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Last Updated: Thursday, 9 March 2006, 17:29 GMT
UK poverty line is moving target

By Evan Davis
BBC economics editor

The Department of Work and Pensions did its best to avoid using the word "failure".

Children
Children are not moving out of poverty fast enough

Its press release on the statistics giving the number of children in poverty was late, and when it came, only in the fifth paragraph was there any mention of a target.

These are all symptoms of the department's embarrassment at the failure to hit it.

But the government is entitled to be annoyed at itself for allowing the failure to meet the target to distract from the better news that poverty continues to fall quite significantly. About 100,000 children a year have been moving out of it.

The government's problem is, that having set this target and the future ones, it clearly has to show some strong will to meet them. And that's a challenge.

The fundamental problem is that if everybody in Britain gets 2% richer each year, the poverty line rises as quickly as the incomes of the poor. So there is no progress on the poverty target.

It's not clear that either tax credits or new jobs can get rid of all child poverty in Britain

You could even have an impoverished millionaire, if everybody else had two million. To cut poverty, the incomes of the poor must outgrow those of everybody else.

That will probably not happen on its own. Yet how can the chancellor or other ministers engineer such an outcome?

Radical action

Can Gordon Brown afford to pay more generous tax credits? They have to get more and more generous and more and more and more expensive to go on lifting ever more people out of relative poverty.

Or can the economy create more jobs to get people into work in the way it has done in the last decade of economic growth?

It's not clear that either tax credits or new jobs can get rid of all child poverty in Britain.

To be more certain of meeting the ultimate target of abolishing child poverty by 2020, the chancellor might have to take more radical action to redistribute incomes.

Not just giving it to the poor, but taking it from those higher up the income spectrum. For example, the chancellor could recast the income tax system with far bigger personal allowances, making up the lost revenue by raising the basic rate.

That's one choice. Alternatively, having missed its first target, the government could choose to miss the rest.

Judging by its attempts to downplay the failure to hit its target, the Department of Work and Pensions seems to think it's easier to cope with the fallout from missing a target, than it is to take the politically costly action necessary to hit it.




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