The Ticking Time Bomb of Child Poverty and Austerity

The UK is the sixth richest country in the world and yet more than one in four children is growing up in poverty today.

  • Child poverty damages childhoods. Growing up in poverty means being cold, going hungry, not owning belongings that others consider essential and not being able to join in activities with friends. It also impacts on health, educational outcomes and the overall experience of childhood.
  • Child poverty destroys life chances. Leaving school with few qualifications translates into lower earnings over the course of a working life. Poorer childhood health results in more complicated health histories over the course of a lifetime, again influencing earnings as well as overall life quality.
  • Child poverty imposes costs on broader society. Governments forgo prospective revenues and commit themselves to providing services in the future if they fail to address child poverty now.

Cross-national studies and evidence gathered over time show us that child poverty is not a natural phenomenon. Instead it is a political phenomenon – the product of choices and actions made by government and society.

Child Poverty damages children’s experiences of childhood and harms their future life chances. Research by Save the Children earlier this year highlights:

  • well over half of parents in poverty (61%) say they have cut back on food and over a quarter (26%) say they have skipped meals in the past year.
  • around 1 in 5 parents in poverty (19%) say their children have to go without new shoes when they need them.
  • a large number of children in poverty say they are missing out on things that many other children take for granted, such as going on school trips (19%) and having a warm coat in winter (14%).
  • only 1 in 5 parents in poverty (20%) say they have not had to borrow money to pay for essentials, such as food and clothes, in the past year.

A recent study by the Institute of Fiscal Studies (IFS) estimates that 800,000 more children will fall into poverty by 2020. That would be a rise in the child poverty rate from 19.9% to 24.4%. This will be the biggest increase in child poverty since the 1980’s, and would completely reverse the improvements made by during the last decade when 900,000 children were removed from poverty. The IFS figures are for children living in absolute poverty. Millions more children live in relative poverty.

As the govt’s spending cuts continue, so more and more families are at real risk of slipping into poverty, either from a reduction in tax credits, child benefit, the decision to uprate benefits in line with the consumer prices index rather than the retail prices index (which tends to show a higher annual inflation rate), the time limiting of employment and support allowance or from the loss of their jobs or stagnating wages. Poverty affects every aspect of a child’s life. 47% of children with asthma are from the poorest 10% of families, poor children are 5 times less likely to have access to a safe outdoor play area, 85% of children living in damp flats have breathing problems.

Austerity measures may also affect children in more subtle ways. There is another type of poverty, one that is more difficult to define and quantify, that of emotional poverty. As the unemployment rate soars, many households are experiencing joblessness for the first time. Children are far from immune from the negative effects of austerity. The additional stress levels, lack of funds and general loss of confidence experienced by parents and family members must impact upon children also. It has been proven that unemployment can become cyclical for generations of families. These children are feeling both the direct and indirect outcomes of unemployment and austerity measures likely affecting their own participation in the workplace in future years.

Children’s charity Unicef has published a report highlighting that child poverty rates within the UK are set to increase significantly, due to government spending cuts. There is recognition that child poverty is one of the most crucial indicators for measuring successful social cohesion, a marker of wellbeing and future prosperity of any given nation. Long-term effects of child poverty include: issues in education, employment, mental and physical health problems and difficulties with social interaction. The standard of living encountered during a person’s childhood is recognized as being instrumental in shaping their future.

Unicef warns that during times of economic recession, children can “drop off the policy agenda” in the scramble to effect immediate change, all planning for future generations is perceived as of secondary importance. This is highly problematic, not only because future planning is negated in favour of a short term outlook, but because a child’s current living situation is under escalated risk during times of financial crisis. Children, as one of the most vulnerable groups of people, cannot be left out of the equation especially in times of financial recession.

This government has proposed changes to child benefit; however, major inconsistencies regarding financial eligibility led to strong opposition and initial proposals were re-drafted highlighting the governments’ incompetence in making basic calculations. The Child Poverty Action Group has already warned that the proposed cuts to child benefit will have an adverse effect on children’s wellbeing. They questioned the moral issue of using children as a battlefield for austerity.

