Today’s FT features an opinion piece from Nick Clegg, where he sets out his refutation of the IFS’s analysis. The Government line seems to have changed from yesterday (when the Financial Secretary to the Treasury equated fairness with growth), as the Deputy Prime Minister is now arguing that fairness is about more than a ‘purely numerical’ view, and that distributional analysis only tells part of the fairness story.

But, as with previous attempts, this argument does not stack up – as I set out below. Read more »

   Filed under: Budget, Child poverty | No Comments »

The Deputy Prime Minister has joined his Treasury colleague in maintaining that the IFS analysis of the distributional impact of the Budget is selective and partial. This is simply wrong. The Budget documents clearly state that only ‘two-thirds‘ of the benefit and tax credit changes are modelled in their analysis of the Budget’s impacts.

In contrast, IFS models all of them (using government data). This includes cuts to Housing Benefit, falls in the relative value of benefits after 2012/13 (as a result of CPI uprating), cuts in DLA and various cuts in Tax Credits. This is why their analysis shows the poorest losing most – all of the cuts the Treasury chose to leave out are highly regressive.

Unsurprisingly, IFS have told Channel 4 News they are ‘surprised by criticism from govt, we’re essentially doing exactly same as they did in Budget annexe, but incl more measures not less’.

   Filed under: Budget, Child poverty | 2 Comments »

This morning’s Today interview with Financial Secretary Mark Hoban provided a revealing insight into the Government’s definition of fairness. In response to an IFS analysis (that is based on DWP figures of the impact of Housing Benefit cuts, and HMT’s figures for how social security changes – specifically indexing benefits with CPI – will affect poor households in 2013/14) he informed us that the IFS’s work, which in fact takes account of the majority of the third of social security changes that the Budget’s distributional analysis chose to exclude, is ‘selective’ as it ‘ignores the impacts of economic growth’.

If fairness and economic growth are the same thing, then Britain has been an increasingly fair society for the vast majority of the post-war period and the post-recession decade in 1980s  (when unemployment hit three million, and the number of children living in poverty rose from one and a half million to three million) saw a positive fairness rise. By this definition the Government need not even bother with policies on social mobility and and the child poverty targets might as well be scrapped – all that fairness will require is a non-recessionary economy. Read more »

   Filed under: Budget, Child poverty | 5 Comments »

Today End Child Poverty reports on new research, commissioned from the IFS, that shows definitively what many others have highlighted – the cuts announced in the Budget will hit families and the poorest the hardest.

As we showed immediately after the Budget, the Chancellor’s claim that the spending changes he announced were ‘progressive’ has always been contentious – significantly the Treasury’s modelling did not include a third of social security changes, including cuts to Housing Benefit and Disability Living Allowance, and only changes up until 2012/13 were considered.

This IFS research puts the Budget’s regressive impact beyond doubt: the poorest will be hit more than many of the richest in cash terms let alone as a percentage; poor and middle income families with children lose out more than any other household types and the very poorest families with children lose more than any other groups – with 5% of their total income being cut. Read more »

   Filed under: Budget, Child poverty, Welfare | 3 Comments »

Yesterday’s Observer reports that the Treasury has told the Department for Work and Pensions to “do its sums” because Iain Duncan Smith’s plans for welfare reform would either cost too much or disadvantage too many people. The Parliamentary timetable means that the conflict will have to be resolved soon.

Last month, I pointed out that the DWP’s options for major reform necessarily involve a choice between cutting the benefits of current claimants (including many who will suffer real hardship as a result) and spending more money – £3.6 billion to implement the ‘Dynamic Benefits’ proposals the Secretary of State developed when he was in Opposition. Read more »

   Filed under: Child poverty, Welfare | 1 Comment »

New data show that, over the past 40 years, life expectancy and infant mortality have improved rapidly across Western Europe. The new edition of Social Trends, published yesterday, includes a mass of useful data that I’ll be returning to several times over the next few days.

