Britain - Child poverty and inequality: the cost of Labour's policies

Mar/Apr 2007

In February this year, Unicef's "reportcard" rating the general well-being of children in 21 OECD countries, placed Britain at the very bottom of the league.

So the fifth largest economy in the world, going by GDP, and one of the richest in Europe, deprives its children more than any other of these developed industrialised countries.

A close second from the bottom, at position 20, was the USA, which, unlike Britain, has no "welfare state" at all. Ireland, Britain's former colony up until partition in 1921, which used to export its impoverished population here as migrant labour for over 150 years, comes in the top half, in position 9! The highest score is achieved by the Netherlands, followed by Sweden, Denmark and Finland. But it is notable that even the east European countries, like Poland, the Czech Republic and the "poor" Mediterranean countries like Spain, Greece and Portugal score better than Britain.

Of course, as the Unicef report points out, deprived children are more likely to be in poor health, to have learning or behavioural difficulties, to do badly at school, to become pregnant at an early age, and when they are adults, to be unemployed and dependent on social welfare benefits. A picture of Blair's Britain?

Less than a year before the publication of this Unicef report, in March 2006, Blair and his minister of welfare, John Hutton published a glossy report boasting of how the Labour government had reduced poverty. In its introduction, Blair wrote "We are now close to the European average for child poverty, instead of the bottom - and we have made the biggest improvement of any EU country." Really?

This Unicef report proves the opposite. Of course, it is based on calculations which define poverty according to income, rather than what people can actually afford on that income. So for instance, it takes no account of the fact that the partial or total privatisation of public services has made them less accessible to the poor - and not just in Britain. Nor does it reflect consequences of the astronomical rise in housing costs in Britain.

In the USA, a wide inequality gap between rich and poor has always been a feature. In Britain, this gap only began to widen significantly in the 1980s, when a number of so-called "entrepreneurs" were able to become "super-rich" by capitalising on Conservative governments' policies. But they have increased their wealth yet more in the last 10 years, thanks to the Blair government's pro-business stance, while at the same time low wages have created an increasing number of "working poor". This is due to the parallel strategy of casualisation (Brown's "flexible labour market") and coercion via the "New Deal" and Jobcentre Plus which forces the unemployed - targeting single parents - into taking part-time and temporary work. So today Britain can boast that it has become the "low-wage" capital of Europe!

Counting Britain's sad children

While the measure for material poverty may only be a relative one, which really only exposes the level of inequality in a country, Unicef's other measurements of "well-being", provide ample evidence to show the consequences of Labour's social policies. Britain scores bottom for almost every one of these other measures.

For instance, here, the percentage of 15 year-olds who do not expect to find work beyond some sort of low-skilled job is more than 33% compared to the OECD average of around 25%.

Britain also has fewer 15-19 year-olds in full-time or part-time education than all the OECD countries except the US, Portugal and New Zealand.

Measures used to assess "good relationships" within the family and "good relationships" with their fellow children, rate 77% of Britain's children as deprived - and this is the worst score in the whole of the OECD. What comes under this heading is sitting down for a meal several times a week with a family, spending regular time talking to a parent, or finding one's peers "kind and helpful". Given that around 47% of children live in one-parent families and the government's policy is to drive lone parents into work "or else", Britain's poor rating is hardly surprising. And little wonder too, to use the government's language, that more British children feel socially "excluded".

As for what are regarded as "risky behaviours", like drinking alcohol and smoking cannabis, Britain is, again, worst. In the majority of OECD countries, around 15% of children aged 11, 13 and 15 years, said they had so much alcohol that they were drunk two or more times in the last 12 months. In Britain as many as 33% of these children said they had been drunk at least twice in the past year. The percentage who had smoked cannabis in the previous 12 months was also over 30% compared with 5% in Greece and Sweden.

It is already common knowledge that Britain has the highest rate of teenage pregnancy in Europe. And despite the government's multi-million pound "strategy" to reduce this, official statistics show that in 2005, the rate rose by 4% for girls under the age of 16 - the last available figures - which is the highest rise in 10 years.