Austerity measures are proving a complete failure, exacerbating the problems of unemployment and thereby increasing levels of child poverty. State-direction job creation, along with relevant supporting policies, is the route to success in lowering the rate of child poverty in the UK. The ‘Lost Generation’ will not just be those currently leaving school to no jobs and no higher and further education places, but the generation before them who are too young to be aware of their disappearing future. To put the brakes on this depressing picture we need to end the madness of austerity Britain. The Children’s Society have said: “It would be a grave injustice if we allowed the burden of the current economic turmoil to fall on the shoulders of disadvantaged children.”

Child Poverty in Britain, £10 Billion To Be Cut From Welfare (RT news report Oct 2012)

End Child Poverty, a coalition of more than 150 charities, welfare organisations, social justice groups and unions has published a report and interactive map detailing the level of child poverty in each constituency, local authority and ward in the UK. The campaign predicts that, as benefits start to fall in real terms later this year, the proportion of children living in poverty will increase significantly.

Commenting on the figures, Enver Solomon, Chair of the End Child Poverty campaign said:

“The child poverty map reveals the depth and breadth of child poverty across the country showing the gross levels of inequality that children face in every region. Far too many children whose parents are struggling to make a living have to go hungry and miss out on the essentials of a decent childhood that all young people should be entitled to.

The huge disparities that exist across the country have become more entrenched and are now an enduring reality as many more children are set to become trapped in long term poverty and disadvantage.

Local authorities have to deal with reduced budgets but they have critical decisions to make. We’re calling on authorities to prioritise low income families in the decisions they make about local welfare spending, including spending on the new council tax benefit, and on protecting families hit by the bedroom tax. This week we have written to local authority leaders in the local authorities with the most child poverty, asking them what they will do to tackle child poverty in their local area.”

The government must also closely examine its current strategy for reducing poverty and consider what more it could do to ensure millions of children’s lives are not blighted by the corrosive impact that poverty has on their daily existence.’’

cpag dorset

Within the local Boroughs in our area, there is a very contrasting picture from ward to ward. In Bournemouth, 33% of children within Kinson South are living in poverty whilst in Littledown and Iford the figure is 8%. In the Poole Town ward, within Alderney it is 30% whilst in Broadstone it is below 5%. Click here for the full percentage breakdown for all wards within Bournemouth, Poole and Christchurch. Excel spreadsheets detailing percentage figures for all South West local authorities can be viewed and downloaded by clicking here.

From April 2013, local authorities will have significantly increased discretion over the allocation of financial support for families, although in circumstances in which this support has been dramatically reduced. Local Authorities will be responsible for:

  • Providing support with the cost of essential items such as replacing cookers or fridges for families on a low income, as the Social Fund is replaced by schemes run by local authorities.
  • Deciding who receives help with paying Council Tax, as Council Tax Benefit is replaced with local assistance schemes. The Resolution Foundation has found that low income families will see their council tax rise by up to £600 a year as a result of this change.
  • Deciding who should receive support with housing costs. April 2013 will see the introduction of the £500 a week benefit cap and the bedroom tax for families who live in social housing if the government believes they have a spare bedroom.
  • Local Authorities have been allocated control over Discretionary Housing Payments, which they can use to help make up rent shortfalls for a small proportion of families affected by these changes.

End Child Poverty believes that Local Authorities should take a strategic decision to protect the poorest families with children when allocating these resources. Local Authorities have not imposed these cuts but, with the removal of ringfencing, they will have a significant influence over how they affect local residents.

If you would like to become involved in BPACC campaigns about this issue or any other, please Contact Us by email to info@bpacc.co.uk

Sources:
End Child Poverty Report – Child Poverty Map of the UK
Child Poverty in the UK – CPAG
Child poverty: a generation sacrificed to austerity – Counterfire
Austerity increases child poverty, report confirms – ISG
UK’s Poorest Families hit Hardest by Recession and Austerity – The Real News
Poverty map shows how cuts in benefits will hurt children – Guardian

Advertisements

Britain needs a pay rise to kickstart growth

The following article has been reproduced with the kind permission of PCS – Public Commercial Services Union

Why is employment rising when the UK economy is still flatlining? Our new research could provide the answer.

Figures show that since the onset of recession in 2008 the real value of wages has fallen by 7%, or more than £50 billion a year. During the same period there has been a real terms drop in consumer demand of 5%.

