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Last Updated: Wednesday, 25 June, 2003, 05:40 GMT 06:40 UK
'Poverty gap' widens under Labour
Living standards of the vast majority of children have risen
Children who live in the poorest UK households have less of a chance of escaping poverty than when Labour came to power, a report concludes.

The research from the Institute for Fiscal Studies says the total poverty gap - the total income by which families fall short of the poverty line - has increased under Labour.

This is despite the fact that the actual number of poor children has fallen.

Child poverty is one of Labour's key targets, and has been at the heart of the political agenda since 1999.

The report said some families had benefited from new means-tested benefits and incentives to return to work, which has led to a fall in the number of poor children and improved living standards of the "vast majority of children" since 1997.

But benefit take-up has been a problem among some of the poorest groups. This could compel the government to re-think its policies and increase spending, the report said.

The researchers said the government was unlikely to abolish child poverty based on its current definition.

Poorest groups

The government wants to abolish child poverty by 2020 and halve it by 2010.

Some families with genuinely low incomes do not claim the means-tested benefits to which they are entitled
Institute for Fiscal Studies

Since 1996, living standards have improved the most for children who were living just below the poverty line.

But children in households with the lowest incomes have benefited much less, the report said.

According to government surveys, 1.1 million children live in households with less than 40% of the national average income.

Four out of 10 of these children live in households that do not receive any of the main means-tested benefits - even though they may be entitled to claim.

"A lot don't appear to be taking up benefits," Alissa Goodman, one of the researchers, told BBC News Online.

Child poverty grew rapidly, but has fallen in recent years

It has been estimated that as many as 600,000 families failed to claim Working Families Tax Credit - the old-style tax credit aimed at low-income families, which was replaced by new tax credits in April 2003.

The researchers said part of the reason might be because there would always be a group of families who were temporarily on low incomes, and therefore did not receive means-tested benefits.

But it could indicate a more sustained trend concerning non take-up of benefits, and this could pose a serious long-term problem for the government's targets.

"Some families with genuinely low incomes do not claim the means-tested benefits to which they are entitled," the report in this month's Economic Journal said.

"This group is obviously a genuine concern, and implies a range of policy responses."

Relative measures

The researchers also questioned whether child poverty could ever be abolished using the government's indicators.

The government's measure for child poverty is a relative one.

Whether a child is considered poor according to the government's definition depends not only on the income of the household in which it lives but also the incomes of the whole population.

As incomes have risen rapidly in recent years, child poverty has become much more difficult to reduce in relative terms.

If the government, however, had fixed the poverty line at its level in 1996, it would have been able to claim very large reductions in child poverty of around 1.2m in its first term.

The researchers concluded that reducing poverty would require more money from the government.

In previous research, it estimated that halving child poverty through the Child Tax Credit might require additional expenditure of 1% of GDP.

Pensioner and child poverty falls
13 Mar 03 |  Business
Tax credits 'failing' families
19 Dec 02 |  Business
Poverty 'unchanged' under Labour
12 Dec 02 |  Business

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