Where now on the long road to ending child poverty?

Is the government’s policy to reduce child poverty in as deep trouble as some have been claiming? The signals in the past few months have been confusing: more money has been promised in the Budget, yet the latest statistics appear to show that things are getting worse rather than better.

The truth is that it is proving extremely difficult to keep up the momentum on the ambitious pledge to halve child poverty by 2010. Large transfers of cash through tax credits form an essential element of anti-poverty policy, even though they cannot be the only part.

A second strand has been helping parents to enter work, since non-working families have a substantially higher risk of poverty. Yet half of poor children live in working families, and the government accepts that a third element must involve raising earnings for parents in work, for example by improving their skills.

In recent months, the government has been particularly busy on the second part of this agenda, reforming the welfare system to encourage, assist and in some cases pressurise more lone parents and disabled people to return to work.

But what has happened to the first part of the story — Gordon Brown’s decade-old project to redistribute money directly to families with children on low incomes?

Last year, the Joseph Rowntree Foundation (JRF) in partnership with the Institute for Fiscal Studies carried out a study which found that, in order to meet the 2010 target, more redistribution would certainly be needed (see ‘The worries about what happens next in the fight against child poverty’, Parliamentary Brief, August 2006).

Despite making optimistic assumptions about the success of the welfare to work programme, the study found that child poverty would fall only marginally under existing policies for uprating tax credits and benefits: from 2.7 million in 2004/5 to 2.65 million in 2010/11 rather than to the target of 1.6 million. In order to meet the target, an injection of approximately £4-5bn would be needed.

Since that time, two developments have caught the public’s attention.

One is that child poverty has appeared to start to rise again, after falling for six consecutive years. Some commentators have suggested that this leaves the government strategy in ‘tatters’.

This overstates the significance of the latest poverty figures, released in March. The headline child poverty total rose by 100,000, but in fact this ‘rise’ is not statistically significant. The sample survey on which the figure is based can only estimate the amount of poverty in the whole population, and a fluctuation of 100,000 is small enough to have been caused by inaccuracies in this estimate.

The real significance of the new figures, taken in conjunction with the poverty data in the previous two years, is that the trend of falling child poverty is indeed flattening off, just as the JRF report predicted.

This does not make the anti-child poverty strategy a failure. Between 1961 when records began and 1998/9 when the target of ending child poverty was announced, it had never fallen for more than two years consecutively, so a continuous six-year fall was completely unprecedented. It was particularly striking because relative poverty (defined as household income below 60 per cent of the median — the measure used here) was falling at a time of healthy growth in all incomes and hence a rising poverty line.

While the record is impressive relative to the past, it risks looking wholly inadequate relative to the stated ambitions for the future. And we must also remember that even after the latest fall, child poverty remains at historically high levels, twice those of a generation ago.

The second new development was the Chancellor’s announcement in the Budget of a rise in tax credits by more than the regular annual commitment, for the first time in five years. This will give an extra £3 a week per child to families on low incomes through the Child Tax Credit. This measure, costing £1bn, goes some way towards providing the £4-5bn needed to raise a further million-plus children out of poverty by 2010. The IFS has projected that it will mean that the 2010 level will now be around 200,000 lower than it would otherwise have been, but still between 800,000 and 900,000 short of the target.

So the Budget moved in the right direction, showing a government willing to put in more money, but not as yet anything like what is needed. A revised IFS projection shows that at least £3.8bn more than present commitments is still required. There are only two remaining Budgets able to influence the 2010 poverty figure.

This summer/autumn will see the publication of the Comprehensive Spending Review and probably the accession of a new Chancellor. This will be the moment to make clear the government’s intentions, a time to take a bold step in making the reduction of child poverty a genuine priority in a difficult public spending climate.

Only such boldness can prevent a major failure in the achievement of a key government ambition. This is not just about numbers and politics: it is about improving the lives of three million children who grow up in hardship in a rich country — a hardship that denies them the things taken for granted by those around them.

Donald Hirsch is author of the Josesph Rowntree Foundation’s report, ‘What will it take to end child poverty? Firing on all cylinders’. Details at www.jrf.org.uk