Think-tank warns a quarter of British children will be living in poverty

The UK government’s tax and benefit policies will leave almost a quarter of children in poverty by the end of this decade, according to a report by the Institute for Fiscal Studies (IFS).

Median incomes are expected to fall by 7 per cent over the period 2009-12 – the largest three-year fall for 35 years – driving absolute poverty up by about 600,000 children and 800,000 working-age adults, according to the respected economic think-tank’s report claimed yesterday.

The introduction of Universal Credit from 2013 will lift 450,000 children and 600,000 working-age adults out of relative poverty – defined as living in a household on less than 60 per cent of average income – by 2020-21, said the IFS.

But its positive impact will be far outweighed by other tax and benefit changes, including the switch from RPI indexation to the less generous CPI inflation measure. The IFS forecasts that 3.3 million children (24.4 per cent) will be in relative poverty and 3.1 million (23.1 per cent) in absolute poverty by 2020, up from 2.5 million (19.2 per cent) and 2.8 million (21.1 per cent) respectively now.

If correct, this would mean the government missing by a wide margin the legally binding targets set down in the Child Poverty Act, which was passed by the former Labour administration with cross-party support in 2010 and stated that no more than 5 per cent of children should be in absolute poverty and 10 per cent in relative poverty by the end of the decade.