But of course, none of the government's strategies can tackle the reasons why teenage girls might decide to go ahead and have a baby, because these are first and foremost social reasons. As Unicef points out, teenagers doing well at school, and looking forward to an interesting and fulfilling life, surrounded by family and friends with similar high expectations, are likely to feel that having a child will prevent them from achieving their goals. Thanks to successive generations of poverty in the working class of Britain, 1 in 4 British teenage girls between 15 and 19 years do not feel they have such prospects.

When it came to asking the young people themselves how they rated their own well-being, British children had the very lowest score out of all the children questioned. Surely this is the most revealing "measure" of all?

A poor pledge

The Unicef report is a clear indictment of Blair's Britain. As its introductory statement says: the true measure of a nation's standing, is how well it attends to its children - their health and safety, their material security, their education and socialisation, and their sense of being loved, valued, and included in the families and societies into which they are born".But of course, if so many children in Britain today are poor, this only reflects the fact that even more adults must also be living in poverty. True, this increase in poverty began before Blair's government came to power. One third of the British population had fallen below the poverty line by 1997, as a result the Conservative governments' attacks on jobs, living standards, employment rights, union rights and all of the public services. Tory policy had been aimed at rolling back the already inadequate British "welfare state", denationalising the public utilities and transport systems, and deregulating the labour market in order to cut social spending, redistribute to the wealthy, and make Britain a cheap labour economy. It was under the Tories that casualisation of work and low wages, along with the withdrawal of employment rights, began.

So by 1996/7 there were 4.2 million children in households earning less than 60% of the median income.

Then of course, Blair's government came into power. And it should be recalled that this was only due to a consensus among the City and the capitalist class that the Tories no longer had either the support or the energy to carry their anti-working class agenda through to the end. Blair was entrusted to use Labour's mandate from the electorate to apply the "finishing touches", which is precisely what he has done.

But Labour's sticking to the Tory public sector spending restrictions for its first two years, meant increasing austerity for the poor and an on-going crisis in the NHS and the other public services. So by 1999, Blair felt obliged to announce he was, at the very least, going to "tackle" the poverty affecting one third of the country's children, as a gesture to the disgruntled electorate.

In March 1999, he made a suitably grandiose announcement - in his now familiar evangelical style: "Our historic aim will be for ours to be the first generation to end child poverty forever, and it will take a generation. It is a 20-year mission, but I believe it can be done."He duly committed his government to cut child poverty by one quarter by 2004/5 and to halve it by 2010. "Ending it" was pencilled in for 2020.

However, by 2004/5 there were still 3.4m children living in poverty. Instead of 1m, only 700,000 had been "lifted out of relative poverty", 300,000 short of the target. And today this is where things have got stuck: 27% of children are still living in homes with incomes below the government's own official poverty line. It may be fewer than the peak of 33% in 1997, but in the context of what Blair and Brown claim is a "booming economy", it takes some explaining! Or it would, if Labour politicians actually felt any obligation to justify themselves, which they evidently do not.

Cutting social spending

In his most recent pre-budget speech, in December 2006, Brown began by saying, " I can report not only the longest period of sustained growth in our history, but of all the major economies - America, France, Germany, Japan - Britain has enjoyed the longest post-war period of continuous growth. (...) Ten years ago Britain was 7th in the G7, bottom of the league for national income per head. In the last 2 years Britain has been second only to the USA. In no other decade has Britain's personal wealth - up 60% - grown so fast."Thanks to Brown's policies which favour the rich, as he said, personal wealth in Britain has increased by 60% over the past 10 years. The joke is that he talks about this as if it is the wealth of the "country" - when in fact it is the wealth of a small band of hugely rich individuals - which has grown. They have managed to increase their incomes beyond their wildest dreams and become millionaires and billionaires. Meanwhile, despite that increase in wealth, British children find themselves at the bottom of the OECD pile.

Of course, thanks to accumulation of wealth at the top, the salaries of City managers and management level employees pull the "median income" upwards. The most recent ONS figure for "median income" for full-time employees, is £447 per week. This would set a "poverty line" (60% of median income) at £268/week. But in fact the top 10% earned more than £886 per week (the highest 1% earning £1,038/week), while the bottom 10% earned less than £244 per week!

