Tough love to end child poverty?

by Stephen Tall on June 18, 2006

Can Labour deliver its 1999 pledge to halve child poverty by 2010-11? That’s the question The Economist posed this week, noting that – though the number has fallen by an impressive 700,000 since then – the Government missed both its 2004-05 targets:

In 2004-05 there were 2.4m poor children, 100,000 above the goal of 2.3m when measured before housing costs, and 3.4m poor children after housing costs, 400,000 more than the milestone of 3m.

This might look like nit-picking – but missing early targets will make it that much more difficult to hit the later ones, especially as public finances are squeezed from 2008 onwards.

Until now, the Government has relied chiefly on the introduction of tax credits to ease the plight of children in poor families. In the future, argues The Economist, they need to incentivise poorer parents back into the work-place, as unemployment is the chief cause of child poverty:

… recent British figures highlight how crucial joblessness is in determining child poverty. In 2004-05, lone parents without work were raising 13% of all children but 31% of poor children. Jobless couples were bringing up 6% of all children but 19% of poor children. Together, the two groups accounted for only a fifth of all children but a half of poor ones.

What this suggests is that the priority should now be to get poor jobless parents back to work. The government has been trying to encourage this by providing extra financial support for working parents. Such help is now among the most generous for low-paid employees in the OECD.

These financial incentives appear to be having some success. The lone-parent employment rate, for example, has risen quite sharply over the past five years. Steep increases in the minimum wage are making work more worthwhile, although there is increasing worry that they may also raise unemployment.

What is crucial now, says Mr Whiteford [of the OECD], is for the state to exert more pressure on lone parents to work while continuing to help them with child care. Britain is unusual in not requiring single parents to look for jobs until their youngest child is 16. Australia, which also has a high proportion of lone parents who are not working, has a similar rule. In most other countries in the OECD, by contrast, single parents have to seek employment much sooner. In July, Australia will change its rule and make new lone parents look for work once their youngest child is six.

Such a reform will seem harsh to many of Labour’s supporters. But the Government has invested political capital in its campaign to end child poverty and it will soon have to take difficult decisions. This may be a time for some tough love.

Astute Lib Dem readers will recall just this measure being put forward by Shadow Work and Pensions Minister, David Laws, last March.

As Mr Laws argued then: “To deliver social justice we will need economic dynamism and economic discipline. We need to show how we can create wealth, as well as redistribute it, and make tough choices and not just the easy ones.”