David Miliband and Labour's '£18bn per year' child poverty spending

David Miliband returned to the limelight yesterday, writing an article in the New Statesman, which received a mixed reception in the media.

In it he discussed New Labour's record in government and this included a defence of Labour's record on poverty. The article Miliband cites Roy Hattersley, the former Labour front-bencher, as having recently claimed that Labour "would never dare mount a real attack on poverty" in government.

Miliband hit back:

"This is weak. For example, by 2010, an extra £18bn per year in real terms was being spent to tackle child poverty."

So what does this £18 billion figure refer to?

Full Fact has been attempting to shed some light on its provenance. Unfortunately Mr Miliband's team have so far been unable to provide us with their source for the claim. Nevertheless, we've taken a look at some of the possible areas of expenditure that the former Foreign Secretary may have had in mind.

The 'spent to tackle child poverty' phrase is problematic because attempts to find official data which details government expenditure explicitly on 'child poverty' are fraught with difficulty.

A child is officially considered to be in poverty if it lives in a household which has an income 60 per cent below the UK average. Unfortunately, while there is data for mean household incomes, and separate data for benefit expenditure, it appears difficult to marry the two together to show the trends in poverty spending since 1997.

The Department for Work and Pensions (DWP) does publish its Benefit Expenditure Tables annually. These figures show benefit expenditure managed by the Department for each year dating back to the Second World War. Helpfully, these are provided in real terms, making it easier to match to Mr Miliband's claim.

The DWP figures also explicitly breaks down the sums spent on benefits explicitly targetted at children each year.

Of course, this data includes all children, not just those in poverty.  While it could be argued that any child-targeted benefit is aimed at preventing child poverty, either by lifting children out of poverty or by preventing them falling into poverty, this is by no means uncontested.

If however we allow benefit expenditure on children as a proxy for spending on child poverty, we can begin to flesh out Mr Miliband's claim.

The figures for expenditure on child-targeted benefits are shown in the table below (selected years only).

Source: DWP

As the eagle-eyed readers may have noticed there is a sharp drop after 2002/03 from £17.1 billion to £5.9 million in 2003/04 and a steady decline thereafter toward £2.2 billion for 2009/10.

However what this data does not show is the introduction of the Child Tax Credit in 2003/04, and t consequent changes to the way that child benefits were handled by Governemnt.

The Child Tax Credit is administered by HM Treasury and therefore is not shown on DWP accounts. Also transferred to the Treasury at this time were Guardian Allowance, Child Benefit and Child's Special Allowance.

Helpfully the Institute for Fiscal Studies (IFS) published a 'Survey of the UK Benefit's System' in November 2010 which included 2009/10 figures on benefits going to families with children. This study included HMRC data.

 Source: IFS

As we can see the IFS estimates that £34.1 billion was spent on families with children in 2009/10. £19 billion of this is spent on child tax credits. £11.9 billion is spent on Child Benefit and £1.9 million in Guardian's Allowance. There is no explicit figure for Child's Special Allowance.

From this information we can calculate two separate figures for 2009/10 child poverty spending. The IFS figure, as stated above is £31.1 billion.

We don't know the differences between the IFS figures and those used by the Government. However if we add the sums paid out by the Treasury as set out by the IFS to those benefits paid by the DWP we can identify some £33.3 billion spent by the Government in 2010 on benefits aimed at children.

So how does Mr Miliband's claim that "by 2010, an extra £18bn per year in real terms was being spent to tackle child poverty" stand up?

The DWP figures from 1996-97 (which date from the perid before certain spending was transferred to the Treasury) shows that the total spending on children was £15.4 billion.

This would indicate that £17.9 billion extra was spent on child-related benefits in 2009/10 compared with 1996/97 in real terms. This would match almost exactly with the figure used by Mr Miliband.

Naturally this is a fairly crude calculation given the limited resources available - but it is the closest we can get to understanding Mr Miliband's claim without his office clarifying his statements.

If this is indeed the methodology used by Mr Miliband then we could also question the phrasing he used. 'By 2010, an extra £18 billion per year was spent' is an ambiguous assertion which could be interpreted in different ways.

The methodology we have used to interpret this figure would suggest that Mr Miliband probably meant that the increase in government expenditure on tackling child poverty was £18 billion higher in 2010 than it was in 1997.

Howevr if Miliband was to mean that Labour was spending an average of £18 billion more each year since 1997 then this would hold little weight. This is because when all of Labour's extra spending is totted up and divided over its 13 year tenure, additional spending averages out at £10.8 billion per yer. This is well short of David Miliband's figure.

The £10.8 billlion is reached by adding together total welfare outlay on children during Labour's time in office (£333.7 billion) and averaging it out over the 13 years, giving £26.3 billion per year. When we compare this to the 1996-97 total, the difference is £10.8 billion.

Conclusion

It would be very helpful for David Miliband to clarify his statement that "by 2010, an extra £18bn per year in real terms was being spent to tackle child poverty" by divulging the statistics he used to reach this conclusion.

By giving the former Foreign Secretary the widest scope possible in interpreting his meaning we've found that there could be some figures that back him up. However read in a different light, this data could also undermine the basis of the claim.

Given this uncertainty, we hope his team will be able to clear any confusion up, and we will update with any response we receive.

Update

David Miliband's team kindly contacted Full Fact to provide the following statement:

"The 1997-98 figure was reached by adding the benefits aimed at children in 1997-98. These include Child Benefit, Family Credit components aimed at children, and the child premiums in income-based JSA and Income Support (which later merged into Child Tax Credit).

"In 2009-10 terms, the total of this was £13.8 billion spent in 1997-98.

"The 2009-10 figure was reached by adding the benefits aimed at children in 2009-10. These include Child Benefit, and Child Tax Credits.

"In 2009-10 terms, the total of this was £31.5 billion spent in 2009-10.

"The real terms increase is therefore £17.7 billion (the cited £18 billion)."

Given that these calculations are mor-or-less in line with those we made ourselves, the only issues that readers should be aware of are that spending on child benefits isn't necessarily synonymous with spending on child poverty, and that his claim refers to the difference in spending in the first and last years of the Labour Government, rather than spending in each of the intervening years.