Twelve: That’s the way the money goes: expenditure patterns as real incomes rise for the poorest families with children

As prior chapters of this volume have documented, there has been a raft of new initiatives in UK labour market and welfare policies (see Chapters Two, Three and Seven in this volume), many of which will have had a particular bearing on mothers’ labour market status and child poverty. These include the National Minimum Wage (NMW), Child and Working Families Tax Credits, National Childcare Strategy, improved maternity and family leave provision and New Deals for Lone Parents and Partners of the Unemployed. There have also been benefit increases for families with children (through increases in Child Benefit and Income Support).

The rapid pace of reform means that there have been sharp increases in household income among poor families with children, whose incomes have risen somewhat faster than incomes on average. As a result, the number of children in relative poverty has started to fall. This change is particularly dramatic given the trends prior to 1997.

Over the 20 years prior to 1997, children replaced pensioners as the group with the highest incidence of relative income poverty in UK society. While average incomes of the elderly rose in real terms and this held even among the poorest fifth, the poorest fifth of children in 1996/97 were in households with real incomes no different in absolute terms from those reported for the corresponding group in 1979 (Gregg et al, 1999b; Dickens and Ellwood, 2003; Chapter Seven of this volume). A number of studies, such as Breadline Britain, highlighted the material deprivation experienced by Britain’s poor (see, most recently, Gordon et al, 2000, which documents the extent of poverty and social exclusion in Britain in 1999).

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