Our report, ‘Britain needs a pay rise’, published today (Tuesday 12), argues this fall in the value of pay could be a major obstacle to the return of economic growth.

The report also busts the myth that civil servants are paid more than their private sector counterparts.

Serious debate on pay

Using data from the Office for National Statistics and research by the Institute for Fiscal Studies, and government departments, employment specialists Croner and Incomes Data Services, and the Resolution Foundation, other findings include:

  • The government’s four-year pay policy, plus the increase in pension contributions, will cut almost £7 billion a year from the value of public sector employees’ pay by 2015.
  • Median pay in the civil service is 4.4%, or £1,263, lower than median pay in direct private sector comparators.
  • At executive officer level civil service pay was 10% below private sector comparators and at administrative officer level it was 8%.
  • These discrepancies in pay for executive officers and administrative officers are found in every nation and region in the UK.

The report aims to generate a serious debate about the effects of low pay and government pay policy on the UK economy.

It comes as 250,000 of our members who work in civil and public services start voting in an industrial action ballot over cuts to their pay, pensions and terms and conditions.

We have asked for a pay rise for civil servants of 5% or £1,200 and for the living wage to be written into government contracts with private sector employers.

Money in people’s pockets

While ministers are not able to increase wages across the whole economy, increases in public sector pay and the national minimum wage – and support for the extension of the living wage by insisting on it for government contracts – would stimulate demand and act as a catalyst for the private sector.

PCS general secretary Mark Serwotka said: “Almost everyone can now see that austerity is not working. The chancellor George Osborne is borrowing more for failure, we are on the verge of a triple dip recession, food banks are on the rise and pay day loan sharks are preying on the vulnerable.

“We believe the government’s pay policy, built on the lie that hardworking civil servants are paid too much, is having a seriously damaging effect on the whole economy.

“Instead of burying their heads in the sand and hoping for the best, ministers can and should act now to put money into people’s pockets and back into our economy.”

Click here to download the full report.

Does weak employment law help economic growth?

The SKWAWKBOX

A week ago, because the coalition was starting to talk about weakening employment laws ‘to help kickstart the economy’, I reblogged my analysis of the Beecroft report and its author’s vested interest in the measures he was proposing.

Late last week, the papers carried reports of Business Secretary Vince Cable’s plan to slash the maximum award for unfair dismissal from its current level of £72,000 to whichever is the lower of the national median wage (currently around £25k) or the employee’s annual salary. That means someone on a salary of £40,000 a year receiving a maximum of around £25k, and someone on £15k only receiving £15k – for unfair dismissal. If a tribunal rules that an employee wasn’t unfairly dismissed, that person gets nothing – which means that while decent, fair employers have little to fear under the current system, unfair, ‘shark’ employers stand to gain massively from being able…

View original post 1,060 more words

Don’t turn back the clock on employee rights

From slashing maternity leave and workplace safety inspections to robbing people of their protection from bullying bosses, this government are turning back the clock on decades of hard won rights for the UK’s employees.

But by chipping away at our rights one piece at a time, they’re hoping nobody will notice until it’s too late.

Help send them a message that we can see what they’re trying to do, by joining our campaign. Sign the petition and add your own message to tell the government why rights at work are so important.

Tell the Government:
Don’t turn back the clock on employee rights
Click here to sign the online petition

Public Sector Job Losses in South West

The following press release from TUC South West was released in March 2012.


One in 14 public sector workers in the South West lost their jobs between July and September last year, according to new figures from the Office of National Statistics.

A total of 37,000 workers – at seven per cent, the largest fall in the country – of those employed in the region by local government, the police, the forces and the NHS lost their jobs.

Nigel Costley, Regional Secretary of the South West TUC, said: ‘All across our region public sector jobs are disappearing in droves as local councils, government agencies and the health service are forced to cut services to the core as the Chancellor’s austerity measures hit hard.

‘More than 37,000 public sector workers in the South West have now lost their jobs at a time when finding work has never been harder.

‘Behind every job loss is not just the job consequences but the loss of valuable public services.

‘Ministers must see that their economic policies are doing huge harm, and with more spending cuts coming down the track and the recovery still weak, thousands more public servants will soon be swelling the ranks of the unemployed.

‘A change of direction which has jobs and growth at its heart is now long overdue.’


