NEW FREE SCHOOL MEALS CRITERIA

NEW FREE SCHOOL MEALS CRITERIA

 Jonathan Bradshaw and Antonia Keung

We had been waiting a long time for the government to decide who is going to be eligible for free school meals (FSM) after Universal Credit is rolled out. At present in England children are entitled to FSM if their family is on income support, income based jobseeker’s allowance, income related employment and support allowance, pension credit or child tax credit with an annual taxable income of £16,190 or less and if they are not eligible for working tax credit. Last year, around 1.1 million children were eligible for and claimed a free school meal, which corresponds to approximately 14% of children in state-funded schools.

Up to now the very small number of families with children receiving Universal Credit were all entitled to free school meals. But the Government has now baulked at the £600million costs of maintaining this policy as an increasing number of families with children are rolled onto UC.

On 16 November 2017 the Department for Education issued a consultation on Eligibility for free school meals and early pupil premium under Universal Credit proposing a net[1] earnings threshold of £7,400 per year starting in April 2018 and they estimated that an extra 50,000 children would become eligible for free school meals, compared to today’s number of claimants. During the rollout of Universal Credit existing recipients of free school meals will not lose their entitlements. Para 4.4 says “Under our proposed threshold, a number of low-income households who are not currently entitled to free school meals will become newly entitled, and the vast majority (around 90%) of pupils currently eligible for free school meals will continue to be eligible. However, although we are increasing the number of eligible children, some households (particularly those working fewer hours but with higher incomes) will have earnings above the new threshold, and would therefore stand to lose eligibility.” This has been clarified in a note “We estimate that by 2022 around 50,000 more children will benefit from a free school meal compared to the previous benefits system. This figure represents the difference between those that gain eligibility under UC to those that would have been eligible under the old system but will not now be eligible under UC. It also takes account of the fact that not everybody claims their meal.”

In February 2018 the Department for Education published the response to the consultation. Basically they intend to go ahead with their proposals.

As CPAG has said the new earnings threshold introduces a new poverty trap[2] or cliff edge into universal credit which risks undermining incentives to work.  “The operation of an income threshold is also likely to create serious practical problems making fair implementation of the policy almost unworkable, and no proposals have yet been put forward for managing this.” The Children’s Society have also commented on the same issues.

CPAG asked us to estimate who would be affected by the net income threshold of £7,400. We used the Family Resources Survey 2015/16 (actually the HBAI data set), the latest available. Net earnings at the bottom end of the distribution will have increased by April 2018 with the increase in the national living wage and the income tax threshold. However we applied the £7400 threshold using net earnings of the benefit unit (ENTERBNU*52) and the dependent child weights (GS_NEWCH) to the 2015/16 data. Subsequently we adjusted the £7400 downwards by 20% to £5920 - an estimate of the 2015/16 terms level in 2018.[3]. The results based on this threshold are included in brackets. We found that 23.1% (19.9%) of dependent children in the UK live in benefit units with net earnings less than £7,400 (£5920) per year. Of course not all these children are in school.

There is a variable that gives the value of FSMs actually received by the benefit unit (FSMBU). This was greater than zero for 22.1% of all children and 41.2% (45.1%) of all children in benefit units with net earnings less than £7400 (£5920). More significantly 16.3% (16.4%) of children were in benefit units with net earnings over £7400 (£5920) but who were receiving free school meals and this constituted 56.9% (59.4%) of all those receiving free school meals. However most of those are children under eight who will continue to receive the universal entitlement to free school meals. However 10.7% (11.4%) of those currently receiving free school meals would be excluded by the new cut off at £7400 (£5920).

It would be very useful to be able to establish the number of children in schools who would be eligible for free school meals under the new arrangements. Unfortunately the ages of children are presented in groups in HBAI. We can identify the five, six and seven year olds who will continue to get free meals automatically but we do not know what proportion of dependent children are in post 16 non-school college education or training and not eligible for free school meals. However

·         As above 23.1% (19.9%) of all dependent children are in benefit units with net earnings less than £7400 (£5920).

