Despite gradually declining inflation, prices remain stubbornly high, heaping more pressure on working families already suffering from a decade with no growth and severe cuts to the social safety net. Over four million children are in poverty in the UK, almost a third of all British children. The solution is obvious; just as pensioners were dug out of indigence by immediate boosts to support and gradually-rising pensions, children should be helped by expanding Child Benefit and protection against poverty. Child Benefit should get the Triple Lock treatment.
While pensioners once faced widespread impoverishment they have now become one of the groups least likely to face poverty (after housing costs have been accounted for). This is a consequence of the State Pension Triple Lock and early changes to benefits, enormously successful policies that have afforded security to older people without forcing them to suffer the indignities of an often-punitive benefits system. There is no reason other than lack of political will that children cannot be afforded the safety net pensioners receive.
At the beginning of the 21st century, pensioner poverty was stubbornly high as millions of older people struggled to make ends meet. An initial step to tackle this involved the creation of a new, more generous benefit consolidating previous support: Pension Credit.
While the creation of Pension Credit was the emergency boost to pensioner incomes required to fight poverty, policymakers identified that reliance on means-tested benefits was not a long-term solution. Means-tested benefits encourage stigma among recipients, leading to some not claiming what they are entitled to, and can subject claimants to ultra-high rates of tax in an effort to weed out those deemed to not really need help.
After a series of reports into the matter, a consensus grew that the best way to fix this was by boosting the value of the State Pension, which is not means-tested, meaning take up is nearly universal. This culminated in the Triple Lock, introduced in 2011 with cross-party support. Each year since then, pensions are meant to be uprated according to the highest of earnings growth, inflation or 2.5%. This has been enormously successful in lifting pensioners off of means-tested benefits and reducing pensioner poverty.
Child Benefit was introduced in 1975 by Barbara Castle, building on the Labour government’s commitment to fight poverty. It was a radically progressive measure- for the first time, support could be given for every single child in Britain. While some claim that the universal nature of Child Benefit is unfair, giving the same amount to the well off as to those in need, in truth Child Benefit is progressive. It pays out more to those families in more need, regardless of their income. A very big family on a higher income is usually in more need than a much smaller family on a lower one. Given that it’s also funded by a progressive taxation system, Child Benefit ends up being highly redistributive despite being paid without any regard to the income of a family.
To start with, the real value of Child Benefit should be increased at least to where it was when the Conservatives came into office. From the 2010 budget until 2014, Child Benefit was frozen, meaning it declined in real terms; as a proportion of the average family’s pay, Child Benefit was worth noticeably less in 2015 than in 2010, despite declining real wages. Any policy to alleviate child poverty must start by increasing Child Benefit, returning its ability to provide sufficient support for every family in the country. The Government could either act to restore its value immediately or adopt an uprating formula of the kind that’s been proven to work by the Triple Lock. The government should adopt an explicit target, guaranteeing that Child Benefit would continue to rise until it represents a solid proportion of the average family’s income.
Universal Credit’s support for families is also inadequate. The arbitrary two-child limit runs directly counter to common sense in fighting poverty. More children means higher costs. Without higher income, larger families are much more likely to be in poverty than those small enough to avoid being penalised by the two child limit. Similarly, Child Benefit has a higher rate for the first child and lower rates for later children. This results in large families being penalised even further. Both of these penalties should be abolished. Child Benefit should be paid at the highest rate (currently £24 a week) and UC Child Allowance should be extended to large families.
Finally, the means-tests applied to family benefits effectively creates extremely high tax rates for parents at specific levels of income. The High Income Child Benefit Charge penalises parents who earn between fifty and sixty thousand pounds a year. Rather than make parents alone shoulder the burden, this means-test should be abolished and paid for by an increase in income tax across all high earners. Having the burden spread broader than just parents would enable the rate of the tax to be much lower. The Universal Credit “taper rate” is also highly onerous: currently workers receiving UC face a tax rate of fifty-five percent or more. The result of which only serves to disincentivise those on lower incomes from working, and crushes any hope that claimants have of getting a stable job. This too urgently needs to be reduced, at least so that benefits claimants don’t face a higher rate of taxes than those on the top band.
Today, children face ubiquitous poverty, and the solution is clear: Child Benefit needs the triple lock treatment. Allowing millions of children to languish in poverty is a choice, just as allowing pensioners to slide into poverty was at the turn of the century. Children in poverty cannot afford half measures, the status quo is a bleaker and bleaker picture where the children living in the world’s sixth largest economy resemble Dickens characters. There is no good reason pensioners can be lifted out of poverty but not children. We have a tried and tested strategy to ease the strain on Britain’s families by increasing, improving and universalising benefits: we should use it.