Speech

Launch of the government's consultation on better measures of child poverty

A speech by the Rt Hon Iain Duncan Smith, Secretary of State for Work and Pensions.

Welcome, thank you for coming.

Thanks also to Cathyrn Kinsey and Clyde Children’s Centre for hosting today’s launch…

… Matthew Reed, for his introduction…

… and the Children’s Society for their support.

Introduction

The consultation we are launching today has been a long time in the making.

Yet I believe the need for it could not be more pressing.

In a country as wealthy as the UK, it is an injustice that so many children remain trapped on the margins…

… growing up in dysfunctional families, characterised by multiple disadvantage.

For many years, I have sought to better understand how poverty affects our poorest communities and our most vulnerable families.

Spending time in deprived neighbourhoods and learning from local leaders, it has long been clear to me that the drivers of disadvantage are many and complex.

Against the grain of the common political discourse, one focused overwhelmingly on the number of people sitting below the relative income line…

… time and time again I was confronted with a clear message - namely that whilst money is important, it rarely tells the whole story.

The reality

Across the UK, there are children living in circumstances that simply cannot be captured by assessing whether their household has more or less than 60% of the average income.

There are many factors that impact on a child’s wellbeing and ability to succeed in life.

Whilst the Child Poverty Act does include a range of measures, a disproportionate focus on relative income does little to represent the experience of those in poverty.

As we saw earlier this year - when the child poverty level dropped by 2% - a fall in the median income may lift a family out of poverty on paper.

Yet at a closer look, real incomes did not rise and absolute poverty was unchanged.

For the 300,000 children no longer in poverty according to the official statistics, life was no different.

‘Poverty plus a pound’

This has long been my concern - that a fixation on relative income… on moving people over an arbitrary line… does little to identify those most in need and entrenched in disadvantage, nor to transform their lives.

For families across the UK, who are income poor…

… but more than that, whose lives are blighted by worklessness, educational failure, family breakdown, problem debt and poor health, as well as other problems….

… giving them an extra pound - say through increased benefits - will not address the reason they find themselves in difficulty in the first place.

Worse still, unless there is a meaningful, sustainable change in the lives of the recipients, they become more dependent not less…

… resulting in poor social outcomes and deeper entrenchment.

We must learn the lessons of the previous decade, where despite best intentions and despite an unprecedented level of spending - £171 billion on tax credits and a 60% real increase in welfare bills…

… the Government failed to reach their target to halve child poverty by 2010.

The ‘poverty plus a pound’ approach failed because the root causes of poverty were left unchecked and not enough was done to break the cycle of disadvantage.

People should be able to get on in life, no matter what their background.

Thinking differently

It is clear that we need to think differently about poverty - doing more to understand the scale and nature of the problem we are trying to solve.

The consensus has moved on since last December when I spoke at the LSE to initiate this debate.

What everyone wants is a system of measuring child poverty that reflects the principle that poverty is about more than income alone…

… recognising that whilst it matters, money is not by itself a representative measure of children’s current wellbeing, nor of their future life chances.

A new multidimensional measure

In truth, no statistic will ever perfectly reflect what it means for a child to live in poverty.

Every individual experiences hardship differently - some children are susceptible to life shocks, while others cope with, or even thrive in spite of chronic disadvantage.

We are also limited by what it is possible to measure, the data available, and how much that data can tell us.

Nevertheless, I believe it is possible to develop a better indicator than the current measure…

… one which does more to reflect vital childhood experiences:

growing up in a stable family… seeing a parent go out to work… going to a good school.

The Coalition Government is committed to developing **a new multidimensional measure **of child poverty.

This new measure will span different indicators, drawing together our knowledge of what it means for a child to live in poverty.

It must be robust in showing the total number of children living in poverty in the UK and the severity of that poverty…

… whilst also being widely accepted by the public as meaningful and accurate.

Today’s consultation

These are the criteria for a new measure.

Today, we are launching a consultation on what that measure should look like…

… harnessing the expertise of local organisations, charities and social enterprises - such as the many gathered here today - and listening to what you have to say.

This consultation is our first step.

In it, we suggest a number of dimensions that might be used to build a picture of a child’s life…

… posing questions which will be crucial to the success of our future measure.

Household income

First, the inclusion of household income remains central.

Income plays a crucial role in a child’s experience of growing up:

those living in low income households have lower expectations for the future, and considerably poorer self-esteem…

… with effects that can last a lifetime.

Take the fact that teenagers who suffered relative low income in the 1980s are almost four times more likely to be in relative low income as adults.

But how we measure income is also important.

