What would a further £25bn of spending cuts mean for child poverty?
Last week, George Osborne delivered a speech so unrelenting in its call for more social security cuts it left even the Spectator noting that this would raise further doubts about the sincerity with which the Conservative party believes in its own social justice agenda. And with good reason: it is difficult to see how £12bn in social security cuts on top of those already announced can be implemented without far-reaching and long-lasting social devastation. Especially if the implied ring-fence around pensions and pensioner benefits (accounting for more than half of the benefits bill and rising) means most of these cuts will have to be made to working age benefits even if that is the part of the bill that is falling.
What would this mean for child poverty? Already, the holes are getting bigger in the safety net. We are in the midst of several years’ worth of real-terms cuts to a range of benefits. Child Benefit, for example, will lose around 15% of its value by 2015. Through the benefit cap and changes to the up-rating of benefits (and in particular of Housing Benefit), we are seeing a decisive break between people’s needs and the support that they are offered. Social security has been placed on a downward escalator, with the worst yet to come.
And people are falling through the safety net. Over half a million people used food banks last year, almost treble the year before. Other short-term coping mechanisms – running up debt and rent arrears, and temporary schemes like Discretionary Housing Payments – are helping to prevent widespread homelessness, for now. Yet, even before the Chancellor’s announcement, the IFS calculated that only about a third of cuts have hit so far. Osborne mentioned a couple of candidates for cuts – housing benefit for under-25s and means-tests for those in social housing earning more than £60,000 a year – but these would barely make a dent. It’s hard to see where that £12bn will come from, without those holes becoming chasms. The Office for Budget Responsibility agreed with the IFS that sick and disabled people are likely to bear the brunt.
What this almost certainly means is further rises in child poverty. From 2.3 million in 2011, the IFS estimates (not factoring in any additional cuts to social security) there will be 3.4 million children in poverty by 2020. This carries enormous social cost, as well as a financial cost to the state of £29bn today, which will rise to £35bn if those poverty projections come to pass. The government is pursuing poverty-producing policies, and we are paying a huge price for this false economy.
The Chancellor in his speech once again talked about the need for tough choices. Choices are indeed being made at all levels. To cut spending, but leave taxes relatively untouched. To focus on the social security budget, and target the benefits of working-age households. But choosing to back up his government’s commitments to the Child Poverty Act in 2010 – and its target to eradicate child poverty by 2020 – by investing in our children is the choice that the Chancellor continues to duck.