Child Poverty

Lord Sikka Excerpts

Thursday 18th June 2026 Lords Chamber

[Lord Sikka (Lab)]

My Lords, I thank my noble friend Lady Lister for securing this valuable debate. I welcome the Government’s child poverty strategy, breakfast clubs, free school meals for all children in households on universal credit and the abolition of the two-child benefit cap. However, such help is not permanent. We all remember that the party opposite opposed lifting the cap and the rise in the minimum wage, which would condemn millions more to poverty.

In a functioning democracy, no child should be condemned to live in poverty. The official total is that 13.4 million people, including 4 million children, live in poverty. Some 25.3 million people, including 7.7 million children, live below the minimum income standard. Too many are denied good food, housing and healthcare, and suffer from anxiety and insecurity from an early age. As a result, many do not attain their full educational, physical and mental-health development, or their employment and earnings potential. They are more likely to need support from health, welfare and public services throughout their life. Child poverty, over the life of the people involved, results in a loss of economic output of around £40 billion a year.

A recent study published in the Nature Human Behaviour journal shows that the effects of poverty alter human biology and accelerate ageing from a very young age. It also noted that adults who endured childhood economic deprivation continue to age at a significantly accelerated biological pace later in life, even if they achieve financial security decades after their initial childhood exposures. We now know that childhood poverty is a major cause of a declining healthy life expectancy, and there is a near 20-year gap between those in wealthy and deprived areas.

Millions every year are sacrificed to the gods of fiscal rules, who set absolutely no target for poverty reduction. Child poverty cannot be eradicated without addressing parental poverty, and parental poverty is deepening. In 1975, workers’ share of gross value added was 71.9%. After 50 years of economic growth and rises in the minimum wage, which the party opposite opposed, that has now declined to 59.3%. Since 2008, the average real wage has hardly changed. According to HMRC data, the annual median wage of payrolled employees is £31,524, and their take-home pay is £26,217. Try surviving on that.

The Joseph Rowntree Foundation estimates that, for a socially acceptable minimum living standard, a couple with two children needs to earn £74,000 a year between them. Even with both parents working, the majority of families cannot hit that standard, and institutionalised poverty remains. Can the Minister say how the Government will increase workers’ share of the wealth created with their brains and brawn? What will they do to increase the median wage?

Trickle-down economics was clearly one of the biggest hoaxes of all time. The tax system hits the poorest the hardest. Wages are taxed at higher rates than capital gains and dividends. Paupers and the super-rich pay council tax at the same rate. Altogether, the poorest 20% of today’s population pays a higher proportion of its income in direct and indirect taxes than the richest 20%. Income tax personal allowances have been frozen at £12,570 a year since April 2021. If increased in line with inflation, the number would stand at £16,048 for 2026-27. As a result, somebody earning £17,000 a year, which is not a lot, will pay £696 in additional income tax this year alone. How is this aiding any fight against poverty? This will not eradicate child poverty or parental poverty. Can the Minister explain whether she thinks this policy is compatible with the Government’s child poverty strategy in any way whatever?

Poverty could be reduced by tackling the cost of living crisis, but there are no curbs on profiteering. In the last three years, the average rental cost has risen by around 28%. Unite scrutinised the accounts of 17,000 companies and found that profit margins since the pandemic had increased by 30% on average. Yes, social security benefits help, but they do not keep pace with inflation and, in any case, they are often measly. So can the Minister somehow persuade the Government to produce a joined-up strategy for reducing child poverty?