Judging by the latest Unicef report and the previous one done in 2005, Brown managed to make poverty worse in the space of just over 12 months! In 2005, Britain was 6th from the bottom of the OECD child poverty league - above Ireland, the USA, and Mexico, which had been included that year and which came last. Today it is Britain which comes last.

Of course, while Britain's poorest may not be as poor as those in Mexico - or even the USA - what the Unicef report this year has underlined is the fact that British children are suffering the consequences of poverty much more than children in any of the other OECD countries.

In fact the main factor in preventing child poverty has been shown by Unicef to be the level of state spending on social benefits.

In this context, it is worth quoting the USA's CIA World Factbook in its description of Britain in 2006, as "a leading trading power and financial centre, .... one of the quintet of trillion dollar economies of Western Europe. Over the past two decades, the government has greatly reduced public ownership and contained the growth of social welfare programmes. (...) The economy is one of the strongest in Europe; inflation, interest rates and unemployment remain low."Indeed, the essential point here is that Brown has "greatly reduced public ownership and "contained the growth of social welfare programmes. This is, of course, not the language Brown would use. He tells us instead that he has achieved unprecedented "social progress" through implementing "partnership" between private and public sectors, adding that: "As recently as the mid-1990s, 75% of all new public spending went to debt interest and social security benefits. Today it is down to less than 20% and the purpose of all these savings is to ensure frontline services will have the resources they need."Yes, and as the unemployed have found out in the last year, the frontline services they need, like those from benefit staff, have disappeared. The effect of recent reorganisation, centralisation and 15,000 job cuts in the Department of Work and Pensions over the last 2 years, affecting mainly job centres and benefits offices was exposed by the Child Poverty Action Group in a report published in September 2006. Among other things, it looked at the service provided by Jobcentre Plus, following the introduction of the new system which relies on getting people to claim benefits by phone (only a few centres had free-phone numbers!) and computerising the data in order to make payments. As the report pointed out, a lot of the poor and unemployed do not have landlines. And though they may have mobile phones, they cannot afford to pay the high cost of long-duration calls on the mobile phone network.

What the new system had resulted in, was a shocking catalogue of backlogs and delays, as long as 6 months or more, before people actually received any payments at all. This is all the more ironical, since Job Seekers Allowance, for those who have just lost their jobs, is only payable for six months. There was no system in place to help those with special needs or language difficulties and claimants were not told about crisis loans. All of which caused a huge increase in the hardship experienced by those dependent on social benefits to survive.

One of the main recommendations of the Child Poverty Action Group report was that the government should take on more staff to help claimants, and train them well. When in fact the government's whole idea in the first place was to reduce the staff and cut costs as well as discourage claimants! For Brown, no doubt, this report is merely confirmation that his policy is working!

Increasing the inequality gap

The government, backed up by supposed "independent" research from organisations like the Institute of Fiscal Studies (IFS) claims that it has actually reduced the poverty gap in the last 4 years. The reason for OECD "discrepancies", is, we are told, due to differences in the statistical methods used! But in fact even the IFS has to admit by that using its own methods, it found that the inequality gap increased between 1997 and 2002 - to reach its highest ever level since (comparable) records began in 1961 - and that it may have shrunk since then, but only to go back to the 1997 level!

Anyway, what is there to boast about when, in deprived areas, the unemployment rate is 36%? Or when 11.4 million individuals live below the poverty line? This is supposedly "down" on the 1996/7 figure of 13.8 million. But it amounts to almost 20% of the whole population! What is more, poverty among working-age non- parents, although usually ignored by the government, is 1% higher than it was when Labour came to power.

Nevertheless Brown claims that "there is already today a higher proportion of the working age population in employment in Britain than in America, Japan, Germany, France or the whole of the euro area." Thus, he "is today strengthening the New Deal with further measures to bring more lone parents and the unemployed into jobs" So to reduce poverty, even more of the very poor should be forced into precarious jobs, which pay rock-bottom wages, which require workers to apply for "tax credits".