·         For any children aged 8-19 it is 23.8% (20.5%)

·         For any children aged 8-15 it is 23.8% (20.5%)

It is reasonable to estimate that approximately 23.8% (20.5%) of children are in benefit units with earnings less than £7400 (£5920) and eligible for free school meals.

For CPAG and The Children’s Society we have also estimated the number of children (and benefit units with children) aged 8-15 with net earnings less than £7400 who would become worse off if they increased their earnings and as a result lost their free school meals. Also we have estimated the number with net earnings over £7400 who would be worse off than they would be if they were receiving free school meals. We have adjusted the net earnings upwards by 15.9% to take account of earning growth 2015-2022. We have also adjusted the value of free school meals upwards by 14.9% an estimate CPI movement by 2022. We have produced the estimates for England, because the new free school meals threshold only applies to England, though it may be adopted by the rest of the UK. In England about 293,000 children living in about 125,000 benefit units would be worse off by increasing their earnings above the threshold and making themselves ineligible for free school meals. About 420,000 children in about 156,000 families would be better off reducing their earnings and becoming eligible for free school meals. All these estimates assume that free school meals are taken up – in fact only about 65% of those eligible claim them[4]. For further discussion of the impact of this cliff edge see The Children’s Society/CPAG The free school meals poverty trap. How work wont pay for 280,00 families. They have recommended that the best solution would be to continue to use UC as a passport to free school meals.

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[1] It is actually the gross earnings as well as £7400 is below the tax threshold and it is below the NI level (£157 per week, between £113 and £157 treated as having paid NI. In April 2018 it is 18 hours work per week at the national living wage of £7.83 per hour.

[2] A single parent of two children, working 16 hours/week on the 2018 National Living Wage of £7.83

per hour, would earn £6.514.20 a year and be entitled to free school meals. If she increased her hours

to 20 hours/week on the same wage, her take-home pay would rise to £8,143.20 and she would lose

entitlement to free school meals. She would gain £1,629 in earnings, but lose £1,026 in withdrawn

Universal Credit and £800 in the value of free school meals – a total of £1,826. She would therefore

be almost £200 worse off a year.

[3] The minimum wage increased by 17% from £6.70 per hour in October 2015 to $7.83 per hour in April 2018. The income tax threshold increased by 8% from £10,600 in April 2015 to £11,500 in April 2018.

[4] https://www.channel4.com/news/factcheck/factcheck-labour-arent-telling-the-full-story-about-free-school-meals

THE UNIT OF ANALYSIS IN POVERTY MEASUREMENT: HOUSEHOLD OR FAMILY

THE UNIT OF ANALYSIS IN POVERTY MEASUREMENT: HOUSEHOLD OR FAMILY

Jonathan Bradshaw

One of the debates occurring in the field of poverty measurement is what unit of resources should be used? Should resources be measured at the household[1], or benefit unit/family[2], or the individual level? At present the DWP Households Below Average Income series (and the Eurostat EU-SILC series) measure poverty at the household level – the incomes of everyone in the household are added together, an equivalence scale (the subject of another different debate) is applied and the equivalised disposable household income is compared with a threshold (conventionally 60% of the median) and all those living in a household with equivalent incomes below that threshold are defined as living in poverty. The implicit assumption is that that income is equitably shared within the household. But there is evidence that this assumption is not always correct[3] – parents particularly mothers may sacrifice their living standards for children[4], and male breadwinners may not share their earnings fully with their wives and partners[5]. In households containing more than one benefit unit this becomes even more problematic. Will an elderly parent living with her adult children share her income with them and vice versa? Will an older (independent) child still living with his parents share his wages with the parents and vice versa?

