Child poverty to increase following Autumn Statement, warns IFS

1 Dec 11
The Autumn Statement has made it ‘inconceivable’ that the government will eradicate child poverty by 2020, the Institute for Fiscal Studies has warned.

By Richard Johnstone | 1 December 2011

The Autumn Statement has made it ‘inconceivable’ that the government will eradicate child poverty by 2020, the Institute for Fiscal Studies has warned.

Chancellor George Osborne's announcements on November 29 would increase child poverty, the economics think-tank said. The failure to match some tax credits to inflation, and the reversal of decisions to raise child tax credits, would add around 100,000 to the number of children in poverty in 2012/13.

This follows warnings by the Child Poverty Action Group that the decision to cancel an above-inflation rise in the child tax credit would lead to greater poverty.

CPAG chief executive Alison Garnham said: ‘Warnings of a bleak future of rising child poverty have not just been ignored, the government has actively decided to let child poverty rise. This is not the fairness we were promised and it will cost the nation dearly in years to come.’

In a post-Autumn Statement briefing, IFS director Paul Johnson said that the chancellor’s announcement of further cuts to public spending in 2015/16 and 2016/17 would put him ‘just on course’ to meet his so-called fiscal mandate. This states that the cyclically adjusted current budget should be balanced by the end of a rolling, five-year period.

Real-terms reductions to government expenditure of 0.9% in both years would form part of a seven-year contraction almost double any other public service spending cuts on record, IFS programme director Gemma Tetlow revealed. Over seven years from 2010, spending will be cut by 16.2%, compared with 9.3% over the seven years from 1975.

Tetlow added that, even with the extra cuts, there is little room for manoeuvre if Osborne is to meet his mandate.

The IFS also revealed that the squeeze on incomes following the recession would lead to more than a decade of falling living standards. Real median household incomes will be lower in 2015/16 than they were in 2002/03, the analysis found.