York charity highlights child poverty fears

12:15am Wednesday 9th April 2008

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YORK MP Hugh Bayley has pledged to raise with ministers a damning new report from the Joseph Rowntree Foundation which warns child poverty could almost double in the next two decades unless tax and benefits policies change.

The report, published today, says those on the lowest incomes are continuing to fall behind the rest because most benefits and tax credits rise only in line with inflation - and therefore do not keep pace with average earnings.

Despite Labour's pledge to eradicate child poverty, the worst-off fifth of the population could lose 17 per cent of their income in the next 20 years unless policies change, the report warns.

The fact that tax allowances and thresholds increased more slowly than earnings added to the problem, said Holly Sutherland, author of the Joseph Rowntree report.

One-off measures announced in the recent budget such as the £17 more a week for poor families with one child and the extra £125 million over three years to help families were no substitute, she said.

Child tax credits themselves did rise in line with average earnings - though there was no commitment that that would continue, Ms Sutherland said.

The problem was that there were many other benefits that rise only in line with inflation - and so fall steadily behind earnings. As long as that continued, the worst off will continue to fall behind.

"For example, if the amount of Job Seeker's Allowance received by a single unemployed person had kept pace with average earnings since 1971, it would be double the value it is now."

If the current system were run for the next 20 years, the relative child poverty rate would rise from 18 per cent to 33 per cent, Ms Sutherland said.

"Pensioners will be largely protected from any increasing risk of poverty due to the decision to align pension benefits with earnings growth," she said. "A similar approach to annual increases in all other benefits and tax credits would insulate children and working-age adults from a steadily-rising risk of poverty."

Mr Bayley stressed the tax credit Labour introduced had lifted 750,000 children out of poverty.

But he admitted that as long as tax credits failed to rise as quickly as earnings, the danger was many of those children could slip back into relative poverty. Since the Government wants to move people from the poverty trap, it should read the report and deal with the findings," he said.

"I will certainly raise it with ministers and with colleagues in Parliament."

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