           
This note assesses what difference it would make to the child poverty rate if poverty was measured at a benefit unit level. It uses the Family Resources Survey 2015/16 (the latest available)[6]. The poverty rate is estimated as the percentage of children living in households with total equivalised disposable income below a threshold of 60% median after housing costs. The data is weighted to the UK child population (using GS_NEWCH).

The Table shows the number of children by the number of benefit units in the household - 86% of all children live in single benefit unit households, (88% in couple households and 81% in lone parent households). The Table also shows the child poverty rate for multi benefit unit households, single benefit unit households and all households. The child poverty rate is four percentage points higher in all multi benefit unit households than in single benefit unit households. For couples with children the difference is three percentage points higher but for lone parents the poverty rate it is four percentage points lower in multi-unit households. For pensioner couples the child poverty rate is also higher in single benefit unit households. The single pensioner households have very small numbers of children.

 Distribution of children by family type and benefit unit and child poverty rates

Number of Benefit Units within the household		Family type for the benefit unit										Total
		Pensioner couple		Single male pensioner		Single female pensioner		Couple with children		Single with children
1		33281		5453		7718		9042315		2583380		11672147
2		17181		0		1161		1043484		413654		1475480
3		0		2119		0		179380		155355		336854
4		0		0		0		11154		21713		32867
5		0		0		0		3546		13138		16684
6		0		0		0		0		7100		7100
Total	50462		7572		8879		10279879		3194340		13541132
% of children in households with only one benefit unit		66		(72)		(87)		88		81		86
Child poverty rate %
More than one benefit unit households		13		(0)		(100)		27		44		33
Single benefit unit household		21		(73)		(66)		24		48		29
All		18		(53)		(70)		24		47		30

( ) indicates small numbers.

 Having more than one benefit unit in a household alters the equivalence scale and probably in most cases the household income. In couple households the extra benefit units are not making an additional contribution to income beyond their equivalent needs and dragging the household into poverty. In single parent households the additional benefit units are more than compensating for their additional needs. Overall, the more benefit units in a household the higher the poverty rate (single benefit unit=29%, two benefit units =33%, three benefit units=34%, four benefit units=35%).

If we moved from the household to the benefit unit for estimating child poverty rates the overall child poverty rate would increase but the composition of poor children would change with fewer poor children living in lone parent families and more in couple families.

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[1] A household in the Family Resources Survey is defined as ‘One person living alone or a group of people (not necessarily related) living at the same address who share cooking facilities and share a living room, dining room or dining area, A household will consist of one or more benefit units/families’.

[2] A family or benefit unit is defined as ‘a single adult or a couple living as married and any dependent children’. https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/599163/households-below-average-income-quality-metholodogy-2015-2016.pdf

[3]Gardiner, K. and Millar, J., (2006) How low-paid employees avoid poverty: An analysis by family type and household structure. Journal of Social Policy, 35 (3), pp. 351-369.

See also http://sticerd.lse.ac.uk/case/_new/research/Intra-household/

[4] Main, G. and Bradshaw, J. (2016) Child poverty in the UK: Measures, prevalence and intra-household sharing,  Critical Social Policy, Vol. 36(1): 1–24.

[5] Pahl, J. (1989) Money and Marriage, Macmillan: Basingstoke.

[6] Actually the HBAI data set.

Fact check on the speech by Kit Malthouse MP PUS DWP in the Westminster Hall Debate on Child Poverty in London, 22 February 2018

Fact check on the speech by Kit Malthouse MP PUS DWP in the Westminster Hall Debate on Child Poverty in London, 22 February 2018[1]

 Jonathan Bradshaw

 “However, I was disappointed to hear the hon. Lady say, as I think she did on the record, that work is no longer the route out of poverty. The Government believe that work offers families the best opportunity to get out of poverty and become self-reliant. That is why we are undertaking the most ambitious reform to the welfare system in decades—so that it supports people to find and stay in work.

