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The Child Poverty Act, which commits future governments to meeting Labour’s goal of eradicating child poverty by 2020, received Royal Assent yesterday. But why might we want an Act of this kind?
The obvious answer is that ending child poverty is the right thing to do and making it law will ensure the goal is met. But the greatest progress on child poverty was made in the first part of the 2000s, before Labour had even thought about enacting a child poverty law. Tony Blair’s pledge to end child poverty was made in 1999, yet the idea of enshrining it in law wasn’t aired until Gordon Brown’s 2008 conference speech. So why do we need a law now?
Child poverty rates began to creep up after 2004, which reflected a slackening off in investment in anti-poverty measures. So perhaps Labour felt that it needed a law to make itself put its investment back on track. Let’s hope not – it would be a slightly odd way of going about things. And it hasn’t worked, as the meagre child poverty measures in Wednesday’s Budget showed.
A more plausible explanation is that this is a political move, because it forces the Conservatives to stick to Labour’s poverty goals. The Tories have come round to the idea of relative poverty but often argue that poverty is about much more than income. Should they form the next government, they may prefer not to have their hands tied by an Act that so explicitly prioritises income-based measures of poverty.
The other view is that the government wanted to look like it was doing something on child poverty at a time when the figures were, and still are, going in the wrong direction yet it was difficult, and still is, to find the cash to put things back on track. Drafting a bill and steering it through Parliament is a lot cheaper than putting an extra £4 billion into tax credits, which is what the Institute for Fiscal Studies said it would cost to half child poverty by this year.
It’s important not to get too cynical and forget the very impressive work that this government has done in tackling poverty, particularly among children and pensioners. But if you set yourself challenging and important targets, you have to do everything in your power to meet them. Now that we’ve got a Child Poverty Act, we should use it at every opportunity to hold the government, now and in the future, to account – but ending child poverty takes real action not just legislation.
Kayte Lawton, research fellow, ippr
It’s safe to say that the Government’s Budget announcement that banks will be forced to provide basic bank accounts to everyone is a Good Thing. The Labour Government has already halved the number of people without a bank account, which, as Darling pointed out, is a useful tool for people’s personal finances. From buying a holiday to getting wages paid in, a bank account certainly comes in handy.
But is access to a bank account the critical personal finance issue of our times? Measures to increase financial education and improve access to financial products and services have been a major feature of efforts to tackle poverty and debt in recent years.
In fact, before the banking crash in 2007, the light touch regulation of banks was paralleled by increasing focus on the ability of individuals to manage their finances. Concern about the extraordinary rise in personal debt focused almost entirely on poor people: those with the smallest levels of debt but most associated with ‘problem debt’.
But, as ippr’s recent report Strength Against Shocks showed, people rarely get into financial difficulty because of ‘bad’ financial management. Poverty, sickness and unemployment are by far the biggest drivers of over-indebtedness.
The disparity between low pay structures and consumer-driven growth is an integral part of the story of debt in low income households. Successive governments have encouraged and supported our cultural obsessions with consumer comforts and home-ownership. But while Britain remains one of the most unequal countries in the developed world, many people on low incomes can only keep up with the Joneses – and the rising cost of living – by taking on debt.
Banks, as we know, have been only too happy to oblige, offering no-income-no-job-no-assets loans and mortgages. Low income families that took part in our research had been inundated with calls, letters and visits from loan companies urging them to manage their poverty through debt.
Financial products simply offer practical ways for poor people to manage limited resources, and access to basic bank accounts barely grazes the surface of Britain’s personal finance crisis. A radical pre-election pledge this is not.
Tess Lanning, researcher, ippr
Last week’s publication of the Conservatives’ energy strategy paper Rebuilding security: Conservative energy policy for an uncertain world shows a new kind of rhetoric from them on this issue. In a departure from last year’s climate-centric papers The decentralised energy revolution and The low carbon economy, the focus of this latest paper is very much on improving energy security. Although the language is mainly about security, a closer look at the proposals reveals that many of them also featured in last year’s climate-change-focused green papers. These include: - Reforming the Climate Change Levy so that it is a tax on carbon rather than energy (a reform that ippr argued for back in 2005). This would help provide a ‘floor price’ for the price of carbon.
- Supporting the development of a new fleet of nuclear power stations
- Accelerating Carbon Capture and Storage (CCS) demonstration (partly through the introduction of an Emissions Performance Standard)
- Developing a smart grid (or ‘energy internet’ as they call it)
- Introducing a ‘Green Deal’ programme, which would offer loans to homeowners to improve the energy efficiency of their properties.
Many of these proposals do not actually differ significantly from the Government’s own – particularly the support for new nuclear, a smart grid and a loan programme for domestic energy efficiency measures (the Government’s version is called ‘Pay-As-You-Save’ and is currently being trialled across the country).
There are some new ideas. The most radical is a proposal to allow feed-in tariffs to be used for large-scale renewables investments (as opposed to the current Renewables Obligation). Some people in the renewables industry fear that this would introduce unnecessary uncertainty around the future of support mechanisms for renewable energy.
A glaring omission is how the Conservatives would tackle fuel poverty. Apart from an objective to make energy affordable and speculation that the Green Deal ‘could provide new and effective options for the deployment of public funds to combat fuel poverty’, there are no further mentions of the issue and certainly no concrete policy proposals for dealing with it.
The number of people unable to afford to heat their homes properly continues to rise, so energy policy must get to grips with this problem as well as meeting security of supply and climate change objectives. ippr recommends establishing an independent commission to create a new UK fuel poverty strategy. It is a shame that the Conservatives have missed this opportunity to develop new thinking on addressing this growing social problem.
So will energy policy represent a new dividing line as the election campaign hots up? Perhaps on style – Conservative energy security versus Labour decarbonisation. But on substance, with the exception of the issue of fuel poverty, the approaches don’t look all that different.
Jenny Bird, research fellow, ippr
The Child Poverty Act, which commits future governments to meeting Labour’s goal of eradicating child poverty by 2020, received Royal Assent yesterday. But why might we want an Act of this kind?
