Background and evidence

The number of children living in relative poverty in the UK increased dramatically over the two decades prior to 1997. As Table 7.1 shows, between one in three and one in four children lived in households with less than 60% of average income when Labour came to power, depending on whether income is measured before or after housing costs (BHC or AHC)1. This represented a much sharper rise in poverty among children than among the rest of the population. By the mid-1990s, child poverty in the UK was higher than in much of the rest of the industrialised world: UNICEF (2000) ranked the UK third bottom of 17 countries, ahead only of Italy and the US.

Table 7.1 also shows what happened to child poverty when measured against a fixed income poverty line (60% of average income in 1996/97). Measured AHC, nearly as high a share of children lived below the fixed line in 1997 as in 1979: after housing costs, real incomes for the poorest families with children had barely changed, despite substantial improvements in average living standards.

The rising level of household worklessness was one important factor behind this trend. One in five children lived in a household with no member in work in 1997, compared to just 8% in 1979 (Gregg and Wadsworth, 2001). This in turn was partly due to the fact that more children were living with a single parent – 22% in 1995/96, up from 10% in 1979 (Gregg et al, 1999, Table 1). In addition, the 1980s and 1990s had seen polarisation of work among two-parent households, with rising numbers of dual worker families on the one hand and no-worker families on the other (Gregg and Wadsworth, 2001).

The incidence of poverty for children in households without work had also increased between 1979 and 1996, even against a constant real poverty line, as benefit levels had lagged behind rising incomes (Gregg et al, 1999a). But not all the poor were workless, and low pay and increasing wage inequality also contributed to rising poverty. While 54% of poor children in 1995/96 lived in a one-parent or a two-parent workless household, that left 46% living with selfemployed workers or with low-paid and/or part-time employees (see Gregg et al, 1999a, Table 4).