The evidence about the impact of worklessness on children’s outcomes, in both the short and the long term, is clear. In 2014-15, 75% of children in workless ​families failed to reach the expected standard at GCSE, compared with 39% for all working families and 52% for low-income working families.”

 Yes but when will Government Ministers begin to accept that most child poverty (67% in 2015/16 both BHC and AHC) is found in working families?

 “As adults, children who grow up in workless families are more likely to be workless themselves, compared with children who grow up with working parents, which creates an intergenerational cycle of disadvantage. It is therefore vital that we continue with our policies to encourage work and to address the often complex employment barriers faced by many disadvantaged families.”

 But the actual number of intergenerational workless is miniscule.[2] The number of long-term unemployed is also very small and the main impact on children comes from poverty not unemployment.[3]

 “A number of hon. Members raised concerns about working families who are in poverty. However, the evidence is clear. Adults in workless families are four times more likely to be in poverty than those in working families. Children living in workless households are five times more likely to be in poverty than those in which all the adults work. Children in lone-parent families are three times less likely to be in poverty if their parent is in full-time work. And the chances of a child being in poverty if one parent works full time and the other part time is one in 20.

We are making good progress. Nationally, there are 954,000 fewer workless households and 608,000 fewer children living in such households now, compared with 2010. In London, there are 197,000 fewer children in workless households than there were seven years ago. By 2016, the number of children in long-term workless households in London was less than half what it was in 2010. The latest data shows that the London employment rate has increased by 7.1 percentage points since 2010. Comparable national figures show a slightly lower increase of 5 percentage points, so London is doing better.

 Universal credit is at the heart of the reforms and the positive change that the Government are committed to driving. Through universal credit, the welfare system is, for the first time, providing working people with the opportunity to progress in work and to work more hours so that they can increase their earnings and become financially secure. Once fully rolled out, it will boost employment by about 250,000 and generate £7 billion in economic benefits a year.”

Universal Credit has had very little impact on these numbers and the OBR is sceptical about the 250,000 claim as it is an estimate based on the scheme as it was before the substantial cut in the work allowance and other changes[4] – including the recent cliff edge introduced by the free school meals income threshold. The Minister of State for Employment recently provided more detail on the 250,000 claim[5]. 

“We are also committed to tackling poverty by helping people with the cost of living. The national living wage, rising to £7.83 an hour in 2018-19, has given the UK’s lowest earners their fastest pay rise in 20 years. The right hon. Member for Enfield North (Joan Ryan) referred to the London living wage in glowing terms with regard to the current Mayor, but of course that project was started well before he came to office. Indeed, I am pleased to say that the largest expansion of the London  living wage came when I was responsible for it at City Hall, between 2012 and 2016. However, that is not the only measure that we have taken. We have cut income tax for more than 30 million people and taken 4 million low earners out of income tax altogether. A typical basic rate taxpayer will now pay £1,000 less in tax compared with 2010.” 

The improvements in the living wage have been offset by the non-uprating and cuts made to working age benefits, especially benefits for children. By 2020 £39 billion will have been taken from the social security budget. Most of this has been taken from the poorest families with children through the benefit cap, the two child limit, the freezing of family benefits and limits to rents. Raising the income tax threshold does not help those with the lowest incomes and benefits those with highest incomes most. It is a regressive measure. Almost all of the savings achieved by cutting benefits were offset by gains for richer groups.  For example, the increases in the personal tax allowance, which overwhelmingly benefit the better off, cost £8 billion under the Coalition, and a further £5.5 billion is being spent in 2017-18 paying for the allowance being increased to £11,500 per year and the higher threshold being raised to £45,000 per year. [6] 

“Hon. Members have raised serious concerns about child poverty rates, including the key findings in the End Child Poverty report, which came out a couple of weeks ago. Let me take this opportunity to emphasise that whichever way we look at child poverty rates—relative or absolute, and before or after housing costs—the headline national statistics published by the DWP show that in London  all are lower than they were in 2010. Across the country, 600,000 fewer people are in absolute poverty now, compared with 2010—the figure is at a record low—and 200,000 fewer children are in absolute poverty.” 

