Social Policy Association 2017 Child Poverty Symposium Not worklessness – poverty! Jonathan Bradshaw Durham University July 2017

Argument Ministerial mantra “work is the best way out of poverty” Used to justify New Deals Benefit cap Two child limit Cuts to Employment and Support Allowance Rent limits Harsh conditionality and sanctions regime May be a way out of poverty But for families with children, even when working full-time on the National Living Wage, social security/cash benefits are vital They have been the main target of austerity

DWP (2017) Improving Lives: Helping Workless Families Made much of 11% children in workless families 8 out of ten for over a year Only 3% have someone unemployed 22% of long term workless 3% of 11%=0.33%, 22% of 8.5%=1.2% Most inactive lone parents 71% disabled 49% Biased review of the literature on impact of worklessness on child outcomes. Any effect disappears after controlling for poverty.

Millennium Cohort Survey Only 2.8% workless in all 6 sweeps 1-14. 6.9% poor in all sweeps. 61% of persistently workless lone mothers 52% disabled 84% either. 0.43% of families may have been persistently unemployed over that 14 year period. Looking in the same way at Understanding Society and EU-SILC

Model families, one earner working 40 hours per week on the minimum wage in April 2017 (£7.50 per hour) TAX CREDIT. Comparison with the poverty threshold <60% median 2015/16 income

Child poverty rates Child poverty composition   Before housing costs (BHC) After housing costs (AHC) All lone parents 27 47 All couples with children 18 24 Lone parent working full-time 15 29 Couples with children both working full-time 3 5 Couples with children one parent in full-time work 26 37   Before housing costs (BHC) After housing costs (AHC) All adults in work 26 29 At least one adult in work, but not all 42 40 Workless households 32 Child poverty rates by working status of parents 2015/16 Table 4: DWP (2017) Households below average income

York Living Wage Project 2014 York City Council, Joseph Rowntree Foundation and York St John University became Living Wage employers. Swaffield, J., Snell, C., Tunstall, B. and Bradshaw, J. (2017) An evaluation of the living wage: identifying pathways out of poverty, Social Policy and Society, accepted 24 Jan 2017 Findings: Not all living wage employees were in poverty before – living standards determined by household income, number of earners, hours worked. Not all living wage employees were lifted out of poverty after living wage – even if working full-time and taking up all in-work benefits. 32% still in poverty AHC. Many of those still in poverty wanted and needed more hours. And higher in-work benefits

Conclusion (Low paid) work is not the “best way out of poverty” George Osborne claimed his higher minimum wage for those over 25 pegged to 60% median earnings by 2020 was a "new settlement" - a large scale shift from being a "low wage, high tax, high welfare economy to a higher wage, lower tax, lower welfare". But it is undermined by frozen and cut in-work benefits. This brings the cumulative loss since 2010 to £27 bn/year. The post 2015 cuts by 2021 Beatty, C. & Fothergill, S. (2016) couples with two or more dependent children will lose £1,450/year, lone parents with two or more will lose £1,750/year. The Institute for Fiscal Studies expects UK relative child poverty to increase from 19% in 2014/15 to 27% in 2021/22 before housing costs and from 29% to 36% after housing costs.