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Last Updated: Monday, 15 March, 2004, 09:28 GMT
Brown's child poverty challenge
By Simon Blake
BBC News social affairs analyst

Families have received more money under Gordon Brown
Families have received more money under Gordon Brown
When Gordon Brown stands up for his annual round of budget poker on Wednesday, one of his aces will be Labour's record in tackling poverty. But this is one game that has proved hugely expensive, and critics are wondering if the government can stay in it for the long term.

Five years after Tony Blair delighted his supporters by committing to 'end child poverty' by 2020, real progress has been made.

Thanks to extra spending on the Child Tax Credit of nearly a billion pounds announced in the Pre-Budget Report, the government looks set to hit its interim target of reducing child poverty by a quarter by April 2005.

That's over a million children lifted out of poverty, and child poverty at its lowest level since 1989.

What is the poverty line and how many live beneath it?

Though there is no specific target on pensioner poverty, half a million pensioners were raised above the poverty level by 2001/2.

More could benefit following the introduction of the Pension Credit.

Widespread poverty

Yet, as Dr Paul Dornan of Child Poverty Action Group (CPAG) points out, poverty still "spreads across the length and breadth of Britain".

According to CPAG, the UK has the second worst regional inequality in the industrialised world after Mexico.

And the limited poverty reductions to date have proved enormously expensive.

By 2004-5, the government will have increased support for families with children by 10.4 billion since 1997 in real terms - a 72% increase.

But around 3 million children will still be poor on the traditional measure.

Why hasn't poverty budged more?

David Willetts, Tory Work and Pensions spokesman, argues that Gordon Brown's beloved tax credits system isn't working very well - partly because of low take-up in the face of complicated form filling, and partly because it has extended means-testing to people on middle incomes.

Many pensioners don't take up the benefits they are entitled to
Many pensioners don't take up the benefits they are entitled to
There's something in this - especially for pensioner benefits.

Analysis by CPAG shows that between 470m and 820m of the Minimum Income Guarantee, the precursor of the Pension Credit, went unclaimed.

But it's not the whole story. Most experts think that the real issue is simply that poverty reduction is inherently very hard.

Hard Labour

The traditional way of defining poverty is through a relative measure based on a percentage of average incomes.

Labour has got some poorer families with kids into work and given higher benefits, so many are - in 'absolute' terms - better off than in 1997.

In cash terms that amounts to an extra 55 a week for the 10% worst-off families.

But not all of this has shown up in the poverty figures because all families have got richer.

Labour has been chasing a moving target.

Just to hold poverty where it is means giving increases in benefits in line with average incomes.

To reduce it requires more money on top of this.

The independent think tank the Institute for Fiscal Studies predicted last year that reducing child poverty to half its 1998-9 level will cost 5.5 billion extra.

New definition

Perhaps that is why Labour had recently given a new definition to child poverty that introduces a less challenging relative measure, alongside two more 'absolute' measures.

Critics accuse it of shifting the goalposts to elbow 800,000 kids off the balance sheet. Fair point perhaps, but the new definition doesn't really help the government escape the fundamental problem.

Even using it, poverty reduction will still mean large spending increases.

Where will Gordon Brown find them in a tight new spending round?

November's pre-Budget report knocked this question off the top of the agenda for this week by pumping cash into the bits of Child Tax Credit targeted on the poorest.

But it also included worrying signs for the future.

Other benefits important to tackling child poverty like Working Tax Credit and Child Benefit were only increased in line with prices.

And the increase in Child Tax Credit was offset by a real terms cut in the part going to most families.

The Labour-affiliated Fabian Society says that it is about fundamental political priorities: the Chancellor must make the case for greater redistribution of wealth if it is to meet its long term goals.

It is launching a commission to examine how ministers can change the terms of public debate.

But there are no easy answers.

The 2003 Budget commissioned a review to look at how to reduce poverty long-term.

For Gordon Brown to deliver the royal flush of ending child poverty, let alone addressing pensioner poverty, it may have to deal him something very special.

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