They are austerity’s children, born after 2010, perhaps now at secondary school – and they account for 3.4 million of Britain’s 4.3 million children in poverty. Most have never known what it is like to be free of poverty. And yet in almost every single year of the past decade, even as their need has been mounting, the government’s support for children has been spiralling downwards, each year more difficult than the year before as, with almost surgical precision, the government has made the already poor even poorer and propelled the number of poor children up by 100,000 a year.
For the past 40 years we have talked of Thatcher’s children – the generation of children brought up in the 1980s at a time of mass unemployment and social security cuts, which I witnessed at first hand as an MP in a mining constituency. Study after study has charted her government’s impact in educational underachievement, broken families and the crushed aspirations of millions of young people unable to find decent work.
The past 14 years have seen even more dramatic events – Brexit, Covid-19 and the energy crisis arising from the Russia-Ukraine war to name only three – but, damaging as these individual events have been to people’s lives, the one constant throughout has been austerity. The newest generation of children, whose families have never known what economic security means, are the biggest losers.
From June 2010 we saw the start of regular freezes in child benefit – it is now worth 20% less than it was then – the end of educational maintenance allowances to help teenagers stay on at school or college at the start of 2011, and the abandonment of the child trust fund, so that, unlike the pre-2010 generation, no child under 14 can draw on such help when turning 18.
April 2013 saw the first blanket cuts in means-tested benefits, when the inflation link was breached – with tax credits for working-age people uprated by only 1%. In the same month the overall cap on housing and universal credit payments, which took no account of need, was introduced. And, in 2016, we entered the age of deep austerity with a four-year freeze in working-age benefits, the removal of the “family premium” element of tax credits and, from 2017, the limitation of children’s benefits to two children per family.
Donald Hirsch’s recent paper on the inadequacy of benefits shows the cumulative impact. The majority (56%) of universal credit recipients have lost out, hit either by the two-child limit – 750,000 families will be affected by 2028 – or by the housing benefit limit, which means their rent is not covered by their benefits. Freezing rent support has helped push 145,800 children into temporary accommodation. Now almost half of children in families with three or more children are in poverty; and this is before the monthly deductions for the loans families had to take out to cover their first five weeks of universal credit, when no benefit was paid. Now half of families with children lose up to 25% of their benefit each month and in some cases 30%, making the Department for Work and Pensions the biggest debt collector in the country.
All Covid-19 and energy price support, worth at its peak £6bn a year, has now been eliminated, with less than £0.5bn offered this year through the household support fund, which is due to end in September. Now, with half of all poor children living in a household that contains a child under five, the children of the 2020s austerity are turning out to be poorer than even the 2010 generation.
Commentators now write about Britain’s endemic problem of underinvestment, highlighting the state of our railways, roads, utilities and physical infrastructure; but there has been less focus on the decade-long experiment – the greatest and most damaging underinvestment of all inflicted on austerity’s children, who will, soon enough, come of age. The damage to them runs deep.
Children raised under UK austerity are now smaller in height at age five than their European counterparts, with tooth extractions among five- to nine-year-olds in poorer communities three and a half times more frequent than in the most affluent communities. Dental decay has become their most common reason for hospital admission.
We know that the first 48 months are more consequential for a child’s development than the next 48 years. Two million children across England benefited from Sure Start, which was designed to prevent children who are born poor from being condemned to equally bad life chances. In the 2000s, a poor child on free school meals living near a Sure Start centre, who would otherwise have been expected to be awarded only DDD in their GCSEs, would be more likely to get three Cs. “Results imply,” the Institute for Fiscal Studies concluded, “that, even without accounting for the full range of potential effects, the benefits to society from the improvements in education outcomes … equate to more than the costs of the programme at its peak in 2010.” But the 74% cut in council spending on Sure Start, which closed 1,200 centres, began as early as 2011 and coincided with ministers cutting overall spending on education, which, since 2010, has suffered “historically large real-term cuts in spending per pupil” according to the IFS. They disable children’s chances and then blame them for struggling to their feet.
Everyone understands that the parlous fiscal position makes it difficult to restore vital services overnight, but there are options that reflect the urgency of the need for action. In a paper published today, Partnership to End Poverty, I call on Jeremy Hunt, in his next financial statement due in September, to raise £2bn to address poverty by requiring the banks to deposit a fraction of their money interest-free at the Bank of England. He could reduce both poverty and the universal credit bill by upskilling 1 million low-paid workers into higher paid jobs. Hunt could also champion a new coalition of compassion between foundations, corporate donors and local and national government to broaden the scope of local amenities – anything from the school breakfast clubs pioneered by the Magic Breakfast initiative to youth zones, 14 of which are now flourishing around the country. And of course he could restore Sure Start.
One innovative way to finance this within the current fiscal rules is by learning from the worldwide success of social impact bonds whose funding is frontloaded by foundations and corporate investors. The bonds were first piloted among young people in Peterborough, and the government pays on the basis of results. This September the government could announce a £1bn children’s social impact bond to expand children’s services and help us ensure that this blighted generation, the children of austerity, escape a future without hope.
Gordon Brown was UK prime minister from 2007 to 2010
