Quarter of children in country ‘at risk of poverty’

Median incomes are expected to fall by seven per cent over the period 2009-12 – the largest three-year fall for 35 years – driving absolute poverty up by about 600,000 children and 800,000 working-age adults, according to the respected economic think-tank.

The introduction of Universal Credit from 2013 will lift around 450,000 children and 600,000 working-age adults out of relative poverty – defined as living in a household on less than 60 per cent of average income – by 2020/21, said the IFS.

But its positive impact will be far outweighed by the combined impact of other tax and benefit changes, including the switch from Retail Price Index indexation to the less generous Consumer Price Index inflation measure.

The IFS forecasts that 3.3 million children will be in relative poverty and 3.1 million in absolute poverty by 2020, up from 2.5 million in relative poverty and 2.8 million in absolute poverty now.

If correct, this would mean the Government missing by a wide margin the legally-binding targets which were set down in the Child Poverty Act, which was passed by the former Labour administration with cross-party support in 2010 and stated that no more than five per cent of children should be in absolute poverty and 10 per cent in relative poverty by the end of the decade.

James Browne, one of the authors of the report, said: “The previous government significantly increased spending on benefits and tax credits for families with children, and child poverty fell by nearly a quarter between 1998 and 2009.

“But this was still not enough for the Government to hit its child poverty targets.

“The Child Poverty Act imposes even more stringent targets in a much more constrained fiscal environment.

“Even if there were an immense increase in the resources made available, it is hard to see how child poverty could fall by enough to hit this supposedly legally-binding target in just nine years.

“If the Government disagrees, then it should set out concrete suggestions about how it will achieve the targets, ideally backed up by quantitative modelling similar to that in our report.”