Comprehensive spending review 2007
What it needs to deliver on child poverty

The Government’s record

The Government has made substantial progress in the seven years since Tony Blair's pledge to eradicate child poverty, and deserves praise for this. When the Government came to power in 1997 child poverty in the UK stood at record levels. In 1996/97, 4.2 million children2 were living in poor households, compared with 1.3 million in 1968,3 representing a rise in child poverty from one in ten to one in three of all children. The UK had the third worst rate of child poverty across the industrialised world in the mid-1990s. Only Russia and the United States had a worse child poverty record than the UK.4

The latest child poverty figures are for 2004/05.5 These show that since 1998/99 child poverty has fallen by 700,000, from 4.1 to 3.4 million, a drop of approximately 17 per cent, on the after housing costs measure. It has also fallen by 700,000 on the before housing costs measure, from 3.1 million to 2.4 million, a drop of approximately 21 per cent.

Still, the Government failed to achieve its target of reducing child poverty by a quarter between 1998/99 and 2004/05. To meet its target on the after housing costs measure child poverty would have needed to have fallen by a further 300,000 to 3.1 million, and on the before housing costs measure by a further 100,000 to 2.3 million.6 The failure to meet the first child poverty target now means that it will be more difficult for the Government to meet its second target of halving child poverty between 1998/99 and 2010/11.

The second target will be judged on a different measure from the first. The first target used a poverty line of 60 per cent of median income, both before and after housing costs. The second target will just focus on incomes before housing costs, as well as adjusting for family size in a different way (by using the Modified OECD equivalence scale instead of the McClements scales). It will also include a material deprivation index.

The Institute for Fiscal Studies (IFS) calculates that, as a result of missing this year's target by 100,000 (measured before housing costs) and of the way that child poverty will be measured for the 2010/11 target, to reduce child poverty to half the level of 1998/99, child poverty now has to fall by about one million between 2004/05 and 2010/11 in order to meet the Government's target. This represents a fall over oneand- a-half-times greater than the 600,000 fall achieved between 1998/99 and 2004/05 (using the Modified OECD equivalence scale).7 As the IFS points out:

Unless the Government is to fall short of this target, or there are radical shifts in parental working patterns, new spending will be needed, from extra borrowing, increased taxation or a reordering of spending priorities.8

Notes

2 Department for Work and Pensions, Households Below Average Income 2004/05, Corporate Document
Services, 2006
3 S Machin, P Gregg and S Harkness, Poor Kids: trends in child poverty 1968-96, Paper presented at the Royal Economic Society’s 1999 Annual Conference, University of Nottingham
4 B Bradbury and M Jantti, Child Poverty Across Industrialised Nations, Innocenti Occasional Paper, 1999
5 See note 2
6 Institute for Fiscal Studies, Poverty and Inequality in Britain: 2006, 2006
7 See note 6
8 See note 6

Comprehensive spending review 2007
What it needs to deliver on child poverty

Contents page
Introduction
The Government’s record
What should the spending review deliver?
Provide most for those children at greatest risk of poverty
Work towards better jobs, not just more jobs
Ensure the safety net protects families against poverty
Maximise the contribution of child benefit within family support
Introduce free at the point of delivery good-quality childcare
Make the reduction of child poverty central to the new child support policies
Make education truly free at the point of delivery
Provide benefit entitlement to all UK residents equally, irrespective of immigration status
Reduce the disproportionate burden of taxation on poorer families
Improve the quality of delivery and gear it to the needs of the poorest families
Notes

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