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Older people 'should share burden'
Deputy Prime Minister Nick Clegg has warned that "punishing pensioners isn't going to help a single child achieve more in life".
Benefits should be cut for wealthy pensioners and the minimum wage pushed up to improve living standards for hard-pressed workers, according to a Government report.
The coalition's social mobility tsar Alan Milburn warned that the low-paid were the "forgotten people of Britain", and insisted older people had to bear more of the burden of austerity.
The comments came as the former Labour minister published his first annual report commissioned by Deputy Prime Minister Nick Clegg.
Mr Milburn told BBC Radio 4's Today programme that the economic recovery was "unlikely to end a decade-long trend of the top half of society prospering and the bottom half stagnating".
Problems were particularly stark for the bottom 10%, who had seen real wages fall significantly since 2008. The low-paid are the "forgotten people of Britain", he said.
"Today child poverty is a problem for working families rather than the workless or the workshy," Mr Milburn said.
"Two-thirds of kids officially deemed poor in this country are in a family where someone is in work."
Mr Milburn said work was no longer a "cure for poverty" and Government and employers both had to address the question of how to "make work pay".
"I think it is a job for both (Government and companies). Tax credits have got a part to play... but employers have to look again at the wages they pay and the career opportunities they provide."
Even before the report was officially published, Liberal Democrat leader Mr Clegg made clear that he did not support significant benefit cuts for pensioners.
Writing in the Daily Telegraph, he said: "It (the report) has many powerful recommendations, such as the need to ensure childcare funding makes work pay even for families on low incomes, and the need to do more on vocational education.
"But it also makes some more debatable assertions, about the appropriate balance of ﬁscal consolidation between different age groups, for example - punishing pensioners isn't going to help a single child achieve more in life."
Mr Milburn said today: "I think Nick is right to say that it would be wrong to punish pensioners. I think the question is: is it right that at a time when working families are seeing their wages stagnating and their public services being cut that wealthy pensioners have their benefits protected?
"I think there is a strong case for looking again at things like the winter fuel allowance or free TV licences, particularly for better-off pensioners in order that we ensure there is a fairer sharing of the burden."
Labour MP Frank Field said: "Anyone - like an MP - who works with talented young graduates for a decade or more knows that they will achieve far less in respect of material possessions than established MPs have already achieved.
"When I left university I expected to get a job, be a member of a generous pension scheme, acquire savings and buy at least one home. The young people working with me know they're lucky if they're able to achieve just one of these objectives.
"To say that today's children and young people will gain far less material possessions than their parents is old hat. What we need to know is why there has been this huge shift in rewards and then do our best to counter them."
In a statement issued as the report was launched, Mr Milburn called on the Government to tackle the UK's "fairness deficit" as well as its financial deficit.
The report found that the Government's austerity programme has been "regressive", with the poorest 20% bearing more of a burden than any other sector of society other than the very rich.
Ministers had been "too slow to act" over youth unemployment and allowed an "inter-generational injustice" which sees better-off pensioners protected but families with children bearing two-thirds of spending cuts.
Even before the recession of 2008, Britain was becoming more unequal, with the top part of society prospering and the bottom stagnating, and this trend is unlikely to be halted by economic recovery, the Commission warned.
The Government's statutory obligation to end child poverty by 2020 will "in all likelihood be missed by a considerable margin", perhaps by as many as two million children.
Low pay for millions of employees has created a growing group of households - dubbed "the forgotten people of Britain" - for whom work is not a way out of poverty, warned the report. Class is now a bigger obstacle than gender to entering the professions, it added.
And the report found that middle-class parents, squeezed between falling earnings and rising house prices, university fees and youth unemployment, now fear their children will grow up to be worse off than they have been.
"Poverty touches almost half of Britain's citizens at some point over a nine-year period and one third over four years," said Mr Milburn.
"Today child poverty is overwhelmingly a problem facing working families, not the workless or the work-shy. Two-thirds of Britain's poor children are now in families where an adult works. In three-quarters of those households someone already works full-time. The principal problem seems to be that those working parents simply do not earn enough to escape poverty...