This is devastating enough but when you take this together with the results of a recent Chartered Institute of Personnel and Development (CIPD) survey of 1,000 employers it gets even worse. It highlights that the governments assurances that the private sector would “fill the hole” made by all the public sector cuts is simply proving to be be pure fantasy without a growth strategy.

The survey showed that a third of private sector employers had kept on more staff than they needed to avoid losing skills.

But almost two-thirds said they would have to cut back if economic growth did not pick up in the next year.

“Recent falls in unemployment suggest that the labour market is on a sound footing, but a closer examination reveals that many employers are holding on to more staff than is required by the current level of demand in order to retain their skills,” said report author Gerwyn Davies.

“This is a make or break moment for employers – unless growth picks up many will find that they cannot hold on to some workers any longer.

“The tenacity with which employers are hanging on to skilled labour is a reflection of the high value they place on it and the damage they fear will be done to their businesses if they are forced to start making more redundancies.”

The survey also showed that public sector organisations were predicting average pay rises of 0.2%, compared with 2.5% in the private sector.

Source: BBC

Stealth tactics: making unfair dismissal worthless

Article from Solicitors Journal:

Having found that it could not politically do away with unfair dismissal outright, the government now wants 
to – quietly – make it worthless, says Anya Palmer.

The government’s employment law review is now halfway into its second year. The qualifying period to bring a claim for unfair dismissal has already been doubled from one year’s service to two, from April, and there are plans to introduce fees for tribunal claims with the obvious intention of deterring claims (see ‘Fire away’, Solicitors Journal 155/38, 11 October 2011). But the business lobby – notably the British Chambers of Commerce, the CBI and the Institute of Directors – wants more.

For months now the business lobby has been pushing for the proposal by millionaire Tory donor Adrian Beecroft to replace the right to claim unfair dismissal with a no-fault compensation scheme. That proposal was rejected for political reasons in November 2011, and was replaced with a more limited proposal to introduce a no-fault scheme for very small businesses employing fewer than ten people. A consultation or ‘call for evidence’ was set up. Business secretary Vince Cable made little secret of the fact that he did not believe there was any evidence to show that making it easier to fire would make employers more likely to hire, even for small employers, but said he was willing to look at whatever evidence people put forward.

The ‘call for evidence’ was due to end on 8 June, but even before it ended the press had been briefed that the small business proposal would not go ahead. On 21 May the government finally published the Beecroft report, apparently forced into doing so by freedom of information requests from The Guardian and shadow business secretary Chuka Umunna. By the time it was published, the political correspondents were reporting that the no-fault dismissal proposals would be quietly shelved (in theory they had already been shelved back in November for all but the small employers). The outcome: Vince Cable and Nick Clegg got to look good for standing up for workers’ rights, and the Tories got to salvage some of the damage done by Downing Street, having secretly commissioned this report from a major 
Tory donor in the first place. The press 
then lost interest. The dogs bark, but the caravan moves on. Is that an end to the matter? Hardly.

On Thursday 24 May the government quietly published the Enterprise and Regulatory Reform Bill, which deals among other things with employment law reform. The bill contains a number of dubious proposals for employment law procedure. For example, it proposes compulsory conciliation by ACAS before any claim can proceed. Any employment lawyer with more than three years’ PQE can tell you that this will not deter claims any more than compulsory grievance procedures did between 2004 and 2009, and will simply increase costs. But I want to focus here on the proposed changes to compensation for unfair dismissal, because my concern is that, having found it politically impossible to simply do away with unfair dismissal, the government wants to gradually make it worthless instead.

Existing remedies

An employee who is dismissed, provided they have two years’ service (there is no service requirement if they can prove discriminatory dismissal but I am talking about ordinary unfair dismissal). If they establish unfair dismissal, there are two elements to the award that they will get: a basic award and a compensatory award.

The basic award is equivalent to a redundancy payment. It is not high: this year it is a week’s pay capped at £430 for each year of service aged under 41 and £615 for each year of service aged over 41. The number of years of service is capped at 20. The minimum award is £860 for two years’ service, and the maximum possible award is £12,090.

Compare this to many countries in Europe where a redundancy or dismissal payment will be a month’s pay (or even 1.5 months’ pay), uncapped, for each year of service and it is readily apparent why it is said that Britain actually has one of the 
most flexible labour markets in the developed world.

