The squeeze on tax credits and benefits will push a further 200,000 children into poverty, the government has admitted for the first time. It suggests a total of a million extra children will be in poverty as a result of government welfare measures.
Ministers have said they no longer regard the relative child poverty statistics as a useful or valid measure as it is highlighten that an extra 200,000 children will be in poverty figure due to the government's decision to lift most in-work and out-of-work benefits by only 1% over the next three years instead of increasing them in line with inflation.
Ministers had been reluctant to state what the impact would be on child poverty, an official government measure that looks at the number of households with incomes at 60% or below the national average household income.
The admission came in an answer to a parliamentary question, work and pensions minister Esther McVey estimated that “the uprating measures in 2013-14, 2014-15 and 2015-16 will result in around an extra 200,000 children being deemed by this measure to be in relative income poverty compared to uprating benefits by CPI [consumer price index]”.
Ministers are trying to push through the benefit squeeze with just one day of debate for the committee stage and third reading of the welfare benefits uprating bill in the House of Commons next Monday.
The answers given by the government also reveals major downward revisions to the poverty-reducing impacts that had previously been claimed by Ministers for Universal Credit. Previously the Secretary of State, Iain Duncan Smith, had estimated the Universal Credit would directly reduce child poverty by 350,000 children, but this has now been revised down to just 150,000.
The bill will mean Coalition policies are set to increase child poverty by at least a million children by 2020, net of the Universal Credit impact and on the relative income measure
Ed Balls, the shadow chancellor, said:
While they give the richest 2% of earners a £3bn tax cut, 200,000 children will be pushed into poverty and millions of working families made worse off.
Ministers have spent weeks refusing to admit what the impact of their policies would be on child poverty and now we know why. Children are paying the price for David Cameron and George Osborne's economic failure and the political games they have decided to play.
The Child Poverty Action Group (CPAG) also criticised the changes. Alison Garnham, Chief Executive, said:
The government's child poverty strategy is in utter disarray now that Minsters have admitted the poverty-producing Welfare Benefits Uprating Bill will push 200,000 more children into poverty. This means in total Coalition policies are set to push a million more children into poverty by 2020.
The figures showing the impact on absolute poverty have not been published.
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, despite their duties under the Child Poverty Act to reduce child poverty across a basket of measures including absolute, relative and persistent poverty as well as for deprivation levels which show how well families are able to meet basic costs.
The bad news is compounded by new government figures showing the Universal Credit would not result in nearly as much poverty reduction as Minsters had previously claimed. It will now lift 150,000 children out of poverty not 350,000 as originally claimed.
Short term spending cuts that create poverty will end up costing taxpayers billions in the future and inflict huge damage on children and our economy.
The government argues the statistics are misleading to consider the impacts of uprating tax credits and benefits in isolation and claims that it is “investing in tackling the root causes of child poverty through making work pay”. However, changes to tax credits that came into force in April last year mean that thousands of parents in part-time employment are now better off on benefits than in work.
The parliamentary answer also claims that “looking at relative income in isolation is not a helpful measure to track progress towards our target of eradicating child poverty”. Ministers have for some time been arguing that the relative income measure is unhelpful since it focuses on too narrow a definition of poverty.
Labour points out that David Cameron, when in opposition, repeatedly argued that relative poverty was important and that the Conservative party would measure and act on it. In 2006, Cameron said:
I want this message to go out loud and clear: the Conservative Party recognises, will measure and will act on relative poverty.
A Department for Work and Pensions spokeswoman said:
Even with plans to limit increases to benefits, people will still see their benefits go up year on year – there is no freeze in support.
And Universal Credit will make 3 million households better off.
Source: The Guardian, Child Poverty Action Group, Mirror