That trade union leaders should still praise the Labour government for its minimum wage, beggars belief. In fact even with the recent increase to £5.85/hour (for those aged 22 or over, since 18-21 year olds get £4.25 and 16-17 year olds get only £3.30), a worker on a 40-hour week would earn £234/week, and fall below the official poverty line.

The TUC calls for the minimum wage to be raised to £6/hour. And yet, even the Greater London Authority has established its own "living wage" level at £7.05 per hour.

It must be said that, at the same time, the TUC acknowledges that its target falls short of the "decency threshold" adopted by the European Council: it was suggested that this "decency threshold" should be 68% of averageearnings, which would mean an hourly rate of £9.30, today, in Britain!

But even the rock-bottom minimum wage is unpoliced and therefore often ignored. All the more so when it comes to paying workers "cash in hand".

The Annual Survey of Hours and Earnings, published by the government's own National Statistics Office, estimated that in the spring of 2006, there were 360,000 jobs which paid less than the national minimum wage.

People in part-time work were almost three times as likely than those in full-time work to be on an hourly rate which was less than this minimum. Today, more than a quarter of all jobs in Britain, that is 7.1m jobs, are part-time. And, of course, the fewer the hours and the lower the wage, the more likely is the employer to be exempt from paying any national insurance contributions - which constitutes a crude encouragement for Scrooge bosses! Besides, all it takes is to categorise workers as engaged in "training", and a boss can get away with paying lower than minimum rates. And he can also offset "accommodation costs" against wages in order to pay less.

With full-time jobs often difficult to find, to make up a proper wage many workers are doing multiple, low-paid, part-time jobs. What is more, a low-paid childless single person can only qualify for tax credits if he/she works a minimum of 30 hours, which would require a second or third part-time job.

The TUC claims that the trend towards casualisation has "slowed" and that these days "only" 6% of jobs (1.4m) are temporary. However, another 1%, that is, around 280,000 temporary workers (according to official statistics) are employed through agencies, which means these workers do not have the right to equal pay and conditions under EU legislation. These workers are also more likely to be on the minimum wage, provided of course the agency obeys the law!

But further down the poverty scale still, are the 5.5m families with children who have to claim tax credits or equivalent "out of work benefits". And as the Citizen's Advice Bureau points out, "the tax credit calculation is very complicated", and depends on a large number of factors. As a result many do not claim, while others who may have been lucky enough to get a pay increase, end up being billed for overpayments.

However, what this great "benefit" amounts to, is a maximum basic payment of just £1,665 per a year! And to get this measly amount, a family has to be earning £5,220/year (£100/week) - or less! That is, all but starving.

On top of this, even the government-friendly IFS points out that Labour's reforms to the benefit system mean that since 1997, someone "choosing" (they should say "forced") to "work harder", and claim tax credit, gets 2½p less of each £1 he or she earns, because other benefits are cut accordingly! But apparently these measures, which keep people in a poverty trap, just cannot be blamed for the inequality gap, because this would not fit with Brown's boast of "lifting the poor out of poverty" through his tax credit system!

Indeed, the IFS recommendation - and this is what the government is following - is to retain the plans to cut social spending in order to "increase the incentive to work", and try and push even more lone parents and disabled into what Brown calls "jobs". Even if, admits the IFS, in order for the inequality gap not to increase further, "new spending will be needed from extra government borrowing, increased taxation or a reordering of spending priorities." Tax the rich? It is not in Brown's plan.

In fact Brown's plans so far, have benefited only the very worst off of the poor who have children. As a result of the increase in child benefit from £27 in 1997, to £64 today, he may well have lifted this very poor layer of families one rung up the ladder. However, he has left the layers of poor above this, totally in the lurch.

How a country treats its elderly...

As for the elderly, the government claims to have improved their lot substantially since 1997, when there were 2.8m below the poverty line. Apparently today, 1m pensioners have been taken out of poverty. However, that means that 1.8m are still poverty-stricken, living on an income of £5,000 or less per year.

