The squeeze on tax credits and benefits will push 200,000 more children into poverty, the government has admitted for the first time.

(22 Posts)
ttosca Mon 21-Jan-13 17:05:53

No, we're in the mess because of the deliberate policy of pushing down wages for 30 years, and replacing it with credit in order to keep up demand.

Are you suggesting then that it is official govt policy to push wages down. And if so did employers lower their rates of pay when the NMW was introduced?

Oh yes. Obviously, apart from the public sector, the government can't actually control wages explicitly. It can, however, enact economic and political policies which have the effect of suppressing wages, such as attacking workers rights, attacking unions, the right to strike, reducing social security so that people feel more insecure and are willing to work for lower wages, privatising formerly govt-owned industries to companies which re-hire at lower rates, shifting the tax burden away from corporations on to individuals through income tax, and so and and so forth.

These are the economic policies which have been going on since the late 1970s in the West and which have resulted in unprecedented wealth inequality, massive increase in household debt, and stagnating living standards for the majority of the population.

torychicetc Mon 21-Jan-13 14:34:57

Most people are very sympatheic to the poor. And so we should be.

niceguy2 Mon 21-Jan-13 13:30:17

No, we're in the mess because of the deliberate policy of pushing down wages for 30 years, and replacing it with credit in order to keep up demand.

Are you suggesting then that it is official govt policy to push wages down. And if so did employers lower their rates of pay when the NMW was introduced?

Just being a pedant here: relative poverty is defined as 60% of the median income adjusted for family size, not average. So if you lined the population up in order of income highest paid at one end and lowest paid at the other the median income would be the income of the person right in the middle. According to the IFS, in 2011 median income was £419 per week while median (*average*) income was £511 per week. So people living in relative poverty were living on £251.4 per week.

IMHO relative poverty is only part of the picture. Income inequality, as measured by the gini coefficient, has fallen, relative poverty levels have fallen yet income levels for all have also fallen (and fallen faster at the top end of the income scale). However, this was caused by the incomes of the lowest income groups falling by less than the incomes of middle and high income groups. So the argument that benefit cuts will force 200,000 children into poverty because of a real terms decrease in benefit depends on what happens to salaried workers' pay. If pay levels increase by 1% (so in effect fall) then there won't be anywhere near as big an increase in relative poverty levels. It doesn't mean that more people won't struggle, starve or be made homeless sad.

brettgirl2 Sun 20-Jan-13 18:19:09

The minimum wage is ridiculously low at the moment. Therefore it won't distort anything!!!

ttosca Sun 20-Jan-13 18:16:09

Or alternatively if the government put the minimum wage too high then the firms would move their operations to India and we' d have less jobs.

There was a bunch of scaremongering when the min wage was introduced (not to mention anti-discrimination laws) that it would destroy the UK economy as businesses couldn't afford to hire. This was shown to be nonsense.

leftycartoons.com/a-brief-history-of-corporate-whining/

The simple fact is both minimum wage and benefits distort the markets for property and labour. Benefits cause rents to be higher than they should be leading to wages being insufficient to pay, meaning people need more benefits.

The market is always 'distorted'. There is no such thing as 'free-market', and nor should there be. If there were such a thing, businesses would be able to fire employees at will, without notice. They would be able to form monopolies, and there would be price-fixing. The 'free-market' is not an ideal. It's something which needs to avoided.

The cost of high rents can be alleviated by building more housing, as there is a huge shortage of affordable housing in this country. Secondly, rent-control should be put in place to stop exploitative landlords. If you simply stop benefits for housing, all you'll succeed in doing is making a lot of people homeless.

We''re in a mess because no one including you knows the answer!!!

No, we're in the mess because of the deliberate policy of pushing down wages for 30 years, and replacing it with credit in order to keep up demand. Couple that with deregulation of the banking industry, and austerity measures, and eventually you have a crisis of under consumption, over production, and underinvestment that we have now.

brettgirl2 Sun 20-Jan-13 17:18:51

Or alternatively if the government put the minimum wage too high then the firms would move their operations to India and we' d have less jobs. The simple fact is both minimum wage and benefits distort the markets for property and labour. Benefits cause rents to be higher than they should be leading to wages being insufficient to pay, meaning people need more benefits. There quite simply isn't an easy answer one thing we do need is more homes, but if the cost of living goes down due to higher supply then economic migration becomes more attractive and we just have a higher population. Demand for property goes up and we end up in the same place.

