Benefits

Tackling child poverty by boosting family income through benefits is a narrow approach that ‘looks set to have failed’ said Ian Duncan Smith, the Work and Pensions Secretary, in a major speech. The speech followed the government’s Autumn Statement, which included welfare measures that on the government’s own projections would lead to an increase in child poverty – another signal of the government’s intentions to develop a new approach to poverty less dependent on benefits.

Duncan Smith claimed there are problems with officially classifying child poverty as a family on 60 per cent or less than the median income, as this had pushed governments into introducing policies with ‘perverse incentives’. He argued that this target created a ‘poverty plus a pound’ approach – where authorities did only enough to keep some families just above the 60 per cent mark without really changing lives, while those at the very bottom could be left behind.

Work in itself is not a solution to poverty, in part because of the spread of low pay work over the last 30 years, argues Richard Dickens in the latest National Institute Economic Review (vol. 218, no. 1). In his article, ‘Child poverty in Britain: past lessons and future prospects’, Dickens examines the impact on child poverty of changes over the past decade in wages and work, tax and benefits, and demographics. He finds that benefit reform increased work among families with children but this did not translate into large falls in child poverty – those entering work depended on substantial increases in benefits to lift them over the poverty line. Changes in the wage structure and demographics increased poverty, while changes to benefits (and, to a lesser extent, taxes) over that period had reduced poverty by making the tax/benefit system more progressive and by favouring families with children over those without children.