Children of austerity

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Thanks to the UNICEF Office for Research a book has been published today tracing what happened to children in rich countries following the financial crisis:

B Cantillon, Y Chzhen, S Handa and B Nolan, Children of Austerity: impact of the great recession on child poverty in rich countries, Oxford: OUP, 2017.

Chapter Nine is by Jonathan Bradshaw, Yekaterina Chzhen and Gill Main on ‘The impact of the recession on children in the UK’.  

The chapter was inevitably written some time ago. While the conclusion of the chapter still holds this blog updates some of the data.

The deep recession of 2008–09 did not immediately translate into a rise in child poverty rates. Relative child poverty, based on 60 per cent of contemporary national median income, continued falling between 2007 and 2013. This is in part the result of median incomes—and therefore the poverty thresholds—falling during this period. However, the fiscal stimulus in place at that time cushioned the impact of the economic crisis on households with children. Now (see Figure 1) in the last two years for which we have data the relative child poverty rate has begun to rise both before and after housing costs.

Figure 1: Child poverty rates <60 per cent contemporary median before and after housing costs

Child poverty rates

Source: Households Below Average Income: 1994/95 to 2015/16 

The main reasons for this increase in child poverty have been and will continue to be the cuts in in-work benefits. In particular

  • The freezing of the level of most working age benefits until 2020.
  • The limits of child tax credits and universal credits (starting this month) to two children only and the many cuts that have undermined universal credit (see CPAG’s Broken promises).
  • Cuts in support for housing costs, particularly the bedroom tax and local rent limits.

These have to be set against an improvement in employment such that 67 per cent of children in poverty in the UK now have a parent in employment. The introduction of the increased minimum wage though welcome has not and will not mitigate the cuts in benefits for families with children. As universal credit replaces tax credits it will further reduce the incomes of families with children – especially low income families.

By the mid-1980s the UK had one of the highest child poverty rates in all rich countries. After 1997 it managed to reduce child poverty using employment policies but particularly cash benefits. When the crisis struck in 2008 the Labour Government responded with policies designed to protect families with children. But the Coalition after 2010 adopted austerity measures which especially harmed families with children. Now the Conservative Government since 2015 is reinforcing these measures with a further £12 billion cuts in working age benefits.

The 2010 Child Poverty Act targets have been abandoned and we are no longer on course to achieve any of them (see Figure 2). The UK is set to slide down the international league table. Now the Institute for Fiscal Studies expects relative child poverty to increase from 18.8 per cent in 2014/15 to 26.6 per cent in 2021/22 before housing costs and from 29.0 per cent to 35.7 per cent after housing costs.

Figure 2: Child Poverty Act 2010 targets. Dotted lines show trend needed to meet targets.

Child Poverty Act 2010 targets

Source: Households Below Average Income: 1994/95 to 2015/16

The decline in real earnings during the recession and subsequent austerity period was combined with an increase in the cost of necessities. So it is important to monitor deprivation as well as income. Table 1 shows the proportion of children lacking necessities, and Table 2 the proportion of adults living in families with children lacking necessities, in 2007/08 compared to 2015/16. Items are counted as lacking if parents report that children do not have the item because the household cannot afford it (answer options include: children have it; lack it because the parents cannot afford it; or lack it for another reason). Table 1 shows that the proportion of children lacking items has fallen or is unchanged in most cases, except a holiday away from home. The same is true in Table 2 except that parents were more likely to lack holidays away from home and insurance for the content of their dwellings. In general what is striking is the lack of any real improvement in living standards over this eight year period.

Table 1: Children lacking necessities in 2007/08 and 2015/16

Item

2007/08

2015/16
Outdoor space or facilities nearby where they can play safely 14% 7%
Enough bedrooms for every child over 10 of different sex to have his or her own bedroom 16% 14%
Celebrations on special occasions such as birthdays, Christmas or other religious festivals 4% 2%
Leisure equipment (for example, sports equipment or a bicycle) 7% 6%
A holiday away from home at least one week a year with his or her family 31% 34%
A hobby or leisure activity 6% 6%
Friends round for tea or a snack once a fortnight 7% 7%
Going on a school trip at least once a term for school-aged children 5% 4%
Play group/nursery/toddler group at least once a week for children of pre-school age 8% 4%

Sources: Table 4.7, Households Below Average Income: 1994/95-2007/08 and Households Below Average Income: 1994/95 to 2015/16 

Table 2: Adults in families with children lacking necessities in 2007/08 and 2015/16

Item 2007/08 2015/16
Enough money to keep your home in a decent state of repair 19% 18%
A holiday away from home for one week a year, not staying with relatives 38% 41%
Insurance of contents of dwelling 19% 22%
Regular savings (of £10 a month) for rainy days or retirement 40% 38%
Replace any worn-out furniture 30% 30%
Replace or repair broken electrical goods such as refrigerator or washing machine 22% 21%
A small amount of money to spend each week on yourself, not on your family 33% 32%
Keep house warm 9% 9%

Sources: Table 4.8, Households Below Average Income (HBAI) 1994/95-2007/08 and Households Below Average Income: 1994/95 to 2015/16


Related Publication

OUT NOW - NEW Welfare Benefits and Tax Credits Handbook 2017/18Welfare Benefits & Tax Credits Handbook 2017-2018

Known as the 'adviser's bible' CPAG’s Welfare Benefits and Tax Credits Handbook is the essential and best-selling guide to all benefits and tax credits.

Our definitive guide to all benefits and tax credits is an essential resource for all professional advisers serious about giving the best and most accurate advice to their clients. 

With detailed information on all the recent changes to the social security system, including the latest on the roll-out of universal credit, the right to reside test and the sanctions regime, the Welfare Benefits and Tax Credits Handbook provides comprehensive advice about entitlement in 2017/18.

Order your copy online

Upcoming events for 2017

Two Child Limit – Implementation, Challenges and the Policy Context Two Child Limit – Implementation, Challenges and the Policy Context

London Thursday 22 June 2017 

This seminar will examine the two child limit in tax credits and means-tested benefits and its inevitable impact on child poverty.

Click here to book your place and for more information


Welfare Rights Conference 2017Welfare Rights Conference 2017

Universal Credit – Understanding and Managing the Risks for Families 

Manchester Thursday 7 September 2017
London Thursday 14 September 2017

This year's conference focuses on the very real risks facing families as the roll out of Universal Credit continues.

Click here to book your place and for more information


Some of our Training courses

Overpayment of benefit
Friday 23 June 2017, 10:00-16:30, London
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
More information - Book now

Personal independence payment
Monday 26 June 2017, 10:00-16:30, London
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
More information - Book now

Universal Credit: conditionality and sanctions (NEW)
Wednesday 28 June 2017, 10:00-16:30, London
£138 voluntary organisations, £195 statutory/other organisations, CPD hours: 5
More information - Book now

View all our Training courses