We''re in a mess because no one including you knows the answer!!!

ttosca Sun 20-Jan-13 16:55:13

You're not showing anything interesting. When I post news articles, I expect people to read beyond the headlines.

If I, or you, were to post the BBC news article stating that "The number of children in poverty fell by 300,000 last year as household incomes dropped", I would expect people to use reason to understand the connection between drop in relative child poverty and a drop in overall income.

Perhaps your problem is that your reasoning doesn't go beyond the headlines.

And yes, the Tories are scum, and are unlikely to ever get a Parliamentary majority again. The public will not forgive them for privitising the NHS, wrecking the economy, killing disabled people, and impoverishing millions.

CogitoErgoSometimes Sun 20-Jan-13 08:43:10

The interesting thing I'm showing is that you tend to use simplistic statistics & headlines to keep pushing your dumbed-down alarmist propaganda that the end of the world is nigh, tories are scum, we're going to hell in a handcart etc. I'm showing that statistics just six months ago said something very different. So to base everything on one statistic is rather foolish, don't you think?

Did you sign up for the five minute argument or the full half-hour? smile

ttosca Sun 20-Jan-13 02:08:33

What have you actually shown, cogito? All you've shown is that technically, relative poverty can decline when everybody becomes poorer. So what?

The headline of your BBC article is:

"The number of children living in poverty in the UK fell by 300,000 last year as household incomes dropped, official figures have revealed."

So actually more children are worse off, as incomes drop overall, and as the number of people using food banks (a measure of absolute poverty doubles).

You're not showing anything interesting at all. All you're trying to do is pretend that child poverty isn't that bad when actually it has become worse.

CogitoErgoSometimes Sat 19-Jan-13 17:22:50

What's the point? You did your usual lazy copy/paste job of scaremongering quoting one stat... 200,000 more as if it was the end of the world. I'm quoting 300,000 fewer to show that statistics can go either way. Sorry, is that not the idea? Are we all meant to just gasp in admiration at you ... like normal?

ttosca Sat 19-Jan-13 15:04:23

Cogito-

Jesus Christ, Cogito. What is the point of that post? You're trying to deny child poverty by linking to an article which shows that because now everybody is poorer, relative child poverty officially declined? For what?

Obviously, neither absolute nor relative poverty is desirable. Both are important measures of poverty.

And we do know that absolute poverty is on the increase, as the number of people using foodbanks in the UK has doubled in the past 12 months:

www.bbc.co.uk/news/uk-20820648

This is absolute poverty. Here, in the UK - one of the richest nations on earth.

CogitoErgoSometimes Sat 19-Jan-13 10:50:41

As recently as June 2012 the headline was.... Child Poverty Down by 300,000 as Incomes Dip If it was down 300,000 in June 2012 and will go up 200,000 this year... that's still a net of 100,000 fewer children in poverty.

pointythings Fri 18-Jan-13 20:06:12

Adeucalione but in the years since Labour took power, the cost of living spiralled - house price boom, rent increase, food and energy prices - whilst wages mostly flatlined because inflation was high on top of all that. If you are including tax credits into account when you are calculating the number of families in receipt of benefits - as I suspect you are - then that is a considerable part of the explanation. Many people ended up needing benefits because their wages were not increasing at a sufficient rate for them to maintain even a basic standard of living.

There isn't an easy fix, this topic has been discussed many times, but I do feel very strongly that we should not be living in one of the richest countries in the world and still have working families struggling so much that they need food banks.

adeucalione Fri 18-Jan-13 08:47:15

It is very hard to argue against change when you consider that the number of families in receipt of benefits increased from 700,000 when Labour took office in 1997 to 4.7 million (on equivalent entitlements) by 2010 - this rises to 6-7 million people when housing benefit and council tax benefit are included.

