Child Poverty SoaredDuring Austerity Years in New Cabinet’s Constituencies
Past evidence shows the damage that spending cuts can create – even in Conservative strongholds
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Child poverty rose by 23.8% in the constituencies of Rishi Sunak’s new Cabinet ministers during the last era of austerity, official statistics show.
The new Prime Minister has entered office promising ‘fiscal responsibility’ amid reports of a £40 billion “black hole” in state revenues caused by a series of recent tax and spending commitments.
Speaking on the steps of Downing Street yesterday, Sunak said that “the Government I lead will not leave the next generation, your children and grandchildren, with a debt to settle that we were too weak to pay ourselves”.
This appears likely to mean further cuts to state spending, with Chancellor Jeremy Hunt telling MPs last week that “we are going to have very difficult decisions, both on tax and on spending.”
Pointing out that his department saw a 24% reduction in spending after the Conservatives entered office in 2010, Hunt said “I do not believe that we are talking about anything on that scale” – but added that “it is going to be tough going forward”.
Despite this, both the Prime Minister and the Chancellor have emphasised that they will seek to be “compassionate” in the way these cuts are applied, with Sunak promising to embrace the spirit of his Coronavirus furlough scheme, which saw support given to those who were at risk of losing their jobs.
However, it’s difficult to imagine how Sunak’s Government will square this circle, given past evidence.
Using statistics from the House of Commons Library, Byline Times calculated that relative child poverty increased by 23.8% from 2014/15 to 2019/20 in the seats currently held by Sunak’s Cabinet ministers.
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From 2009/10 to 2015/16, local government spending was cut by a staggering 60% in real terms, while the Department for Work and Pensions budget – which administers benefits on behalf of some of society’s poorest – fell by only marginally less than 60%. This agenda was pursued by Prime Minister David Cameron in response to the 2008 financial crisis, which saw Government spending and borrowing rise dramatically.
As a result of the austerity, local services suffered and the economy stagnated – pushing more people into poverty. In eight out of the 14 years since 2009, real wages have fallen, limiting Government revenues all while an ageing population has placed more pressure on the state.
Every single constituency currently represented by a Cabinet minister saw its child poverty rate increase from 2014/15 to 2019/20, with Sunak’s own constituency of Richmond in North Yorkshire experiencing an increase of 17.9% and Hunt’s seat of South West Surrey seeing an increase of 19.6%.
The largest rises were experienced in Leader of the Commons Penny Mordaunt’s Portsmouth North seat (43.7%), COP President Alok Sharma’s Reading West seat (44.7%), and Scotland Secretary Alister Jack’s Dumfries and Galloway seat (35.7%).
Overall, however, Cabinet members occupy seats with less child poverty than the UK average. The UK child poverty rate was 19.3% in 2019/20 – a figure exceeded by the constituencies of only five of Sunak’s Cabinet ministers – while the average child poverty rate in Cabinet-held seats was 13.7%.
A renewed era of austerity risks compounding the problems that took root during Cameron’s time in office. A further 1.3 million people are expected to be in absolute poverty next year, including 500,000 children – estimates that were made before any prospective cuts to Government spending.
“There is no fat left to trim and patient services will inevitably be cut if the NHS is expected to find any further savings,” the NHS Confederation has warned – as the health service is forced to deal with a record waiting list in the aftermath of the Coronavirus pandemic.
The Government has also refused to confirm whether benefits will rise in-line with high inflation rates. If they don’t, poorer individuals in receipt of Universal Credit – 40% of whom are in work – will be forced to survive on less, despite rising energy costs.
Meanwhile, more progressive solutions to the current economic crisis are being shunned. For example, economists have observed that the supposed £40 billion black hole in state revenues is a self-created problem – based on the Government’s ambition for debt to be falling as a percentage of GDP by 2024/25. If the Government relaxed this rule, the fiscal hole would shrink or vanish entirely.
Another potential solution largely untouched by Sunak is to apply more taxes on higher earners. Research indicates that a progressive wealth tax on multi-millionaires and billionaires could generate £43.7 billion a year for the Government – roughly the size of its current annual revenue shortfall.
“Our Government cannot expect to be trusted if it would rather tax working people than wealthy people,” says Gemma McGough, British entrepreneur and founding member of Patriotic Millionaires UK. “If they do anything in the next few months, they should do this: tax the rich – tax us – instead.”
The decision to opt for more austerity would push more vulnerable people into poverty, even in the constituencies of Conservatives MPs, as it has in the past.