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Child Poverty Set to Surge, Says Gloomy IFS Study

Posted on the 11 October 2011 by Periscope @periscopepost
The End Child Poverty Rally

Protesters at the End Child Poverty rally, 2008. Photo Credit: Need Not Greed

Coalition economic policies and the effects of the recession will drag 200,000 more children into absolute poverty by 2015, a report commissioned by the Institute of Fiscal Studies (IFS) predicts. Commissioned by the Joseph Rowntree Foundation from the IFS (the UK’s leading public finance thinktank), the report, entitled “Child and Working Age Poverty 2010-2020”, suggests that Prime Minister David Cameron might have to rethink his assurance at an EU Summit press conference last year “that neither the budget, nor the spending round … would result in any increase in child poverty.”

The report shows that relative (in households earning 60 percent of median income) child poverty has dropped by 100,000 from 2010-2011, but is set to increase by 400,000 by 2015, and by a further 400,000 by 2020. In total, the report predicts that 3.3 million children (from 2.5 million in 2011) will be in relative poverty — that’s 24.4 percent of children in the UK — and 3.1 million children (from 2.8 million in 2011) will be in absolute poverty — that’s 23.1 percent of children. Relative and absolute working-age poverty is set to increase too.

The IFS blames “high inflation and weak earnings growth over this period” for the increases, along with government economic policies to reduce benefits and tax credits. Child Poverty fell by about a quarter (nearly 700,000) under Labour, and the Child Poverty Act 2010 commits governments to reducing child poverty to 10 percent by 2020. The IFS figures show that, if the government continues on the same course, that goal will not be met.

“Ministers seem to be in denial that, under current policies, their legacy threatens to be the worst poverty record of any government for a generation”, said Alison Garnham, Chief Executive of Child Poverty Action Group.

Child poverty? More like poverty of reason. Fraser Nelson on The Spectator’s Coffee House blog criticised the poverty measure for its definition of relative poverty as 60 percent of median income, and said that the previous government used it for soundbites to claim that “child poverty­ has fallen substantially in recent years.“ He argued that this rhetoric was meaningless, as they were simply raising these people just above the threshold with benefits. “This idea — child poverty — rejected the idea that poverty can be alleviated by one’s actions and behaviour,” he insisted. “One might say that adults could climb out of poverty by finding work, but no such complaint can be levelled at children.” What is needed, he argued, is to get British workers working again.

The 2020 target is a pipedream. James Plunkett on  The Independent blogs argues that Labour, too, would have missed the 2020 target by a “country mile” and acknowledges that the current dire economic circumstances are to blame for the increase. But he did affirm that Chancellor of the Exchequer George Osborne’s “decision to shift tax credit and benefit calculations from the RPI to the lower CPI measure of inflation“, effectively a “stealth tax” on the poor, is also to blame. In the end, he argued, we need to set ourselves more realistic goals to eradicate child poverty.

Don’t listen to the government when they accuse the IFS of “static” modeling. Tom Clarke on The Guardian’s Comment is Free pointed out that the 7 percent decrease in average income puts an end to the increase of average living standards year on year that Britain has experienced since the 1920s. He said that the government is reneging on Oliver Letwin’s commitment to Labour’s child poverty targets and that Labour’s work lifting children out of poverty will be undone by 2020. He also pointed out that Iain Duncan Smith’s £2 billion Universal Credit scheme is a drop in the water compared with the £18 billion of social security cuts his department is proposing. “It would be a brave optimist indeed who would currently want to bet on this [the macroeconomy] working to float children up and out of penury”, concluded a downbeat Clarke.

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