What can be done about low wages and child poverty in Croydon?

By - Thursday 14th January, 2016

Sean Creighton looks at how belonging to a low waged family impacts on young people’s experience

There’s a lot of talk about regeneration in Croydon. The reality is that 24% of jobs here are low paid and 22% of employed residents are in low paid work, according to the Trust for London and New Policy Institute’s London Poverty profile. Low pay is the major cause of poverty – not unemployment.

The issue of low pay is at the heart of the argument about cutting tax credits. The dangers of an increase in child poverty as a result of the Government’s tax credit changes were highlighted by former Prime Minister Gordon Brown in a lecture to mark Child Poverty Action Group’s 50th anniversary. During it, he paid tribute to long time CPAG supporter, former member of its National Committee, and former Government Minister the late Malcom Wicks, MP for Croydon North, for his long-term involvement in the child poverty campaign.

As a CPAG branch activist in the first half of the 1970s and member of the National Executive along with Malcom, I attended Brown’s speech. It was a stunning performance full of humour and anecdote as well as forensic analysis of why the cuts would damage particularly the working poor (i.e. those on low wages). He emphasised that the current Prime Minister had indicated in the General Election campaign that he would look after low paid working families and not cut tax credits.

In a civilised society, every child should have the opportunity to flourish

He stressed the damage an increase in child poverty would do to children’s chances in life. He defended the ‘welfare’ state, for its collective provision of health services, pensions, education and help to the low paid and those who cannot work. He reminded his listeners that there is a poverty life cycle that people move in and out of, and that external circumstances can push people into poverty.

The mass unemployment of the 1970s and 1980s is no longer the main cause of poverty – it is low wages, just as Rowntree and Booth found in their studies towards the end of the nineteenth. But even if the minimum wage was put up to £14 an hour, there would still be working families in poverty because wages cannot take account of the costs of bringing up children, which change as they grow older. That is why child benefit and tax credits is so important within a universal benefit system.

He said it should be a principle for a civilised society that it ensures that every child has the opportunity to flourish. Poverty prevents that.

Ruth Lister, former Director and now President of CPAG and a member of the House of Lords, paid tribute to Brown as a long term supporter for ending child poverty. It had been the theme of his maiden speech in 1983.

The cost of raising a child up to its eighteenth year is £153,679

CPAG research has shown that in 2000 there were 1 4.1m children in poverty, falling through Labour government measures to 3.8m in 2005/6 and 3.6m in 2010/11. This had risen to 4.1m in 2015/16 and its projected to rise (before the tax credit cuts) to 4.3m in 2020/21. CPAG research at local food banks shows the major causes of the growing demand is reduced benefit income because of previous coalition Government’s benefit cap and bedroom tax measures, sanctions and benefit stops, and delays in administering benefits.

The average cost of a child over 18 years is £153,679. Between 2008 and 2014 this cost went up 42%. If two parents work and both are on a minimum wage, they would only earn enough to meet 82% of the cost. Because of the erosion of the value of child benefit, CPAG estimates that between 2010 and 2015 a family with two kids receiving child benefit and full child tax credit will lose £2,014.

More than half children on free school meals miss school trips and do not take part in activities which cost money

There are educational knock-on effects. More than half of children on free school meals miss school trips, over a quarter steer clear of subjects requiring expensive materials, and others do not take part of after-school activities which cost money. These findings are supported by survey work carried out by the teachers union NASUWT, in its reports The Cost of Education 2014 and The impact of financial pressures on children and young people (2014).

CPAG’s campaigning demands are:

  • Make ending child poverty a national economic and social priority
  • Develop and fund and implement a long-term plan to end child poverty
  • Back working parents by helping them bring home a decent income and by strengthening universal credit
  • Reduce the demand for foodbanks by ending costly delays and poor decision in the benefits system
  • Protect families from rising living costs by restoring the value of children’s benefits, protecting them with a ‘triple lock’ and poverty-proofing the school day so that children and young people’s experiences are the same regardless of family income
  • Develop and fund an ambitious childcare strategy

Brown praised the work of charities like CPAG, the Living Wage Foundation and the faith groups that are the backbone of food banks, but stressed that while important, charity could not provide all the answers. The role of political parties is important, parties with a set of principles, a set of policies which it can seek to implement based on those principles, and around which public support can be mobilised.

The local council rightly wishes to reduce low wages in the borough and for Croydon to become a Living Wage Borough. The Opportunity and Fairness Commission is also arguing for more council, employers’ and citizens’ action to achieve it. Brown stressed that positive campaigning gives hope to people and is a key element in public mobilisation.

Sean Creighton

Sean Creighton

A former employee of and freelance project worker with community and voluntary organisations, Sean is active with Croydon Assembly and with the Planning and Transport Committee of the Love Norbury group of residents associations. He is Chair of the Norbury Community Land Trust. He is a historian of Croydon and South-West London, British black society, social action and the labour movement. He coordinates the Samuel Coleridge-Taylor and Croydon Radical History networks. He runs blog sites covering Croydon, Norbury and history events, issues and news. He runs a small scale publishing imprint called History & Social Action Publications. He gives talks on a range of history topics and leads history walks.

More Posts - Website

  • Robert Ward

    Thanks Sean.

    Reading the NPI report to which you refer illustrates a problem of trying to deal with poverty – there is no definition, or more precisely there are dozens of definitions. Having less than 60% of the median income was the ‘official’ definition but when the median income went down, poverty as calculated like this went down even though nothing had changed for those at the bottom. There are now other definitions based on an absolute income, before or after housing costs, before or after tax, national, regional, local, accounting for family size, or not. We end up with a pick-the-definition-that-fits-your-argument situation (that usually means quoting whichever indicator shows that it is getting worse fastest).

    Inequality is now also gathering more definitions. The Gini coefficient was almost universal, but then it gave some uncomfortable results, at least for some, when inconveniences such as that wealth inequality narrowed most during the Thatcher period. Strange concepts have appeared like the difference between the top 1% or 10% and the median, or the average, or the bottom 10%, or 20% and more.

    That said, there is a good deal I would agree with here. The need for a minimum wage for example.

    The problem with the recent past was that the taxpayer subsidised employers to pay low wages. That had some advantages in a recession because it encouraged employers to take on more people. That’s what happened, although many such jobs went to other EU nationalities for whom low pay is higher than median pay in their own country. Disadvantage is it also results in a low productive economy, a key weakness of the UK. That situation can now be slowly rectified as the economy recovers, which is what has been done. One can discuss how well or badly the transition has been managed so far.

    I disagree on the impact and fairness of measures like the benefit cap. An income of £26,000 net (after tax), especially given that in certain circumstances some benefits can take income beyond that figure is in my opinion extraordinarily generous when many, possibly the majority paying for this don’t receive anywhere near that.

    On programmes to end child poverty, one quickly gets into the question of the boundaries between parental responsibility and the responsibility of the state. At what point does the state step in and how is that managed. That’s what makes an apparently simple objective extremely difficult to address.

    That said, it doesn’t mean we shouldn’t do something. Particularly the no brainers like removing administrative errors, minimising delays and making sure work always pays.