Welfare to work policies and child poverty: A review of issues relating to the labour market and economy

The paper looks at the scope for raising employment rates among parents (in particular among lone parents), and at wage opportunities, determining whether those moving into work get good enough pay to produce adequate incomes for their families. It focuses in particular on the situation of lone parents, but recognises that around half of children in poverty live with couples, and that the employment rates and in particular the joint earnings of these couples will also be important in getting child poverty down.

The study suggests that, on current policy positions, the Government will miss the stated 70 per cent employment target for lone parents. However, lone parent employment rates will rise, partly because more lone parents will be older and have older children in the future, but also because of the future effect of government initiatives, including its childcare strategy and the Pathways programme.

This study suggests that the lone parent employment rate could reach 65 per cent by 2010 on the basis of measures already in place or announced in the Welfare Reform Green paper, the 2005 Pre-Budget Report (PBR) and the 2006 Budget. To go beyond that, and to have a fighting chance of hitting the target of 70 per cent by 2010, will require three additional steps: rolling out the New Deal Plus for Lone Parents; a series of special, focused measures to tackle the weak employment of lone parents in London; and a new approach to job retention. Further improvements to work incentives may also prove necessary.

The paper’s analysis draws from the experience of reforms in the United States as well as from recent trends in the United Kingdom, including the demonstrable effects on employment rates of various measures to date. It concludes that the Government is running out of time to meet its targets, and that given lags between policy announcement and delivery, the Pre-Budget Report, Budget and Comprehensive Spending Review taking place between the end of 2006 and summer 2007 represent the last opportunity to give the required boost.