BRIEFING PAPER Number 7891, 1 February 2017 Child Poverty in the UK By Feargal McGuinness (Target for Reduction) Bill, 2016-17 Contents: 1. The Bill 2. Policy developments since 2010 3. Statistics on child poverty www.parliament.uk/commons-library | intranet.parliament.uk/commons-library | [email protected] | @commonslibrary 2 Child Poverty in the UK (Target for Reduction) Bill, 2016-17 Contents Summary 3 1. The Bill 4 2. Policy developments since 2010 5 2.1 The Child Poverty Act 2010 5 2.2 The Child Poverty Strategy 2011-14 and consultation on Measuring Child Poverty 6 2.3 Child Poverty Strategy 2014-17 7 2.4 The Welfare Reform and Work Act 2016 and ‘life chances’ 8 2.5 Life chances strategy 9 3. Statistics on child poverty 11 3.1 What do the measures used in the Bill mean? 11 3.2 Recent trends and projections 12 Relative and absolute low income 12 Low income and material deprivation 14 Persistent poverty 14 Projections for child poverty 15 3.3 ‘Life chances’ indicators 17 Children in workless households 17 Educational attainment 18 Cover page image copyright: After school play by Nella2010. Licensed under CC BY 2.0 / image cropped. 3 Commons Library Briefing, 1 February 2017 Summary This briefing has been prepared ahead of second reading on the Child Poverty in the UK (Target for Reduction) Bill 2016-17, scheduled to occur on 3 February 2017. This Bill is a Private Members’ Bill (Ballot Bill), sponsored by Dan Jarvis MP. The Bill places a duty on the Secretary of State to meet four targets for child poverty by some target date (to be specified). The targets are based on a relative low income measure, a combined low income and material deprivation measure, an absolute low income measure and a persistent poverty measure. The Bill also allows the Secretary of State to introduce, via statutory instrument, targets relating to other measures to be met by the target date. The four measures and targets specified in the Bill are the same as those used in the Child Poverty Act 2010 (although the Child Poverty Act stated the targets were to be met by 2020/21). The targets in the Child Poverty Act were subsequently removed by the Welfare Reform and Work Act 2016, although it had been clear for some time that the targets would not be met. In its 2015 State of the Nation Report, the Social Mobility and Child Poverty Commission observed that the targets “will be missed by a country mile”. The Welfare Reform and Work Act 2016 instead introduced a duty on Ministers to report annually on two ‘life chances’ indicators, relating to children in workless households and educational attainment. During the 2010-15 Parliament, Ministers had repeatedly signalled their intention to introduce improved poverty measures. During the passage of the Welfare Reform and Work Act, David Cameron’s Government announced it would publish a life chances strategy, covering other non-statutory indicators in addition to the indicators in the Act. The life chances strategy was originally expected in spring 2016 but it now appears it will not be published. However, the Government has announced it will publish a Social Justice Green Paper in 2017. 4 Child Poverty in the UK (Target for Reduction) Bill, 2016-17 1. The Bill The Bill places a duty on the Secretary of State to meet four targets for child poverty by some target date. The date by which the targets must be met is to be set by the Secretary of State, having consulted with the Social Mobility Commission. The Bill also allows the Secretary of State to introduce, via statutory instrument, targets relating to other measures to be met by the target date. The Bill also requires the Government to publish a UK strategy, setting out policies to meet the targets, and to publish biennial progress reports. The four targets set out in the Bill are: • Relative low income – to reduce the proportion of children who live in relative low income (in families with incomes below 60% of the median, before housing costs) to less than 10%. • Combined low income and material deprivation – to reduce the proportion of children who live in material deprivation and have a low income (below 70% of the median, before housing costs) to less than 5%. • Absolute low income – to reduce the proportion of children who live below an income threshold fixed in real terms (60% of median income in 2010/11) to less than 5%. • “Persistent” poverty – to reduce the proportion of children that experience long periods of relative low income (specifically, who were in relative low income for at least three out of the past four years) to less than 7%. The four targets are those that were used in the Child Poverty Act 2010 (which were later removed from the 2010 Act by the Welfare Reform and Work Act 2016). However, while the 2010 Act specified that the targets should be met by 2020/21, this Bill does not specify a target date. The 2010 Act specified that the persistent poverty target should be set in regulations; it was later set at 7% following a consultation.1 This is the target used in the Bill. 1 Department for Education, Setting the 2020 persistent child poverty target: government response, 16 October 2014. Persistent poverty is defined as being in relative low income for three years out of a four year period. 