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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

Child Poverty – austerity and the impact of the recession

Jonathan Bradshaw

Truth and Lies Conference

York

31 January 2014

outline
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
before the coalition in 2010 case report
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
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)
distributional consequences unfair between generations and incomes
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
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.
consequences
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
slide11
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)
welfare reform ugh accumulates injury
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
a better way
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
a better way1
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
conclusion
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.