ࡱ> 2417 bjbjUU .(7|7|l| |||~~~~~~$y ||F :,h qS|l*  h0R'@F'h,.Z"Making It Happen on Child Poverty Margaret Cuthbert Jim Cuthbert December 2007 The latest Joseph Rowntree Foundation report on the state of poverty and social exclusion in the United Kingdom was published in December and attracted a good deal of publicity in the national press. Some of its key findings were that: One in three children live in relative poverty. Half of children in poverty are in working families. Child poverty in 2006 was still 500,000 higher than the target set for 2005. These are shocking statistics on poverty for a developed economy such as the UKs, and are among the worst in Europe. They show clearly that despite a commitment by Tony Blair in 1999 to halve child poverty by 2010, before completely eradicating the problem in 20 years, there has been little progress made in the past three years. At this season of goodwill, it is a particularly apposite counterpoint to the above figures to note that, in the December of 2005-06, (that is, in the same period as covered by the child poverty figures), KPMG, one of the big accountancy firms, gave its 552 UK partners an average bonus of more than 548,000 each. PricewaterhouseCoopers, the largest accountancy firm with 800 partners, reported the average profit per partner rising 17 per cent to 620,000. Ernst & Young awarded its 400 partners an average 14 per cent rise in bonuses to 561,000. The profits to pay these bonuses were generated in the UK, and largely as a result of advice on taxation, and on matters relating to all those industries, like utilities, which are regulated. The above figures on poverty relate to the UK: and an obvious question is, what is happening in Scotland? In fact, in our article in the Scots Independent in April we had analysed the same data for Scotland, so we already know that, while the 2005 interim target was met, aided by a fall of 10% between 1995 and 2005 in the population of under 16 year olds, there was no further reduction in child poverty in Scotland between 2005 and 2006, and it is highly unlikely that the target of halving child poverty by 2010 will be reached. We dug a bit further ourselves than the Joseph Rowntree and found that child poverty is far from evenly spread. In 2006, before local authority wards were reclassified, 19 of the 79 wards in Glasgow had more than 50% of children living in families which are entirely dependent on benefits. Now we have a new SNP Scottish Government which has launched its first ever Economic Strategy and has announced its Budget for the next three years. So what are the prospects that at last we will see real progress on issues like child poverty? The principal aim of the Economic Strategy is to improve economic growth rates in Scotland with an immediate target of raising Scotlands GDP growth rate to the UK level by 2011. It aims to provide the opportunities and incentives for all to contribute to Scotlands sustainable economic growth; and for this, its immediate target is to increase overall income and the proportion of income earned by the three lowest income deciles as a group by 2017. Unfortunately, there is no explicit mention of child poverty. This could be because the view has been taken that it is families which are poor and it is they which need to be targeted. Nevertheless we note that in the past few years there has been an improvement in old age poverty with no corresponding improvement in child poverty: so in our view it is unfortunate that child poverty has not been specifically identified as a target in its own right. What are the chances of achieving a significant cut in child poverty under the new SNP strategy and budget? We should not fool ourselves that the task will be in any sense easy. The amount available for spending by the Scottish government is seriously curtailed as the UK government has tightened its controls on public expenditure: further, Scotland will not escape the effects of the current credit crunch and uncertainties in world markets. Even under more favourable circumstances when Labour was in power, Scotland did not make much progress. But on the positive side, we are not handicapped as Labour was by its unwillingness to cross swords with Westminster; and the new SNP government has succeeded in inspiring Scots and in igniting a spirit of community and pride in Scotland which has not been seen for many a year. At this point, an interesting and relevant historical aside is to look back at the experience of King Louis XIV in France. When Louis XIV took over in France as a young king, even he, as an absolute monarch, had extreme difficulty in establishing sway over his advisers controllers such as Fouquet were running the finances not for the benefit of the State but for themselves. The effect was that in 1661, 62% of the finances raised from the ordinary people of France found its way into private pockets. One of Louis first great achievements was to transform this situation: within six years, France had increased the effective take from a reduced level of taxation, so that the budget was actually in surplus. (In those days, more effective and brutal mechanisms were available to motivate public servants). Unlike the situation facing Louis, the problem facing the Scottish Government is not how to raise revenue effectively, but how to spend it to greater effect. Nevertheless there are parallels. Given that the revenues of the Scottish Government are effectively fixed (by Barnett), the Scottish Government is unlikely to be able to transform Scotland, unless it can transform the effectiveness of government, this time in spending revenue rather than raising it. There is plenty of scope for doing this. As we have pointed out in earlier articles in the Scots Independent, schemes such as PFI/PPP, the quasi-privatization of Scottish Water, and the use of current cost accounting in public sector capital programmes, are all reducing the benefit which we as taxpayers and customers are getting for our spend. Further, there has been insufficient attention given to maximising the value of reserved programmes to Scotland through improved working with Westminster. But there is a necessary condition which needs to be in place for the Scottish Government to succeed. No radical improvement in the effectiveness of state expenditure is likely to be possible until the officials of the state are themselves enthusiastically committed to change. Our limited contact with officials on some issues suggests that in certain areas officials are thirled to a negative and defensive attitude which does not bode well. It is a strange experience when we find ourselves arguing with officials who are still trying to defend the failed policies of the previous administration, rather than embracing the opportunities presented by a clean slate. A key initial test for the new SNP government is therefore, however good your intentions, do you have the will, and the confidence to make officials your servants rather than your masters? If not, the outlook, and not just for child poverty, will not be bright. $cmH sH  B*ph 0J5\"4AOP=m>?& ' ^ _ STLM$a$ $7$8$H$a$7$8$H$$ & Fa$$a$$a$$a$,1h. 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