"A job remains the best safeguard against being poor. But it is not a cure for poverty.
"Over the last decade earnings growth has been lagging behind prices. More and more people are at risk of poverty as a result. Today the UK has one of the highest rates of low pay in the developed world. Five million workers, mainly women, earn less than the Living Wage.
"These are the people that heed the urgings of politicians of all hues to do the right thing, to stand on their own two feet, to strive not shirk. Yet all too often the working poor are the forgotten people of Britain. They desperately need a new deal."
The report recommended:
:: A Government target to end long-term youth unemployment by increasing learning and earning opportunities for young people who should lose benefit if they fail to take up offers of education, training or work;
:: A higher minimum wage;
:: Switching childcare funding from higher-rate taxpayers to parents on benefits;
:: Paying teachers more to teach in the worst schools;
:: Pressure on employers to provide higher minimum levels of pay and better career prospects, enabled by higher skills;
:: Half of all firms to offer apprenticeships and work experience;
:: An end to unpaid internships, and pressure on the professions to recruit from a broader cross-section of society;
:: More Government action to help parents to parent.
Mr Milburn said: "It is part of Britain's DNA that everyone should have a fair chance in life. Yet compared to many other developed nations, we have high levels of child poverty and low levels of social mobility. Over decades we have become a wealthier society but we have struggled to become a fairer one...
"Just as the UK Government has focused on reducing the country's financial deficit, it now needs to redouble its efforts to reduce our country's fairness deficit.
"If Britain is to avoid being a country where all too often birth determines fate, we have to do far more to create more of a level playing field of opportunity. That has to become core business for our nation. We look to Government and others to make it happen."
While welcoming official efforts to increase mobility, Mr Milburn said: "The question is whether the scale and depth of activity is enough to combat the headwinds that Britain faces if we are to move forward to become a low-poverty, high-mobility society. The conclusion we reach is that it is currently not."
And he added: "We conclude too that the economic recovery is unlikely to halt the trend of the last decade, where the top part of society prospers and the bottom part stagnates. If that happens, social inequality will widen and the rungs of the social ladder will grow further apart.
"The promising reforms we see in schools and some aspects of welfare will not, on their own, offset the twin problems of high youth unemployment and falling living standards that are storing up trouble for the future. We see a danger that social mobility - having risen in the middle of the last century then flat-lined towards the end - could go into reverse in the first part of this century."
A senior Liberal Democrat source insisted Mr Clegg remained committed to stripping better-off pensioners of benefits - but opposed any bid to target pensioners more widely.
The Commission's report noted that the projected rise in state pension costs over this Parliament was £13 billion at today's prices - more than half the cash being saved by benefit cuts.
"We do not believe that favouring pensioners over their children and grandchildren will be a sustainable position over the long term if a meaningful dent is to be made in the UK's high levels of child poverty and low levels of social mobility," it concluded.
A " triple lock" was introduced by the coalition in 2010 guaranteeing annual state pension increases in line with whichever is highest of inflation, average earnings or 2.5%.
"The Liberal Democrats are incredibly proud to have introduced the triple lock guarantee in government which has led to the largest ever cash increase in the state pension," the source said.
"We certainly don't believe that all pensioners should be targeted during further fiscal consolidation.
"But we certainly will continue to vocally make the case, as Nick Clegg has done, that there should be a greater contribution from the wealthiest in society - for example through our mansion tax or by removing benefits from millionaire pensioners."
Mr Milburn said he was yet to meet a politician who did not privately accept the need to end some universal pensioner benefits and urged them to say so publicly.
"When you talk to many better-off pensioners, they feel instinctively uncomfortable about this. Their concerns are much more about their grandchildren than themselves.
"So there is a good case for all political parties to look at whether benefits like the winter fuel allowance and free TV licences should be made available to all pensioners or should instead be made available purely to the poorest pensioners.
"Although, of course, that is a difficult territory for politicians to step into, my suspicion is that it's less harmful than they think," he told reporters at the launch of his report.
"Certainly I've not met a politician in private who does not agree with that sentiment. So the question is whether they are prepared to say what they say in private, in public and, more importantly, to act in a way that is consistent with their private views."
