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.

 

---

[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.