Some of this is simply not true. It also depends on what is meant by 2010 (the national data is published in calendar years and for London in three year averages).  HBAI[7] shows the UK relative child poverty rate BHC at 20% in 2009/10 or 18% in 2010/11 and 20% in 2015/16 BHC and AHC 30% in 2009/10 and 27% in 2010/11 and 30% in 2015/16 AHC. The relative child poverty rate in London for the period ending 2015/16 is the same as it was in the period beginning 2010/11 both BHC and AHC. The ‘absolute child poverty threshold actually uses the poverty threshold held constant in real terms in 2010/11. For the UK the percentage of children living below that threshold in 2015/16 was the one percentage point lower BHC and the same as it was in 2010/11 AHC. These data are detailed in the Table below. There is also evidence that over this period the child poverty gap has been increasing steadily.[8]

Relative child poverty rate HBAI 4_14ts
UK	09/10	10/11	11/12	12/13	13/14	14/15	15/16
BHC	20	18	18	17	17	19	20
AHC	30	27	27	27	28	29	30
‘Absolute' child poverty rate HBAI 4_20ts
UK	09/10	10/11	11/12	12/13	13/14	14/15	15/16
BHC	19	18	19	19	18	17	17
AHC	28	27	28	29	29	27	27
Relative child poverty rate HBAI 4_16ts Three year averages
London	07/08-09/10	08/09-10/11	09/10-11/12	10/11-12/13	11/12-13/14	12/13-14/15	13/14-15/16
BHC	21	20	18	17	18	17	17
AHC	39	38	37	37	38	37	37
‘Absolute' child poverty rate HBAI 4_22ts Three year averages
London	07/08-09/10	08/09-10/11	09/10-11/12	10/11-12/13	11/12-13/14	12/13-14/15	13/14-15/16
BHC	21	19	18	18	19	17	16
AHC	38	37	37	38	39	37	35

 “Let me turn to the figures used by End Child Poverty. Those are projections based on Her Majesty’s Revenue and Customs data from 2014, and even the academics who produced the analysis have pointed out the limitations in the method. More recent data, published by HMRC since the report, shows that rather than rising, the proportion of children in low-income families in London fell in 2015 to an estimated 19%, compared with 24% in 2014. Indeed, every parliamentary constituency saw falls between 2014 and 2015. That includes some of the areas highlighted by the report. For example, in Bethnal Green and Bow there was a fall of 12 percentage points and in Poplar and Limehouse a fall of 11 percentage points. There was a fall of 6 percentage points in Hackney South and Shoreditch, as there was in Westminster North and in Enfield North. The data and the projection from the data in 2014 were immediately contradicted by the data subsequently published for 2015.”

Professor Donald Hirsch of Loughborough University who produces these figures writes[9]. The data the Minister “was using, the raw figures produced by the HMRC, is flawed in multiple ways. In addition to its limitations in looking at trends over time……., it has some pretty bizarre aspects, pointed out by the HMRC itself in its latest commentary. One is that the measure of median income to which poverty is being compared by the HMRC is actually going down, whereas all the DWP’s income distribution analysis shows median income rising.  “Falling” median income creates a falling “poverty line”, and hence a lower child poverty count. Another feature is that HMRC has for the time being decided not to count out-of-work families on Universal Credit as being in poverty, even though it did so when similar families were on tax credits. This directly brings the child poverty count down.

 The local data that we produce corrects for these quirks in the HMRC data by calibrating the results with the Households Below Average Income survey results. It uses the national differences between the HBAI and HMRC results, for in-work and out-of-work poverty respectively, as the basis for an adjustment to each of the local results. While this can only be seen as an estimate of what the correct figures actually are at the local level, it is a far more meaningful estimate than using the flawed HMRC figures without adjustment.”