Prime Minister David Cameron has stuck to a general election promise to protect pensioner benefits during this Parliament despite pressure from Mr Clegg and within his own party to reconsider.
Dot Gibson, National Pensioners Convention general secretary, said: "Older people have seen a cut to the value of their pensions with the switch from the Retail Price Index to the lower Consumer Price Index (rate of inflation), a reduction in the winter fuel allowance, a freeze to their personal tax allowances, the removal of £1.8 billion from social care budgets and the decline of many other public services.
"The majority of older people don't even have enough money coming in to pay tax, so this idea that pensioners have done well at the expense of younger generations is dangerous - when the real division is between the rich with their generous bonuses and the rest of us who are struggling to get by."
Alison Garnham, chief executive of Child Poverty Action Group, said: "The Commission's verdict is clear: the Coalition's current child poverty strategy is failing and child poverty is set to rise. The important thing now is to focus on the positive recommendations the Commission makes to turn this situation around.
"We need firm action to help families suffering problems like low pay, lack of full-time work and job insecurity. The Government should start by taking up the Commission's recommendation to increase the national minimum wage and to give all low earner families a higher level of childcare support under Universal Credit.
"The simplest approach of giving the full 85% childcare support to all including the lowest paid would help reduce child poverty and get more second earners and lone parents into paid work."
Asked whether David Cameron agreed with Mr Milburn that pensioners should share more of the pain of fiscal consolidation, the Prime Minister's official spokesman said: "No."
The spokesman told a daily Westminster press briefing: "The Prime Minister believes it was right to have made the commitments he has made to pensioners with regard to pensioner benefits, the basic state pension and the triple lock.
"He thinks those are the right priorities."
The spokesman said that the Government remains committed to its child poverty targets.
And he added: "The key to tackling poverty and raising people's incomes is of course through work and through a welfare system that ensures that work always pays."
Children's charities welcomed the Commission's call for cash earmarked to help better-off parents with childcare to be diverted to help those on benefits.
A £1,200-per-child tax break announced in this year's Budget has come under fire for benefiting high-earner couples on up to £300,000 between them while some low-wage parents lose out.
Under the plans, the state would cover 85% of the childcare costs of income tax-paying parents on Universal Credit but campaigners want that extended to all claimants.
The Commission report said four in every five pounds being spent on the voucher scheme would help the best-off half of parents - money it said "could be spent more effectively within Universal Credit to further incentivise parental employment".
Gingerbread chief executive Fiona Weir said: "The Government has a real opportunity to transform the lives of many working single parents who are bringing their children up in poverty.
"Providing extra childcare support would ensure the Government delivers on its promise to make every extra hour of work pay."
Jonathan Rallings, Barnardo's assistant director of policy and research, said: "The Government's priority must be to make sure that today's disadvantaged young people don't have to struggle tomorrow.
"They can start by guaranteeing quality face-to-face careers guidance, good vocational training, and funding that covers the everyday expenses of study."
Some of the young people the charity worked with were skipping meals because of inadequate hardship grants, he said.
Saga, which campaigns for older people, accused Mr Milburn of "playing the politics of envy" and dismissed his calls for pensioners to bear the burden.
Director of communications Paul Green said: "Alan Milburn appears to be a bit bonkers and is barking up the wrong tree.
"Playing the politics of envy is not the way to create a cohesive society. Young people are not poorer because their parents have worked hard and are richer.
"Pensioners may have paid off their mortgages, but they have fewer opportunities to earn more and change their financial circumstances than others in society."
TUC general secretary Frances O'Grady said: " In-work poverty can only be tackled through higher wages and a decent safety net for those who fall on hard times.
"This means a higher minimum wage and encouraging employers to pay fairer wages through living wage agreements and new wage councils. It also means the Government must stop its assault on social security that is hurting low-paid workers as well as those seeking jobs.
"Britain needs a pay rise to tackle child poverty and improve social mobility. Ministers must work with unions and employers to ensure that the benefits of our recovery are shared fairly throughout the workforce."