IFS says ‘tax and benefit reforms introduced since April 2010’ can account for most of the projected rise in numbers
One in four children in Britain – 3.4 million – will be in relative poverty by 2020, the Institute for Fiscal Studies (IFS) has warned.
In a report, conducted for the Northern Ireland executive but held to describe the position in the UK as a whole, the IFS says “tax and benefit reforms introduced since April 2010 can account for almost all of the increases in child poverty projected over the next few years”.
The shakeup will result in another 600,000 children falling into relative poverty during this parliament, with this figure rising by more than 1 million by 2020, the IFS says. The jump will result in Britain missing binding targets to reduce child poverty by 2020. The target was to reduce child poverty to one in 10, or fewer, of all children, or about 1.3 million.
The IFS, the country’s leading public finance thinktank, warns that “it seems impossible the targets set out in the Child Poverty Act could be met”, and recommends the government now needs to “reveal a credible plan for meeting the targets it has signed up to; or that it sets different objectives, which reflect its view of what is both desirable and achievable”.
In the report, which was conducted for the Northern Ireland executive but considered a pan-UK position, the institute says warns the coalition that “tax and benefit reforms introduced since April 2010 can account for almost all of the increases in child poverty projected over the next few years”.
It also discounts the idea that the government’s welfare reforms would be able to change poverty levels.: “Despite the impact of universal credit,the overall impact of reforms introduced since April 2010 is to increase the level of income poverty in each and every year from 2010 to 2020.”
In an update to work first done in October 2011, the IFS considered the spectrum of welfare changes and calculated that the number of children in absolute poverty in 2015 would rise by 900,000 to 3 million. By 2020, 3.4 million young people – about one in four children – will find themselves in relative poverty. This represents an increase of 1.1 million on the figures for 2011.
In percentage terms, the IFS says relative child poverty will rise by 6% between 2010–11 and 2020–21 – in effect reversing all of the reductions that took place under Labour between 2000–01 and 2010–11.
At the end of the decade, rates of absolute child poverty will be 27.2%, compared with a target of 5%. In relative terms, it will be about 24% in 2020, compared with the goal of 10% written in law.
Liam Byrne, the shadow work and pensions secretary, said: “The IFS verdict is clear – by both internationally recognised measures, this government is set to plunge over a million children into poverty by the end of this decade, undoing all the good work of the last Labour government.”
Charities warned that a generation was being failed. Alison Garnham, of Child Poverty Action Group, said: “We always put our children’s needs first in family life, and we should do as a nation, too. But today’s dire projections reveal we are in danger of failing the next generation. The government has child poverty targets and a child poverty strategy because it knows poverty destroys life chances and generates huge costs to our economy.”
A child is considered to be in relative poverty if he or she lives in a household whose income is below 60% of the average in that year, and in absolute poverty if he or she lives in a household whose real-terms income is below 60% of the 2010-11 average – a period set as a benchmark in this year’s Child Poverty Act.
The work and pensions secretary, Iain Duncan Smith, has argued for anew definition of child poverty to take address account of parental problems such as drug addiction, education and unemployment.
This change of tactics has influential critics. Alan Milburn, chair of the government’s commission on social mobility and child poverty, said last month that he did not “think there is a cat in hell’s chance that the 2020 [child poverty] target will be hit. Most people, even if they don’t say it publicly, know that privately.” The commission is urging Duncan Smith to reconsider his controversial ideas to tinker with the way poverty is measured, withMilburn warning that this simply “conflates the causes of poverty with the consequences”.
A DWP spokesman said: “Despite paying out £170bn in tax credits alone, the previous government failed to meet their target to halve child poverty by 2010 and far too many children were left behind. That is why we want to take a new approach by tackling the root causes of poverty including worklessness, educational failure and family breakdown.
“The IFS analysis does not fully take into account the dynamic and behavioural changes that will result from our welfare reforms. In fact, the changes under Universal Credit will make three million households better off and lift up to 250,000 children out of poverty.”