Institute for Fiscal Studies: child poverty targets will be missed

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