5 Commons Library Briefing, 1 February 2017 2. Policy developments since 2010 Summary This section summarises developments in the measurement of child poverty since the Child Poverty Act 2010 introduced four targets for child poverty, to be met by 2020/21. Meeting the targets would represent “eradication” of child poverty. The targets were mainly based on income-based measures of poverty, but during the 2010-15 Parliament, Ministers repeatedly signalled their intention to introduce improved poverty measures. The Welfare Reform and Work Act 2016 removed the four targets in the Child Poverty Act and instead introduced a duty on Ministers to report annually on two ‘life chances’ indicators, relating to children in workless households and educational attainment. The Cameron Government announced it would also publish a life chances strategy, covering other non-statutory indicators as well. The strategy would “set out a comprehensive plan to fight disadvantage and extend opportunity, including a wider set of non-statutory measures on the root causes of child poverty such as family breakdown, problem debt, and drug and alcohol addiction.” The life chances strategy was originally expected in spring 2016. It now appears the strategy will not be published. The Government will instead publish a Social Justice Green Paper in 2017. 2.1 The Child Poverty Act 2010 The stated purpose of the Child Poverty Act 2010 was to “define success in eradicating child poverty and create a framework to monitor progress at a national and local level.”2 It introduced four challenging and legally binding child poverty targets to be met by 2020/21, based on relative low income; absolute low income; combined low income and material deprivation; and persistent low income. The Child Poverty in the UK (Target for Reduction) Bill uses the same measures and target values as the Child Poverty Act. The Child Poverty Bill was introduced by the Labour Government in the 2008-09 session (and was carried over to the 2009-10 session). Although it received cross-party support, both the Conservatives and Liberal Democrats criticised elements of the Bill. In particular, the Conservatives’ key concern was that the targets in the Bill were “poor proxies for achieving the eradication of child poverty.” The Conservatives said they would “aim to widen the agenda and build up targets, which are more likely to address the underlying causes of poverty.”3 The Child Poverty Act also required the Government to publish a Child Poverty Strategy every three years (this duty was also removed by the 2 Child Poverty Act 2010, Explanatory Notes, para 6 3 HL Deb 15 Jan 2010 c26 6 Child Poverty in the UK (Target for Reduction) Bill, 2016-17 Welfare Reform and Work Act). The Coalition Government published Strategy documents in 2011 and 2014, discussed further below. The targets in the Child Poverty Act were removed by the Welfare Reform and Work Act 2016 along with most of the other duties and provisions in the Child Poverty Act.4 However, it had been clear for some time that the targets would not be met by the 2020/21 target year. In its first annual State of the Nation Report in October 2013, the Social Mobility and Child Poverty Commission (an independent body created by the Child Poverty Act to advise on child poverty strategies) warned that “the United Kingdom is clearly not on track to meet its statutory goal of ending child poverty”.5 In December 2015, the Commission observed the targets would be missed “by a country mile”.6 Further information on the background to the Child Poverty Act is provided in the Library’s Research Paper on the Child Poverty Bill (prepared for Second Reading of that Bill). Library briefing paper Child Poverty Act 2010: a short guide provides a summary of the Act and party positions during its passage through Parliament. 2.2 The Child Poverty Strategy 2011-14 and consultation on Measuring Child Poverty During the 2010-15 Parliament, Ministers repeatedly signalled their intention to introduce improved poverty measures. The Coalition’s Government Child Poverty Strategy for 2011-14, A New Approach to Child Poverty: Tackling the Causes of Disadvantage and Transforming Families’ Lives, made clear the view that the measures in the Child Poverty Act were insufficient for understanding the root causes of poverty and led to ineffective and expensive policy responses.