Pensioners have, according to the Institute for Fiscal Studies, seen the "highest rise in incomes" compared to the rest of the population. This, we are told, is entirely due to Brown's innovations, like pension credit and winter fuel payments.

However, there is one small problem with such assertions: they do not take into account the things that pensioners now have to pay for which they did not have to pay for before, or which were previously not so costly. For instance today, more often than not they have to pay for home care, if they need it - or do without. Their council tax bills have soared, some by up to 40%. 26% of people over 65 say they have had to cut back on basics in order to pay their council tax bills or have had to borrow money to do so. And whether or not they have "winter fuel payments" their energy bills (and now water bills) have also soared by an average of 20%. Everything costs more. After bills this means that the poorest pensioners have only around £59.46 to live on per week.

So these statistics which are put out to show how Labour has improved pensioners' lot are plain lies. But then that is the purpose of official statistics.

Obviously the exacerbation of poverty by the rising cost of living applies not just to pensioners, but the whole of the working class. For instance, the energy regulator, Ofgem, has estimated that there are altogether 4m households in "fuel poverty" - defined as having to spend more than 10% of their income on energy to maintain a warm home - as a result of recent gas and electricity price rises. 15,000 people have been unable to pay a penny off their mortgages over the last 12 months. 8.3m letters were sent to households threatening legal action last year for non-payment of water bills. Over 2m households were struggling to pay their council tax bills according to a report by the Joseph Rowntree Foundation.

Yet what the Joseph Rowntree Foundation has also shown, by calculating a poverty rate based on household spending (rather than median income) is that poverty rose by 11% between 1996/7 and 2002/3! It also found that pensioners' poverty was unchanged, at 1997 levels. It is quite obvious why the government will never choose to use this much more accurate measurement of poverty.

A working class in hock

If one was to measure poverty relative to the "decency threshold", cited above, the figures would be drastically worse. But never fear, with the help of this government's deregulation of lending, capital has come to the "rescue" of the working class, by tying a tight knot of indebtedness around its neck.

Indeed, it is this possibility of "living on credit" which really distinguishes "rich Britain" from the 3rd World - and other poorer OECD countries, for that matter. One third of all western Europe's "unsecured debt" is in Britain! The average British citizen owes twice as much as his/her counterpart in the rest of western Europe.

By the end of December 2006, the City's banks and insurance companies could boast that they had put the British population in hock to the tune of £1.29 trillion. This is the figure for personal lending, but on top of this, secured lending on homes added another £1 trillion - an increase of 11.5% in the last 12 months alone.

The average household debt today is £8,791 - excluding mortgages. But it is as much as £53,326 if mortgages are included, meaning an average owed by every single British adult of £27,445!

Banks and other lenders instituted 34,626 mortgage repossession orders in the last quarter alone of 2006, up 15% on 2005. Today, 1.4m adults who have over £10,000 unsecured debt - equivalent to the population of Birmingham plus Bristol - say they are likely to have to declare themselves bankrupt. One in three among the population failed to save one penny during 2006.

As for credit card debt, this was £54.9bn in December 2006. And since the average credit card interest payment rate is 16.84% (11.5% above the base rate), 3.4 million credit card holders regularly make only the minimum monthly payment. This, however did not prevent banks and finance companies from sending out around 1.3 billion items of junk mail enticing people to take out credit card offers and loans last year - that makes 27 items per head of adult population!

In fact there were 183 million plastic cards in issue in 2005 - 4 for every British adult!

But the tragedy of this vicious cycle of credit and debt, is that it means that stress, depression and relationship problems - precipitated purely by financial worries - are estimated to affect as many as 43% of the population. In 2005, there were five known suicides caused directly by overwhelming debt.

Criminalising children

One "measure" which was not mentioned by the Unicef report on child well-being, and which probably says more about the dire social situation for Britain's working class youth, is the numbers who are detained in British prisons.

In the last months, the British media has been exposing once more the scandal of Britain's prisons which are bursting at the seams and the fact that Britain has the highest prison population in Western Europe. However, Britain also has the highest number of under 18-year-olds in prison.

