The Institute for Fiscal Studies says an extra £4.2bn a year
is needed to put child poverty fight back on track
The government is set to miss its target of halving the number
of children in poverty by 2010-11 by a wide margin, the
Institute for Fiscal Studies
said today.
The think-tank predicted that 2.3 million children would be
living in poverty by the target date, 600,000 more than the
government intends.
Ministers pledged to reduce child poverty - defined as the
number of children living in households with less than 60% of
median income, before housing costs - from 3.4 million in 1998-9 to
1.7 million in 2010-11, or 13% of the population. The figure for
2006-7 stood at 2.9 million.
In a study
commissioned by the Joseph Rowntree Foundation, the IFS
predicted that recent and planned government increases in tax
credits and benefits would be insufficient to hit the target. In
January, weekly child benefit for oldest children rose from £18.80
to £20 per week, and for younger children, from £12.55 to
£13.20.
Recession
The think-tank said the economic slow down in 2008-9 would
reduce the level of child poverty, because benefits and tax credits
for people on low incomes would grow relative to average
earnings.
But it warned the recession would weaken the battle against
child poverty in the long-term because it would reduce revenues
available to the government.
However, ahead of this April's Budget, the IFS said that the
2010-11 target could be met by increasing the per child element of
the child tax credit - due to rise to a maximum of £2,235 a year in
April - by a further £725, at a cost of £4.2bn a year. The benefit
is paid to families earning less than £50,000, regardless of their
work status, although only those on very low incomes receive the
maximum.
Rising cost of meeting target
The IFS's estimate of the annual cost of meeting the target has
risen by 50% since last year, when it predicted the government
needed to invest £2.8bn extra a year in benefits and tax credits to
achieve its aim.
The report comes with the government consulting on its plan to
"end" child poverty by 2020, to inform legislation to enshrine the
pledge in law. While it originally suggested this would mean
reducing levels to 5%, a consultation paper published last month
suggested this could be revised up to 10%.
The IFS said meeting a 5% target by 2020-21 would involve
investing an extra £37bn a year in benefits and tax credits and
improving take-up, while a 10% target would cost £19bn a year.
A bill to enshrine the 2020 child poverty target
in law is currently before parliament.
• More at www.ifs.org.uk