Child Poverty austerity and the impact of the

Child Poverty – austerity and the impact of the recession Jonathan Bradshaw Truth and Lies Conference York 31 January 2014

Outline I will remind you of the world before austerity The Coalition austerity strategy The false claims of fairness Consequences The beastly rhetoric and lies I will leave to others Welfare reform The future

Before the Coalition in 2010 (CASE report) Labour did not “throw money at welfare with little effect” Invested in education, health, child care, housing quality and neighbourhoods Social spending as % GDP increased – but only to the middle of the international league table Labour had reduced child and pensioner poverty and stabilized inequality Improvements in almost all outcomes Then Faced with the banking crisis and deficit Response broadly anti cyclical and redistributive Economy growing in 2010

After 2010 election. Austerity rules Aspiration to reduce the deficit (£ 81 billion) by 2014 – far too fast Crucial decision: 20% from increased tax and 80% from cuts in services and benefits. Actually now 15/85 300, 000 public sector already jobs gone – plan to reach 1 million by 2017 Unemployment 2. 4 million – 20% youth unemployed Public sector pay limit £ 20 billion cut from transfers Working age benefits fall in real terms (CPI and 1% cap latter takes £ 3. 8 billion from poor) Prices rising faster than incomes = falling living standards Real incomes fall by 10%

Distributional consequences unfair – between generations and incomes Cribb, J. , Hood, A. , Joyce, R. & Phillips, D. (2013) Living Standards, Poverty & Inequality in the UK: 2013, London: Institute for Fiscal Studies: http: //www. ifs. org. uk/publications/6759, p 78

Why is it unfair? Cuts loaded on poor families with children (Children’s Commissioner 2013) i. e. Educational Maintenance Allowance Future Jobs Fund scrapped Child Benefit frozen Working aged benefits/tax credits increased by CPI and then 1% - unprecedented. Pensioners protected by triple lock 2013 budget - raising the tax threshold does not help the poor with incomes below it That cut+fuel duty, beer and corporation tax cut = £ 28 billion given away Abolition of 50% tax rate Devastating cuts in services.

Consequences No growth, no recovery, nearly triple dip Deficit targets missed, lost AAA rating Fresh round of (unfair) austerity in spending round 2013 Unemployment and youth unemployment 500, 000 helped by food banks Falling living standards 2008 -2015 Absolute child poverty up 2% points 2011/12. Relative 17% now - 24% in 2020 (IFS) Majority of poor children (67%) now have a working parent Outcomes deteriorating – child subjective well-being, staying on rates, NEET, suicide, relationship breakdown … Waste – the costs of child poverty £ 29 billion

Odious government rhetoric - adds insult to injury Iain Duncan Smith eliding child poverty with 200, 000 “troubled families”/drugs Misuse of statistics and evidence Bizarre attempt to redefine poverty concept Supported by chorus from the gutter press Deeply wrong (about real nature of the Welfare State), unpleasant and unforgiving Influences attitudes and beliefs Heroic churches, NGOs, academics and other “vested interests” ? Labour Party

Welfare reform – accumulates injury Three elements Cuts Bedroom tax affecting 600, 000 Benefit cap affecting 75, 000 Abolition of Social Fund Abolition of Council Tax Benefit Now PIP deliberately designed to save £ 2. 2 billion (20%) Welfare spending cap – gimmick or disaster Work programme and toughened conditionality, seven days waiting and weekly signing. Despite unemployment. Failing. Social Security reform Incompetent and flawed ESA reassessments – 60% win appeals in York Universal Credit – delayed

A better way? Take it more slowly - £ 25 billion cuts planned after 2015

General Govt Spending as % GDP 2000 -2018 IMF WEO database April 2013 60 55 50 Canada France Germany 45 Italy Japan United Kingdom United States 40 35 30 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

This SUICIDES 18 16 14 12 10 8 6 4 2 0 1998 1999 2000 2001 2002 2003 UK 15 -19 suicide rate 2004 2005 2006 UK 20 -24 suicide rate 2007 2008 UK total suicide rate 2009 2010 2011

Or this SUBJECTIVE WELL-BEING

A better way? Take it more slowly Anti cyclical policies – Australia, USA, Iceland Take more from tax less from benefits/services Priority to poor children not rich pensioners (me) Don’t trade-off expenditure on benefits for services

Short-term action Continue to be outraged, but stay calm Continue to respond to the needs of the vulnerable Document the evidence Support NGOs that stand up for the poor = Cof. E, CPAG, Children’s Society Nothing is likely to change in the short-term

Longer term thinking CPAG Living Wage Housing supply – public investment still falling! Progressive taxation. Hooray for 50% A new settlement in favour of children