The most recent comparative figures available, collected by the European Council for 2002, report that 2,937 under 18s were in prison in Britain (excluding Northern Ireland) which was an increase of 300 on the year 2000. This compares with 834 in Germany, 688 in France, 13 in Norway and none in Sweden.

In February this year the number of youth in custody in Britain reached a record high of 3,350. 190,000 under-18s were dealt with through the courts last year, with 4% or 7,600 receiving custodial sentences. 12 of those who committed suicide in prison in 2005 were under 21 years of age and one of them was only 16 years.

More recently, the targeting of youth has become a prime objective as a result of Labour's adoption of the "tough on youth crime" and "zero tolerance" policies. By the summer of 2004, over 2,500 Anti-Social Behaviour Orders had been made, with 80 of them given to children aged 12 and under. By June 2005, some 50 children a month were being incarcerated for breaching their ASBOs. In July 2005, an Act of Parliament removed anonymity of children who breach the terms of their ASBO, so that their names could be posted publicly in order to "shame" them.

However, possibly the worst aspect of the British state's attitude towards young "offenders" is that Britain has the lowest age of criminal responsibility in the European Union. Scotland has an age of criminal responsibility as low as 8 years old, but in the rest of Britain this is still only 10 years. In fact in 1998, the Blair government even abolished the right of the defence to argue that children between the age of 10 and 14 years were not culpable on grounds of immaturity, despite protestations from the UN.

As regards the rest of Europe, the lowest age of criminal responsibility is 12 years old (Greece, Ireland, Netherlands and Turkey) and the highest, 18 years (Belgium and Luxembourg). Norway raised their limit in 1990, from 14 to 15 years.

Since 1998, the government has been opening more so-called Secure Training Centres, a number of them privately run by a Group4 subsidiary called "Rebound". Children as young as 12 years old are placed in them. It was in one of these that a 15 year old boy died in 2004, 3 days into a 12 month sentence. 3 guards had restrained him and as a result, choked him to death, using what was, at the time, a Home Office approved, so-called "Seated Double Embrace". It is ironic that in the context of the never-ending media focus on child abuse that Blair's criminal justice system is so obviously guilty of just that.

Only one way out

Is it possible for a British government to eradicate poverty? Of course not. This would require that capitalism, together with its class system, is eradicated. But was it possible for Blair to improve the lives of the poor, even if they were not even in work? Of course it was. It would, however, have required a completely different redistributive policy from the one adopted by Chancellor Gordon Brown since 1997. To name just two measures: he would have had to take from the rich - by taxing their ever-rising profits - and add the proceeds on to social benefits and public service budgets - and he would have had to set a minimum wage at a high enough level to eradicate poverty pay.

Instead, what Brown did, faced with the gross inequalities which had arisen during the 18-year Tory regime, was to disguise them.

His tax credits for the low-paid and topping up of only one selected benefit - for children - while placing restrictive conditions on all others - were, purely and simply, a subsidy to the bosses who pay low wages and an incentive for them to keep on doing so.

And of course, by cutting the bosses' labour costs together with corporation tax, Brown redistributed the wealth made by the workers, to the bosses, not to the poor! Neither did the setting of a minimum wage at the low level agreed to by the bosses, do more than effectively pull all wages downwards towards this low minimum.

This goes a long way towards explaining why today this country has the dubious record of having the poorest children in Europe and the widest inequality gap.

But while the future for the poor, and for the generation of children who have lived for the past 10 years under the Labour government, may look bleak, this does not mean that the tide cannot be turned.

The working class has always had the means to change society and to alleviate poverty for good. It still has. Indeed it is the only force in society today which can achieve this. No reports nor studies are needed to prove to workers that the capitalist system flourishes at their expense and that while the rich get richer, the poor get poorer.

It is true, however, that after so many years of facing a situation where the bosses have had the upper hand, thanks to successive governments' policies, workers have little confidence in their own power to turn society on its head. But since there is no other choice, one day the working class will have to take this step. It will have to create its own political organisation and its own collective fighting battalions, to carry out the struggle for a classless society. Because that is the only way that society will ever achieve "well-being" for every individual, young or old.