 “Let me deal quickly with some of the specifics that were raised. The hon. Member for Barnsley Central (Dan Jarvis) raised the issue of child poverty targets. Some hon. Members will remember that there was recognition by the Government in the past that making a long-term difference to the lives of disadvantaged children required an approach that went beyond a focus on the welfare system. That is why the Government repealed the income-related targets set out in the Child Poverty 

Act 2010 and replaced them with new statutory measures of parental worklessness and, critically, as my hon. Friend the Member for Hornchurch and Upminster (Julia Lopez) mentioned, children’s educational attainment. That is vital; all the evidence points to its being critical to long-term welfare and prosperity. Those are the two areas that can make the biggest difference.”

Well, relative child poverty has begun to rise and is expected to go on rising[10]; child homelessness has been increasing; infant mortality and youth suicides have stopped falling; the numbers of looked after children has increased; and child life satisfaction has fallen[11]. All worrying  trends.

“It was slightly disappointing to hear from the Opposition a fairly stout defence of the previous benefits system. As far as I can tell, that was a fraudulent system, perpetrating a lie upon the poor. It was designed to trap them in poverty. That is why we saw very little change in long-term poverty, which is what we are dedicated to tackling. I can reassure hon. Members that we are not complacent and particularly not in London, and we will be doing our best over the years to come to try to address the problems that have been raised.”

The legacy benefits system contributed to the biggest reduction in child poverty since records began after 1999. The undermining of that system since 2010 and now the roll-out of universal credit will (according the IFS[12]) sweep away all the gains that were made.

 

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[1] https://hansard.parliament.uk/Commons/2018-02-22/debates/8E08C1C1-89F1-4CFA-A042-85859AEEF57B/ChildPovertyLondon?highlight=child%20poverty%20london#contribution-370EAF76-200B-452B-B86D-E1FB849D57D3

[2]  Robert Macdonald, R., Shildrick, T., and Furlong, A. (2014) In search of ‘intergenerational cultures of worklessness’: Hunting the Yeti and shooting zombies, Critical Social Policy, Vol 34, Issue 2, 2014

[3] Bradshaw, J., Movshuk, O. and Rees, G. (2017) It’s poverty, not worklessness, Poverty, 158, 7-10.

[4] Bradshaw, J. (2018) The Office for Budget Responsibility is sceptical about the DWP claims for the labour supply effects of Universal Credit. Blog http://jonathanbradshaw.blogspot.co.uk/2018/02/the-office-for-budget-responsibility.html

[5] http://www.parliament.uk/documents/commons-committees/work-and-pensions/Correspondence/Letter-from-Alok-Sharma-to-the-Chair-regarding-Universal-Credit-6-February-2018.pdf

[6] http://sticerd.lse.ac.uk/case/_new/research/Social_Policy_in_a_Cold_Climate/Programme_Reports_and_event_information.asp

[7] https://www.gov.uk/government/statistics/households-below-average-income-199495-to-201516

[8] Bradshaw, J. and Keung, A. (2017) UK child poverty gaps increasing but small reductions in deprivation, http://jonathanbradshaw.blogspot.co.uk/2017/12/uk-child-poverty-gaps-increasing.html

 [9] http://www.cpag.org.uk/blogs/donald-hirsch

[10] Hood, A. and Waters, T. (2017) ‘Living standards, poverty and inequality in the UK: 2016–17 to 2021–22’: https://www.ifs.org.uk/publications/8957.

[11] Bradshaw, J. (2017) The outcomes for children of austerity, Blog, http://jonathanbradshaw.blogspot.co.uk/2017/10/the-outcomes-for-children-of-austerity.html

[12]  Hood, A. and Waters, T. (2017) ‘Living standards, poverty and inequality in the UK: 2016–17 to 2021–22’: https://www.ifs.org.uk/publications/8957.