CHILD POVERTY IN UK

Child Poverty In UK



Child Poverty in UK

Introduction to the issues

Although the Committee's predecessor in the previous Parliament had considered undertaking an inquiry into child poverty, it was not until the current Parliament that the timing was deemed to be right. The Government had announced its intention to eradicate child poverty in 20 years, to halve it by 2010 and to reduce it by a quarter by 2004. The first stage in this challenging target would be reached in the current Parliament and if the momentum was to be maintained towards the later, even more demanding, targets, additional money would almost certainly be required. The additional expenditure would need to be agreed in the Spending Review currently being undertaken by the Government. The Committee hopes that its inquiry and this report will influence and assist those discussions as well as informing the House.

Perhaps the most ambitious commitment made by the current U.K. Labour Government is its stated intention to eliminate child poverty within a generation-defined as 20 years. In this paper we review the concerns that led to adoption of this goal, and we summarize the welfare reform strategy developed to achieve it. We explore in more detail the elements of the strategy that directly increase families' incomes and compare various components with their equivalent in the U.S. We present micro-simulation evidence on the likely first-round effects of the financial changes and the limited statistical evidence on program effects that are currently available. We then look at the future developments that the Government has announced or has proposed but not yet implemented. The paper is concluded with a short discussion of what we see as the strengths and weaknesses of the Labour program.

In the late 1990s, this relative poverty during childhood was almost evenly split between in-work poverty-where there is an earner in the household-and workless poverty- where there is no working adult present. In 1996, nearly 1 in 5 children lived in households where no adult worked, up from 7 percent in 1979 and 4 percent in 1968 (Gregg, Harkness, and Machin, 1999).

Ninety per cent of these children were in the poor households that make up the bulk of the observed spike in Figure INCDIST. The U.K. is way out of line with other developed nations with respect to the numbers of children living in workless households: Twenty percent of children in the U.K. lived in workless households in 1996; in the country with the next worst record, Ireland, it was 15 percent, and in all other European countries it was 11 percent or less (OECD, 1998, p.12). In the U.S., working poverty is more common, and even before the current emphasis on getting people off welfare, only 1 in 10 children lived in a household where no adult worked (OECD, 1998 and Dickens and Ellwood, 2000).

Around a quarter of children living with two parents were in poverty in 1996, up from 1 in 10 in 1979, and they made up just under 60 percent of ...