How much money it takes to halve child poverty by 2010
Thought blog readers might find it useful if I flagged up the Institute for Fiscal Studies’ thoughts on how the Budget affects progress towards the government’s target of halving child poverty by 2010. Don’t forget that they and JRF first put remarkably similar figures, back in 2006, on how much the target would cost to achieve, then set at £4billion.
From the oral evidence to the Treasury Select Committee on the Budget on 17 March (uncorrected, so the link might wander):
[responding to question 67 from Sally Keeble MP] Robert Chote, IFS: One way of hitting the 2010 target, our best guess would be that if you were to increase the child element of the Child Tax Credits, the means-tested element, by £7.50 a week and then give a new payment of £12.50 a week for the third and subsequent child through the family element [...] that would cost £2.8 billion. That gives you some sense of how much more money there is to find.
Also interesting is this:
Q68 Ms Keeble: We have talked about this before, but how about going into work as a solution to child poverty, particularly given the prospects of increased unemployment?
Mr Chote: It does not make much difference on the timescale for 2010. [...] success on that front does not really get you very far in terms of the near-term target, it is either transfer payments or nothing at this stage.
So, getting more people into work isn’t the key to the 2010 target - putting more money in the pockets of families living below the poverty line whether in work or not through tax credits and benefits is. Longterm, talking about the next target of ending all child poverty by 2020, of course getting people into work and making sure they are paid decently is crucial (IPPR have recently published an interesting report on this) - though good social services, education and healthcare are important too.
But in order to think about what comes next, in order to have any chance of the 2020 target, we’ve got to get this one right. If you’ll forgive me badly paraphrasing a credit card ad - more money in tax credits for poor families: £2.8bn. Halving (then a shot at ending) child poverty: priceless.
EDIT, next morning: turns out I wrote a post setting out the background last December - here.
A question (a serious one, not rhetorical).
Is this a one off cost? Or an annual cost, from now for evermore?
If it’s the former then it’s a pittance so why not?
If it’s he latter then it isn’t so small.
I don’t think it’s a one-off cost - the level of spending on tax credits and benefits has to be kept at that level consistently, or child poverty will go backwards, towards 1999 baseline levels.
It’s the government’s own fault that we’re at a stage where only direct cash transfers will do it, cos they missed the 2005 quarterway target and started worrying about this one too late. The 2020 target is off the scale expensive if done only through cash transfers, so will have to be done through the government’s preferred methods of increasing employment and targeting extra social/health/education spending at the poorest families. If those are successful, then spending on tax credits and benefits goes down.