Sunday, 25 August 2013

Child poverty - why solutions are so hard to find

The Observer has highlighted some truly concerning numbers about the growing child poverty in Britain today. The figures come from a report of the National Children's Bureau that tracked child poverty over the last decades. In essence, it shows that child poverty has not been declining in the UK but instead, steadily growing. This despite the enormous amount of policy attention and cash that was spent under the last Labour government. Billions of pounds were made available through tax credits for families with little palpable impact on child poverty.

Why is it so hard to reduce child poverty, let alone to eradicate it as the previous Labour government grandly announced?

For a start, there are some statistical issue with how to measure child poverty. Currently, child poverty is a relative measure which means that every household with a combined income of below 60% of the median UK household income counts as poor. Every child in such a household is then automatically categorised as growing up in poverty. This is clearly a very blunt way of measuring poverty. If everyone was a millionaire in the UK and drove two SUVs, there would still by definition be some people who fall below 60% of the median household income, no matter how well off they are.

The government recognised this and suggested recently to re-define poverty capture real poverty and its effects on children. The left leaning media uttered a howl of disapproval but it would do them good to consider the government's argument. The current way of measuring child poverty in the UK would allow the coalition government to demonstrate significant progress in reducing it, since median household income has actually decreased in the UK, hence fewer children live in the lowest income group.

This is a statistical anomalie and one that can be fixed. However the actual problem with child poverty may lie elsewhere. Effectively, children are not the object of poverty reduction programmes or policies. They cannot be since they are not recipient of state funding. Parents are. So, when we talk about child poverty and how to reduce it, we actually talk about poverty of parents and household income.

This means that any programme or re-distributive policy is not targeted at children but at their parents. It is the parents who are the determining factor that make or break poverty reduction. This makes child poverty a tricky business indeed since it assumes that any additional resources spent on children are actually consumed by them. That's usually not true. Tax credits boost the income of families, but whether or not parents then spend this money on their children is beyond government's control.

So, reducing child poverty is actually a business with many known unknowns. Re-distributive programmes aimed at reducing child poverty banks on the compliance and co-operation of parents to spend the additional family resources on their children. That often requires a fundamental shift in parental behaviour.

So, perhaps we have simply too blunt instruments for the task. It may be far more effective to target our resources at those domains over which parents have no or little influence such as schools, pre-schools and nurseries. It may be sad, but perhaps, some kids may just have to be saved from their parents.

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