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TACKLING POVERTY AND EXTENDING OPPORTUNITY - MAJOR TREASURY STUDY

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A major Treasury study on the causes and scale of poverty and inequality in Britain and the best means of tackling ...
A major Treasury study on the causes and scale of poverty and inequality in Britain and the best means of tackling it was launched today by Chancellor Gordon Brown, social security secretary Alistair Darling and minister for public health Tessa Jowell.

The six-month research study 'Tackling Poverty and Extending Opportunity' contains shocking conclusions on the scale of poverty and inequality, and the passage of inequality from generation to generation.

The study, based on 1997 figures, shows:

- 12 million people in the UK - nearly a quarter of the population - live in relative poverty - almost three times the number in 1979;

- inequality rose by a third between 1977 and 1996 - almost unique among developed countries;

- inequality is passed from generation to generation - the children of the low paid are much more likely to be low paid.

It is the most extensive government analysis yet of child poverty, showing that:

- 4 million children were living in poverty in 1995 - three times the number of 20 years ago;

- 2 out of every 5 children are born poor. Many of them born to families who were not poor before the birth of their child. As many as 1 in 6 families are pushed into poverty with the birth of a child;

- poverty damages a child's life chances. By the time children are 22 months old there are clear social class differences in their rate of educational development and these differences continue to widen when children start school.

The study concludes that work and access to work is the key driver in Britain today and lack of work is the primary cause of poverty. It shows:

- the number of workless households has more than doubled over the last 20 years;

- work is the best route out of poverty - 8 out of 10 people who moved into work moved out of the poorest fifth;

- education is key to success in the labour market - what you learn is directly related to what you earn - half of people who have no qualifications are without a job.

Work history also has a profound effect on life chances of individuals and their children:

- in the mid 1990's half of those leaving unemployment were unemployed again within the year;

- people get stuck in a low-pay, no-pay cycle. The number of men stuck in this cycle or on a long-term, low-paid job has doubled since the early 1980s from 1 in 14 to 1 in 7.

The findings in the Treasury report are backed-up by research published today by the Joseph Rowntree Foundation confirming that the government is right to be concerned about persistent and scarring nature of poverty, particularly on children.

The paper highlights the strategy the government is pursuing to tackle this poverty and inequality. The strategy covers investment in education to give poor children an equal chance to fulfil their potential, help for families, help to get into work and additional£6 billion a year in support for children. It includes:

- 375,000 people are already participating in the New Deal. It has already helped 55,000 young people, 6,000 long-term unemployed workers and 6,000 lone parents from welfare into work;

- reform of the tax and benefit system to make work pay and remove the unemployment and poverty traps for families with children. The Working Families Tax Credit will provide every family with children with a full-time job a guaranteed minimum income of£200 a week. It means working families will be£24 better off than if they were on Family Credit;

- increases in Child Benefit - by next year it will be worth£15 for the first child and£10 for the second and subsequent children

- making sure that all children have the chance to thrive when they start school by providing£540 million for the Sure Start programme to deliver integrated services for children under 4 targeted at the areas of greatest need. Budget 99 announced further support for the very earliest stages of development with a Sure Start Maternity Grant to replace the Maternity Payment at double the rate (£200). Investing an additional #19 billion in education over the next 3 years to raise standards and narrow the performance gap.

As a result of these measures one and a quarter million people will be lifted out of poverty by the end of this parliament - 700,000 of them children. And the poorest fifth of families with children will be over£1,000 a year better off.

NOTES

'Tackling Poverty and Extending Opportunity' is the fourth in the series of Treasury documents headed 'The Modernisation of Britain's Tax and benefit System'. Copies are available from HM Treasury's Public Enquiry Unit, Room 89/2, HM Treasury, Parliament Street, London SW1P 3AG telephone 0171 270 4558. It is also available on the Treasury's web-site: http://www.hm-treasury.gov.uk.

An accompanying document giving further detail of the research work is also available. Titled 'Persistent Poverty and Lifetime Inequality: The Evidence', it is available from the address above.

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