Friday, June 1, 2012

Rethinking Child Poverty

The Centre for Social Justice, an independent British think tank, has published a new report that calls for a radical rethinking of the UK government's relative income inequality approach to measuring and reducing poverty.  The measure, introduced by the previous Labour government and perpetuated by the current Conservative-Liberal Democrat Coalition government, has proved expensive and ineffective, the report argues, because it is is misconceived.

Crude and flawed yardsticks for measuring child poverty should be scrapped and replaced with a range of new indicators reflecting the true causes of deprivation, according to the leading think-tank.

The Centre for Social Justice condemns the existing official formula as arbitrary and faulty and says that it conveys almost nothing about the suffocating nature of genuine hardship.

Christian Guy, Managing Director of the CSJ, said: “Labour's misguided child poverty targets have wasted over £150 billion pounds of taxpayers' money. By not reforming this misfiring system, the Coalition risks doing nothing to tackle child poverty.

“It must start showing that it is serious about reducing real deprivation.  Poverty is about more than money - it is about the family breakdown, addiction, debt-traps, and failing schools that blight the lives of our children.”

The current formula, based mainly on income inequality targets, has led to narrow and expensive policy responses, costing taxpayers at least £150 billion from 2004 to 2010.

In a new report, the CSJ calls for a complete overhaul of the system, in which the accent would be on measuring the underlying causes of blighted young lives, such as family breakdown, welfare dependency and educational failure, rather than the symptoms of low relative income.

The current system, enshrined in Labour's 2010 Child Poverty Act, classifies a child as poor if he or she is brought up in a family with an income below 60 per cent of median household income.

The ‘relative’ yardstick takes no account of the true, underlying causes of a deprived upbringing, for instance whether a child has the love and care of two parents, whether he or she has the role model of adults who go out to work for a living, or whether drug or alcohol addiction scars family life.

And because the measure is relative (and because income differences are inevitable in a free society), lofty promises, such as Labour's commitment to eliminate child poverty by 2020, are by definition practically unachievable.

The 60 per cent target also has perverse effects. It encourages governments to throw ever-increasing amounts of money at the problem in the forlorn belief that cash alone can solve the problem.

Between 2004 and 2010, the Government spent £150 billion on tax credits designed to lift individuals to just above the 60 per cent poverty line. Yet the number of children classified as living in poverty hardly moved. The total number declined marginally from 2.7 million in 2004/05 to 2.6 million in 2009/10, but the percentage remained the same at 21 per cent.

The CSJ report declares: “The first methodological flaw of the Government's central measure of poverty is that it is defined in relative terms. The result of this is that the poor will always exist statistically, as it is inevitable that some in society will have less than others.

“However, simply having less money than others does not necessarily render an individual to be in poverty. The measure therefore confuses poverty with income inequality. The commitment to eradicating child poverty by 2020 is thus almost impossible to achieve on the basis of a relative measure.

“What's more, on the basis of this measure, a household can be moved into or out of poverty without any change in their circumstances. For example, in a recession, as median incomes fall, so does the poverty line. This means that many households who were previously in poverty are now out of poverty (above the new, lower poverty line).

“Similarly, and somewhat bizarrely, an increase in the size of pensions will lift the median income and thereby push more children below this arbitrary poverty line.

“Measuring poverty in this way also fails to distinguish between those furthest away from the poverty line and those just below. As a result, the depth of poverty is not fully realised and improvements in living standards which raise children from far below the poverty line to just below are not captured.

“However, our main concern is that the exclusive use of an arbitrary line to measure child poverty tells us almost nothing about the real issues blighting the lives of the most disadvantaged.

“This spreadsheet-driven approach is relatively simple to calculate and provides figures which are convenient for politicians and the media to use.

“Yet we know from our own extensive research as well as the research of others that the key drivers of poverty are family breakdown, educational failure, economic dependency and worklessness, addiction and serious personal debt.

“It is these drivers which any serious attempt to tackle poverty must address, and so in turn any effort to accurately measure levels of poverty must assess the prevalence of these drivers.”

The CSJ suggests a new approach to computing poverty levels, taking into account a far wider range of variables, reflecting quality of life as well as quantity of income.

These include sources of income because income earned through work promotes the self-reliance and self-respect of families.

Equally, family consumption rather than income might be a better indicator of poverty levels.

Other factors that should be taken into account include the ability to save, the quality of a child’s parenting, family stability because children from broken homes are twice as likely to suffer behavioural problems than those from intact families, levels of worklessness in households because children tend to repeat the work habits of their parents, access to good schools, truancy rates, drug and alcohol addiction and levels of household debt.

Mr Guy added: “The CSJ strongly believes that any strategy to tackle poverty should focus on the root causes of deprivation and the social breakdown which fuels it, not the symptoms.

“Yet the way the previous Government conceptualised and sought to measure poverty is deeply flawed.

“The legacy of this is a narrow and one-dimensional Child Poverty Act which focuses solely on income and material deprivation. This is despite huge swathes of evidence to demonstrate that poverty is about far more than this.

“Poverty is not just about income, it is about family breakdown, educational failure, intergenerational worklessness, addiction, serious personal debt and poor mental health.

“It is absolutely vital that any serious measure of poverty reflects this. It is wholly unacceptable for such high and deep-seated levels of poverty to exist in the UK today. Such poverty devastates our communities and destroys the life chances of our children.

“We call on the Government to make a bold commitment to confronting this problem head-on. Transforming the way poverty is measured would be a crucial first step.

“We therefore urge the Government to review its Child Poverty Act in order to construct a measure of poverty which is fit for the 21st Century. It would be one of the most radical and commendable accomplishments of its period in office.”


The Centre for Social Justice (CSJ) is an independent think tank established in
2004 to put social justice at the heart of British politics.

In 2007 the CSJ published its landmark report, Breakthrough Britain. This publication, which set out 190 evidence-based policy recommendations to tackle poverty in Britain, transformed the social policy and political landscape and was awarded Publication of the Year by Prospect Magazine in 2008.

Since Breakthrough Britain the CSJ has published over 40 reports which have shaped government policy and influenced opposition parties. These have included the seminal papers Dying To Belong and Dynamic Benefits, which has led the Coalition Government’s welfare reforms.

The CSJ manages an Alliance of over 250 of the most effective grass roots, poverty-fighting organisations. 

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