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Pre budget report: tackling child poverty
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2 October 2007
The Rt. Hon Alastair Darling
Chancellor of the Exchequer
HM Treasury
1 Horseguards Road
London
SW1A 2HQ
Pre budget report: tackling child poverty
I am writing to you ahead of your first Pre-Budget Report and Comprehensive Spending Review as Chancellor, to urge you to put tackling child poverty at the heart of your spending commitments.
As you know, time is fast running out for the Government to meet its valuable and ambitious commitment to halve child poverty by 2010. As a member of the Campaign to End Child Poverty, we believe that the most important commitment within this spending round must be to the £4bn that the Joseph Rowntree Foundation has estimated will be necessary if the target is to be met.
A shocking half of children in one-parent families are poor, and they make up 42 per cent of all poor children. We wrote to your department (and others) in January to set out how we believe that this poverty should be tackled during the spending review process, and a copy of this document is attached.
However, we believe that there are three specific commitments that you could make within this Pre-Budget Report that would go a considerable way to helping to meet the child poverty target. - Commitment to a full disregard for child maintenance in means tested benefits from 2008
- The introduction of help for lone parents who want to work in jobs of less than 16 hours; and
- A more joined up approach to separated families.
We discuss these further below.
Commitment to a full disregard for child maintenance in means tested benefits from 2008.
At present, the White Paper on child maintenance committed to 'significantly raise' the level of the disregard for child support payments within means tested benefits, above the current £10 level, but not to do this until 2010/11. Given that the requirement to co-operate with the Child Support Agency for lone parents on benefits will be abolished in 2008, we are seriously concerned that without a good incentive to seek child maintenance, the number of parents on benefits who receive it will fall. We therefore urge that the increase in the maintenance disregard is brought forward.
We also believe that there remains a strong case for a full disregard as a cost effective means of tackling poverty. The Joseph Rowntree Foundation have estimated the cost of lifting a child out of poverty using tax credits at around £4,300 a head.[i] In contrast, the Henshaw report, which recommended a full maintenance disregard, estimated the cost of this at £230 million in 2005. This suggests a cost of between £2875 and £2,555 per child taken out of poverty.
We understand that there are concerns within the Treasury of the impact of such a disregard on incentives for lone parents claiming benefits to move into work. However, we believe that these are unfounded. A full disregard would still leave non-working lone parents a substantial incentive to work and provide much greater confidence that they would retain their maintenance payments alongside their in-work benefits. And research shows that parents who receive maintenance are more likely to be in work.
The introduction of help for lone parents who want to work in jobs of less than 16 hours.
A large proportion of the gap in employment rates between lone and couple mothers, is due to the fact that 8 per cent of employed lone mothers work in jobs of less than 16 hours compared with 17 per cent of mothers in couples.
Yet new research by One Parent Families|Gingerbread and the Institute for Fiscal Studies, published by the Joseph Rowntree Foundation, suggests that a relatively modest change in benefit rules to increase the earnings disregards in Income Support, Housing Benefit and Council Tax Benefit, could have a significant impact on the number of lone parents moving into work. The research finds that increasing these to the level of 16 times the National Minimum Wage, could lead to a 5.4 percentage point increase in the lone parent employment rate, lifting many more children out of poverty. At a cost to Government of around £790 million, the cost per job would be far lower than that for the introduction of Working Families Tax Credit.[1] This is a policy which would also echo new provision for claimants of the Employment and Support Allowance, who will, for a 52 week period, be allowed to earn up to £86 a week whilst keeping all of their means tested benefits.[ii]
A more joined up approach to separated families.
We welcomed the acknowledgement in the recent Treasury and DfES report Aiming high for children: supporting families that "how parents continue to engage with each other to support their children after separation can have a major impact on a child’s well-being. A low level of conflict between parents, a good quality relationship with the resident parent and high parenting capacity with both the resident and non-resident parent can all minimise the negative impacts that parental separation might otherwise have on children’s health, social and educational outcomes."[iii]
Yet despite the involvement of several government departments in dealing with different aspects of relationship breakdown, and the recent establishment of the Department for Children Schools and Families, there is as yet no overarching approach that links the work of the Treasury, the Department for Work and Pensions and the Child Support Agency, the Ministry of Justice and the Home Office. We believe that there is the potential both for a better service for families, and a better use of resources, in combining the work of these departments in this area.
Finally, we wanted to take this opportunity to express our very strong concern at the current proposals to ask lone parents whose youngest child is 12 (and from 2010 those whose youngest child is only seven) to claim Jobseeker’s Allowance rather than income support. We fully support the objective of helping more lone parents into work and have pioneered programmes such as Marks&Start to help achieve this. However, we believe that these proposals will not achieve their intended effect of increasing the employment rate of lone parents. Indeed, they could be counterproductive. The remarkable success in helping lone parents into work over the past eight years has been achieved through a voluntary approach, combining tailored support with incentives. The proposed more conditional approach runs the risk that lone parents will come forward for the help they need to get into work for fear of being sanctioned. Moreover, it will involve the duplication of resources within Jobcentre Plus, which is already at overstretch and, most importantly, risk making some of the poorest families still poorer. We believe that a much more constructive and supportive approach is possible, and would go far further towards meeting the Government’s aims.
I look forward to hearing how the Government intends to take the next steps towards ending child poverty.
Yours sincerely
Chris Pond
Chief Executive
One Parent Families|Gingerbread
[i] Hirsch D (2006) What will it take to end child poverty? Firing on all cylinders Joseph Rowntree Foundation. [ii] Bell K, Brewer M and Phillips D (2007) Lone parents and ‘mini jobs’ Joseph Rowntree Foundation. [iii] HM Treasury, DfES (2007) Aiming high for children: supporting families HM Treasury and DfES.
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