CogitoErgoSometimes Fri 18-Jan-13 08:12:38

Since the definition of poverty is a percentage (60%) of the average income, and since wages are not rising at anything like 1%/year, I can't see how more people will be declared poor just because benefits are rising more slowly. Indeed, over the last few years the depression in average earnings has meant that 60% threshold has come down relatively and more people have fallen the right side of it even though their circumstances have not changed. Poverty is not something we want in our society but I think we have to be very careful how much weight we attach to the relative poverty stats. It can be 200,000 up or down for no reason at all.

ttosca Thu 17-Jan-13 19:21:31

maisiejoe-

Sorry - I meant statutory living wage.

ttosca Thu 17-Jan-13 19:09:28

maisiejoe-

If you want to reduce the costs of welfare, then supporting a statutory minimum wage would help a great deal, as corporations would have to pay their workers a fair wage, rather than an insufficient wage to live on, which is then subsidized by the state.

ttosca Thu 17-Jan-13 19:07:26

maisiejoe-

> Am I missing something - what is the question? And poverty IMHO is what happens in India and Africa.

Poverty happens in the UK as well, I'm afraid.

Number of UK food banks double in 12 months

www.bbc.co.uk/news/uk-20820648

> Work should always pay and be worth doing - ALWAYS!

I agree, it should!

> How can it make sense for people to be better off on benefits.

In most circumstances, you are indeed better off financial if you work rather than collect benefits. The problem is that not that benefits are too high - Jobseeker's Allowance is £71 per week for an adult - but that wages are too low.

What has happened is that, thanks to30 years of neo-liberal policies of pushing down wages, outsourcing, attacks on labour unions, attacks on workers rights, etc. wages are the lower and lowest end of the scale are not enough to live on.

So yes, I absolutely agree with you 100%, that work should pay - always. Unfortunately, it doesn't.

Since wages are now so low for the lowest paid, the government has had to 'top up' wages so that people can survive. In effect, the state is subsidising the wage costs of corporations.

> For the feckless giving them more money or making it more attractive to have another child and gain further benefits is never going to work. It will be a brave gov who starts making people who have no visible income and no inclicnation to work to stop getting benefits after a max of 2 children. None of this 'I am entitled to a 3- bedroom house'. People having mortages dont go to their local council demanding a bigger house because they had another child!

I'm afraid you've fallen for the myths about welfare. The majority of people who claiming benefits of some sort (including tax credits, etc.) are not 'feckless'. They are hard-working families trying to survive on low wages.

-----

Almost two-thirds of the £15.9bn welfare and benefit cuts announced in the emergency budget and spending review will hit working families, union leaders claimed yesterday.

The TUC said an analysis of welfare changes showed working households will suffer a loss of about £9.4bn, nearly twice the level of losses for non-working households.

About 69% of the policies announced in the spending review will hit working households, according to the TUC study.

The TUC general secretary, Brendan Barber, said: "Ministers say their welfare and benefit cuts are fair and justified because they will make work pay.

"Polls show that they have already lost the fairness argument. It is working families – both the poor and the squeezed middle – who are the big losers from welfare cuts, not the alleged workshy scroungers that the government claims to target.

"These deep rapid cuts concentrated on families with children weren't in any election manifestos. The speed and scale of the cuts are not an economic necessity, but a political choice."

He added: "No one voted for these cuts to their living standards, more child poverty, mass job losses and a 'get out of tax free' card for the banks. The government needs to reconsider its spending plans before it causes any more economic damage and pain to working families."

--

www.guardian.co.uk/politics/2010/nov/01/welfare-cuts-working-families-tuc

pointythings Thu 17-Jan-13 18:50:46

maisiejoe many of these families are working. They are just very badly paid to the point where they need top-ups.

maisiejoe123 Thu 17-Jan-13 18:45:15

Am I missing something - what is the question? And poverty IMHO is what happens in India and Africa. Work should always pay and be worth doing - ALWAYS! How can it make sense for people to be better off on benefits.

