Fabians call for 50% tax to cut poverty

30 Mar 06
The Comprehensive Spending Review 2007 must prioritise anti-child poverty investment if ministers are to hit their targets on the issue, a new report claims.

31 March 2006

The Comprehensive Spending Review 2007 must prioritise anti-child poverty investment if ministers are to hit their ambitious targets on the issue, a powerful new report claims.

A study by a Fabian Society commission, published on March 30 and the culmination of two years' research, calls for an overhaul of the way that the government funds anti-poverty measures, as well as wider attempts to improve “life chances” across the UK.

The commission, chaired by Lord Victor Adebowale, recommends fourteen measures to put Labour back on track to meet its pledge to halve child poverty by 2010 and eradicate it by 2020. The Department for Work and Pensions recently announced that, despite a 700,000 rise in the number of children lifted out of poverty since 1997, the government missed its interim target to reduce poverty by 25% by 2005.

But the Fabians' recommendations go further than simply tackling stalled anti-poverty programmes.

The think-tank calls for annual 'life chances audits', undertaken across government departments, which would detail progress on improving conditions for all children and young people in the UK.

Improved payments to disadvantaged mothers and pregnant women, extended and flexible parental leave, better access to childcare, new Treasury-led Public Service Agreement targets to reduce educational inequalities between social groups, and a review of school admissions policies also feature prominently.

Encouraging genuine political commitment to tackling inequality, measured through manifesto pledges, for example, is also vital.

Richard Brookes, author of the report and director of research at the Fabians, told Public Finance that the government could pay for the extensive programme partly through a new top-rate of tax, paid at 50%, on the UK's highest earners.

The package would also require a re-allocation of existing resources during next year's CSR, he acknowledged.

'Many of our proposals…on the public services side of the equation are not costly and would only require a realignment of existing spending commitments, for example in education,' Brookes told PF.

'But we accept that some of the welfare proposals, particularly in boosting Child Benefit payments for the second child…could be more expensive.'

Despite recent progress, and significant investment under the Labour government, one in five children in the UK still lives in poverty and life chances remain very unequal for children from different backgrounds, Brookes reports.

Infant mortality rates among children whose parents undertake routine occupations is double that for children from professional households – a gap that has widened since 1996. Additionally, the gap in educational attainment at Key Stage Two has stayed the same since 1998.

Kate Green, chief executive of the Child Poverty Action Group, said: 'Having missed its first child poverty target, this report should set the government's agenda for next year's CSR, which will be the last chance to ensure that child poverty really can be halved by 2010.'

But at Fabian event on March 28, Labour MP Ed Balls, who helped launch child and working tax credits – the government's flagship anti-poverty measures - while he was a Treasury civil servant, indicated that ministers would be reluctant to introduce new tax bands to cover additional costs.

'Rather than radical reform, we have to think actively about building on existing successes, such as tax credits,' he added.


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