One of the crowning achievements of the last Labour government was a significant reduction in child poverty. This was achieved not only by supporting more parents into work, but through significantly increasing the generosity of financial support paid by the state to low-income parents. Today, that ambitious New Labour goal to halve child poverty feels like a distant memory as this government looks set to preside over a significant rise over the course of this parliament.
That financial support was slashed away by Conservative chancellors from 2010 onwards, meaning that Labour has inherited a tax and benefit system that is far meaner when it comes to children living in financially precarious families. The poorest tenth of families with children lost on average £6,000 a year as a result of tax and benefit changes between 2010 and 2024. On top of that, it is the poorest households that have been most sharply affected by the cost of living crisis. This explains why the UK’s child poverty rate rose the fastest of 39 OECD and EU countries between 2012 and 2021, a symptom of the lack of priority and care afforded to poor children by successive Conservative governments and the product of policy choices to cut taxes in a way that disproportionately benefited better-off households rather than protect children from growing up in families where it is a constant struggle to put food on the table and keep homes warm. Almost one in three children live in relative child poverty and one in four in absolute poverty in households with incomes of less than 60% of the median income in 2011, adjusted for inflation.
There is only one reliable way to reduce child poverty in an economy characterised by huge numbers of low-paid jobs and stagnating wages, and that is to give low-income parents more money by reversing some of the cuts the Conservatives made to tax credits and benefits. That should have been one of the top fiscal priorities for an incoming Labour government. But nearly a year into its first term, there has been almost nothing of substance forthcoming. Instead, there is just the vague promise of an imminent child poverty strategy by the summer. Even worse, there are plans to cut disability benefits to the extent that some disabled parents stand to lose up to £10,000 a year in the personal independence payment and carer’s allowance. Even before these planned cuts, the forecast was that with no extra support for low-income parents, there would be an extra 400,000 children living in poverty by 2029. If Labour goes ahead with the disability cuts, that number will be even higher.
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Ministers are reportedly considering adding in limited measures to tackle child poverty as part of their package of welfare cuts. The suggestion is that they might boost the incomes of low-income parents of babies by around £300 a month, and of toddlers by around £150 a month. But this does not go far enough in terms of lifting children out of poverty, especially when it is part of a set of reforms estimated to take out around £8bn a year from disability benefits by 2029.
The problem for Labour is that it has constrained itself with self-imposed fiscal rules and manifesto promises when it is prioritising an increase in defence spending. The last Labour government did not face the same trade-off: the economy was growing and tax revenues rising, and so Gordon Brown could channel some of that money into keeping children off the breadline. Rachel Reeves has committed that public debt should be falling by the end of the forecast period and that day-to-day spending should not exceed revenues. Labour has also hemmed itself in with its manifesto pledge that it would not increase income tax, national insurance or VAT. Together with a grim economic forecast – which is not likely to get rosier against the backdrop of a possible global trade war – this means that there are no resources left to put into meaningfully tackling child poverty.
This is desperately short-termist. It should never be acceptable for children in one of the richest countries in the world to have to go without basics. But it also carries long-term costs for the exchequer: growing up in poverty can have far-reaching consequences for these children’s educational, employment and health outcomes in adulthood. So it’s not good enough to say that there’s no money to tackle this. If money can be found for increasing defence spending, it should be found for improving the living standards of our poorest children. If reducing child poverty means raising taxes, it should be a trade-off a Labour government is prepared to make.
The biggest risk is not that it loses some votes at the margins because it decided to raise a few billion through income tax. It’s that it never rises above being a government buffeted by circumstance and terrible global headwinds, that it never discovers the agency it takes to spend some political capital on doing the right thing. It’s that when voters go to the polling booth at the next general election, they’re not quite sure what difference a Labour government made.