Relative income only tells us about the amount of money a household has coming in.

It does not tell us whether a family has savings or assets to fall back on.

Currently, a family who are cash poor but asset rich are counted as being in poverty.

Yet their circumstances may be very different to a family without any assets at all - who have no means of tiding themselves over during difficult periods, and therefore find themselves locked in poverty.

Money to meet basic needs

Nor does relative income tell us whether money is reaching children, or if the family are able to afford essential items - in other words, levels of material deprivation.

Say a household’s income is going towards servicing problem debt - as for a third of children in income poverty, who live in households with arrears on one or more of their bills.

A family trapped in spiralling debts may not have money left to meet their most basic needs…

… something that the current child poverty measure simply cannot uncover…

… but which has a profound impact on children.

Worklessness

The source of income also makes a difference.

For some people, such as those with severe disabilities, income from the state will always play a vital role - and this Government will always stand by its promise to protect the most vulnerable.

However, for those who are able to work, this has to be seen as the best route out of poverty.

The pound we earn is always more powerful than the pound we are given.

Being out of work and on benefits… especially for long periods of time… can have a devastating impact on parents’ confidence, relationships and well-being - which in turn has negative implications for children.

Children in workless households are more likely to have challenging behaviour… poor academic attainment… and be unemployed themselves when they grow up… than if a parent was in paid employment.

Work is not just about more money.

It has a transformative effect on children’s lives and aspirations.**

Parents’ chances

Given this vital importance, it also matters whether parents have a real opportunity to become self-sufficient.

This means measuring factors such as parental health and skills, which determine whether a family has the resilience and resources to lift themselves out of poverty.

A lack of qualifications, for example, increases the chances of being unemployed or low paid… in some cases, more than doubling the likelihood of being in persistent, rather than temporary poverty.

The scar of growing up in a household with low parental skills can persist across generations.

Of parents with low qualifications, only a quarter of their children will gain high level skills - compared to over two thirds, where parents are high achieving themselves.

As problems become ingrained…

… all too often, children who grow up in poverty become the parents of the next generation living in poverty.

Family

A realistic measure of child poverty should describe this vicious cycle - incorporating those factors which impact so severely on children’s life chances.

By itself, an income measure fails to capture the most important building block in a child’s early years: family.

Evidence shows a marked relationship between family breakdown and socio-economic disadvantage.

A third of children in lone parent families live in households in the poorest income quintile… compared to a fifth of those in couple families.

The consequences of family breakdown are not only financial.

Where children are drawn into parental conflict they are more likely to suffer poor outcomes, doing less well at school and being more likely to run away from home.

As one young person explained to us: “The young kids are always outside, even in the snow and the rain… their house is not their sanctuary, it’s something to escape from.”

Growing up in a dysfunctional family… living in poor housing… or an unsafe or deprived area…

… these are the disadvantages that children experience acutely…

… and which surely, a better measure of child poverty must do more to reflect.

Access to quality education

If home life is important, so too school life.

When children don’t get the best start in life, it is often left to the education system to pick up the pieces.

What’s more, how well a child does at school is another of the strongest determinants of how well they go on to do in adulthood.

Quality early years education, followed by a school with good teachers, facilities and ethos can open the door to opportunity and achievement…

… whereas attending a failing school can crush ambition, pushing disadvantaged children still further into a cycle of poverty.

This is a bleak future, and one which we can no longer overlook.

Only through a better representation of this experience will we truly know how many children are living in poverty in the UK.

The challenge

Whether it be debt, worklessness, ill health, addiction, family breakdown or educational failure…

… across the Coalition, we are taking action to address the barriers that hold children back.

The challenge remains how we measure their effect.

It is possible: local authorities already include a wide basket of indicators in measuring child poverty.

The local data released last week showed both that the number of children in workless households fell and that wider indicators of child poverty were improving.

It is time for our national measurements to catch up.

Expertise beyond Whitehall

In developing a new multidimensional measure, we need to consider how different dimensions interrelate, which overlap, and which can be easily quantified.

Doing so will require a wide range of expertise.

Our consultation is a call to action.

Launched today, it will run until 15 February 2013.

I urge you to bring your knowledge to bear on what the future measure could look like.

This is groundbreaking work…

… and a unique opportunity to shape how child poverty is understood…

… now and for generations to come.

Conclusion

The new measure is designed to expose the real scale of child poverty in this country, and to make clear the real challenge we face…

… ensuring that improvement in the number of children in poverty is not just the result of an extra pound in a parent’s pocket, or worse, the economy shrinking…

… but of a life that has been transformed.

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