The compensatory award is based on loss of earnings and is currently capped at £72,300. Large awards are rare – the median award last year was only £4,600. But for an employee who does suffer substantial loss and can prove it, their loss is arbitrarily capped at that amount.

It is obviously unfair that compensation for unfair dismissal is capped at all. A claimant who wins their discrimination case does not have their compensation arbitrarily capped. Nor does a claimant who wins a personal injury claim. So why should compensation for ordinary unfair dismissal claims be capped? But capped they are.

In 1998 Labour set out a principled case for removing the cap in a white paper 
called Fairness at Work, but the business secretary at the time, Peter Mandelson, backtracked and compromised by raising the cap from one arbitrary figure (£12,000) to another arbitrary figure (£50,000) and index linking it. That is the origin of the current figure of £72,300.

The government is consulting on a wide range of measures as part of the employment law review, but there has been no consultation on changing the level of compensation. The proposal to reduce compensation simply appeared unannounced in clause 12 of the Enterprise and Regulatory Reform Bill.

Proposed power to reduce compensation

Clause 12 provides that the secretary of state may by statutory instrument vary the limit of the compensatory award to be:

(a) a specified amount of between one and three times median annual earnings; or

(b) a specified number of weeks’ pay
(but not less than 52) – or the lower of the two.

Median annual earnings are currently £26,000, so, assuming whole numbers are used, this would give the secretary of state power to limit compensation to either £26,000, £52,000 or £78,000 under limb (a), or to limit it to a specified number of weeks pay (at least a year) under limb (b), or to apply the lower of the two if both (a) and 
(b) are used.

To set the cap at £26,000 would in real terms be returning it almost back to where it was in 1999 when the Labour government raised it.

Logically I assume that this government intends to go for the lower limits and to use both limits and the ‘lower of the two’ provision so that in short order compensation can be reduced from its present level of £72,300 to, for example, £26,000, or a year’s salary if less (as £26,000 is the median, nearly half the population would earn less than that so the limit would then be even lower in their case).

If that is done then someone earning £52,000 would not be able to recover more than six months’ loss even if it reasonably takes them nine months to find another job. And someone earning £20,000 could not recover more than £20,000 even if they reasonably suffer a £26,000 loss.

This is about as arbitrary as it gets, and the ‘lower of the two’ provision makes it perfectly clear whose side the government is on here. No principled case has been advanced for empowering the government to impose these arbitrary limits.

Clause 12(3) provides that the amount of the limit in limb (a) may vary in relation to different descriptions of employers. So it may be that there will be a compromise for the lifetime of this government: compensation could be limited to three times median earnings for large employers, two times for medium employers and a multiplier of one for small employers. However, given the direction in which the Conservative party’s sympathies lie, it’s not unreasonable to suppose that if they were to win the next election they would simply reduce the limit across the board.

The Enterprise and Regulatory Reform Bill was due to have its second reading on Monday 11 June. So far this proposal has passed entirely without comment in the national press, with the exception of a piece I wrote for the (online only) Guardian Law. Apart from that there has been no coverage even in the legal press until now. The government has not been called on to defend this proposal. We do not even know if Labour will oppose it. Chuka Umunna was very vocal on Twitter about no-fault dismissal, so I asked him on Twitter where he stood on these proposals. He has not replied.

A concrete example

To give an example of why the arbitrary 
cap is so unfair, let me give you the example of a case I did in 2004. The claimant was a lift engineer who had worked for his employers for 38 years, since 1965. He was unfairly blamed by his employers for an accident which was nothing to do with him. The tribunal’s findings were clear. He was blameless. The tribunal ordered reinstatement. The employer refused to reinstate him.

The claimant did an excellent job of mitigating his losses, setting up as self-employed so that his loss of earnings was minimal. But he could not mitigate the damage to his final salary pension scheme. His net losses were valued at £121,000. 
The tribunal was only able to award him £53,500 (the limit at that time). To add insult to injury he had to pay tax on his award to the extent that it exceeded £30,000.

I would be interested to know what justification Nick Clegg or Vince Cable can offer for agreeing to extend this arbitrary cap, other than the obvious one that it helps keep them in government.