New analysis highlights child poverty risks of Chancellor’s new spending cap

March 18, 2014

New analysis commissioned by Child Poverty Action Group from the Institute for Social and Economic Research (ISER) at Essex University highlights how the expected budget announcement on capping Annually Managed Expenditure (AME) could drive up UK child poverty rates.

The ‘AME cap’ will set an annual ceiling on overall spending for working age support through tax credits and benefits for low paid workers, carers, disabled people and single parents.

The analysis shows that:

  • Income transfers from this kind of support are an essential part of preventing high poverty rates in the EU countries with lowest child poverty.
  • The UK leaves tax credits, social security and family benefits to do much more of the heavy lifting than in other EU countries where progressive taxation and structural factors of the economy play a larger role.

Alison Garnham, Chief Executive of Child Poverty Action Group, said:

“Our economy and our society get a huge return from social security spending but the Chancellor’s cap would degrade its poverty-fighting ability by introducing rationing of basic support for children, working families and disabled people. It would tie the government’s hands on some of the most effective actions ministers can take to reduce child poverty, locking-in cuts for the poorest families who really need the same protection we’ve given pensioners.

“The research makes clear that all the EU countries with much lower child poverty rates than Britain use income transfers for poverty prevention. If they can do so much better for their children, then so can we.

“If we caught up with other countries on things like progressive taxation, decent pay, affordable housing and better help with childcare to make it easier for parents to work, our social security system wouldn’t be left to do so much of the heavy lifting. Action in these areas would bring down child poverty too, whereas Osborne’s cap will only push more children into poverty.”

ENDS

Notes to Editors

  • The full analysis can be downloaded from the top right of this page. It was prepared for Child Poverty Action Group by the Institute for Social and Economic Research (ISER) at Essex University. As well as the analysis, a short explanatory note authored by CPAG is also attached. Information and graphics may be reproduced from the ISER note in reporting.
  • For information on the large rises in UK child poverty that are projected by the Institute for Fiscal Studies, read their latest analysis published in January 2014: http://www.ifs.org.uk/bns/bn144.pdf
  • CPAG is the leading charity campaigning for the abolition of child poverty in the UK and for a better deal for low-income families and children.
  • CPAG is the host organisation for the Campaign to End Child Poverty coalition, which has members from across civil society including children’s charities, faith groups, unions and other civic sector organisation, united in their campaigning for public and political commitment to ensure the goal of ending child poverty by 2020 is met.

For further information please contact:

Tim Nichols

CPAG Press Officer

Tel. 020 7812 5216 or 07816 909302 

tnichols@cpag.org.uk

www.cpag.org.uk