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by Chris Pierson
17th June 2022

Where is the justice, or the advantage, of allowing the child to endure the temporal want resulting from the sins of its parents? There is an advantage, and a great one: the same tendency to immorality which characterised the parent is bequeathed to the offspring – the moral disease requires a cure – under a healthy social condition that cure will be found in the poverty which has followed in its train.” Herbert Spencer, ‘The Proper Sphere of Government’.

Blaming the poor for their poverty – and punishing them accordingly – is a commonplace in the modern (and not-so-modern) politics of welfare. And this has very often involved punishing the children of poor parents for having the temerity to be born into poorer families.

This was a recurring feature of the politics of welfare austerity in the decade between 2010 and 2020, as the Cameron-Osborne governments repeatedly emphasised the ’unaffordability‘ of current welfare state commitments and the associated need to reduce both the scale and the generosity of benefit payments. A key premise of reform was not just that costs should be cut but, further, that lessening the generosity of benefits would alter the behaviour of those whose incomes would be thus reduced. As a rule such initiatives fail (see chapter 1 in my book) simply leaving the poor, and thus their children, worse off than they were before.

A recent report by the Larger Families Project offers us an empirical evaluation of one of these behaviour-bending policy initiatives. In 2015, the Cameron government introduced a ’two-child‘ limit on benefits, with child benefit and child-related increments to other benefits limited (in most circumstances) to the first two children. The reform was to apply to future births (from 2017) with the intention of controlling costs, at least in part by reducing fertility (more specifically, the decision to have a third or subsequent child) in the relevant population. The evidence of the report is that subsequent changes in fertility were marginal – perhaps amounting to a fall of around five per cent. Similarly, the savings made (in what is any case a very small component of the overall welfare budget) were also marginal. The report suggests that the most important policy impact of the ’two-child‘ limit was to increase the number of children living in poverty: a number which had already increased by around half a million since 2010.

It is not quite clear when ‘austerity’ as a policy stance came to a close (one possible date is Sajid Javid’s spending review of 4 September 2019 which explicitly didn’t include any austerity measures). But ’austerity’, along with any savings that had been made over the preceding decade, was largely blown away in the succession of budget-busting measures taken by Chancellor Rishi Sunak in the early months of the first COVID-19 lockdown(in the spring of 2020. The welfare state is one of the unacknowledged success stories of the pandemic, unlike the almost universally-praised vaccination programme. Both the emergency measures, like furlough and the additional resources directed to the NHS, and the ‘regular’ welfare state, in which the numbers on Universal Credit doubled from three to six million in a matter of weeks, were extraordinarily successful in enabling both citizens and the economy to weather the immediate shock of a 25 per cent drop in GDP. And we should anticipate that the post-COVID-19 welfare state will be permanently larger than its pre-pandemic forerunner: both because of a legacy in terms of health and social care costs (not to mention educational catch-up) but also as future governments, and populations, have to service a very large public debt in a period in which interest rates are rising fast.

For some poor families, the twenty pound per week uplift in Universal Credit in the early days of the pandemic meant that they were actually a little better off for a time. But the withdrawal of that increment in October 2021 and the subsequent increase in benefits (as of April 2022), which was way below the prevailing rate of inflation, means that the poor, and their children, will generally be (still) poorer in the wake of the pandemic. In its most recent evaluation, the Resolution Foundation anticipates that absolute child poverty will rise by around five percentage points between 2020-21 and 2022-23.

Given that all the major parties committed themselves under the Child Poverty Act of 2010 to work to eliminate child poverty, the record of the last twelve years looks like an abject policy failure. But it points us towards a still starker and more unwelcome truth: that we cannot hope to ‘fix’ social inequality through the mechanisms of the welfare state. New Labour had a pretty good go at this between 1997 and 2005; the numbers of children and pensioners living in absolute poverty halved between these dates. But, even if the political will existed, circumstances are now much less promising. Child poverty is just one amongst an intimidatingly difficult set of challenges which we face: including an ageing society, changes in the shape of our working lives and climate change. As its Labour founders recognised, the welfare state alone cannot realise social change – even if that social change is nothing more adventurous than a significant reduction in child poverty. To do this, we need to think harder, and again, about the supply side of the welfare state (that is how we raise the resources to fund it) and still more generally about what we can do to reduce inequalities of wealth and opportunity as these are increasingly transmitted across generations.

To do this, we need to think not only about what and how much we spend but, even more crucially, about how, how much and what we tax. We need to confront our collective myopia about inheritance and defend the logic of taxing unearned wealth. We need to shift the burden from the taxation of income towards the much more effective taxation of wealth and natural resource, (or what the great American journalist Henry George called ‘land’. Without these sorts of reforms, the welfare state will become increasingly (just) a public mechanism for the health care and income maintenance of a growing elderly population – and social inequality, and with it child poverty, will continue to grow.

Chris Pierson is Emeritus Professor of Politics at the University of Nottingham.

 

The next welfare state? cover.

The Next Welfare State? by Christopher Pierson is available on the Policy Press website. Order here for £19.99.

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