Act, and removed the requirement for a child poverty strategy. A long-promised ‘life chances strategy’ never materialised, and instead the government published Improving Lives: helping workless families. Since then, there has been no evidence of a policy focus on tackling child poverty, which has continued to rise.

It is clear that with leadership, ambition and effective policy-making we can reduce child poverty. A child poverty strategy needs to take a wide, co-ordinated and long-term approach, investing to reduce poverty now, but also to prevent poverty. By implementing a child poverty strategy that addresses families’ material resources, not only can children get a healthy diet, toys and books, and school trips, but also the stress and anxiety experienced by parents and children when there are money worries disappear – as does the sense of exclusion and shame which children may experience when they are unable to join in sports or music activities with their friends, or when they are bullied for being poor.

By addressing childcare, housing, education and parenting support, a child poverty strategy can ensure children have enriching childhood experiences and good life chances. Enshrining these initiatives in a strategy with cross-party support, statutory targets and meaningful leadership will ensure its long-term success. But not only does the child poverty strategy need to be comprehensive, it needs to form part of a wider focus on children – their childhoods and their futures. For example, a child poverty strategy should link into a children’s health strategy because reducing poverty would improve children’s mental and physical health. It is through this sustained, co-ordinated effort, with all parts of government pulling in the same direction, that we can end child poverty for good.

Conclusion

In order to end child poverty, we must measure child poverty effectively. We can do this through a number of income-based child poverty measures. Child poverty measures that are not based on income are not measuring poverty. In addition to the right measures, we need a child poverty strategy and associated targets, with responsibility for meeting these targets held at both a central and local government level, and cross-government responsibilities, to ensure change happens.

We have set this out in more detail in our book published last year, available here: 2020 Vision: ending child poverty for good.

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About CPAG
Child Poverty Action Group works on behalf of the more than one in four children in the UK growing up in poverty. It doesn’t have to be like this. We use our understanding of what causes poverty and the impact it has on children’s lives to campaign for policies that will prevent and solve poverty – for good. We provide training, advice and information to make sure hard-up families get the financial support they need. We also carry out high profile legal work to establish and protect families’ rights.

February 21