The benefits to society would far outweigh the cost of ending child hardship
A narrow focus on boosting income from parental employment in the forthcoming UK Government Child Poverty Strategy “will barely shift the dial” on family hardship levels, a charity has said.
Action for Children says this will lift only 150,000 children out of poverty by the end of the decade.
With 4.3 million children in the UK now living in poverty, including around one in four in Scotland, the prime minister promised during the last election that his government would introduce an ambitious plan to lift ‘millions’ out of poverty.
Action for Children modelled and costed different combinations of measures the government’s Child Poverty Strategy - due to report in the summer - could include to achieve the government’s ambitions.
Its Paying the Price report looked at benefit levels and take-up, childcare, work incentives, pay and conditions, employment support, housing and child maintenance.
It found that scrapping the two-child limit and benefit cap is the single most cost-effective policy option the government could implement, lifting 600,000 children out of poverty by 2030 at a cost of £3.9 billion per year.
However, if this was the only significant spending commitment in the strategy, more than a quarter (26%) of children would still be living in poverty by 2035.
To lift at least a million children out of poverty by 2030 would require going further – not only removing the two-child limit and benefit cap – but ensuring the child-related elements of Universal Credit rise above the rate of inflation and increasing the take-up of means-tested benefits. This would reduce child poverty by 28% (1.2m) and cost £10.4bn a year by 2030.
To reduce child poverty by a million by 2030 without scrapping the two-child limit and benefit cap, the government would need to implement every other policy included in the analysis. But this would be far less cost effective, costing £22bn a year.
Policies focused on employment have an important part to play in the strategy. But these are less targeted, less cost-effective and more uncertain in their impact than others. A narrow focus on measures to increase parents’ income from employment would lift only 150,000 children out of poverty by 2030.
Implementing all the measures in the model – including investment in employment support programmes, a real living wage, building 90,000 social homes a year and reforming child maintenance – would cut the child rate by half to 15% by 2045, returning it to levels not seen since the 1970s when fewer than one in six children were in poverty.
Tackling child poverty is costly, but the long-term economic prize is significant. The charity said. The report also calculated the economic gains lower hardship levels would have on particular generations of children across their lifetimes.
If the government reduces the child poverty rate by 28% (1.2m by 2030, the policy costs of keeping it at that level for those children would be £80bn over their lifetime, but the benefits to society would be worth at least £164bn through reduced public service demand, higher tax revenues and lower welfare spending.
Fiona Steel, national director for Scotland at Action for Children, said:“This report sets out the path by which the UK Government can consign our shamefully high levels of child hardship to history. The question now is whether it is willing to do what’s needed.
“This research makes clear that a UK-wide Child Poverty Strategy which focuses on boosting parents’ income through employment will barely shift the dial. If the UK Government wants to keep its promise to significantly reduce child poverty and keep it down in the long term, this means scrapping the caps and boosting benefits.
“We‘ll continue to call on the Scottish Government to do more on tackling child poverty but recognise many of the levers reside at a UK level and so this report makes clear the choices a UK Government must take.
“In the current fiscal climate, there’s no doubt it will require difficult choices but poverty has a price too.
“This is a once in a generation opportunity to invest in children – not only transforming lives but delivering massive economic benefits. Failing to do so will condemn more Scottish children to a life of poverty.”
