Frank Field's Review
The Frank Field Review
The Foundation Years: preventing poor children becoming poor adults, the report of the Independent Review on Poverty and Life Chances was published on 3 December. The Review, chaired by Frank Field MP, was commissioned by the Prime Minister in June to report 'by the end of the year'; its publication seems to have been brought forward, without the media exercise one might normally expect in advance of the publication of a report such as this.
In policy terms, the report has two main elements:
A summary of the evidence on the importance of the early years for a child's future life chances; the significance of this evidence has been widely accepted.
A more contentious narrative about the relative unimportance of income.
The early years
The report puts together evidence showing the importance of children's pre-school years for their future life chances. For instance, 18% of children who were in the bottom quarter for early development scores at the age of five achieved an A Level or higher, compared to nearly 60% of those who were in the top quarter.
The evidence on the significance of the early years has been mounting for years and is now widely accepted. It was, for instance, one of the main themes of Narrowing the Gap, the 2006 report of the Fabian Commission on Child Poverty and Life Chances. The Foundation Years gives the impression that the last government ignored this evidence, but in fact it was a consistent theme - it underlay the creation of Sure Start and was reflected by a number of other policies, including:
The Sure Start Maternity Grant, restricted by the emergency Budget to the first child in families, costing low-income families £500 a year for other children.
The Health in Pregnancy Grant, abolished by the emergency Budget, at a cost to families of £190.
The baby element of tax credits, worth up to £545 and cut in the emergency budget.
The toddler tax credit, legislated for by the last government but withdrawn in the emergency Budget before it could be introduced. This would have been worth £4 a week for low-income families with children under three.
Above-inflation increases in Child Benefit - frozen for three years by the emergency Budget.
The increase in the proportion of childcare costs covered by tax credits from 70 per cent to 80 per cent. In the Spending Review this was cut back to 70 per cent again.
It is true that the emergency Budget also increased the Child Tax Credit by £150 above inflation. It is also true that, for some families, this will be more than the amount lost through the measures listed above; none of them will be the families with very young children that this report suggests should be an especial target for extra support. Low income families with new babies will be more than £1,200 a year worse off than they would have been had the grants and Baby Element remained in place, and a Toddler Tax Credit been introduced.
Income
The report includes this chart:
This chart shows the very rapid growth of poverty in the decade when tax and benefit policies were very likely to increase poverty and inequality. This is followed by a period when poverty does not grow consistently, and when there were not many policies affecting redistribution one way or another. Finally, it shows that there was a decline when the policies of the 1980s were partially reversed. The close relationship between policy and poverty suggests that redistribution is in fact very important. If the growth of poverty were instead linked to problems of parenting among the poor or a wider demoralisation that particularly affected the poor one would expect a much more gradual process of change, dating back to the 1960s (or whenever the rot set in) and continuing during the 2000s.
In fact, the report uses this chart to illustrate a rather contorted argument about the relative unimportance of income:
Child Poverty rates in the UK had increased substantially over the previous 20 years. When records began in the early 1960s child poverty stood at 13%. Rates remained fairly stable throughout the 1970s, before rising steeply between 1979 and the early 1990s. They then levelled off until around the turn of the century, when, subsequent to the announcement of the new target, child poverty began to fall. However, this decline since 2000 stalled in around 2005, as less money was invested in income transfers relative to previous years, so that the proportion of children in the UK living in poor households remains high by European standards ...(para 2.8)
It is hard to draw from this the lesson that income transfers should be de-prioritised. The investment in these measures produced a substantial reduction in poverty, which stopped falling when the investment stopped. Surely the most reasonable conclusion to draw from this chart is that further reductions require further investment?
The report makes passing references to income being important - 'of course' - but the thrust is to argue for a radical change of policy on child poverty that would justify the cuts listed earlier:
No longer should governments automatically increase benefits for children but in each financial year consider whether the life chances of poorer children will be increased more by transferring any benefit increases into building the Foundation Years. (p. 7)
This is justified by reference to evidence showing that interventions such as pre-school education can help children from poor backgrounds to do better than children from the same backgrounds that do not receive these interventions. None show that income is unimportant and one passage illustrates this point:
There is a complex relationship between parenting and poverty. Poor parenting exists across the income distribution, but tends to have less of an impact on better off children where other factors provide greater protection against poor outcomes. However, stress and conflict can disrupt parenting and a lack of money or debt is one of the major sources of stress for poorer families. One study showed that a reduction in income and worsening mental health tend to lead to a reduction in parenting capacity. Increases in income, however, did not necessarily improve parenting capacity. (para 3.18)
A reasonable interpretation of findings like this would be that progress on child poverty requires practical support in education and health as well as increases in the incomes of poor families. The Children Left Behind, UNICEF's latest Report Card on child poverty in the developed nations (published on 3 December) made precisely this point:
Socio-economic status is about more than income. ... Yet of the available measures, the most important single guide to, and predictor of, a family's socio-economic status remains its level of household income. Reducing bottom-end inequality in incomes will not solve all other problems, but it will make their solution easier. Climbing the socio-economic ladder is more feasible if the rungs are closer together. (p. 9)
UNICEF is, in many ways, close to the Field report - they conclude that anti-inequality policies are 'unlikely to be successful if they are limited to social protection expenditures alone' and calls for a focus on 'early intervention' but they also say that social protection is 'a critical determinant' of how many children fall behind and how far. They quote the OECD's 2008 report Growing Unequal?, which argued:
The redistributive effect of government expenditures dampened the rise in poverty in the decade from the mid-1980s to the mid-1990s, but amplified it in the decade that followed, as benefits became less targeted on the poor. If governments stop trying to offset the inequalities by either spending less on social benefits, or by making taxes and benefits less targeted to the poor, then the growth in inequality would be much more rapid. (p. 16)
Conclusion
The Foundation Years makes important and valuable points about the importance of a child's very early years for their future life chances. Unfortunately, this contribution is linked to a tendency to downplay the importance of income for anti-poverty measures that the TUC fears will be used to justify cuts such as those in the emergency Budget and Spending Review.
We will continue criticise reductions in benefits; while welcome, improvements in or new services for poor families will not be sufficient compensation. Poor families with very young children will lose as much as £1200 a year from the cuts announced in the past 6 months, it seems very unlikely that investment in early years provision will make up for this.
We predict that, if these cuts are not reversed:
The number and proportion of children living in families with an income below 60 per cent of the equivalised median will be higher in 2015 than it is today.
The government will not only fail to meet the 2020 target (accepted by all parties) of ending child poverty, it will fail even to meet by that date the interim target of halving the number of children in poverty.
Unions and other anti-poverty campaigners will be bitterly critical of this failure.
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