Perhaps the most ambitious commitment made by the current Labour government in the UK is its stated intention to eliminate child poverty within a generation – defined as 20 years. In this chapter the government's motivation for this initiative, what the government means when it talks about child poverty, and the welfare reform strategy developed to achieve it is discussed. What the reform package has accomplished so far is then discussed and followed with a look at future developments the government has announced or proposed but not yet implemented. The chapter concludes with a short discussion of what are seen as the strengths and weaknesses of the Labour programme.

Motivation

Chapters One and Three have already previewed the factors leading up to and influencing Labour's child poverty initiative. The economic and social evidence on which the government bases its commitment is concentrated on here. This evidence falls into three parts: how the changing British economy has affected the ability of working-age adults to secure incomes above poverty levels, the particularly stark deterioration in the circumstances of Britain's children relative to other groups, and the mounting evidence that deprivation in childhood adversely affects a person's long-term outlook. The importance attached to this evidence is apparent in a number of Treasury publications, in particular analyses of developments in the labour market (HM Treasury, 1997), the problems of inactive workers (HM Treasury, 2001), and poverty dynamics and life-chances (HM Treasury, 1999b).

The changing economy

Of the many changes in the British social economy over the past two decades that have affected the ability of working-age adults to secure incomes above poverty levels, four are particularly important: (1) growth in workless households, (2) increased earnings inequality, (3) reduced earnings mobility, and (4) an increased wage loss from spells of unemployment.

Growth in workless households: Britain has one of the highest employment rates among developed nations, with 75% of working-age adults in work (a fraction below that in the US). Although this aggregate employment rate has been pretty stable, the share of households with at least one working-age adult but no one employed has grown sharply, from 8% in 1979 to 17% in 2000 (Gregg and Wadsworth, 1996, 2002a).