Budget 2010: Protect those hit hardest by the recession

The target to halve child poverty by 2010 looks certain to be missed. But the Budget should contain measures to protect the incomes of poor working families hit hard by the recession.

Progress against the child poverty has been made – there were 2.9 million children living in poverty (measured After Housing Costs) in 2007-08 (the latest available figures) compared to 3.4 million in 1997-8. But although the Institute for Fiscal Studies predict that measures introduced since then should reduce the number of children in poverty by a further 600,000 by 2010-11, this will still leave it well short of the target to have ‘just’ 1.7 million children in poverty by this date.

Nobody is expecting this Budget to be the moment when Government announces significant additional investment towards meeting the target. Gingerbread and other members of the End Child Poverty coalition are calling for Government to use this opportunity to protect the incomes of poor working families hit hard by the recession. Measures that would achieve this include increasing the childcare element of the Working Tax Credit so that it meets 100 per cent of childcare costs, rather than the current 80 per cent.

This would put more money in the pockets of many of the poorest working families, and is emerging as a popular choice among the single parents that Gingerbread surveyed for our manifesto. Measures to help parents with the costs of school uniforms could also help low income parents deal with something that they often say puts pressure on their budgets. But while these measures will help reduce poverty, meeting the next target, to end child poverty by 2020 will require much more radical action.

The experience of the last ten years shows that we can’t wait till 2017 before we start thinking about what this looks like. Missing the 2010 target should not be reason for a counsel of despair, but provides a stark warning that tackling poverty will take time. The Child Poverty Bill – now through its final stages in the House of Lords – obliges Government to prepare a strategy setting out what action it will take to achieve the target within a year of Royal Assent. This is the point at which campaigners will be expecting a radical vision that looks through and beyond the current economic circumstances to set out how the 2020 target will be met.

One thing is clear – current plans will mean going backwards on child poverty, rather than forwards. As the IFS puts it:

“child poverty would remain a long way above target in 2020 if the usual uprating rules were followed between 2010 and 2020. Increases in benefits and tax credits for low-income families with children would not keep pace with increases in median income.”

The strategy to tackle child poverty cannot be purely income based, but nor can it leave out this critical plank. Increases in poverty in the 1980s and 1990s can be partly explained by the incomes of those on benefits falling dramatically behind. Government needs to set out how it will ensure that benefits and tax credits stay in line with any rises in the standard of living. Plans to reduce the deficit must take into account the priority that all parties have now agreed to by signing up to the child poverty bill.