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Child Poverty – austerity and the impact of the recession

Child Poverty – austerity and the impact of the recession. Jonathan Bradshaw Truth and Lies Conference York 31 J anuary 2014. Outline. I will remind you of the world before austerity The Coalition austerity strategy The false claims of fairness Consequences for poverty

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Child Poverty – austerity and the impact of the recession

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

  2. Outline • I will remind you of the world before austerity • The Coalition austerity strategy • The false claims of fairness • Consequences for poverty • The beastly rhetoric and lies (I will leave to others) • Austerity+Welfare reform=a perfect storm • The future

  3. 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

  4. Poverty rates after housing costs

  5. 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 1million by 2017 • Unemployment 2.3 million – 18% youth unemployed • Public sector pay limit • £20 billion cut from transfers • Working age benefits fall in real terms (CPI and 1% cap - latter takes £3.8billion from poor) • Prices rising faster than incomes = falling living standards • Real incomes fall by 6% 2007/8-2013/14 (IFS today)

  6. 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

  7. 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 – lost 15% value • Council tax • 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.

  8. Consequences • Nearly triple dip • Deficit targets missed, lost AAA rating • Fresh round of (unfair) austerity in next spending round • 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). All gains lost. • Majority of poor children (67%) now have a working parent • Outcomes deteriorating – child subjective well-being, suicide, relationship breakdown … • Waste – the costs of child poverty £ 29 billion rising to £35 billion

  9. Lies • Misuse of statistics and evidence • Bizarre attempt to redefine poverty concept • Deeply wrong (about real nature of the Welfare State), unpleasant and unforgiving • Influences attitudes and beliefs –Benefit Street • Heroic churches, NGOs, academics and other “vested interests” • ? Labour Party (bedroom tax, 50% tax rate)

  10. Welfare reform (ugh!) – accumulates injury Three elements • Cuts • Bedroom tax affecting 600,000 • Benefit cap affecting 75,000 • Abolition of Social Fund • Abolition/localisation of Council Tax Benefit – pensioners protected again • 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. Vicious sanctions regime. • Social Security reform • Incompetent and flawed ESA reassessments – 60% win appeals in York • Universal Credit – delayed ?disaster

  11. Single person JSA and pension credit scales April 2012 prices

  12. A better way? • Take it more slowly - £25 billion cuts planned after 2015 • £12 billion from social security pensions ring fenced • Must come from working age and children

  13. General Govt Spending as % GDP 2000-2018 IMF WEO database April 2013

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

  15. Percentage of gross income taken in taxes 2011/12

  16. Conclusion • Economy now growing thanks to housing boom and debt fuelled consumption – will it last? • Terrible and long term damage to our safety net. • Grossly unfair between income groups and generations. • Gleeful government. • Cheered on by gutter press – deeply depressing • Irresponsibly wasteful and damaging.

  17. SUBJECTIVE WELL-BEING 11-15

  18. SUICIDES

  19. Attitudes changing?

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