For the feckless giving them more money or making it more attractive to have another child and gain further benefits is never going to work. It will be a brave gov who starts making people who have no visible income and no inclicnation to work to stop getting benefits after a max of 2 children. None of this 'I am entitled to a 3- bedroom house'. People having mortages dont go to their local council demanding a bigger house because they had another child!

Working families make these decisions all of the time. We would have liked to have had 3 children but for financial reasons stopped at two. Is that so unplatable for a government to state to people having child after child.

ttosca Thu 17-Jan-13 18:28:50

The squeeze on tax credits and benefits will push 200,000 more children into poverty, the government has admitted for the first time. This suggests that in total a million extra children will be in poverty as a result of government welfare measures.

The extra 200,000 children in poverty is a result of the government's decision to lift most in-work and out-of-work benefits by only 1% a year over the next three years, instead of increasing them in line with inflation.

Ministers had been reluctant to state what the impact would be on child poverty, an official government measure of relative poverty that looks at the number of households with incomes at 60% or less than the national average household income.

But in an answer to a parliamentary question, the work and pensions minister, Esther McVey, estimated that "the uprating measures in 2013-14, 2014-15 and 2015-16 will result in around an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI [consumer price index]".

Ministers are trying to push through the benefits squeeze with just one day of debate for the committee stage and third reading of the welfare benefits uprating bill in the Commons on Monday.

Labour said the figures showed children were victims of Tory "political games". Ed Balls, the shadow chancellor, said: "The true character of this Conservative-led government has now been exposed. While they give the richest 2% of earners a £3bn tax cut, 200,000 children will be pushed into poverty and millions of working families made worse off.

"Ministers have spent weeks refusing to admit what the impact of their policies would be on child poverty and now we know why. Children are paying the price for David Cameron and George Osborne's economic failure and the political games they have decided to play."

Liam Byrne, the shadow work and pensions secretary, said: "The chancellor's pathetic little games have real consequences for millions of families struggling to make ends meet.

"Ten years of Tory party detoxification has been destroyed because the chancellor needed a new-year dividing line and Britain's poorest children are paying the price. The nasty party is well and truly back."

The Child Poverty Action Group (CPAG) also criticised the changes but a Department of Work and Pensions spokesperson said: "Even with plans to limit increases to benefits, people will still see their benefits go up year on year – there is no freeze in support. And universal credit will make 3m households better off."

Ministers have argued that it is misleading to look at the impact of the benefits uprating move in isolation. They have separately said they no longer regard the relative child poverty statistics, introduced by Labour, as a useful or valid measure. "Looking at relative income in isolation is not a helpful measure to track progress towards our target of eradicating child poverty," the parliamentary answer said.

Ministers have for some time been arguing that the relative income measure is unhelpful as it focuses on too narrow a definition of poverty. The government has introduced a range of additional measures.

Labour points out that David Cameron, when in opposition, repeatedly argued that relative poverty was important and that the Conservative party would measure and act on it.

The government has previously admitted that some families with children might be £728 a year better off out of work as a result of losing their working tax credits following new rules which came into force in April 2012.

Cameron, in his Scarman lecture in 2006, said: "I believe that poverty is an economic waste and a moral disgrace. In the past, we used to think of poverty only in absolute terms – meaning straightforward material deprivation. That's not enough. We need to think of poverty in relative terms, the fact that some people lack those things which others in society take for granted. So I want this message to go out loud and clear: the Conservative party recognises, will measure and will act on relative poverty."

CPAG said that the 200,000 increase set out in the written answer should be added to the 800,000 increase in children in relative income poverty by 2020 that the Institute of Fiscal Studies (IFS) found in its analysis of the coalition's welfare cuts.

The group said: "This now makes it a total of a million children that the coalition's policies are expected to push into relative income poverty by 2020."

The IFS analysis included the impact of a fall in poverty due to the introduction of universal credit.

CPAG claimed the government had revised down the number of children that would be taken out of poverty due to the universal credit from 350,000 to 150,000.

www.guardian.co.uk/society/2013/jan/17/benefits-squeeze-200000-children-poverty

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