One example is a table of demographic indicators for 1970 and 2005/10 for the UK and several west European countries that we normally compare ourselves with. This includes data on men’s and women’s life expectancy at birth and on infant mortality rates – very good basic indicators about the combined social and economic success of different countries. Read more »

   Filed under: Child poverty, Europe | 1 Comment »

The Chancellor claims that the Budget will have a “statistically insignificant” impact on child poverty in 2012-13 – and valiant attempts to illustrate the Budget’s progressive credentials continue. Can the child poverty claim be substantiated? For a number of reasons I think not.

Most importantly, the Budget has not considered the distributional impact of service cuts. The ONS have shown that households who are poorest receive far more from the state in benefits in kind (such as education or health services) than the richest. As an FT analysis suggests, the losses poor families will experience from spending cuts will far outweigh the impacts of tax and benefit changes.

But even if the impact of services cuts is discounted (and there is no good reason why it should be) by the Budget’s own admission (see p65 para A10) the model used to simulate child poverty impacts only includes “two-thirds of benefits and tax credits changes” that are proposed. Those that are missed out (full set of data sources here) include: Read more »

   Filed under: Budget, Child poverty | 3 Comments »

Richard has already blogged about the impact of ditching RPI as the measure for indexing benefits.

It provoked me into building a quick spreadsheet model of the difference it would have made since 2000.

If child benefit had been linked to CPI since 2000 instead of RPI it would now be £18.05p for the first child rather than the current £20.30. Read more »

   Filed under: Budget, Child poverty | 18 Comments »

Today, the TUC joined a coalition of charities, including the Equality Trust the Child Poverty Action Group and Barnardo’s to ask the leaders of the main parties to commit to a Fairness Test on any tax rises or spending cuts they would introduce in government.

We know, from the experience of previous rounds of cuts, that cuts in public services tend to hit the poorest the hardest. Services – such as Sure Start – are often designed with poorer families in mind; cuts in these services therefore tend to be particularly regressive. The lower your income, the less likely you are to be able to afford any alternative, so cuts tend to reduce the freedom of the poor far more than the rich. Read more »

   Filed under: Child poverty, Public services, Public spending, Welfare | 4 Comments »

Despite the difficult economic circumstances, the Chancellor managed to find resources for increased support for unemployed people and children in poverty. Nicola has written about the extension of the Future Jobs Fund beyond 2011, which is one of the best parts of the Budget and there are other valuable advances on the poverty agenda.

The Budget also announced that the minimum wage is going to rise by 2.2% in October, to £5.93 an hour; there were pressures for the N.M.W. to be frozen. Read more »

   Filed under: Budget, Child poverty, Welfare | 4 Comments »

You can tell the paleolithic right is feeling frisky when the old nonsense about lone parents starts up again. You know, the rants we used to get from Michael Portillo and others about feckless teenage girls getting themselves pregnant (amazing how they manage it by themselves, but there you go).

Of course, its all the fault of our ludicrously generous benefit system. And who wouldn’t get pregnant when there’s Income Support on offer?

There’s a prime example in today’s Metro that manages to draw the wrong conclusions from an opinion poll the Metro itself commissioned. Read more »

   Filed under: Child poverty, Inequality, Social exclusion, Welfare | 4 Comments »

At single parent charity Gingerbread, we’ve been researching how single parents’ incomes and spending patterns compare with families with two parents. Our new report ‘Family Finances’ shows that lone parents’ poverty and struggles to get by can’t simply be blamed on bad choices about money.

In doing the research for this report, we were interested in finding out whether single parents were lacking key financial products, and what patterns there were in their attitudes towards money and their ‘financial capability’. We also wanted to know what their priorities were for Government action to improve their financial situation, and how they thought banks and building societies could help.  The report presents the full analysis but here’s some of the highlights. Read more »

   Filed under: Child poverty, Earnings | 2 Comments »