Child poverty is set to continue rising under the Conservative Party’s social security plans, while Labour’s £9 billion of extra spending would mean 550,000 fewer children in poverty but not see current poverty rates fall, according to new research published today by the Resolution Foundation.
The shifting shape of social security shows how the size and shape of the UK benefit system has evolved over the past seven decades, rising from around for 4 per cent of GDP at the creation of the modern welfare state in the mid-late 1940s to around 10 per cent of GDP today. It is set to rise again to around 12 per cent of GDP over the next fifty years, largely as a result of our ageing society
However, major policy changes have reduced support for working-age households since 2010, resulting in overall spending in 2023-24 being around £34 billion a year lower on current plans than had the 2010 benefit system remained in place.
The Foundation notes that this unprecedented retrenchment of support has fallen almost entirely on low-to-middle income working-age families, as pensioner benefits such as the state pension have been protected. For example, the benefit freeze of the past four years has left the average couple with kids in the bottom half of the income distribution £580 a year worse off, while the majority of the impact of the two-child limit on support for families is still to take effect.
Turning to the main parties’ social security plans, the report says that the Conservatives’ 2019 manifesto makes no changes to existing policy. As a result, under Conservative plans child poverty risks reaching a 60-year high of 34 per cent.
Labour’s £9bn worth of extra social security spending, including the scrapping of the two-child limit, would halt this rise, with 550,000 fewer children living in poverty compared to Conservative plans.
However, Labour’s proposals do not reverse the £5 billion benefits freeze, and could still see more children living in poverty in 2023 than do today. The Liberal Democrat manifesto also plans for an extra £9 billion of social security spending, and would see a slightly bigger 600,000 reduction in child poverty compared to Conservative plans, but would still not see child poverty rates decline.
The Foundation notes that Labour’s reforms create a complex set of winners and losers. Large families, private renters and disabled people are the main beneficiaries. Many working-age families that fall outside these groups could still find themselves worse off under Labour compared to the UK’s pre-2015 social security system, due to the effects of the benefits freeze enduring. It estimates that working couples with children would remain worse off by £150 per year on average, and working single parents would remain £600 worse off.
The Foundation notes that Labour’s proposed changes for working-age families are far smaller than changes for one group of pensioners in the next parliament, with £58 billion of retrospective payments to women affected by State Pension Age changes.
Laura Gardiner, Research Director at the Resolution Foundation, said “The modern welfare state has evolved over the past 70 years, and has changed dramatically over the past decade. Policy choices since 2010 have reduced the generosity of support for working-age families by £34 billion.”
“Against the backdrop of major cuts, the parties’ manifestos do offer big choices on social security.”
“Under the Conservatives little is set to change, and child poverty risks reaching a record high in the coming years. Labour and Liberal Democrat pledges to spend £9 billion more would mean child poverty being over 500,000 lower than under Conservative plans. However, this would not do enough to see child poverty fall from today’s already high levels.”