Government plans 'will increase poverty'

HUNDREDS of thousands of people will be dragged into poverty by the Government's tax and benefit reforms, according to research published last night.

The Institute for Fiscal Studies (IFS) forecast an overall rise in poverty among both children and working-age adults over the next three years.

Its findings contradict Chancellor George Osborne's claims that the spending review will not increase child poverty over the next two years.

The IFS predicted a rise in absolute poverty, defined as households with a real-terms income of less than 60 per cent of the national average in 2010-11, of 900,000 people by the end of 2014.

The forecast also shows a rise in absolute child poverty for the first time in 15 years.

According to the report, the Government's tax and benefit changes will increase poverty by 200,000 children and 200,000 working-age adults in 2012-13. The IFS said that the rise was down to the impact of changes to local housing allowance, which the Treasury had not factored into its forecast that child poverty would not rise.

In 2013-14, the tax and benefit changes will take another 300,000 children and 500,000 adults into poverty, the IFS found.

Any rise in poverty would hugely undermine the Government's stated target of reducing absolute child poverty to five per cent by 2020-21.

Robert Joyce, one of the authors of the IFS report, said: "We find that the coalition Government's measures act to increase poverty among these groups slightly in 2012-13 and more clearly in 2013-14."

The report, funded by the Joseph Rowntree Foundation, prompted alarm among charities.

Alison Garnham, chief executive of the Child Poverty Action Group, said: "The cuts programme must remain under constant review and subject to ongoing revision to meet the national interest of protecting children and preventing the awful economic consequences of leaving poor families cut loose."

Barnardo's chief executive Martin Narey said: "It would be disastrous if child poverty figures are allowed to rise."

The Treasury insisted there was "considerable uncertainty" in the IFS results which meant they "may not be meaningful".

Centre-right think tank Policy Exchange said the IFS was not describing poverty but inequality and that the IFS definition would mean that there are actually more people in poverty in Britain today than there are in Poland.